What changed in this filing

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Item 1. Financial Statements

2020-08-10 compared with 2020-05-11 · 267 added, 220 removed, 464 unchanged (51% of the section changed)

6 unchanged sentences

Accounts Receivable, net

Inventory, net

Prepaid and Other Current Assets

21 unchanged sentences

Preferred Stock, $0.0001 par value, 2,000,000 shares authorized;

no shares issued and outstanding at March 31, 2020 and December 31, 2019

no shares issued and outstanding at June 30, 2020 and December 31, 2019

Common Stock, $0.0001 par value;

170,000,000 shares authorized;

69,049,102 and 65,378,890 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

70,156,922 and 65,378,890 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

Additional Paid-in Capital

Accumulated Deficit

( 321,392,548

( 306,516,265

Accumulated Other Comprehensive Income

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31, 2020

Three Months Ended March 31, 2019

Three Months Ended June 30, 2020

Three Months Ended June 30, 2019

Six Months Ended June 30, 2020

Six Months Ended June 30, 2019

Cost of Sales

1 unchanged sentence

General and Administrative

Settlement Expense

Research and Product Development

2 unchanged sentences

Realized Gain on Investments

Warrant Modification Expense

Interest Expense

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended March 31, 2020

Three Months Ended March 31, 2019

Three Months Ended June 30, 2020

Three Months Ended June 30, 2019

Six Months Ended June 30, 2020

Six Months Ended June 30, 2019

Unrealized Loss on Available-for-Sale Debt Instrument Investments

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the three months ended March 31, 2020

For the three and six months ended June 30, 2020

ADDITIONAL PAID-IN CAPITAL

2 unchanged sentences

Balance as of January 1, 2020

( 306,516,265

Unrealized Loss on Available-for-Sale Investments

4 unchanged sentences

Balance as of March 31, 2020

( 314,500,003

Unrealized Loss on Available-for-Sale Investments

Foreign Currency Translation Adjustments

Issuance of common stock, net of offering costs/Public offering

Vesting of Restricted Stock Units Issued, net of taxes withheld

Warrant Modification Expense

Stock-based Compensation expense

Balance as of June 30, 2020

( 321,392,548

The accompanying notes are an integral part of the condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the three months ended March 31, 2019

For the three and six months ended June 30, 2019

ADDITIONAL PAID-IN CAPITAL

2 unchanged sentences

Balance as of January 1, 2019

( 272,388,234

Unrealized Loss on Available-for-Sale Investments

4 unchanged sentences

Balance as of March 31, 2019

( 281,066,581

Unrealized Gain on Available-for-Sale Investments

Foreign Currency Translation Adjustments

Issuance of common stock, net of offering costs/Public offering

Issuance of common stock, net of offering costs/At-the-market offering

Stock-based Compensation

Balance as of June 30, 2019

( 291,358,764

The accompanying notes are an integral part of the condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2020 and 2019

For the six months ended June 30, 2020 and 2019

Cash Flows From Operating Activities:

2 unchanged sentences

Stock-based Compensation

Warrant Modification Expense

Increase in Inventory Reserves

1 unchanged sentence

Amortization of Debt Financing Costs and Accretion of Debt Discount

Loss (Gain) on Disposal of Assets

Realized (Gain) on Sale of Investments Available-for-Sale

1 unchanged sentence

Changes in Assets and Liabilities:

(Increase) Decrease in Accounts Receivable, net

Decrease in Accounts Receivable, net

Decrease in Insurance Receivable

(Increase) Decrease in Inventory

Decrease in Prepaid and Other Assets

Increase in Accounts Payable

Decrease in Settlement Payable

(Increase) Decrease in Prepaid and Other Assets

Increase (Decrease) in Accounts Payable

Increase (Decrease) in Settlement Payable

Decrease in Lease Liability

Increase in Other Liabilities

Decrease in Other Liabilities

Decrease in Deferred License Revenue

6 unchanged sentences

Purchase of Research and Development Licenses (Related Party)

Cash Provided By Investing Activities

Cash Provided By (Used In) Investing Activities

Cash Flows From Financing Activities:

4 unchanged sentences

Offering Costs from the Issuance of Common Stock / Public Offering

Proceeds from the Issuance of Common Stock / At-the Market Offering

Offering Costs from the Issuance of Common Stock / At-the Market Offering

Proceeds from the Exercise of Employee Stock Options

Repurchase of Common Shares to Pay Employee Withholding Taxes

Repurchase of Common Stock to Pay Employee Withholding Taxes

Cash Provided By Financing Activities

Increase (Decrease) In Cash and Cash Equivalents

Cash At Beginning Of Period

Cash At End Of Period

Cash and cash equivalents At Beginning Of Period

Cash and cash equivalents At End Of Period

Supplemental Disclosure of Cash Flow Information:

2 unchanged sentences

Change in Unrealized Loss on Marketable Securities Available-for-Sale

Delivery of Common Stock Underlying Restricted Stock Units

Issuance Costs related to Debt Financing, not yet paid

Insurance Financing Note Payable

Fair Value of Warrants issued related to Debt Financing

5 unchanged sentences

Rockwell Medical, Inc.

and subsidiaries (collectively, “we”, “our”, “us”, or the “Company”), is a biopharmaceutical company dedicated to improving outcomes for patients with iron-deficiency anemia, with an initial focus on patients with end-stage renal disease (ESRD) and on dialysis.

The Company is focused on developing its proprietary ferric pyrophosphate (“FPC”) therapeutic platform, and the first product developed from this platform is Triferic, the first-FDA approved product for the replacement of iron and maintenance of hemoglobin in adult hemodialysis patients.

and subsidiaries (collectively, “we”, “our”, “us”, or the “Company”), is a biopharmaceutical company dedicated to improving outcomes for patients with iron deficiency and iron-deficiency anemia, with an initial focus on patients with end-stage kidney disease (ESKD) and on dialysis.

The Company is focused on developing its proprietary ferric pyrophosphate citrate (“FPC”) therapeutic platform.

The first product developed from this platform is Triferic, the first-FDA approved product for the replacement of iron and maintenance of hemoglobin in adult hemodialysis patients.

We initiated commercial sales of Triferic Dialysate, during the second quarter of 2019 and received approval by the U.S.

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Our mission is to transform anemia management in a wide variety of disease states across the globe, while improving patients’ lives.

Accordingly, we are building the foundation to become a leading medical and commercial organization in the field of dialysis.

Accordingly, we are building the foundation to become a leading medical and commercial organization in the field of iron deficiency.

Triferic® is a registered trademark of Rockwell Medical, Inc.

