KRMD 10-K & 10-Q changes, risk factors and insider trading

The size of the markets for our products and any future products may be smaller than we estimate and may decline.

Our estimates of the total addressable market for our products are based on a number of internal and third-party estimates and assumptions, including, without limitation, the assumed prices at which we can sell our products in those markets. While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors.

As a result, our estimates of the annual total addressable market for our products may prove to be incorrect. If the actual number of patients with indications who would benefit from our products, the price at which we can sell our products or the annual total addressable market for our products is smaller than we have estimated, it may impair our prospective market and revenue opportunity.

Most of our customers prefer to purchase our products through distributors, rather than directly from us, because of “one-stop shopping” convenience and their ability to ship directly to patients. We sell most of our products through a small number of distributors, three in the U.S. and six outside the U.S. As of December 31, 2025, these nine distributors comprised approximately 77% of our net revenues with one U.S. distributor contributing 29%. Purchasing patterns by these distributors cannot always be predicted and fluctuate from quarter to quarter and year to year based on, among other things, their expectations of customer demand. Any decline in business with the distributors outside the U.S. could have an adverse impact on our business. If we were unable to sell through the distributors outside the U.S., we would have to find other distributors or broaden our customer base and expand direct relationships with customers. Other distributors may not be available or may not agree to arrangements that are commercially reasonable. In the U.S. we could transition to direct customer purchase; however, customers may not want to purchase directly from us and may decide to purchase competitors’ products through their distributors. Moreover, a transition from distributors to direct customer purchase would be time consuming and costly.

Our ability to meet customer demand depends, in part, on our ability to obtain timely and adequate delivery of raw materials and components for our products. A majority of the materials and components that go into the manufacturing of our products, including all of our consumables subassemblies, are single-sourced from third-party suppliers.

We do not have long-term agreements in place with any of our suppliers, with the exception of an agreement with Command that expires December 31, 2026, subject to renewal. Due to regulatory requirements relating to the qualification of suppliers, we are not likely to be able to establish additional or replacement sources on a timely basis or without excessive cost. We are in the process of establishing alternative sources of supply for our raw materials and components, but there can be no assurance we will be able to do so.

If a cybersecurity incident was to occur, it could cause substantial disruption to our information systems and breaches of our security systems which could harm our business, customer relations and financial condition.

We collect and store sensitive data in the regular course of business on our networks and on third-party controlled applications. Such sensitive information includes our intellectual property and proprietary business information, information about our customers, suppliers and business partners, and personally identifiable information of our customers and employees. The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. Our information technology and infrastructure may be subject to cybersecurity attacks by hackers or breached due to human error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disruption of our operations and the services we provide to customers, and damage to our reputation and loss of confidence in our products and services, which could adversely affect our business, operating margins, revenues and competitive position. In addition, the regulatory environment regarding data security and privacy evolves frequently and has become increasingly restrictive.

We also use third-party information technology systems to store information, interface with customers, maintain financial accuracy, secure our data and accurately produce our financial statements. If our information technology systems do not effectively and securely collect, store, process and report relevant data for the operation of our business, whether due to equipment malfunction or constraints, software deficiencies, human error or cyber incident, our ability to effectively plan, forecast and execute our business plan and comply with applicable laws and regulations would be materially impaired. Any such impairment could have a material adverse effect on our results of operations, financial condition and the timeliness in which we report our operating results.

Our insurance coverage related to information risks, breaches, and business interruption is subject to deductibles and coverage limitations. We may not be able to maintain our current insurance coverage on acceptable terms, if at all, and, if available, coverage may not be adequate to protect us against future claims. If we are unable to obtain insurance at an acceptable cost or on acceptable terms or otherwise protect against such information risks and breach claims, we could be exposed to significant liabilities.

Recent immigration enforcement actions in the U.S. could impact our operations or the operations of our suppliers and vendors, and the ability to retain talented personnel.

Recent immigration enforcement by the U.S. government has resulted in increased audits of our employment records, as well those of our suppliers and vendors, and the classification of employees, and may limit access to visa programs for employees. Such changes may affect our ability, and the ability of our suppliers and vendors, to retain talent, increase recruitment costs and affect innovation. We may be required to spend more time focusing on compliance with such immigration controls and spend more costs on employment and immigration attorneys and human resources specialists to ensure compliance with U.S. government requirements.

Risks Related to Our Industry

Failure to obtain 510(k) clearance or PMA approval from the FDA for our new products or enhancements to our existing products may affect our ability to grow our business.

