KORU Medical Systems, Inc. Announces Amendment No. 3 to Loan and Security Agreement with HSBC Ventures USA Inc.
Key Points from the Report:
- Company: KORU Medical Systems, Inc. (NASDAQ: KRMD)
- Event: Entry into a material definitive agreement (Amendment No. 3 to the Loan and Security Agreement with HSBC Ventures USA Inc.)
- Date of Event: March 30, 2026
- Filing: Form 8-K filed with the SEC, signed by Thomas Adams on April 3, 2026
Details of the Amendment
KORU Medical Systems, Inc. has entered into Amendment No. 3 to its existing Loan and Security Agreement with HSBC Ventures USA Inc., dated as of March 30, 2026. This amendment introduces several important changes and updates to the current loan facility, which may have significant implications for the company’s liquidity, financial flexibility, and operations.
Key Provisions and Financial Covenants:
- Draw Period End Date Extended: The period during which KORU Medical can draw funds under the loan agreement is now extended to June 30, 2027. This can be further extended to December 31, 2027, contingent upon the company achieving an “EBITDA Milestone Event.”
- EBITDA Milestone Event: This milestone is achieved if KORU Medical delivers evidence (satisfactory to HSBC) by June 30, 2027, that it has recorded positive adjusted EBITDA for two consecutive fiscal quarters after the effective date of the third amendment. Attaining this milestone triggers the extension of the draw period, providing increased access to capital.
- Financial Covenants—Liquidity: KORU Medical is required to maintain a “Remaining Months Liquidity” greater than twelve (12) months, which will be tested monthly. If the company’s trailing three-month adjusted EBITDA is positive, it will be considered in compliance for that month, regardless of the exact liquidity calculation.
- Definition Updates: The amendment includes updated definitions for critical terms such as “Adjusted EBITDA,” “Eligible Foreign Accounts,” “Quick Assets,” “Testing Date,” and “Total Liabilities.” These definitions clarify the calculation and compliance requirements under the agreement.
- Cash Management: The company must report the aggregate amount of unrestricted and unencumbered cash and equivalents, including details of accounts with institutions other than HSBC and whether such accounts are subject to control agreements in favor of HSBC. At least 75% of cash must be maintained with HSBC or its affiliates to remain in compliance with the terms.
Potential Shareholder Impact
- Improved Liquidity Position: The extension of the draw period and the possibility of further extension upon meeting EBITDA milestones suggest a more robust liquidity position for KORU Medical. This flexibility can support ongoing operations, strategic investments, or expansion initiatives.
- Focus on Profitability: The requirement to achieve positive adjusted EBITDA for two consecutive quarters as a trigger for extending the loan facility signals to shareholders and the market that the company is emphasizing operational profitability and disciplined financial management.
- Stricter Cash Controls: The covenants on cash holdings and the need to keep a significant proportion of cash with HSBC may limit flexibility but ensure the lender’s oversight and risk management.
- Price Sensitivity: Achieving the EBITDA milestone and maintaining required liquidity can be seen as key indicators of financial health. Success or failure in these areas could directly influence investor sentiment and share price, as they reflect the company’s ability to access capital and manage its obligations.
Other Noteworthy Information
- No Written, Soliciting, or Pre-commencement Communications: The filing confirms that there are no written communications under Rule 425, no soliciting material under Rule 14a-12, and no pre-commencement tender or issuer tender offers. This indicates the amendment is strictly related to the loan agreement and not part of a merger, acquisition, or tender offer process.
- Emerging Growth Company Status: KORU Medical is not classified as an emerging growth company, nor has it elected to use the extended transition period for new or revised financial accounting standards.
Conclusion
The amendment to the Loan and Security Agreement with HSBC Ventures USA Inc. is a significant event for KORU Medical Systems, Inc. It strengthens the company’s liquidity framework and provides a clear path toward extended financial flexibility, contingent upon operational improvements. Investors should closely monitor the company’s ability to achieve the stated EBITDA milestones and maintain the required liquidity, as these will be pivotal for ongoing access to capital and could materially affect the company’s valuation and share price.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should review the full text of the SEC filing and consult with their financial advisor before making any investment decisions. The author and publisher are not responsible for any investment actions taken based on the information contained herein.