Liquidity and Capital Resources

As of March 31, 2020 , the Company had approximately $37.4 million of cash and cash equivalents, $11.5 million of investments available-for-sale, working capital of $46.1 million and an accumulated deficit of $314.5 million .

Net cash used in operating activities for the three months ended March 31, 2020 was approximately $6.5 million .

As of June 30, 2020 , the Company had approximately $ 26.7 million of cash and cash equivalents, $ 13.3 million of investments available-for-sale, working capital of $ 40.0 million and an accumulated deficit of $ 321.4 million .

Net cash used in operating activities for the six months ended June 30, 2020 was approximately $ 16.2 million .

Management evaluated the Company’s ability to continue as going concern for at least the next 12 months from the filing of this report.

2 unchanged sentences

On March 16, 2020, the Company closed a debt financing transaction with net proceeds at closing of approximately $ 21.2 million , net of fees and expenses (See Note 15 for further detail).

The Company will require additional capital to sustain its operations and make the investments it needs to execute upon its longer-term business plan, including the continued commercialization of Triferic Dialysate and Triferic AVNU, which was approved by the FDA in March 2020, executing plans for enhancing its medical capabilities, generating additional data for Triferic and developing Triferic for new therapeutic indications.

During the six months ended June 30, 2020, the Company sold 987,716 shares of its common stock as part of its sales agreement with Cantor Fitzgerald & Co.

for proceeds of $ 2.0 million , net of issuance costs.

Approximately $ 32.6 million remains available for sale under this facility.

See Note 10 for further detail.

The Company will require additional capital to sustain its operations and make the investments it needs to execute upon its longer-term business plan, including the continued commercialization of Triferic Dialysate and Triferic AVNU, executing plans for enhancing its medical capabilities, generating additional data for Triferic and developing Triferic for new therapeutic indications.

If the Company is unable to generate sufficient revenue from its existing long-term business plan, the Company will need to obtain additional equity or debt financing.

If the Company attempts to obtain additional debt or equity financing, the Company cannot assume that such financing will be available on favorable terms, if at all.

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results.

The results for the condensed consolidated statement of operations are not necessarily indicative of results to be expected for the year ending December 31, 2020 or for any future interim period.

The condensed consolidated balance sheet at March 31, 2020 has been derived from unaudited financial statements;

however, it does not include all of the information and notes required by U.S.

GAAP for complete financial statements.

The condensed consolidated balance sheet at December 31, 2019 has been derived from audited financial statements, however, it does not include all of the information and notes required by U.S.

GAAP for complete financial statements.

The accompanying condensed consolidated financial statements should be read in conjunction

The COVID-19 pandemic and resulting global disruptions have adversely affected our business and operations, including, but not limited to, our sales and marketing efforts and our research and development activities, and the operations of third parties upon whom we rely.

As noted above, we intend to initiate a sample evaluation program for Triferic AVNU during the third quarter of 2020 in order to prepare for a commercial launch.

Quarantines, shelter-in-place, executive and similar government orders may negatively impact our sales and marketing activities, particularly if our sales representatives are unable to interact with current and potential customers to the same extent as before onset of the COVID-19 pandemic.

Depending on the severity of the impact on our sales and marketing efforts, the timing of our commercial launch of Triferic AVNU could be adjusted into the first quarter of 2021.

The COVID-19 pandemic and resulting global disruptions have caused significant volatility in financial and credit markets.

We have utilized a range of financing methods to fund our operations in the past;

however, current conditions in the financial and

ROCKWELL MEDICAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

with the consolidated financial statements for the year ended December 31, 2019 and notes thereto included in the Company’s Annual Report on Form 10-K filed on March 17, 2020.

credit markets may limit the availability of funding or increase the cost of funding.

Due to the rapidly evolving nature of the global situation, it is not possible to predict the extent to which these conditions could adversely affect our liquidity and capital resources in the future.

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

The accompanying condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

The accompanying condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States (“U.S.”) of America (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.

Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements.

The condensed consolidated balance sheet at June 30, 2020 , condensed consolidated statements of operations for the three and six months ended June 30, 2020 and 2019 , condensed consolidated statements of cash flows for the six months ended June 30, 2020 and 2019 , and condensed consolidated statement of changes in shareholder’s equity for the three and six months ended June 30, 2020 and 2019 are unaudited, but include all adjustments, consisting of normal recurring adjustments, that the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The results for the three and six months ended June 30, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020 or for any future interim period.

The condensed consolidated balance sheet at December 31, 2019 has been derived from audited financial statements, however, it does not include all of the information and notes required by GAAP for complete financial statements.

The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2019 and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 as filed with the SEC on Form 10-K on March 17, 2020.

The Company’s consolidated subsidiaries consisted of its wholly-owned subsidiaries, Rockwell Transportation, Inc.

and Rockwell Medical India Private Limited.

The accompanying condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries.

All material intercompany balances and transactions have been eliminated in consolidation.

Certain reclassifications have been made to the 2019 financial statements and notes to conform to the 2020 presentation.

10 unchanged sentences

The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term.

The Company continues to account for leases in the prior period financial statements in accordance with ASC Topic 840.

Loss Per Share

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

ASC 260, Earnings Per Share , requires dual presentation of basic and diluted earnings per share (“EPS”), with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.

5 unchanged sentences

Securities that could potentially dilute net income per share in the future that were not included in the computation of diluted loss per share were as follows:

As of March 31,

As of June 30,

Options to purchase common stock

2 unchanged sentences

Warrants to purchase common stock

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Adoption of Recent Accounting Pronouncements

15 unchanged sentences

Product sales – The Company accounts for individual products and services separately if they are distinct (i.e., if a product or service is separately identifiable from other items and if a customer can benefit from it on its own or with other resources that are readily available to the customer).

The consideration, including any discounts, is allocated between separate products and services based on their stand-alone selling prices.

The consideration, including any discounts, is allocated between separate products and

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

services based on their stand-alone selling prices.

The stand-alone selling prices are determined based on the cost plus margin approach.

6 unchanged sentences

The amounts received from Wanbang Biopharmaceuticals Co., Ltd.

(“Wanbang”) and Sun Pharmaceutical Industries Ltd.

(“Wanbang”) and amounts to be received from Sun Pharmaceutical Industries Ltd.

("Sun Pharma") are recognized as revenue over the estimated term of the applicable distribution and license agreement as regulatory approval was not received and the Company did not have sufficient experience in China and India, respectively, to determine that regulatory approval was probable as of the execution of the agreement.