Such increased costs and delays or failures associated with the clearance and approval process and continuing review of approved products, could adversely affect our business, operating results and prospects. There is no assurance that future clearance or approval of our new products or enhancements to our existing products will be granted, or that we will be able to continue selling our products. Such failures could hurt our ability to maintain and grow our business.

If coverage and reimbursement from third-party payors for procedures utilizing our products are inadequate, adoption of our products will be adversely affected and our revenues and prospects for profitability will suffer.

Purchasers of our products bill various third-party payors, including governmental healthcare programs, such as Medicare, and private insurance plans, for procedures in which our products are used. Reimbursement is a significant factor considered those purchasers in determining whether to acquire and utilize medical devices. Therefore, our ability to successfully commercialize our products depends significantly on the adequacy of coverage and reimbursement from these third-party payors.

Third-party payors, whether foreign or domestic, governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, in the U.S., no uniform policy of coverage and reimbursement for medical device products exists among third-party payors. Therefore, coverage and reimbursement for medical device products can differ significantly from payor to payor. In addition, payors continually review new technologies for possible coverage and can, without notice, deny coverage for these new products. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained or maintained if obtained.

Reimbursement systems in international markets vary significantly by country and by region within some countries, and reimbursement approvals must be obtained on a country-by-country basis. In many international markets, a product must be approved for reimbursement before it can be approved for sale in that country. Further, many international markets have government-managed healthcare systems that control reimbursement for new devices and procedures. In most markets, there are private insurance systems as well as government-managed systems.

Risks Related to Legal and Regulatory Compliance

In the European Union (“EU”), we are required to comply with the new Medical Device Regulation (“MDR” or “EU MDR”) effective May 2021, which supersedes the prior Medical Device Directives. Medical devices which have a valid CE certificate to the current Medical Device Directives (issued before May 2021), as do all of our current products, can continue to be sold until December 2028 or until the CE certificate expires, whichever comes first, providing there are no significant changes as defined in Article 120 of EU MDR.

The MDR was published in May 2017 with a 3-year transition period. That transition period was extended to May 2021 due to the COVID-19 pandemic. In early 2023, the transition period was further extended to December 2028 for class IIa products. The CE mark required to sell medical devices in the EU is affixed following conformity assessment and either approval from an appointed independent notified body or through self-certification by the manufacturer. The selected pathway to CE marking is based on product risk classification. CE marking indicates conformity to the applicable essential requirements of the relevant Medical Device Directives and in the future to the general safety and performance requirements for the new MDR. The MDR will change multiple aspects of the existing regulatory framework for CE marking, such as increased clinical evidence requirements and other new requirements, including Unique Device Identification (“UDI”) as well as many other post-market obligations. MDR also significantly modifies and increases the compliance requirements for the industry and will require significant investment by us in the near future to implement.

Risks Related to Economic Conditions

Approximately 26% of our net revenues in the year ended December 31, 2025, came from our operations outside the U.S., and we intend to continue to pursue growth opportunities in foreign markets. Our foreign operations subject us to certain risks, including, among others, the effects of fluctuations in foreign currency exchange, uncertainties with respect to local economic and political conditions, competition from local companies, trade protectionism and restrictions on the transfer of goods across borders, including tariffs or other barriers to market participation, pricing pressure that we may experience internationally, U.S. diplomatic and trade relations with the governments of the foreign countries in which we operate, foreign regulatory requirements or changes in such requirements, local product preferences and product requirements, longer payment terms for accounts receivable than we experience in the U.S., difficulty in establishing, staffing and managing foreign operations, changes to international trade agreements and treaties, changes in tax laws, weakening or loss of the protection of intellectual property rights in some countries, and import or export licensing requirements.

There may be greater uncertainty and market volatility following U.S. and global elections, resulting from potential shifts in trade policies, tariffs or other trade protection measures, and the reaction of other countries thereto, or changes to international trade agreements, which could have a material adverse effect on our operations, including our ability to source and manufacture products in a timely and cost effective manner, financial condition, results of operations and/or liquidity. Geopolitical developments related to various global conflicts are sources of uncertainty and may cause disruptions to global or regional markets, supply chains or operations in the regions. Such global conflicts include, but are not limited to, Russia’s invasion of Ukraine in 2022, uncertainty in the Middle East region, increasing tensions between China and Taiwan, and U.S. military operations in Venezuela. Sanctions and export restrictions may continue to proliferate, leading to greater uncertainty in emerging and growth markets. Any significant changes in the political, economic, financial, competitive, legal and regulatory or reimbursement conditions where we conduct, or plan to expand, our international operations may have a material impact on our business, financial condition or results of operations.