1 unchanged sentence

For the business under the Company’s distribution agreement with Baxter (the “Baxter Agreement”), and for the majority of the Company’s international customers, the Company recognizes revenue at the shipping point, which is generally the Company’s plant or warehouse.

For other business, the Company recognizes revenue based on when the customer takes control or receipt of

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For other business, the Company recognizes revenue based on when the customer takes control or receipt of the product.

The amount of revenue recognized is based on the purchase order less returns and adjusted for any rebates, discounts, chargebacks or other amounts paid to customers.

4 unchanged sentences

In thousands of US dollars ($)

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Six Months Ended June 30, 2020

Products By Geographic Area

Rest of World

Drug Revenues

6 unchanged sentences

Total Concentrate Products

Three Months Ended March 31, 2019

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

In thousands of US dollars ($)

Three Months Ended June 30, 2019

Six Months Ended June 30, 2019

Products By Geographic Area

Rest of World

Drug Revenues

Product Sales – Point-in-time

License Fee – Over time

7 unchanged sentences

In thousands of US dollars ($)

March 31, 2020

June 30, 2020

December 31, 2019

1 unchanged sentence

Contract liabilities

There were no impairment losses recognized related to any receivables arising from the Company’s contracts with customers for the three months ended March 31, 2020 and 2019 .

For the three months ended March 31, 2020 and March 31, 2019 , the Company did not recognize material bad-debt expense.

There were no material contract assets recorded on the condensed consolidated balance sheet as of March 31, 2020 and December 31, 2019 .

The Company does not generally accept returns of its concentrate products and no reserve for returns of concentrate products was established as of March 31, 2020 or December 31, 2019 .

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

There were no material losses recognized related to any receivables arising from the Company’s contracts with customers for the three and six months ended June 30, 2020 and 2019 .

For the three and six months ended June 30, 2020 and June 30, 2019 , the Company did not recognize any material bad-debt expense.

There were no material contract assets recorded on the condensed consolidated balance sheet as of June 30, 2020 and December 31, 2019 .

The Company does not generally accept returns of its concentrate products and no material reserve for returns of concentrate products was established as of June 30, 2020 or December 31, 2019 .

The contract liabilities primarily relate to upfront payments and consideration received from customers that are received in advance of the customer assuming control of the related products

Transaction price allocated to remaining performance obligations

For the three months ended March 31, 2020 , revenue recognized from performance obligations related to prior periods was not material.

Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, totaled $11.6 million as of March 31, 2020 .

For the three and six months ended June 30, 2020 , revenue recognized from performance obligations related to prior periods was not material.

The amount relates primarily to upfront payments and consideration received from customers that are received in advance of the customer assuming control of the related products.

1 unchanged sentence

The Baxter Agreement includes minimum commitments of product sales over the duration of the agreement.

Unfulfilled performance obligations related to the Baxter Agreement are product sales of $8.6 million , which will be amortized through expiration of the Baxter Agreement on October 2, 2024.

Unfulfilled performance obligations related to the Baxter Agreement are product sales of $ 8.2 million as of June 30, 2020, which is being amortized ratably through expiration of the Baxter Agreement on October 2, 2024.

Investments - Available-for-Sale

Investments available-for-sale consisted of the following as of March 31, 2020 and December 31, 2019 :

March 31, 2020

Investments available-for-sale consisted of the following as of June 30, 2020 and December 31, 2019 :

June 30, 2020

Amortized Cost

9 unchanged sentences

Available-for-Sale Securities

The fair value of investments available-for-sale are determined using quoted market prices from daily exchange-traded markets based on the closing price as of the balance sheet date and are classified as Level 1, as described in Note 3, Fair Value Measurement to our condensed consolidated financial statements.

As of March 31, 2020 and December 31, 2019 , the amortized cost and estimated fair value of our available-for-sale securities were due within one year.

Components of inventory, net of reserves as of March 31, 2020 and December 31, 2019 are as follows:

Raw Materials

Work in Process

Finished Goods

As of March 31, 2020 , we classified $0.6 million of inventory as non-current, all of which was related to Triferic or the active pharmaceutical ingredient and raw materials for Triferic.

As of March 31, 2020 , we had total Triferic inventory aggregating $3.4 million , against which we had reserved $2.4 million .

The fair value of investments available-for-sale are determined using quoted market prices from daily exchange-traded markets based on the closing price as of the balance sheet date and are classified as a Level 1 measurement under ASC 820 Fair Value Measurements.

As of June 30, 2020 and December 31, 2019 , the amortized cost and estimated fair value of our available-for-sale securities were due within one year.

ROCKWELL MEDICAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

The $1.0 million net value of Triferic inventory consisted of $0.2 million of Triferic Dialysate finished goods with expiration dates ranging from June 2020 to May 2021, $0.5 million of Triferic API with estimated remaining shelf life extending through 2023, and $0.3 million of raw materials for Triferic with estimated remaining shelf life extending beyond 2025.

Components of inventory, net of reserves, as of June 30, 2020 and December 31, 2019 are as follows:

Raw Materials

Work in Process

Finished Goods

As of June 30, 2020 , we classified $ 0.8 million of inventory as non-current, all of which was related to Triferic or the active pharmaceutical ingredient and raw materials for Triferic.

As of June 30, 2020 , we had total Triferic inventory aggregating $ 3.7 million , against which we had reserved $ 2.5 million .

The $ 1.2 million net value of Triferic inventory consisted of $ 0.2 million of Triferic Dialysate finished goods with expiration dates ranging from December 2020 to May 2021, $ 0.5 million of Triferic API with estimated remaining shelf life extending through 2023, and $ 0.5 million of raw materials for Triferic with estimated remaining shelf life extending beyond 2025.

Property and Equipment

As of March 31, 2020 and December 31, 2019 , the Company’s property and equipment consisted of the following:

As of June 30, 2020 and December 31, 2019 , the Company’s property and equipment consisted of the following:

Leasehold Improvements

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Accumulated Depreciation

Net Property and Equipment

Depreciation expense for the three months ended March 31, 2020 and 2019 , totaled $0.2 million and $0.2 million , respectively.

Property and Equipment, net

Depreciation expense for the three months ended June 30, 2020 and 2019 totaled $ 0.2 million .

Depreciation expense for the six months ended June 30, 2020 and 2019 totaled $ 0.4 million .

Accrued Liabilities

Accrued liabilities as of March 31, 2020 and December 31, 2019 consisted of the following:

Accrued liabilities as of June 30, 2020 and December 31, 2019 consisted of the following:

Accrued Research & Development Expense

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Total Accrued Liabilities

Insurance Financing Note Payable

On June 3, 2019, the Company entered into a short-term note payable for $1.9 million , bearing interest at 4.65% per annum to finance various insurance policies.

Principal and interest payments related to this note will begin on July 3, 2019 and are paid on a straight-line amortization over a 10 -month period with the final payment due on April 3, 2020.

As of March 31, 2020 , the Company’s insurance note payable balance was $0.2 million .

Deferred Revenue

1 unchanged sentence

The upfront fee was recorded as deferred revenue and is being recognized based on the proportion of product shipments to Baxter in each period, compared with total expected sales volume over the term of the Baxter Agreement, which expires in October 2024.

The Company recognized revenue of approximately $0.5 million for the three months ended March 31, 2020 and 2019 .

Deferred revenue related to the Baxter Agreement totaled $8.6 million as of March 31, 2020 and $9.1 million as of December 31, 2019 .

If a “Refund Trigger Event” occurs under the Baxter Agreement, we would be obligated to repay a portion of the upfront fee and any paid portion of the facility fee.

In the event of a Refund Trigger Event occurring from April 1, 2020 to December 31, 2021, Baxter would be eligible for a 25% refund of the Baxter Agreement’s upfront fee.

In addition, if Baxter terminates the Baxter Agreement because Baxter has been enjoined by a court of competent jurisdiction from selling in the United States any product covered by the Baxter Agreement due to a claim of intellectual property infringement or misappropriation relating to such product

The Company recognized revenue of approximately $ 0.5 million and $ 1.0 million for the three and six months ended June 30,

ROCKWELL MEDICAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

prior to the end of 2020 , Baxter would be eligible for a partial refund of the upfront fee of $6.6 million .

2020 and 2019 , respectively.

Deferred revenue related to the Baxter Agreement totaled $ 8.2 million as of June 30, 2020 and $ 9.1 million as of December 31, 2019 .

If a “Refund Trigger Event” occurs under the Baxter Agreement, we would be obligated to repay a portion of the upfront fee and any paid portion of the facility fee.

In the event of a Refund Trigger Event occurring from April 1, 2020 to December 31, 2021, Baxter would be eligible for a 25 % refund of the Baxter Agreement’s upfront fee.

In no event does the Baxter Agreement require more than one refund be paid.

1 unchanged sentence

The upfront fee was recorded as deferred revenue and is being recognized as revenue based on the agreement term.

The Company recognized revenue of approximately $0.1 million for the three months ended March 31, 2020 and 2019 .

Deferred revenue related to the Wanbang Agreement totaled $2.9 million as of March 31, 2020 and $3.0 million as of December 31, 2019 .

The Company recognized revenue of approximately $ 53,000 and $ 0.1 million for the three and six months ended June 30, 2020 and 2019 , respectively.

Deferred revenue related to the Wanbang Agreement totaled $ 2.9 million as of June 30, 2020 and $ 3.0 million as of December 31, 2019 .

On January 14, 2020, we entered into license and supply agreements with Sun Pharma (the "Sun Pharma Agreements"), for the rights to commercialize Triferic Dialysate (ferric pyrophosphate citrate) in India.

2 unchanged sentences

A Joint Alliance Committee, comprised of members from the Company and Sun Pharma, will guide the development and execution for Triferic Dialysate in India.

Sun Pharma will be responsible for all clinical, regulatory and commercialization activities.

Sun Pharma will be responsible for all clinical and regulatory approval, as well as commercialization activities.

The upfront fee was recorded as deferred revenue and is being recognized as revenue based on the agreement term.

The Company recognized revenue of approximately $2,500 during the three months ended March 31, 2020 .

The Company recognized revenue of approximately $ 2,500 and $ 5,000 during the three and six months ended June 30, 2020 , respectively.

Stockholders’ Equity

The Company held its annual meeting of stockholders on May 18, 2020 (the “Annual Meeting”).

At the Annual Meeting, the Company’s stockholders approved the amendment and restatement of the Rockwell Medical, Inc.

2018 Long Term Incentive Plan to increase the number of shares of common stock issuable thereunder by 2,900,000 shares (the “Amended 2018 Plan”).

Preferred Stock

As of March 31, 2020 and December 31, 2019 , there were 2,000,000 shares of preferred stock, $0.0001 par value per share, authorized and no shares of preferred stock issued or outstanding.

As of March 31, 2020 and December 31, 2019 , there were 170,000,000 shares of common stock, $0.0001 par value per share, authorized and 69,049,102 and 65,378,890 shares issued and outstanding, respectively.

As of June 30, 2020 and December 31, 2019 , there were 2,000,000 shares of preferred stock, $ 0.0001 par value per share, authorized and no shares of preferred stock issued or outstanding.

As of June 30, 2020 and December 31, 2019 , there were 170,000,000 shares of common stock, $ 0.0001 par value per share, authorized and 70,156,922 and 65,378,890 shares issued and outstanding, respectively.

Controlled Equity Offering (or "At the Market" Offering)

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The Company may suspend or terminate the Sales Agreement at any time.

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

During the year ended December 31, 2019, the Company sold 1,840,443 of shares of its common stock pursuant to the Sales Agreement for gross proceeds of $ 5,383,079 , at a weighted average selling price of approximately $ 2.92 .

The Company paid $ 309,479 in commissions and offering fees related to the sale of the common stock.

As of March 31, 2020 , approximately $34,616,921 remains available for sale under this facility.

For the six months ended June 30, 2020 , the Company sold 987,716 of shares of its common stock pursuant to the Sales Agreement for gross proceeds of $ 2,034,073 , at a weighted average selling price of approximately $ 2.06 .

The Company paid $ 56,443 in commissions and offering fees related to the sale of common stock.

Approximately $ 32.6 million remains available for sale under this facility.

We are not required to sell any shares at any time during the term of the facility.

1 unchanged sentence

Public Offering of Common Stock

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

On February 4, 2020 , the Company entered into an underwriting agreement with Cantor Fitzgerald & Co., as underwriter, pursuant to which the Company agreed to issue and sell an aggregate of up to 3,670,212 shares of its common stock, which included 478,723 optional shares that may be sold pursuant to an over-allotment option granted to the underwriters.

1 unchanged sentence

On February 19, 2020 , the underwriter exercised its over-allotment option to purchase an additional 478,723 shares at a price of $ 2.22 per share, which closed on February 21, 2020 .

The Company raised a total of $8.0 million , net of an estimated issuance costs of $0.1 million , relating to the sale of the common stock in the Offering.

The Company raised a total of $ 8.0 million , net of issuance costs of $ 0.1 million , relating to the sale of the common stock in the Offering.