A government shutdown may have a material adverse impact on our business and results of operations.

The Company is subject to various federal regulations and various federal agency oversight. A government shutdown or understaffing at applicable federal agencies could result in unforeseen delays despite compliance with these regulations and federal agency requirements. Such a delay could materially and adversely affect the Company’s results of operations, cash flows and liquidity.

A downturn in global economic conditions in government-sponsored healthcare systems could adversely affect our operations.

Deterioration in the global economic environment, particularly in countries with government-sponsored healthcare systems, may cause decreased demand for our products and increased competition, which could result in lower sales volume, lower end-user demand through changes to payor reimbursement, and downward pressure on the prices for our products, longer sales cycles, and slower adoption of new technologies. A weakening of economic conditions in the U.S. and/or abroad may also adversely affect our suppliers, which could result in interruptions in supply. Further, sanctions, tariffs, or other measures that restrict international trade, as well as instability resulting from global conflicts, could negatively affect our business operations and results.

Pandemics or disease outbreaks, such as the COVID-19 pandemic, have created and may continue to create significant volatility, uncertainty and economic disruption in the markets we sell our products into and operate in, primarily the U.S., Europe, and Asia-Pacific and may negatively impact business and healthcare activity globally. In response to the COVID-19 pandemic, governments around the world imposed measures designed to reduce the transmission of COVID-19 and individuals responded to the fear of contracting COVID-19. In particular, elective procedures and exams were delayed or cancelled, there were significant reductions in physician office visits, and hospitals postponed or canceled capital purchases as well as limited or eliminated services. While elective procedures and exams and capital purchases have increased from initially depressed levels, the reduction in elective procedures, exams and capital purchases has had, and we believe may continue to have, a negative impact on the sales of our products. Additionally, governments and other third-party payors around the world facing tightening budgets could move to further reduce the reimbursement rates or the scope of coverage offered, which could further adversely affect sales of our products.

One of our two most significant international distributors is located in the United Kingdom (“UK”), and the other is in Finland, a member of the EU. The June 2016 referendum resulted in the UK’s decision to exit the EU (commonly known as “Brexit”), and the subsequent commencement of the official withdrawal process by the UK government in March 2017, has created uncertainties affecting business operations in the UK and the EU. On January 31, 2020, the UK withdrew from the EU. Under the withdrawal agreement agreed between the UK and the EU, the UK was subject to a transition period until December 31, 2020 (the “Transition Period”) during which EU rules continued to apply. During the Transition Period, negotiations between the UK and the EU continued in relation to the future customs and trading relationship between the UK and the EU following the expiration of the Transition Period. Due to the COVID-19 global pandemic, negotiations between the UK and the EU were delayed. However, on December 24, 2020, the negotiators from the EU and UK reached an agreement on a new partnership. This agreement sets out the rules that apply between the EU and the UK as of January 1, 2021. New regulations require medical device registration with the Medicines and Healthcare Products Regulatory Agency (“MHRA") before being placed on the Great Britain market (England, Wales, and Scotland). Additionally, all medical devices will require a UK Conformity Assessment mark (“UKCA”) by June 30, 2030. CE marks issued by Notified Bodies will remain valid until this time. Therefore, we must be compliant with applicable legislation in order to identify our devices with the UKCA mark and continue to market and sell our devices in Great Britain beyond June 30, 2030.

Risks Related to Our Financial Position

Changes in tariff and trade policies by the US administration, and uncertainties with respect to such policies, may have an adverse impact on our costs of goods and gross margin.

In February 2026, the Supreme Court of the United States held that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) exceeded the President’s statutory authority and were unlawful. As a result, previously implemented IEEPA-based reciprocal tariffs were terminated. Shortly thereafter, the Trump Administration announced and implemented a new across-the-board tariff of up to 15% on certain imports pursuant to Section 122 of the Trade Act of 1974. These actions have resulted in changes to applicable U.S. tariff rates and may continue to create uncertainty regarding U.S. trade policy, which could materially affect import costs, supply chains, pricing, and overall operating results.

General Risk Factors

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

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

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

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

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

Net Income

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

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

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:

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.

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:

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 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.