The Offering was made pursuant to the Company’s effective Registration Statement on Form S-3 (File No.

1 unchanged sentence

Stock-Based Compensation

The Company recognized total stock-based compensation expense during the three months ended March 31, 2020 and 2019 as follows:

The Company recognized total stock-based compensation expense during the three and six months ended June 30, 2020 and 2019 as follows:

Three Months Ended

Six Months Ended

Service-based awards:

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Restricted Stock

A summary of the Company’s restricted stock awards during the three months ended March 31, 2020 is as follows:

A summary of the Company’s restricted stock awards during the six months ended June 30, 2020 is as follows:

Number of Shares

1 unchanged sentence

Unvested at January 1, 2020

Unvested at March 31, 2020

A summary of the Company’s restricted stock awards during the three months ended March 31, 2019 is as follows:

Unvested at June 30, 2020

A summary of the Company’s restricted stock awards during the six months ended June 30, 2019 is as follows:

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Notes to Condensed Consolidated Financial Statements

Number of Shares

1 unchanged sentence

Unvested at January 1, 2019

Unvested at March 31, 2019

Unvested at June 30, 2019

The fair value of restricted stock awards are measured based on their fair value on the date of grant and amortized over the vesting period of 20 months .

As of March 31, 2020 unvested restricted stock awards of 146,800 were related to performance based awards.

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Notes to Condensed Consolidated Financial Statements

As of June 30, 2020 , unvested restricted stock awards of 146,800 were related to performance-based awards.

Service-Based Restricted Stock Units

A summary of the Company’s service based restricted stock units during the three months ended March 31, 2020 is as follows:

A summary of the Company’s service-based restricted stock units during the six months ended June 30, 2020 is as follows:

Number of Shares

1 unchanged sentence

Unvested at January 1, 2020

Unvested at March 31, 2020

A summary of the Company’s service based restricted stock units during the three months ended March 31, 2019 is as follows:

Unvested at June 30, 2020

A summary of the Company’s service-based restricted stock units during the six months ended June 30, 2019 is as follows:

Number of Shares

1 unchanged sentence

Unvested at January 1, 2019

Unvested at March 31, 2019

Unvested at June 30, 2019

The fair value of service based restricted stock units are measured based on their fair value on the date of grant and amortized over the vesting period.

The vesting periods range from 1 to 3 years .

Stock-based compensation expense of $0.2 million and $0.3 million was recognized during the three months ended March 31, 2020 and 2019 , respectively.

As of March 31, 2020 , the unrecognized stock-based compensation expense was $0.7 million , which is expected to be recognized over an estimated weighted average remaining term of 1 year .

Stock-based compensation expense of nil and $ 0.2 million was recognized during the three and six months ended June 30, 2020 , respectively.

Stock-based compensation expense of $ 0.4 million and $ 0.8 million was recognized during the three and six months ended June 30, 2019 , respectively.

As of June 30, 2020 , the unrecognized stock-based compensation expense was $ 0.6 million , which is expected to be recognized over an estimated weighted average remaining term of 1 year .

Included in the forfeited service-based restricted stock units are 96,541 units related to the resignation of the Company's former President and Chief Executive Officer on April 17, 2020.

These forfeited awards reduced stock-based compensation expense by $ 0.2 million .

Performance-Based Restricted Stock Units

A summary of the Company’s performance based restricted stock units during the three months ended March 31, 2020 is as follows:

A summary of the Company’s performance-based restricted stock units during the six months ended June 30, 2020 is as follows:

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Notes to Condensed Consolidated Financial Statements

Number of Shares

1 unchanged sentence

Unvested at January 1, 2020

Unvested at March 31, 2020

A summary of the Company’s performance based restricted stock units during the three months ended March 31, 2019 is as follows:

Unvested at June 30, 2020

A summary of the Company’s performance-based restricted stock units during the six months ended June 30, 2019 is as follows:

Number of Shares

1 unchanged sentence

Unvested at January 1, 2019

Unvested at March 31, 2019

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Notes to Condensed Consolidated Financial Statements

Stock-based compensation expense recognized for performance based restricted stock units was $0.2 million and $0.4 million during the three months ended March 31, 2020 and 2019 , respectively.

As of March 31, 2020 , the unrecognized stock-based compensation expense related to performance based restricted stock units was $0.7 million , which is expected to be recognized over an estimated weighted average remaining term of 2 years .

Unvested at June 30, 2019

Stock-based compensation expense recognized for performance-based restricted stock units was ($ 1.2 ) million and ($ 1.0 ) million during the three and six months ended June 30, 2020 and $ 0.4 million and $ 0.8 million for the three and six months ended June 30, 2019 , respectively.

As of June 30, 2020 , the unrecognized stock-based compensation expense related to performance-based restricted stock units was $ 0.1 million , which is expected to be recognized over an estimated weighted average remaining term of 2 years .

The forfeited performance-based restricted stock awards of 905,625 is due to the resignation of the Company's former President and Chief Executive Officer on April 17, 2020.

These forfeited awards reduced stock-based compensation expense by $ 1.3 million .

Service-Based Stock Options

The fair value of the service based stock options granted for the three months ended March 31, 2020 were based on the following assumptions:

The fair value of the service-based stock options granted for the six months ended June 30, 2020 were based on the following assumptions:

Exercise price

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Risk-free interest rate

A summary of the Company’s service based stock option activity for the three months ended March 31, 2020 is as follows:

0.35% - 1.65%

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Notes to Condensed Consolidated Financial Statements

A summary of the Company’s service-based stock option activity for the six months ended June 30, 2020 is as follows:

Average Exercise

Outstanding at January 1, 2020

Outstanding at March 31, 2020

Exercisable at March 31, 2020

A summary of the Company’s service based stock option activity for the three months ended March 31, 2019 is as follows:

Outstanding at June 30, 2020

Exercisable at June 30, 2020

A summary of the Company’s service-based stock option activity for the six months ended June 30, 2019 is as follows:

Average Exercise

Outstanding at January 1, 2019

Outstanding at March 31, 2019

Exercisable at March 31, 2019

Outstanding at June 30

Exercisable at June 30, 2019

The aggregate intrinsic value in the table above is calculated as the difference between the closing price of our common stock and the exercise price of the stock options that had strike prices below the closing price.

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Notes to Condensed Consolidated Financial Statements

During the three months ended March 31, 2020 , the Company granted stock options to purchase up to 51,148 shares of common stock to certain employees.

During the three months ended March 31, 2020 , 457,334 shares were forfeited.

During the six months ended June 30, 2020 , the Company granted stock options to purchase up to 1,610,344 shares of common stock to certain employees.

During the six months ended June 30, 2020 , 211,471 shares were forfeited.

Forfeitures are recorded in the period of occurrence;

compensation expense is adjusted accordingly.

Stock-based compensation expense recognized for service based stock options was $0.4 million and $0.7 million for the three months ended March 31, 2020 and 2019 , respectively.

As of March 31, 2020 , total stock-based compensation expense related to unvested options not yet recognized totaled approximately $1.7 million , which is expected to be recognized over an estimated weighted average remaining term of 1.2 years .

Stock-based compensation expense recognized for service-based stock options was $ 0.3 million and $ 0.8 million for the three and six months ended June 30, 2020 , respectively.

Stock-based compensation expense recognized for service-based stock options was $ 0.5 million and $ 1.2 million for the three and six months ended June 30, 2019 , respectively.

As of June 30, 2020 , total stock-based compensation expense related to unvested options not yet recognized totaled approximately $ 3.1 million , which is expected to be recognized over an estimated weighted average remaining term of 1.4 years .

Included in the forfeited service-based stock options are 129,375 unvested options related to the resignation of the Company's former President and Chief Executive Officer on April 17, 2020.

These forfeited awards reduced stock-based compensation expense by $ 0.2 million .

Included in the expired service-based stock options are 3,783,335 options related to the settlement with the former Chief Executive Officer, Robert Chioini, former Chief Financial Officer, Thomas Klema, and a former and then current director.

See Note 14 for further details.

Performance-Based Stock Options

A summary of the performance based stock options for the three months ended March 31, 2020 is as follows:

A summary of the performance-based stock options for the six months ended June 30, 2020 is as follows:

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Notes to Condensed Consolidated Financial Statements

Number of Shares

1 unchanged sentence

Outstanding at January 1, 2020

Outstanding at March 31, 2020

Exercisable at March 31, 2020

A summary of the performance based stock options for the three months ended March 31, 2019 is as follows:

Outstanding at June 30, 2020

Exercisable at June 30, 2020

A summary of the performance-based stock options for the six months ended June 30, 2019 is as follows:

Number of Shares

1 unchanged sentence

Outstanding at January 1, 2019

Outstanding at March 31, 2019

Exercisable at March 31, 2019

Stock-based compensation expense recognized for performance based stock options was $0.1 million for the three months ended March 31, 2020 and 2019 .

As of March 31, 2020 , the unrecognized stock-based compensation expense related to performance based stock options was $0.4 million .

On April 17, 2020, Stuart Paul resigned as Chief Executive Officer of the Company, effective immediately.

The effects of his resignation are discussed in Note 18 below.

The tables above are as of March 31, 2020 and do not reflect Mr.

Paul's resignation.

All changes relating to his resignation will be reflected in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

Outstanding at June 30, 2019

Exercisable at June 30, 2019

Stock-based compensation expense recognized for performance-based stock options was ($ 0.6 ) million and ($ 0.5 ) million for the three and six months ended June 30, 2020 .

Stock-based compensation expense recognized for performance-based stock options was $ 0.1 million and $ 0.2 million during the three and six months ended June 30, 2019 .

As of June 30, 2020 , the unrecognized stock-based compensation expense related to unvested performance-based stock options was $ 0.1 million .

The forfeited unvested performance-based stock options of 388,125 is due to the resignation of the Company's former President and Chief Executive Officer on April 17, 2020.

These forfeited options reduced stock-based compensation expense by $ 0.7 million .

Related Party Transactions

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Gupta, payable in four quarterly installments of $ 250,000 each on October 15, 2018, January 15, 2019, April 15, 2019 and July 15, 2019, and reimbursement for certain legal fees incurred in connection with the Charak MSA.

The Company recorded $1.1 million as Research and Development Expense - License Acquired (Related Party) for the twelve

ROCKWELL MEDICAL, INC.

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Notes to Condensed Consolidated Financial Statements

months ended December 31, 2018 .

The Company recorded $ 1.1 million as Research and Development Expense - License Acquired (Related Party) for the twelve months ended December 31, 2018 .

The Company paid all four of the quarterly installments totaling $ 1.0 million and accrued $ 0.1 million for the reimbursement of certain legal expenses during the year ended December 31, 2019 .

As of March 31, 2020 and December 31, 2019 , the Company accrued $27,500 and $0.1 million , respectively, as a related party payable on the condensed consolidated balance sheet.

As of June 30, 2020 , and December 31, 2019 , the Company accrued $ 27,500 and $ 0.1 million , respectively, as a related party payable on the condensed consolidated balance sheet.

In addition, the Company accrued $ 0.2 million relating to certain IP reimbursement expenses as a related party payable on the condensed consolidated balance sheet.

Pursuant to the Charak MSA, the aforementioned parties entered into an Amendment, dated as of October 7, 2018 (the “Charak Amendment”), to the 2002 Agreement, under which Charak granted the Company an exclusive, worldwide, non-transferable license to commercialize SFP for the treatment of patients with renal failure.

The Charak Amendment amends the royalty payments due to Charak under the 2002 Agreement such that the Company is liable to pay Charak royalties on net sales by the Company of products developed under the license, which includes the Company’s Triferic® product, at a specified rate until December 31, 2021 and thereafter at a reduced rate from January 1, 2022 until February 1, 2034.

Additionally, the Company shall pay Charak a percentage of any sublicense income during the term of the agreement, which amount shall not be less than a minimum specified percentage of net sales of the licensed products by the sub-licensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and be no less than a lower rate of the net sales of the licensed products by the sub-licensee in jurisdictions where there exists no valid claim, on a country-by-country basis.

Additionally, the Company

ROCKWELL MEDICAL, INC.

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Notes to Condensed Consolidated Financial Statements

shall pay Charak a percentage of any sublicense income during the term of the agreement, which amount shall not be less than a minimum specified percentage of net sales of the licensed products by the sub-licensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and be no less than a lower rate of the net sales of the licensed products by the sub-licensee in jurisdictions where there exists no valid claim, on a country-by-country basis.

Also pursuant to the Charak MSA, the Company and Charak entered into a Commercialization and Technology License Agreement I.V.

Triferic® (now Triferic AVNU), dated as of October 7, 2018 (the “IV Agreement”), under which Charak granted the Company an exclusive, sublicensable, royalty-bearing license to SFP for the purpose of commercializing certain intravenous-delivered products incorporating SFP for the treatment of iron disorders worldwide for a term that expires on the later of February 1, 2034 or upon the expiration or termination of a valid claim of a licensed patent.

Triferic® (now Triferic AVNU), dated as of October 7, 2018 (the “IV Agreement”), under which Charak granted the Company an exclusive, sub-licensable, royalty-bearing license to SFP for the purpose of commercializing certain intravenous-delivered products incorporating SFP for the treatment of iron disorders worldwide for a term that expires on the later of February 1, 2034 or upon the expiration or termination of a valid claim of a licensed patent.

The Company is liable to pay Charak royalties on net sales by the Company of products developed under the license at a specified rate until December 31, 2021.

8 unchanged sentences

Because SFP has not yet received regulatory approval, the $ 1.1 million purchase price paid and accrued for these assets has been expensed in the Company’s statement of operations for the year ended December 31, 2018 .

In addition, the potential milestone payments are not yet considered probable, and no milestone payments have been accrued at March 31, 2020 .

In addition, because the potential milestone payments are not yet considered probable, no milestone payments have been accrued at June 30, 2020 .

We lease our production facilities and administrative offices as well as certain equipment used in our operations including leases on transportation equipment used in the delivery of our products.

3 unchanged sentences

In addition, we occupy a 1,408 square foot office space in Greer, South Carolina under a lease expiring April 2021.

In addition, we executed a

In addition, we executed a lease for 4,100 square feet of office space in Hackensack, New Jersey with a lease term beginning on April 1, 2019 and expiring on July 1, 2024.

At June 30, 2020 , the Company had operating lease liabilities of $ 2.5 million and right-of-use assets of $ 2.4 million , which are included in the consolidated balance sheet.

The following summarizes quantitative information about the Company’s operating leases:

ROCKWELL MEDICAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

lease for 4,100 square feet of office space in Hackensack, New Jersey with a lease term beginning on April 1, 2019 and expiring on July 1, 2024.

At March 31, 2020 , the Company had operating lease liabilities of $2.9 million and right-of-use assets of $2.8 million , which are included in the consolidated balance sheet.

The following summarizes quantitative information about the Company’s operating leases:

Three Months Ended

March 31, 2020

Three Months Ended March 31, 2019

Three Months Ended June 30, 2020

Three Months Ended June 30, 2019

Six Months Ended June 30, 2020

Six Months Ended June 30, 2019

Operating leases

17 unchanged sentences

Operating lease liabilities

Settlement Agreement

On August 7, 2018, the Company entered into a confidential settlement agreement and mutual release (the “Settlement Agreement”) with its former CEO, former CFO and a former and then current director.

For more details see Note 15 in our Annual Report on Form 10-K filed on March 17, 2020.

On August 7, 2019, the Company entered into a settlement agreement relating to class action lawsuits.

This resulted in a settlement expense of approximately $0.4 million for the year ended December 31, 2019.

See Note 16 below for further details.

The terms of the settlement were approved by the court on February 26, 2020.

Commitments and Contingencies

Demand Notice

ROCKWELL MEDICAL, INC.

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Notes to Condensed Consolidated Financial Statements

In February 2020, the Company received a letter from a supplier relating to a supply agreement entered into with the Company in 2015.

The supplier alleged the Company did not meet certain annual minimums under the supply agreement, and has requested $ 3.0 million in penalties, plus payment of the cost for certain raw materials.

Based upon current information, the Company believes it has several defenses to the supplier’s claims.

No lawsuit has been filed.

The Company intends to cooperate with the supplier in an effort to amicably resolve its claim.

If a resolution cannot be concluded;

however, the Company intends to vigorously defend itself from the supplier’s allegations.

No lawsuit was filed.

While the Company believed it had several defenses to the supplier's claim, the Company and the supplier negotiated an amicable resolution of the dispute.

On July 31, 2020, the Company and the supplier entered into a settlement agreement, which released the Company from any penalties relating to annual minimums under the 2015 agreement, established new minimums under an amended supply agreement and required the Company to pay for certain raw materials with 50 % of the cost to be paid upon execution of the settlement agreement and the remaining 50 % to be paid no later than December 31, 2020.

SEC Investigation

As a follow up to certain prior inquiries, the Company received a subpoena from the SEC during the Company’s quarter ended September 30, 2019 requesting, among other things, certain information and documents relating to the status of the Company’s request to the Centers for Medicare & Medicaid Services (the "CMS") for separate reimbursement status for Triferic Dialysate, the Company’s reserving methodology for expiring Triferic inventory, and the basis for the Board’s termination of the former CEO and CFO.

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Notes to Condensed Consolidated Financial Statements

Executive Officer, Robert Chioini, and former Chief Financial Officer, Thomas Klema, in 2018.

The Company is cooperating with the SEC and is responding to the SEC’s requests for documents and information.

22 unchanged sentences

Pursuant to the terms and conditions of the settlement agreement, the Company will pay the Plaintiffs $ 3.7 million (the “Settlement Amount") in exchange for a full release of all liability as to all defendants.

Of the Settlement Amount, the Company contributed approximately $0.1 million , which represented the remaining retention amount under the Company’s director and officer liability insurance policy as of March 31, 2020 .

The remainder of the settlement amount will be funded by the Company’s director and officer insurance policy.

This resulted in a settlement expense of approximately $ 0.4 million for the year ended December 31, 2019.

Of the Settlement Amount, the Company contributed approximately $ 0.1 million , which represented the remaining retention amount under the Company’s director and officer liability insurance policy as of June 30, 2020 .

The remainder of the settlement amount has been funded by the Company’s director and officer insurance policy.

The settlement was approved by the court on February 26, 2020.

2 unchanged sentences

1:19-cv-02373, and Plaintiff John Post filed a Verified Stockholder Derivative Complaint on May 10, 2019 in Case No.

1:19-cv-02774 (the

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

“Derivative Complaints”) in the United States District Court in the Eastern District of New York, purportedly on behalf of the Company (as nominal defendant) and against certain of the Company’s current and former directors (the “Individual Defendants”).

1:19-cv-02774 (the “Derivative Complaints”) in the United States District Court in the Eastern District of New York, purportedly on behalf of the Company (as nominal defendant) and against certain of the Company’s current and former directors (the “Individual Defendants”).

The Derivative Complaints assert causes of actions against the Individual Defendants for breach of fiduciary duty, waste of corporate assets, and unjust enrichment.

3 unchanged sentences

If a settlement is not reached, the Defendants anticipate filing motions to dismiss.

The Company has tendered the above shareholder derivative actions to its director and officer insurance carrier(s) for defense and indemnity under its applicable insurance policies.

The Company maintains a $1.0 million self-insured retention under the applicable insurance policies, which will be exhausted upon payment of the Company’s share of the Settlement Amount from the settlement of the class action described above.

The Company tendered the above shareholder derivative actions to its director and officer insurance carrier(s) for defense and indemnity under its applicable insurance policies.

On May 18, 2020, the Company, the Individual Defendants and the Plaintiffs (the "Settling Parties") entered into a formal Stipulation of Settlement, which memorializes the terms of the Settling Parties'

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

settlement of the Derivative Complaints.

On June 2, 2020, the court issued an order preliminarily approving the settlement.

A hearing is set for August 10, 2020 to determine if the court should issue a final order approving the final settlement.

The Company has exhausted self-insured retention under the above insurance policies.

The Company’s director and officer insurance company has funded the settlement amount on behalf of the Company.

Termination of our former CEO and CFO

On August 7, 2018, the Company entered into a confidential settlement agreement and mutual release with Robert Chioini, its former Chief Executive Officer, Thomas Klema, its former Chief Financial Officer and a former and then current director.

For more details see Note 15 in the Company’s Annual Report on Form 10-K filed on March 17, 2020.

Loan and Security Agreement

8 unchanged sentences

The Company has the option, under certain circumstances, to add 1.00 % of such interest rate amount to the then outstanding principal balance in lieu of paying such amount in cash.

For the three months ended March 31, 2020 and 2019 , interest expense amounted to $80,907 and nil , respectively.

For the three months ended June 30, 2020 and 2019 , interest expense amounted to $ 0.5 million and nil , respectively.

For the six months ended June 30, 2020 and 2019 , interest expense amounted to $ 0.6 million and nil , respectively.

The Loan Agreement is secured by all assets of the Company and Rockwell Transportation, Inc.

1 unchanged sentence

The Loan Agreement contains customary representations and warranties and covenants, subject to customary carve outs, and includes financial covenants related to liquidity and trailing twelve months sales of Triferic, with the latter beginning with the period ending December 31, 2020, or September 30, 2020 if the Company draws the second tranche of $ 5.0 million .

As of March 31, 2020 , we were in compliance with all the reporting and financial covenants.

As of June 30, 2020 , the Company was in compliance with all the reporting and financial covenants.

In connection with each funding of the Term Loans, the Company is required to issue to Innovatus a warrant (the “Warrants”) to purchase a number of shares of the Company’s common stock equal to 3.5 % of the principal amount of the relevant Term Loan funded divided by the exercise price, which will be based on the lower of (i) the volume weighted average closing price of the Company’s stock for the 5 -trading day period ending on the last trading day immediately preceding the execution of the Loan Agreement or (ii) the closing price on the last trading day immediately preceding the execution of the Loan Agreement (or for the second and third tranches only at the lower of (i) $ 1.65 per share or (ii) the volume weighted average closing price of the Company’s stock for the 5 -trading day period ending on the last trading day immediately preceding the relevant Term Loan funding).

2 unchanged sentences

In connection with the first tranche of the Term Loans, the Company issued a Warrant to Innovatus, exercisable for an aggregate of 477,273 shares of the Company’s common stock at an exercise price of $ 1.65 per share.

As of March 31, 2020, the outstanding balance of the Term Loan was $20.7 million , net of unamortized issuance costs and unaccreted discount of $1.8 million .

The following table reflects the schedule of principal payments on the Term Loan as of March 31, 2020:

As of June 30, 2020 , the outstanding balance of the Term Loan was $ 20.8 million , net of unamortized issuance costs and unaccreted discount of $ 1.7 million .

The following table reflects the schedule of principal payments on the Term Loan as of June 30, 2020 :

ROCKWELL MEDICAL, INC.

3 unchanged sentences

Subsequent Events

Resignation of President and Chief Executive Officer and Director

On April 17, 2020, Stuart Paul resigned as the President and Chief Executive Officer of the Company and as a member of the board of directors of the Company (the “Board”) effective immediately.

As a result of Mr.

Paul’s resignation and the previously disclosed decision by Lisa Colleran not to stand for reelection at the Company’s 2020 Annual Meeting of Stockholders (the “Annual Meeting”), the size of the Board will be reduced to five directors effective as of the Annual Meeting.

Resignation of Chief Financial Officer

On June 5, 2020, Angus Smith, the Company's Chief Financial Officer, notified the Company of his intent to resign from the Company effective July 3, 2020.

As a result of Mr.

Paul’s resignation, certain time-based, all performance-based and all market-based stock awards previously granted to Mr.

Paul will be forfeited.

Such forfeitures will be reflected in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

The estimated expense reduction in stock compensation expense related to the forfeited stock awards is approximately $2.4 million .

Appointment of President and Chief Executive Officer

On April 17, 2020, the Board appointed Russell H.

Ellison, M.D., M.Sc.

as the Company’s President and Chief Executive Officer effective immediately.

Ellison has served as a member of the Board since January 2020.

He will continue to serve as a Class III Director but has resigned as a member of the Compensation Committee.

On April 17, 2020, in connection with Dr.

Ellison’s commencement of employment, the Company entered into an employment agreement with Dr.

Ellison pursuant to which he will serve as the Company’s President and Chief Executive Officer (the “Employment Agreement”).

The Employment Agreement provides that Dr.

Ellison will serve as an at-will employee.

Ellison will receive an annualized base salary of $500,000 (“Base Salary”) and is eligible for a one-time performance-based bonus of $500,000 upon the achievement of certain performance goals, as set forth in the Employment Agreement.

Ellison will be eligible to earn year-end performance bonuses with a target bonus opportunity of 70% of his Base Salary (“Target Bonus”) and is eligible to participate in the employee benefit plans and programs generally available to the Company’s similarly situated senior executives.

Ellison is also eligible to receive annual long-term incentive grants consistent with similar practices for the Company’s senior executives, awarded at the discretion of the Compensation Committee of the Board.

In connection with his commencement of employment, he received an initial equity grant comprised of a time-based option to purchase up to 600,000 shares of the Company’s common stock (the “Initial Time-Based Options”) and a performance-based option to purchase up to 600,000 shares of the Company’s common stock (the “Initial Performance-Based Options”).

The Initial Performance-Based Options are conditioned upon and subject to stockholder approval of an Amendment and Restatement of the Rockwell Medical, Inc.

2018 Long-Term Incentive Plan, which will be voted upon by the stockholders at the Annual Meeting.

In the event that such stockholder approval is not obtained, the Initial Performance-Based Options will be forfeited and of no further force or effect.

Smith's resignation, certain of his time-based, all of his performance-based and market-based stock awards previously granted to Mr.

Smith will be forfeited.

Such forfeitures will be reflected in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

The estimated expense the forfeited stock awards is approximately $ 0.7 million .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements