What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-04-08 compared with 2021-03-31 · 261 added, 308 removed, 767 unchanged (43% of the section changed)

17 unchanged sentences

In making their assessment of internal control over financial reporting, our management used the criteria described in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Our evaluation included documenting, evaluating and testing of the design and operating effectiveness of our internal control over financial reporting.

Based on this evaluation, and the remediation of all the material weaknesses as described in our Annual Report filed on Form 10-K for the year ended December 31, 2019 relating to change management and third-party management controls, user access security and segregation of duties as it relates to user access controls in our Information Technology General Controls ("ITGC"), and the pervasive effect on other ITGC dependent business activity level internal control cycles, we concluded that we maintained effective control over financial reporting at a reasonable assurance level as of December 31, 2020.

Changes in Internal Controls

During the quarter ended June 30, 2020, the Company remediated the ITGC control deficiencies in connection with change management and third-party management and enhanced evidentiary review and documentation of key ITGC controls and implemented new programs and policies to provide improved control over change management and third-party management controls to the ERP system.

During the quarter ended September 30, 2020, we continued our improvements by remediating the ITGC control deficiencies in connection with user access security and segregation of duties as it relates to user access controls.

During the quarter ended December 31, 2020, we finalized our remediation efforts by evaluating and testing the design, implementation and operating effectiveness of the pervasive effect from the ITGC material weakness on other ITGC dependent business activity level internal control cycles.

As of December 31, 2020, our management has remediated all material weaknesses described in our Annual Report filed on Form 10-K for the year ended December 31, 2019 and has deemed internal controls over financial reporting, our disclosure controls and procedures were effective as of December 31, 2020.

Based on our evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2021.

Attestation Report of the Registered Public Accounting Firm

As a non-accelerated filer, we are not required to provide an attestation report on our internal control over financial reporting issued by the Company’s independent registered public accounting firm.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2021, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable

Directors, Executive Officers and Corporate Governance.

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The following documents are filed as part of this report or were previously filed and incorporated herein by reference to the filing indicated.

3.1 Restated Articles of Incorporation, as amended as of August 28, 2019 (Company’s Form 8-K filed August 30, 2019).

3.1 Certificate of Incorporation, dated as of August 28, 2019 (Company’s Form 8-K filed August 30, 2019).

3.2 Amended and Restated Bylaws (Company’s Form 8-K filed November 5, 2020).

1 unchanged sentence

4.2 Description of Securities

(Company's Form 10-K filed March 17, 20 20)

4.3 Form of Warrant (Company's Form 8-K filed on September 25, 2020).

4.4 Form of Pre-Funded Warrant (Company's Form 8-K filed on September 25, 2020).

4.5 For of Warrant to Purchase Common Stock for Innovatus (Company's Form 8-K filed March 20, 2020).

4.5 For m of Warrant to Purchase Common Stock for Innovatus (Company's Form 8-K filed March 20, 2020).

10.1 Licensing Agreement, dated January 7, 2002, by and among the Company, Charak LLC and Dr.

4 unchanged sentences

10.4 Investment Agreement, dated October 2, 2014, by and between the Company and Baxter Healthcare Corporation (Company’s Form 10‑K filed March 3, 2015).

*10.5 Amendment to October 1, 2014 Stock Option Agreement with Robert L.

Chioini (Company’s Form 10‑K filed March 3, 2015).

*10.5 Rockwell Medical, Inc.

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*10.14 Form of Contingent Option Agreement for Directors (2018 Long Term Incentive Plan) (Company’s Form 8-K filed March 21, 2018).

*10.16 Amendment to October 2, 2015 Stock Option Agreement with Robert L.

Chioini (Company’s Form 10 K filed February 29, 2016).

10.17 First Amendment to Exclusive Distribution Agreement, dated June 23, 2017, by and between the Company and Baxter Healthcare Corporation (with certain portions redacted pursuant to a confidential treatment request) (Company’s form 10-Q filed August 9, 2017).

10.15 First Amendment to Exclusive Distribution Agreement, dated June 23, 2017, by and between the Company and Baxter Healthcare Corporation (with certain portions redacted pursuant to a confidential treatment request) (Company’s F orm 10-Q filed August 9, 2017).

*10.16 Form of Indemnification Agreement (Company’s Form 8-K filed August 30, 2019).

2 unchanged sentences

*10.18 Approval of Independent Director Compensation (Company’s Form 8-K filed March 21, 2018).

*10.21 Ajay Gupta Employment Agreement, dated October 7, 2018 (Company’s Form 8-K filed October 12, 2018).

10.19 Registration Rights Agreement, dated October 17, 2018 (Company’s Form 8-K filed October 19, 2018).

*10.23 Angus Smith Employment Agreement, dated October 26, 2018 (Company’s Form 8-K filed November 2, 2018).

10.24 Confidential Settlement Agreement and Release, dated August 7, 2018, by and among the Company, Robert Chioini, Thomas Klema, Patrick Bagley and Ronald Boyd (Company’s Form 10-Q filed November 9, 2018).

10.2 Master Services and IP Agreement, dated October 7, 2018, by and among the Company, Charak, LLC and Dr.

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Ajay Gupta (Company's Form 10-K filed on March 18, 2019).

10.29 Sales Agreement dated March 22, 2019, between Rockwell Medical, Inc.

and Cantor Fitzgerald & Co.

(Company’s Form 8-K filed March 22, 2019).

10.24+ Products Purchase Agreement, dated July 1, 2019, by and between the Company and DaVita Inc.

1 unchanged sentence

*10.25 Russell Skibsted Employment Agreement, dated September 15, 2020 (Company’s Form 8-K filed on September 16, 2020).

10.32 Securities Purchase Agreement dated September 23, 2020 (Company’s Form 8-K filed on September 25, 2020).

*10.26 Russell Ellison Employment Agreement, dated April 17, 2020 (Company’s Form 8-K filed on April 20, 2020).

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10.28 Loan and Security Agreement, dated March 16, 2020, by and among the Company, Innovatus Life Sciences Lending Fund I, LP and the lenders party thereto (Company’s Form 10-Q filed on May 11, 2020).

21.1 List of Subsidiaries.

10.29 Second Amendment to the Exclusive Distribution Agreement entered into as of March 16, 2020 between the Company and Baxter Healthcare Corporation (Company’s Form 10-Q filed on November 15, 2021).

10.3 First Amendment to Loan and Security Agreement, dated September 24, 2021, by and among the Company, Innovatus Life Sciences Lending Fund I, LP and the lenders party thereto (Company’s Form 8-K filed on September 30, 2021)

21.1 List of Subsidiaries (Company's Form 10-K filed on March 31 , 2021) .

23.1 Consent of Marcum LLP.

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President and Chief Executive Officer

March 31, 2021

April 8, 2022

POWER OF ATTORNEY

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SIGNATURE TITLE DATE

/s/ Russell Ellison President, Chief Executive Officer and Director (Principal Executive Officer) March 31, 2021

/s/ Russell Ellison President, Chief Executive Officer and Director (Principal Executive Officer) April 8, 2022

Russell Ellison

/s/ Russell Skibsted Chief Financial Officer (Principal Financial Officer) March 31, 2021

/s/ Russell Skibsted Chief Financial Officer (Principal Financial Officer) April 8, 2022

Russell Skibsted

McGarry Principal Accounting Officer March 31, 2021

McLaughlin Director March 31, 2021

Cooper Director March 31, 2021

McGarry Principal Accounting Officer April 8, 2022

Cooper Director April 8, 2022

/s/ Robert S.

Radie Director March 31, 2021

/s/ Allen Nissenson Director March 31, 2021

Radie Director April 8, 2022

/s/ Allen Nissenson Director April 8, 2022

Allen Nissenson

/s/ Andrea Heslin Smiley Director March 31, 2021

/s/ Andrea Heslin Smiley Director April 8, 2022

Andrea Heslin Smiley

Ravich Director March 31, 2021

Ravich Director April 8, 2022

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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Notes to the Consolidated Financial Statements

F- 10 – F- 30

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet s of Rockwell Medical Inc.

We have audited the accompanying consolidated balance sheets of Rockwell Medical Inc.

and Subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

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(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

We determined that there was a critical audit matter as discussed below.

Evaluation of Going Concern

As disclosed in Note 2 to the consolidated financial statements, the Company has experienced significant net losses since inception, has an accumulated deficit and has used significant cash flows for operations during 2021, which caused management to evaluate if those factors raised substantial doubt about the Company’s ability to continue as a going concern which could be mitigated through Management’s plan.

Management’s plan as disclosed in Note 2 includes increasing prices with some of its customers and implementing certain cost cutting and containment measures, all of which are significant assumptions in the Company’s projections used in its evaluation of going

The Company’s management has exercised significant judgment in their determination of how existing accounting principles generally accepted in the United States of America should be applied to the evaluation of going concern, the associated financial statement presentation and note disclosures relating to substantial doubt about the Company’s ability to continue as a going concern.

We identified the evaluation of the Company’s ability to continue as a going concern as a critical audit matter due to the nature and extent of audit effort required to obtain sufficient appropriate audit evidence to address the risks of material misstatement related to the disclosure of the Company’s liquidity and ability to continue as a going concern for at least the next twelve months in the consolidated financial statements.

The nature and extent of audit effort required to address the matter included significant involvement of more experienced engagement team members.

The primary procedures we performed to address this critical audit matter included the following:

• Understand management’s process and related internal controls in conducting the evaluation of going concern, including preparing projections.

• We examined the executed Amendment to the Products Purchase Agreement and the terms in the agreement compared to the significant assumptions in the projected financial information, including, but not limited to, the projected revenue, growth rates, margins, as well as to the historical performance of the concentrates business.

• We examined the executed Stock Purchase Agreement for the sale of preferred shares and traced the receipts of the proceeds to the bank account and the projected financial cash flow information.

• We evaluated and tested management’s assumptions for projected price increases to subsequent customer invoices to validate the projected financial information, including, but not limited to, the projected revenue, gross margins, as well as to the historical performance of the concentrates business for cost assumptions.

• We examined and tested certain assumptions reasonableness to test the changes to the expected cash flows.

• We concluded on the probability of success of management’s plan.

/s/ Marcum LLP

(PCAOB ID 688 )

We have served as the Company’s auditor since 2018.

March 31, 2021

Chicago, Illinois

April 8, 2022

ROCKWELL MEDICAL, INC.

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Investments Available-for-Sale 9,158 9,997

Accounts Receivable, net of a reserve of $ 9 for both 2020 and 2019

Accounts Receivable, net of a reserve of $ 16 for 2021 and $ 9 for 2020

Inventory 4,076 3,913

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Accrued Liabilities 5,090 5,013

Settlement Payable — 104

Lease Liability - Current 2,004 1,167

Deferred License Revenue 2,171 2,175

Term Loan - Net of Issuance Costs 7,381 —

Insurance Financing Note Payable 437 —

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Deferred License Revenue - Long-Term 5,986 8,015

Long Term Liability - Other 14 —

Total Liabilities 46,039 43,578

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Cost of Sales 64,351 59,472

Gross Profit 2,725 2,839

Gross (Loss) Profit ( 2,420 ) 2,725

Research and Product Development 6,835 7,092

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General and Administrative 15,348 16,182

Settlement Expense, net of Reimbursement — 430

Operating Loss ( 30,336 ) ( 28,420 )

Other Income (Expense)

Realized Gain (Loss) on Investments 8 30

Other Expense

Realized Gain on Investments — 8

Warrant Modification Expense — ( 837 )

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Interest Income 22 238

Total Other Income (Expense) ( 2,470 ) 397

Total Other Expense ( 2,338 ) ( 2,470 )

Net Loss $ ( 32,674 ) $ ( 30,890 )

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Issuance of Common Stock, net of Issuance Costs / At-the-market 1,128,608 — 2,262 — — 2,262

Issuance of Warrants related to Debt Financing — — 501 — — 501

Warrant Modification Expense — — 837 — — 837

Stock-based Compensation — — 475 — — 475

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Vesting of Restricted Stock Units Issued, net of taxes withheld 258,305 — ( 6 ) — — ( 6 )

Issuance of Common Stock, net of Issuance Costs / Public offering 26,849,021 2 40,677 — — 40,679

Issuance of Common Stock, net of Issuance Costs / At-the-market offerings 1,128,608 — 2,262 — — 2,262

Issuance of Warrants related to Debt Financing — — 501 — — 501

Warrant Modification Expense — — 837 — — 837

Issued shares for services 155,000 — 107 — — 107

Stock-based Compensation — — 943 — — 943

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Changes in Assets and Liabilities:

Decrease in Insurance Receivable — 371

Decrease in Accounts Receivable, net 32 2,777

(Increase) Decrease in Inventory ( 1,306 ) 317

(Increase) Decrease in Accounts Receivable, net ( 1,742 ) 32

Increase in Inventory ( 656 ) ( 1,306 )

Decrease in Other Assets 1,823 76

Increase (Decrease) in Accounts Payable 1,136 ( 1,474 )

(Decrease) Increase in Accounts Payable ( 416 ) 1,136

Decrease in Settlement Payable — ( 104 )

Decrease in Lease Liability ( 1,771 ) ( 1,439 )

Increase (Decrease) in Other Liabilities 534 ( 532 )

(Decrease) Increase in Other Liabilities ( 48 ) 534

Decrease in Deferred License Revenue ( 2,033 ) ( 1,887 )

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Purchase of Equipment ( 522 ) ( 1,046 )

Purchase of Research and Development Licenses (Related Party) — ( 750 )

Cash Provided By (Used in) Provided By Investing Activities 3,212 ( 4,750 )

Cash Provided By Investing Activities 311 3,212

Cash Flows From Financing Activities:

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Payments on Short Term Note Payable ( 1,530 ) ( 763 )

Payments on Debt ( 750 ) —

Proceeds from the Issuance of Common Stock / Public Offering — 43,148

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Offering Costs from the Issuance of Common Stock / At-the Market Offerings — ( 63 )

Proceeds from the Exercise of Employee Stock Options, Net of Tax — 148

Proceeds from issuance of Common Stock for payment related to services provided 107 —

Repurchase of Common Stock to Pay Employee Withholding Taxes ( 6 ) ( 19 )

Cash Provided By Financing Activities 63,316 21,085

Increase (Decrease) In Cash and Cash Equivalents 36,887 ( 10,919 )

Cash (Used in) Provided By Financing Activities ( 2,179 ) 63,316

(Decrease) Increase In Cash and Cash Equivalents ( 35,402 ) 36,887

Cash and Cash Equivalents At Beginning Of Period 48,682 11,795

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We have two novel, FDA approved therapies, Triferic and Triferic AVNU, which are the first two products developed from our FPC platform.

We are marketing both products to kidney dialysis centers for their patients receiving dialysis.

In 2021, we intend to advance our FPC platform strategy by starting a Phase II trial for the treatment of iron deficiency anemia in patients outside of dialysis, who are receiving intravenous medications in the home infusion setting.

In our R&D pipeline, we are also exploring FPC’s impact in the treatment of hospitalized patients with acute heart failure, with the potential to begin another Phase II program in these patients in 2022.

We market both products to kidney dialysis centers for their patients receiving dialysis.

In late 2021, we filed an IND with the United Stated Food and Drug Administration ("FDA") with the goal to advance our FPC platform strategy by conducting a Phase II trial for the treatment of iron deficiency anemia in patients outside of dialysis, who are receiving intravenous ("IV") medications in the home infusion setting.

The trend toward providing medical care, including the delivery of infused medications, at home make the home infusion market a rapidly growing area of healthcare.

We believe that the home infusion setting is a natural path for expansion of our platform as many of the patients suffer from diseases that are associated with iron deficiency and anemia.

In our R&D pipeline, we are also investigating FPC’s impact in the treatment of hospitalized patients with acute heart failure.

We are the second largest supplier of hemodialysis concentrates in the United States, with a reputation for excellent service, quality, and reliability.

We believe that this reputation, which is based on over 25 years of service to the kidney dialysis centers, combined with about $ 60 million in annual revenue, approximately 300 dedicated employees, expertise in manufacturing and logistics and the added expertise in pharmaceutical development and commercialization brought to the Company by recent additions to our management team, gives us a solid foundation on which to grow.

Liquidity and Capital Resources

Since inception, Rockwell has incurred significant net losses and have funded its operations primarily through revenue from commercial products, proceeds from the issuance of debt and equity securities and payments from partnerships.

Liquidity and Going Concern Considerations

Since inception, Rockwell has incurred significant net losses and has funded its operations primarily through revenue from commercial products, proceeds from the issuance of debt and equity securities and payments from partnerships.

At December 31, 2021, Rockwell had an accumulated deficit of approximately $ 370.1 million and stockholders' equity of $ 2.5 million.

1 unchanged sentence

Net cash used in operating activities for the year ended December 31, 2021 was approximately $ 33.5 million.

Based on the currently available working capital, capital raise and debt financing noted above, management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of the filing of this report.

In February 2020, the Company sold 3,670,212 shares of its common stock for proceeds of $ 8.0 million, net of issuance costs.

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).

On September 23, 2020, the Company sold 23,178,809 shares of its common stock for proceeds of $ 32.7 million, net of issuance costs (see Note 11 for further detail).

During the year ended December 31, 2020, the Company sold 1,128,608 shares of its common stock as part of its At-the-Market ("ATM") sales agreement with Cantor Fitzgerald & Co.

for proceeds of $ 2.3 million, net of issuance costs.

Approximately $ 32.3 million remains available for sale under this facility.

See Note 11 for further detail.

The Company expects it will require additional capital to sustain its operations and make the investments it needs to execute its strategic plan, including the commercialization of Triferic (dialysate) and Triferic AVNU in dialysis, generating additional data for Triferic in dialysis, developing FPC for iron deficiency anemia in patients undergoing home infusion and for progressing our pipeline development program of new indications for its FPC platform.

If the Company is unable to generate sufficient revenue from sales of its commercial products and from partnerships, the Company will need to obtain additional equity or debt financing.

Prior to filing our Form 10-K for the year ended December 31, 2021, the Company had experienced significant inflationary pressures in its dialysis concentrates business, particularly in recent months, which has resulted in an accelerated operating loss associated with this business line.

As a result of these inflationary pressures, and in light of the fact that the Company's concentrates business continued to operate at a loss in 2021, the Company sought to renegotiate certain terms of its supply contracts with the Company’s two largest customers in an effort to allow the Company to stabilize its concentrates business.

These factors raised substantial doubt about the Company’s ability to continue as a going concern and depended, in part, on the degree of success in addressing inflationary pressures affecting the Company’s concentrates business, as well as the Company’s ability to contain costs, raise additional working capital and remain in compliance with financial and operating covenants under the Company’s secured loan.

On April 6, 2022, the Company was able to execute an amendment to one of its supply agreements that restructures the supply relationship, which management expects to result in improved financial performance of the Company's concentrate business.

The Company also entered into an equity investment agreement with one of the contracting parties for up to $ 15 million of investment in two tranches of $ 7.5 million each.

The first tranche of $ 7.5 million was funded on April 7, 2022.

The second $ 7.5 million tranche is to be funded subject to the Company raising $ 15 million in additional capital by June 30, 2022.

The Company’s existing liquidity, taking into account the two executed agreements described above and implementing increases to product pricing, containing certain costs, and reducing expenses, management believes that the Company has sufficient capital to fund its operations and is sufficient to fund its operations and anticipated capital expenditures for the next 12 months.

The Company expects it will require additional capital to sustain its operations and make the investments it needs to execute its strategic plan in developing FPC for iron deficiency anemia in patients undergoing home infusion and for progressing our pipeline development program of new indications for our FPC platform.

If the Company is unable to generate sufficient cash flows from operations as described above, 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.

Currently, because the Company's public float is less than $75 million, we are subject to the baby shelf limitations under our current registration statement on Form S-3, which limit the amount we may offer under our Form S-3.

This could limit our ability to raise capital under this registration statement.

As previously reported, on June 11, 2021, the Company received written notice (the “Notification Letter”) from the Nasdaq Stock Market ("Nasdaq") notifying the Company that it is not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5450(a)(1) for continued listing on The Nasdaq Global Market.

Nasdaq Listing Rule 5450(a)(1) requires listed securities maintain a minimum closing bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum closing bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.

Based on the closing bid price of the Company’s common stock for the 30 consecutive business days prior to the date of the Notification Letter, the Company did not meet the minimum closing bid price requirement.

The Notification Letter provided for 180 calendar days, or until December 8, 2021, for the Company to regain compliance with Nasdaq Listing Rule 5450(a)(1).

To regain compliance, the closing bid price of the Company’s common stock must be at least $1.00 per share for a minimum of 10 consecutive business days at any time prior to December 8, 2021.

The Company was not able to meet the minimum compliance requirements set forth by Nasdaq by December 8, 2021.

On December 9, 2021, the Company received a written notice from Nasdaq indicating that the Company’s application to transfer its listing venue from The Nasdaq Global Market to The Nasdaq Capital Market for its common stock had been approved.

The Company’s common stock commenced trading on The Nasdaq Capital Market at the opening of business on December 10, 2021 under the symbol “RMTI.”

Also on December 9, 2021, the Company received written notice that Nasdaq has determined the Company is eligible for an additional 180-day extension, or until June 6, 2022, to regain compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market.

To regain compliance, the closing bid price of the Company’s common stock must be at least $1.00 per share for a minimum of 10 consecutive business days at any time prior to June 6, 2022.

In addition, the Company is subject to certain covenants and cure provisions under its Loan Agreement with Innovatus.

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The COVID-19 pandemic and resulting domestic and global disruptions have adversely affected Rockwell's business and operations, including, but not limited to, its sales and marketing efforts and our research and development activities, and the operations of third parties upon whom the Company relies.

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

Quarantines, shelter-in-place, executive and similar government orders and the recent surge in infections domestically have negatively impact Rockwell's sales and marketing activities.

The Company's international business development activities may also be negatively impacted by COVID-19, especially with the recent surge in infections and resulting quarantines or shelter-in-place orders.

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and Rockwell Medical India Private Limited.

Rockwell Medical India Private Limited was formed in 2017 for the purpose of conducting certain commercial activities in India.

Rockwell Medical India Private

Limited was formed in 2018 for the purpose of conducting certain commercial activities in India.

All 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.

Revenue Recognition

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Drug and dialysis concentrate products are sold directly to dialysis clinics and to wholesale distributors in both domestic and international markets.

Distribution and license agreements for which upfront fees are received are evaluated upon execution or modification of the agreement to determine if the agreement creates a separate performance obligation from the

underlying product sales.

For all existing distribution and license agreements, the distribution and license agreement is not a distinct performance obligation from the product sales.

1 unchanged sentence

Conversely, when regulatory approval already exists or is probable, revenue is recognized at the point in time that control of the product transfers to the customer.

The Company received upfront fees under four distribution and license agreements that have been deferred as a contract liability.

The Company received upfront fees under five distribution and license agreements that have been deferred as a contract liability.

The amounts received from Wanbang Biopharmaceuticals Co., Ltd.

(“Wanbang”), Sun Pharmaceutical Industries Ltd.

("Sun Pharma") and Jeil Pharmaceutical Co., Ltd.

("Jeil 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, India and South Korea, respectively, to determine that regulatory approval was probable as of the execution of the agreement.

("Sun Pharma"), Jeil Pharmaceutical Co., Ltd.

("Jeil Pharma") and Drogsan Pharmaceuticals ("Drogsan 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, India, South Korea and Turkey, respectively, to determine that regulatory approval was probable as of the execution of the agreement.

The amounts received from Baxter Healthcare Corporation (“Baxter”) are recognized as revenue at the point in time that the estimated product sales under the agreement occur.

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Net Revenue $ 62,197 $ 56,578 $ 5,619

For the years ended December 31, 2020 and 2019, license fee revenue was $ 2.2 million and $ 2.3 million, respectively.

For each of the years ended December 31, 2021 and 2020, license fee revenue was $ 2.2 million.

For the years ended December 31, 2021 and 2020, product sales revenue was $ 59.7 million and $ 60.0 million, respectively.

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For the years ended December 31, 2021 and 2020, the Company did no t recognize material bad-debt expense and there were no material contract assets recorded on the consolidated balance sheets as of December 31, 2021 and 2020.

The Company does not generally accept returns of its concentrate products and no reserve for returns of concentrate products was established as of December 31, 2020 or 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 December 31, 2021 or 2020.

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.

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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.

The Company applies the practical expedient in paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

The Company applies the practical expedient in ASC 606, paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

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

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Investments – Available for Sale

The Company has designated its short term investments as of each balance sheet date as available-for-sale securities and accounts for them at their respective fair values.

Available-for-sale securities are measured at fair value, including accrued interest, with temporary unrealized gains and losses reported as a component of stockholders' equity until their disposition.

We review all available-for-sale securities at each period end to determine if they remain available-for-sale based on our then current intent and ability to sell the security if required to do so.

The cost of securities sold is based on the specific identification method.

All of our investments available-for-sale are subject to periodic impairment review.

We recognize an impairment charge when a decline in the fair value of our investments below the cost basis is judged to be other than temporary.

The Company determines the appropriate classification of its investments in equity securities at the time of purchase and reevaluates such determination at each balance sheet date.

Marketable securities that are bought and held principally for the purpose of selling them in the near term are reported at fair value, with unrealized gains and losses recognized in earnings.

Marketable debt securities classified as available for sale securities are carried at fair market value, with the unrealized gains and losses, net of tax, included in the determination of comprehensive income (loss) and reported in stockholders’ equity.

All of the Company's investments available-for-sale are subject to periodic impairment review.

The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other than temporary.

Accounts Receivable

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The carrying amount of trade accounts receivable is reduced by an allowance for doubtful accounts that reflects our best estimate of accounts that may not be collected.

We review outstanding trade accounts receivable balances and based on our assessment of expected collections, we estimate the portion, if any, of the balance that may not be collected as well as a general valuation allowance for other accounts receivable based primarily on historical experience.

The Company reviews outstanding trade accounts receivable balances and based on its assessment of expected collections, the Company estimates the portion, if any, of the balance that may not be collected as well as a general valuation allowance for other accounts receivable based primarily on historical experience.

All accounts or portions thereof deemed to be uncollectible are written off to the allowance for doubtful accounts.

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Inventory that is not expected to be converted to cash over the next year is classified as non-current.

Our policy is to reserve for our drug product inventory that we determine is unlikely to be sold to, or if sold, unlikely to be utilized by our customers on or before its expiration date.

The Company's policy is to reserve for its drug product inventory that it determines is unlikely to be sold to, or if sold, unlikely to be utilized by its customers on or before its expiration date.

Property and Equipment

Property and equipment is recorded at cost and are depreciated using the straight‑line method over the useful lives of the assets, which range from three to ten years .

Property and equipment is recorded at cost and is depreciated using the straight‑line method over the useful lives of the assets, which range from three to ten years .

Expenditures for routine maintenance and repairs are expensed as incurred.

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Impairment losses on long-lived assets, such as real estate and equipment, are recognized when events or changes in circumstances indicate that the undiscounted cash flows estimated to be generated by such assets are less than their carrying value and, accordingly, all or a portion of such carrying value may not be recoverable.

losses are then measured by comparing the fair value of assets to their carrying amounts.

Impairment losses are then measured by comparing the fair value of assets to their carrying amounts.

For the years ended December 31, 2021 and 2020, there were no impairments of long-lived assets.

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Deferred Revenue

In October 2014, the Company entered into a 10 year distribution agreement with Baxter and received an upfront fee of $ 20 million.

In October 2014, the Company entered into the Baxter Agreement, which has a term of 10 years and received an upfront fee of $ 20 million.

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 Distribution Agreement.

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Deferred revenue related to the Baxter agreement totaled $ 5.2 million and $ 7.2 million as of December 31, 2021 and 2020, respectively.

If a “Refund Trigger Event” occurs prior to December 31, 2021, Rockwell would be obligated to repay 25 % of the upfront fee.

During the year ended December 31, 2016, the Company entered into a distribution agreement with Wanbang and received an upfront fee of $ 4.0 million.

During the year ended December 31, 2016, the Company entered into a distribution agreement with Wanbang (the "Wangbang Agreement") and received an upfront fee of $ 4.0 million.

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 $ 0.2 million and $ 0.3 million during the years ended December 31, 2020 and 2019, respectively.

The Company recognized revenue of approximately $ 0.2 million during the years ended December 31, 2021 and 2020, respectively.

Deferred revenue related to the Wanbang Agreement totaled $ 2.5 million and $ 2.7 million as of December 31, 2021 and 2020, respectively.

On January 14, 2020, the Company 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.

In January 2020, the Company 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.

Under the terms of the Sun Pharma Agreements, Sun Pharma will be the exclusive development and commercialization partner for Triferic (dialysate) in India, and the Company will supply the product to Sun Pharma.

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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 $ 10,000 during the year ended December 31, 2020.

Deferred revenue related to the Sun Pharma Agreement totaled $ 90,000 as of December 31, 2020.

On September 7, 2020, the Company entered into a license and supply agreements with Jeil Pharma (the "Jeil Pharma Agreements"), for the rights to commercialize Triferic (dialysate) (ferric pyrophosphate citrate) in South Korea.

The Company recognized revenue of approximately $ 10,000 for both of the years ended December 31, 2021 and 2020.

Deferred revenue related to the Sun Pharma Agreement totaled $ 80,000 and $ 90,000 as of December 31, 2021and 2020, respectively.

In September 2020, the Company entered into a license and supply agreements with Jeil Pharma (the "Jeil Pharma Agreements"), for the rights to commercialize Triferic (dialysate) (ferric pyrophosphate citrate) in South Korea.

Under the terms of the Jeil Pharma Agreements, Jeil Pharma will be the exclusive development and commercialization partner for Triferic (dialysate) in South Korea, and the Company will supply the product to Jeil Pharma.

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

The Company recognized revenue of $ 10,000 and $ 2,500 during the year ended December 31, 2021 and 2020, respectively.

Deferred revenue related to the Jeil Pharma Agreement totaled $ 187,500 and $ 197,500 as of December 31, 2021 and 2020, respectively.

In June 2021, the Company entered into license and supply agreements with Drogsan Pharma (the "Drogsan Agreements"), for the rights to commercialize Triferic (dialysate) and Triferic AVNU in Turkey.

Under the terms of the Drogsan Agreements, Drogsan Pharma will be the exclusive commercialization partner for Triferic (dialysate) and Triferic AVNU in Turkey.

In consideration for the license, the Company received an upfront fee of $ 0.15 million, and will be eligible for milestone payment and royalties on net sales.

A Joint Alliance Committee, comprised of members from the Company and Drogsan Pharma, will guide the execution for Triferic (dialysate) and Triferic AVNU in Turkey.

Drogsan Pharma will be responsible for all regulatory approval and commercialization activities, and the Company will supply the product to Drogsan Pharma for Turkey.

The upfront fee will be recorded as deferred revenue and will be recognized as revenue based on the agreement term.

The Company recognized revenue of $ 7,500 during the year ended December 31, 2021.

Deferred revenue related to the Jeil Pharma Agreement totaled $ 0.2 million as of December 31, 2020.

We account for income taxes in accordance with the provisions of ASC 740‑10, Income Taxes.

Deferred revenue related to the Drogsan Agreements totaled approximately $ 0.1 million as of December 31, 2021.

Rockwell accounts for income taxes in accordance with the provisions of ASC 740‑10, Income Taxes.

A current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the year.

Deferred tax liabilities or assets are recognized for the estimated future tax effects of temporary differences between book and tax accounting and operating loss and tax credit carryforwards.

A valuation allowance is established for deferred tax assets if we determine it to be more likely than not that the deferred tax asset will not be realized.

A valuation allowance is established for deferred tax assets if the Company determine it to be more likely than not that the deferred tax asset will not be realized.

The effects of tax positions are generally recognized in the financial statements consistent with amounts reflected in returns filed, or expected to be filed, with taxing authorities.

For tax positions that the Company considers to be uncertain, current and deferred tax liabilities are recognized, or assets derecognized, when it is probable that an income tax liability has been incurred and the amount of the liability is reasonably estimable, or when it is probable that a tax benefit, such as a tax credit or loss carryforward, will be disallowed by a taxing authority.

For tax positions that the Company considers to be uncertain, current and deferred tax liabilities are recognized, or assets derecognized, when it is probable that an income tax liability has

been incurred and the amount of the liability is reasonably estimable, or when it is probable that a tax benefit, such as a tax credit or loss carryforward, will be disallowed by a taxing authority.

The amount of unrecognized tax benefits related to current tax positions is insignificant.

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Basic EPS excludes dilution.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issued common stock were exercised or converted into common stock or resulted in the issuance of common stock that are then shared in the earnings of the entity.

Diluted EPS reflects the potential dilution that could occur if securities or other

contracts to issued common stock were exercised or converted into common stock or resulted in the issuance of common stock that are then shared in the earnings of the entity.

Basic net loss per share of common stock excludes dilution and is computed by dividing the net loss by the weighted average number of shares outstanding during the period.

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Warrants to purchase common stock 26,426,863 26,426,863

33,307,113 12,968,474

Total 32,641,851 33,307,113

Accumulated Other Comprehensive Income

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Significant Market Segments and Customers

We operate in one market segment, the hemodialysis market, which involves the manufacture, sale and distribution of hemodialysis products to hemodialysis clinics, including pharmaceutical, dialysis concentrates, dialysis kits and other ancillary products used in the dialysis process.

Rockwell operates in one market segment, the hemodialysis market, which involves the manufacture, sale and distribution of hemodialysis products to hemodialysis clinics, including pharmaceutical, dialysis concentrates, dialysis kits and other ancillary products used in the dialysis process.

One customer, DaVita, Inc.

("DaVita"), accounted for 50 % of our sales in 2020 and 49 % of our sales in 2019.

Our accounts receivable from this customer were $ 1.1 million and $ 1.2 million as of December 31, 2020 and 2019, respectively.

In October 2014, we entered into the Distribution Agreement with Baxter, which was amended in June 2017 and March 2020, pursuant to which Baxter received exclusive distribution rights for our concentrate products in the United States, a commitment by Rockwell to maintain a specified manufacturing capacity for Baxter, a cap upon the net amount of reimbursable transportation expenses and modified extension terms.

Our domestic customer contracts for the supply of dialysis concentrate products that permitted assignment to Baxter without consent have been assigned to Baxter.

As a result, for 2020 and 2019, our direct sales to Baxter aggregated approximately 25 % and 27 % of sales, respectively, and we had a receivable from Baxter of $ 1.6 million and $ 2.0 million as of December 31, 2020 and 2019, respectively.

DaVita and Baxter and the accounts administered by Baxter are important to our business, financial condition and results of operations.

The loss of any significant accounts could have a material adverse effect on our business, financial condition and results of operations.

No other domestic customers accounted for more than 10% of our sales in any of the last two years.

The majority of our international sales in each of the last two years were sales to domestic distributors that were resold to end users outside the United States.

Our sales to foreign customers and distributors accounted for approximately 9 % and 11 % of our total sales in 2020 and 2019, respectively.

One international customer, Nipro Medical Corporation, accounted for 7 % and 9 % of our sales for 2020 and 2019, respectively.

("DaVita"), accounted for 47 % of Rockwell's sales in 2021 and 50 % of its sales in 2020.

Rockwell's accounts receivable from this customer were $ 1.0 million and $ 1.1 million as of December 31, 2021 and 2020, respectively.

In October 2014, Rockwell entered into the Baxter Distribution Agreement, which was amended in June 2017 and March 2020, pursuant to which Baxter received exclusive distribution rights for the Company's concentrate products in the United States, a commitment by Rockwell to maintain a specified manufacturing capacity for Baxter, a cap upon the net amount of reimbursable transportation expenses and modified extension terms.

Rockwell's domestic customer contracts for the supply of dialysis concentrate products that permitted assignment to Baxter without consent have been assigned to Baxter.

As a result, for 2021 and 2020, Rockwell's direct sales to Baxter aggregated approximately 26 % and 25 % of sales, respectively, and the Company had a receivable from Baxter of $ 3.5 million and $ 1.6 million as of December 31, 2021 and 2020, respectively.

DaVita and Baxter and the accounts administered by Baxter are important to Rockwell's business, financial condition and results of operations.

The loss of any significant accounts could have a material adverse effect on the Company's business, financial condition and results of operations.

No other domestic customers accounted for more than 10% its our sales in any of the last two years.

The majority of Rockwell's international sales in each of the last two years were sales to domestic distributors that were resold to end users outside the United States.

Rockwell's sales to foreign customers and distributors accounted for approximately 10 % and 9 % of its total sales in 2021 and 2020, respectively.

One international customer, Nipro Medical Corporation, accounted for 8 % and 7 % of its sales for 2021 and 2020, respectively.

Distribution Agreement

In October 2014, we entered into the Distribution Agreement with Baxter, pursuant to which Baxter became our exclusive agent for commercializing our hemodialysis concentrate and ancillary products in the United States and various foreign countries for an initial term of 10 years ending October 2, 2024.

We retain sales, marketing and distribution rights for our hemodialysis concentrate products for our international customers and in those countries in which we have an established commercial presence.

In October 2014, Rockwell entered into the Baxter Distribution Agreement, pursuant to which Baxter became Rockwell's exclusive agent for commercializing its hemodialysis concentrate and ancillary products in the United States and various foreign countries for an initial term of 10 years ending October 2, 2024.

Rockwell retains sales, marketing and distribution rights for its hemodialysis concentrate products for its international customers and in those countries in which its has an established commercial presence.

During the term of the Distribution Agreement, Baxter has agreed not to manufacture or sell any competitive concentrate products in the United States hemodialysis market, other than specified products.

The Distribution Agreement does not include any of the Company’s drug products.

In June 2017, we entered into the First Amendment to Exclusive Distribution Agreement with Baxter (the “Amendment”).

In June 2017, Rockwell entered into the First Amendment to Exclusive Distribution Agreement with Baxter (the “Amendment”).

The Amendment provides for, among other things, reduced pricing on certain accounts and incentives to Baxter to pursue new customers and increase future sales.

In March 2020, we entered into the Second Amendment to the Exclusive Distribution Agreement with Baxter (the “Second Amendment”).

Second Amendment provides for, among other things, a commitment by Rockwell to maintain a specified manufacturing capacity for Baxter, a cap upon the net amount of reimbursable transportation expenses and modified extension terms.

Under the Distribution Agreement, Baxter purchases concentrate-related products from us at pre-determined gross margin-based prices per unit adjusted each year during the term and subject to an annual true up.

In March 2020, Rockwell entered into the Second Amendment to the Exclusive Distribution Agreement with Baxter (the “Second Amendment”).

The Second Amendment provides for, among other things, a commitment by Rockwell to maintain a specified manufacturing capacity for Baxter, a cap upon the net amount of reimbursable transportation expenses and modified extension terms.

Under the Distribution Agreement, Baxter purchases concentrate-related products from Rockwell at pre-determined gross margin-based prices per unit adjusted each year during the term and subject to an annual true up.

The Distribution Agreement also requires Baxter to meet minimum annual purchase levels, subject to a cure period and certain other relief, in order to maintain its exclusive distribution rights.

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Purchases in any calendar year that exceed the minimum may be carried forward and applied to future years’ minimum requirements.

The Distribution Agreement, as amended by the Second Amendment, also contains provisions regarding our obligations to maintain specified manufacturing capacity and quality levels.

We continue to manage customer service, transportation and certain other functions for our current customers.

For customer service, Baxter pays us an amount equal to our related costs plus a slight mark-up for these services.

For transportation costs, Baxter pays us an amount equal to our related costs, subject to the defined caps contained within the Second Amendment, which are based upon defined percentages of liquid concentrate product being shipped.

The Distribution Agreement also provides that, upon the mutual determination of us and Baxter, Baxter will pay us up to $ 10 million to build a new manufacturing facility in the Pacific time-zone that would serve customers in the western United States.

The fee payable in connection with construction of the facility will be reduced to the extent that the facility is not operational within 12 months after the start of construction.

Except for any leased components, we will own and operate the facility when completed.

The Distribution Agreement, as amended by the Second Amendment, also contains provisions regarding Rockwell's obligations to maintain specified manufacturing capacity and quality levels.

Rockwell continues to manage customer service, transportation and certain other functions for its current customers.

For customer service, Baxter pays Rockwell an amount equal to our related costs plus a slight mark-up for these services.

For transportation costs, Baxter pays Rockwell an amount equal to its related costs, subject to the defined caps contained within the Second Amendment, which are based upon defined percentages of liquid concentrate product being shipped.

The Distribution Agreement also provides that, upon the mutual determination of Rockwell and Baxter, Baxter will pay Rockwell up to $ 10 million to build a new manufacturing facility in the Pacific time-zone that would serve customers in the western United States.

The fee payable in connection with construction of the facility will be reduced to the extent that the

facility is not operational within 12 months after the start of construction.

Except for any leased components, Rockwell will own and operate the facility when completed.

Either party may terminate the Distribution Agreement upon the insolvency or material breach of the other party or in the event of a force majeure.

In addition, Baxter may also terminate the Distribution Agreement at any time upon 270 days’ prior written notice to us or if (i) prices increase beyond certain thresholds and notice is provided within 45 days after the true up payment is due for the year in which the price threshold is exceeded, (ii) a change of control of the Company occurs and 270 days’ notice is provided, or (iii) upon written notice that Baxter has been enjoined by a court of competent jurisdiction from selling in the United States any product covered by the Distribution Agreement due to a claim of intellectual property infringement or misappropriation relating to such product.

In addition, Baxter may also terminate the Distribution Agreement at any time upon 270 days’ prior written notice to Rockwell or if (i) prices increase beyond certain thresholds and notice is provided within 45 days after the true up payment is due for the year in which the price threshold is exceeded, (ii) a change of control of the Company occurs and 270 days’ notice is provided, or (iii) upon written notice that Baxter has been enjoined by a court of competent jurisdiction from selling in the United States any product covered by the Distribution Agreement due to a claim of intellectual property infringement or misappropriation relating to such product.

If Baxter terminates the Distribution Agreement under the discretionary termination or the price increase provisions, it would be subject to a limited non-compete obligation in the United States with respect to certain products for a period of two years .

Pursuant to the Distribution Agreement, we received an upfront fee of $ 20 million in October 2014.

If a “Refund Trigger Event” occurs prior to December 31, 2021, we would be obligated to repay 25 % of the upfront fee and any paid portion of the facility fee.

A “Refund Trigger Event” means any of the following:

(i) a change of control of the Company involving any of certain specified companies;

(ii) a termination by Baxter due to the Company’s bankruptcy or breach, or due to price increases that exceed the stated thresholds;

(iii) a termination by either party due to a force majeure;

(iv) settlement or adjudication of any claim, action or litigation relating to a covered product that materially and adversely affects Baxter’s commercialization of the product;

and (v) any regulatory action or ruling relating to a covered product that materially and adversely affects Baxter’s commercialization of the product.

Pursuant to the Distribution Agreement, Rockwell received an upfront fee of $ 20 million in October 2014.

In December 2021, Baxter sent us a letter reserving its right to assert that it could claim a refund of a portion of its upfront payment if it terminates the Distribution Agreement as a result of certain price increases.

While management believes that the claims in Baxter’s letter are without merit and that Baxter cannot recoup any portion of its upfront payment, management cannot assure you what a mediator or arbitrator may decide if it pursues such claim.

Rockwell intends to vigorously defend against any such claim.

The Upfront Fee has been deferred and is being recognized as revenue based on the proportion of product shipments to Baxter in each period to total expected sales volume over the term of the Distribution Agreement.

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Total $ 5,599 $ 5,089

As of December 31, 2020 and 2019, we classified $ 1.2 million and $ 0.4 million, respectively, of inventory as non-current all of which was related to Triferic or the active pharmaceutical ingredient for Triferic.

As of December 31, 2020 and 2019, we had total Triferic inventory aggregating $ 3.9 million and $ 3.5 million respectively, against which we had reserved $ 2.6 million and $ 2.8 million, respectively.

For the year ended December 31, 2020, the Company’s inventory reserves and write-offs decreased overall by $ 0.1 million, which consisted primarily of an increase in inventory reserve of $ 0.3 million offset by a reduction to inventory reserve of $ 0.4 million related to destruction of Triferic inventory.

For the year ended December 31, 2019, inventory reserves and write-offs increased by $ 1.3 million.

The $ 1.3 million net value of Triferic inventory consisted of $ 0.1 million of Triferic (dialysate) finished goods with expiration dates ranging from May 2021 to September 2021, $ 0.3 million of Triferic API with estimated useful lives extending through 2023, and $ 890,000 of Triferic raw material with an estimated useful live of 25 years.

As of December 31, 2021 and 2020, the Company classified $ 1.5 million and $ 1.2 million, respectively, of inventory as non-current all of which was related to Triferic or the active pharmaceutical ingredient for Triferic.

As of December 31, 2021 and 2020, Rockwell had total Triferic inventory aggregating $ 1.7 million and $ 3.9 million, respectively, against which Rockwell had reserved $ 0.1 million and $ 2.6 million, respectively.

The $ 1.6 million net value of Triferic inventory consisted of $ 0.3 million of Triferic (dialysate) finished goods with expiration dates ranging from July 2022 to December 2023, $ 0.4 million of Triferic API with estimated useful lives extending through 2023, and $ 0.9 million of Triferic raw material with an estimated useful live of 25 years.

Property and Equipment

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Total goodwill was $ 0.9 million at December 31, 2021 and 2020.

We completed our annual impairment tests as of December 31, 2020 and 2019, and determined that no adjustment for impairment of goodwill was required during the years ended December 31, 2020 and 2019.

Rockwell completed its annual impairment tests as of December 31, 2021 and 2020, and determined that no adjustment for impairment of goodwill was required during the years ended December 31, 2021 and 2020.

Accrued Liabilities

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Total Accrued Liabilities $ 5,090 $ 5,013

Insurance Financing Note Payable

On July 3, 2021, the Company entered into a short-term note payable for $ 2.0 million, bearing interest at 3.93 % per annum to finance various insurance policies.

Principal and interest payments related to this note began on July 3, 2021 and are paid on a straight-line amortization over 9 month with the final payment due on March 3, 2022.

As of December 31, 2021, the Company's insurance note payable balance was $ 0.4 million.

Stockholders’ Equity

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As of December 31, 2021 and 2020, there were 170,000,000 shares of common stock, $ 0.0001 par value per share, authorized and 93,986,470 and 93,573,165 shares issued and outstanding, respectively.

During the year ended December 31, 2019, 30,000 vested employee stock options were exercised for net cash proceeds of $ 147,900 at a weighted average exercise price of $ 4.93 per share.

During the year ended December 31, 2020, no vested employee stock options were exercised.

During the years ended December 31, 2021 and 2020, no vested employee stock options were exercised.

Controlled Equity Offering

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The base prospectus contained within the registration statement, and a prospectus supplement was filed with the SEC on March 22, 2019.

Sales of the shares, if any, pursuant to the Sales Agreement, may be made in sales deemed to be a “at the market offering” as defined in Rule 415(a) of the Securities Act, including sales made directly through The Nasdaq Global Market or on any other existing trading market for the Company’s common stock.

The Company intends to use the proceeds from the offering for working capital and other general corporate purposes.

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

During the year ended December 31, 2019, the Company sold 1,840,443 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.

For the year ended December 31, 2020, the Company sold 1,128,608 of shares of its common stock pursuant to the Sales Agreement for gross proceeds of $ 2,325,478 , at a weighted average selling price of approximately $ 2.06 .

The Company paid $ 63,000 in commissions and offering fees related to the sale of common stock.

As of December 31, 2020, approximately $ 32.3 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.

Our ability to sell common stock under the facility may be limited by several factors including, among other things, the trading volume of our common stock and certain black-out periods that we may impose upon the facility, among other things.

Public Offerings of Common Stock

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.

On February 6, 2020, the Company closed the sale of 3,191,489 shares of its common stock at the public offering price of $ 2.22 per share (the "Offering").

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 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.

333-227363), which was previously filed with the SEC.

On September 23, 2020, the Company entered into a Securities Purchase Agreement (the “2020 Purchase Agreement”) with certain purchasers named therein, pursuant to which the Company agreed to issue and sell to several institutional and accredited investors in a registered direct offering, 21,818,544 shares of common stock and warrants to purchase up to 23,178,809 shares of common stock (the “Warrants”) at a combined purchase price equal to $ 1.51 per share.

Each Warrant is exercisable for one share of common stock at an exercise price of $ 1.80 per share.

The Warrants are immediately exercisable and will expire on September 25, 2022.

The Company also offered to certain purchasers pre-funded warrants to purchase up to an aggregate of 1,360,265 shares of common stock (the “Pre-Funded Warrants”), in lieu of shares of common stock.

The purchase price of each Pre-Funded Warrant is equal to the price at which a share of common stock is sold to the public in the offering, minus $ 0.001 , and the exercise price of each Pre-Funded Warrant is $ 0.001 per share.

The Pre-Funded Warrants were exercised in conjunction with the issuance of common stock under the Securities Purchase Agreement.

The Company received gross proceeds of approximately $ 35.0 million in connection with the offering, before deducting placement agent fees and related offering expenses of approximately $ 2.3 million.

A holder (together with its affiliates) may not exercise any portion of the Warrant to the extent that the holder would own more than 9.99 % (or, at the holder’s option upon issuance, 4.99 %) of the Company’s outstanding common stock immediately after exercise, as such percentage ownership is determined in accordance with the terms of the Warrant or Pre-Funded Warrant.

The Company agreed to pay H.C.

Wainwright & Co., LLC (the "Placement Agent") a cash fee of 6 % of the aggregate gross proceeds raised in the offering, minus $ 0.4 million payable by the Company to a financial advisory firm for services related to the offering.

In addition, the Company agreed to pay the Placement Agent (i) 6 % of the aggregate gross proceeds to be received, if any, from the cash exercise of any Warrants through December 25, 2021 and (ii) 4.0 % of the aggregate gross proceeds to be received, if any, from the cash exercise of any Warrants subsequent to December 25, 2021.

The Company also agreed to pay the Placement Agent non-accountable expenses of $ 50,000 as well as $ 12,900 for the clearing fees of the Placement Agent in connection with the offering.

The Company has accounted for the common stock for the 2020 Purchase Agreement as equity on the accompanying consolidated balance sheets as of December 31, 2020.

The amount allocated to common stock was $ 26.1 million.

This allocation is equal to the total proceeds of $ 35.0 million less the amount allocated to Warrants of $ 8.9 million and is also net of the direct and incremental costs associated with the 2020 Purchase Agreement of $ 2.3 million.

The Black-Scholes pricing model was used to calculate the value of Warrants relating to the 2020 Purchase Agreement.

Restricted Common Stock

During the year ended December 31, 2020, 988,958 shares of performance-based restricted stock and 152,097 shares of time-based restricted stock were forfeited.

Forfeitures of the performance-based and time-based restricted stock were related to the resignation of Stuart Paul, former CEO, and Angus Smith, former CFO.

During the year ended December 31, 2020, 224,994 shares of common stock related to fully vested restricted stock units were delivered to officers and employees of the Company.

The Company withheld 8,348 of these shares of common stock at a fair value of $ 18,950 to cover the employees and officer’s withholding taxes related to the vesting of restricted stock units.

The registration statement on Form S-3 expired on October 1, 2021 and no further sales may be made under the Sales Agreement.

During the year ended December 31, 2021, the Company did not sell any shares of its common stock pursuant to the Sales Agreement.

Stock-Based Compensation

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The Compensation Committee of the Board of Directors (the “Committee”) is responsible for the administration of the 2007 LTIP and 2018 LTIP, including the grant of stock based awards and other financial incentives including performance based incentives to employees, non‑employee directors and consultants.

Our standard stock option agreement under the 2007 LTIP and 2018 LTIP allows for the payment of the exercise price of vested stock options either through cash remittance in exchange for newly issued shares, or through non‑cash exchange of previously issued shares held by the recipient for at least six months in exchange for our newly issued shares.

The Company's standard stock option agreement under the 2007 LTIP and 2018 LTIP allows for the payment of the exercise price of vested stock options either through cash remittance in exchange for newly issued shares, or through non‑cash exchange of previously issued shares held by the recipient for at least six months in exchange for our newly issued shares.

The 2007 LTIP and 2018 LTIP also allow for the retention of shares in payment of the exercise price and income tax withholding.

method results in no cash being received by us, but also results in a lower number of total shares being outstanding subsequently as a direct result of this exchange of shares.

Shares returned to us in this manner would be retired.

The latter method results in no cash being received by the Company, but also results in a lower number of total shares being outstanding subsequently as a direct result of this exchange of shares.

Shares returned to the Company in this manner would be retired.

The Company recognized total stock-based compensation expense during the years ended December 31, 2021 and 2020 as follows (table in thousands):

Year Ended December 31,

Service based awards:

Restricted stock awards $ — $ ( 33 )

Restricted stock units $ 344 $ 372

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Performance based awards:

Restricted stock awards $ ( 390 ) $ —

Restricted stock units — ( 1,148 )

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Unvested at December 31, 2020 146,800 5.70

Forfeited ( 68,500 ) 5.70

Unvested at December 31, 2021 78,300 $ 5.70

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As of December 31, 2021, unvested restricted stock awards of 78,300 were related to performance based awards.

The forfeited performance-based restricted stock awards of 68,500 was due to the termination of the Company's former Chief Science Officer on January 19, 2021.

These forfeited awards reduced stock-based compensation expense by $ 0.4 million.

Stock-based compensation expense of nil was recognized for both the year ended December 31, 2021 and 2020, respectively.

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Performance Based Restricted Stock Units

A summary of the Company’s performance based restricted stock units during the year ended December 31, 2020 and 2019 is as follows:

As of December 31, 2021, there were no outstanding performance-based restricted stock units

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

Number of Shares Weighted Average

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Unvested at December 31, 2020 — $ —

Number of Shares Weighted Average

Unvested at January 1, 2019 988,958 $ 4.48

Unvested at December 31, 2019 988,958 $ 4.48

Stock-based compensation expense recognized for performance based restricted stock units was $( 1.1 ) million and $ 0.6 million for the year ended December 31, 2020 and 2019, respectively.

Stock-based compensation expense recognized for performance based restricted stock units was nil and $( 1.1 ) million for the year ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, there was no unrecognized stock-based compensation expense related to performance-based restricted stock units.

The forfeited performance-based restricted stock awards of 988,958 is due to the resignation of the Company's former President and Chief Executive Officer, Stuart Paul, on April 17, 2020 and the resignation of the Company's former Chief Financial Officer, Angus Smith, effective July 3, 2020.

These forfeited awards reduced stock-based compensation expense for the year ended December 31, 2020 by $ 1.4 million.

Service Based Stock Options

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Granted 2,288,386 1.94 9.0 —

Exercised ( 30,000 ) $ 4.93 —

Expired ( 4,249,596 ) ( 8.07 )

Forfeited ( 530,858 ) ( 3.88 ) —

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Granted 1,947,162 0.88 — —

Exercised — $ — —

Expired ( 1,408,709 ) ( 7.00 ) —

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Outstanding at January 1, 2020 388,125 $ 4.70

Outstanding at December 31, 2019 388,125 $ 4.70

Granted 750,000 2.20

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Outstanding at December 31, 2020 750,000 $ 2.20

Cancelled ( 750,000 ) 2.20

Outstanding at December 31, 2021 — $ —

Exercisable at December 31, 2021 — $ —

Stock-based compensation expense recognized for performance-based stock options was $( 0.4 ) million and $( 0.2 ) million for the year ended December 31, 2021 and 2020.

As of December 31, 2020, the unrecognized stock-based compensation expense related to unvested performance-based stock options was $ 0.2 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, Stuart Paul, on April 17, 2020.

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

A performance option may be comprised of either a performance based award or a market-based award.

Performance based awards start vesting on the grant date through the probability date of the measured performance, and the fair value is the market price of one common share on the grant date.

Evaluation of the expected vesting period is reviewed quarterly.

Market-based awards vest upon the achievement of the market-based performance goal, provided the continued employment of the

Company’s employee.

The fair value of each market-based stock option was determined through the use of the Monte Carlo simulation method.

Over the performance period, the number of shares expected to be issued is adjusted upward or downward based upon probability of achievement of performance targets.

The ultimate number of shares issued and the related compensation cost recognized is based on a comparison of the final performance metrics to the specified targets.

The fair value of the performance-based stock options granted for the year ended December 31, 2020 were based on the following assumptions:

Expected stock price volatility 74.4 %

Risk-free interest rate 0.4 %

Dividend yield rate —

Term (years) 5.7

Related Party Transactions

As of December 31, 2021, there were no performance based stock options outstanding.

The canceled unvested performance-based stock options of 750,000 is due to management determining that the performance goal will not be achieved.

License Agreements

Product License Agreements

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On October 7, 2018, the Company entered into a Master Services and IP Agreement (the “Charak MSA”) with Charak and Dr.

Ajay Gupta, a former Officer of the Company (see Note 18).

Ajay Gupta, a former Officer of the Company.

Pursuant to the MSA, the parties entered into three additional agreements described below related to the license of certain soluble ferric pyrophosphate (“SFP”) intellectual property owned by Charak, as well as the Employment Agreement (defined below).

The Charak MSA provides for a payment of $ 1.0 million to Dr.

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 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 December 31, 2020, the Company has fulfilled its reimbursement obligation of certain legal expenses and accrued $ 0.1 million relating to certain IP reimbursement expenses and certain sublicense royalty fees as a related party payable on the condensed consolidated balance sheet.

As of December 31, 2021 and 2020, the Company has accrued $ 86,400 and $ 100,700 , respectively, relating to certain IP reimbursement expenses and certain sublicense royalty fees as an accrued liability 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.

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From January 1, 2022 until February 1, 2034, the Company is liable to pay Charak a base royalty at a reduced rate on net sales and an additional royalty on net sales while there exists a valid claim of a licensed patent, on a country-by-country basis.

The Company shall also pay to Charak a percentage of any sublicense income received during the term of the IV Agreement, which amount shall not be less than a minimum specified percentage of net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and not be less than a lower rate of the net sales of the licensed products by the sublicensee 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 Technology License Agreement TPN Triferic®, dated as of October 7, 2018 (the “TPN Agreement”), pursuant to which Charak granted the Company an exclusive, sublicensable, royalty-bearing license to SFP for the purpose of commercializing worldwide certain TPN products

incorporating SFP.

exists a valid claim, on a country-by-country basis, and not be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis.

The license grant under the TPN Agreement continues 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.

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The potential milestone payments are not yet considered probable, and no milestone payments have been accrued at December 31, 2021.

Director Compensation

In 2019, the Company compensated non-employee directors with a cash retainer, which was approved by the Board of Directors, to serve on a special Advisory Committee of the Board, which committee was delegated to provide Board-level oversight of senior management and not have any management authority within the Company.

Independent directors Lisa Colleran and John Cooper were appointed to the Advisory Committee.

The aggregate compensation paid to the members of the advisory Committee for the year ended December 31, 2020 and 2019 was $ 225,000 and $ 202,500 , respectively.

The Advisory Committee disbanded in May 2020.

Commitments and Contingencies

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.

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

The lease terms range from monthly to seven years .

We occupy a 51,000 square foot facility and a 17,500 square foot facility in Wixom, Michigan under a lease expiring in August 2021.

We also occupy two other manufacturing facilities, a 51,000 square foot facility in Grapevine, Texas under a lease expiring in December 2025, and a 57,000 square foot facility in Greer, South Carolina under a lease expiring February 2023.

In addition, we occupy 4,100 square feet of office space in Hackensack, New Jersey under a lease expiring on July 1, 2024.

This lease is currently being offered for sublease.

Rockwell occupies a 51,000 square foot facility and a 17,500 square foot facility in Wixom, Michigan under a lease expiring in August 2024.

Rockwell also occupies two other manufacturing facilities, a 51,000 square foot facility in Grapevine, Texas under a lease expiring in December 2025, and a 57,000 square foot facility in Greer, South Carolina under a lease expiring February 2023.

In addition, Rockwell occupies 4,100 square feet of office space in Hackensack, New Jersey under a lease expiring on October 31, 2024.

This lease was subleased on December 15, 2021 with an expiration date of October 31, 2024.

The following summarizes quantitative information about the Company’s operating leases (dollars in thousands):

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Year Ended December 31, 2026 259 665

Year Ended December 31, 2026 — 163

Remaining future payments 120 311

Total 5,357 3,651

2 unchanged sentences

$ 4,802 $ 3,089

We evaluate various kinds of risk that we are exposed to in our business.

In our evaluation of risk, we evaluate options and alternatives to mitigating such risks.

For certain insurable risks, we may acquire insurance policies to protect against potential losses or to partially insure against certain risks.

For our subsidiary, Rockwell Transportation, Inc., we maintain a partially self-insured workers' compensation policy.

Under the policy, our self‑insurance retention is $ 350,000 per occurrence and $ 602,354 in aggregate coverage for the policy year ending July 1, 2021.

The Company evaluates various kinds of risk that it is exposed to in its business.

In its evaluation of risk, the Company evaluates options and alternatives to mitigating such risks.

For certain insurable risks, Rockwell may acquire insurance policies to protect against potential losses or to partially insure against certain risks.

For the Company's subsidiary, Rockwell Transportation, Inc., Rockwell maintains a partially self-insured workers' compensation policy.

Under the policy, its self‑insurance retention is $ 350,000 per occurrence and $ 599,000 in aggregate coverage for the policy year ending July 1, 2022.

The total amount at December 31, 2021 by which retention limits exceed the claims paid and accrued is approximately $ 431,000 for the policy year ending July 1, 2022.

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Purchase Obligations

We have contracts for anticipated future obligations through December 31, 2021 of approximately $ 25.5 million, which include $ 23.8 million for concentrate manufacturing and $ 1.7 million in ancillary supplies.

Demand Notice

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.

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.

As of December 31, 2020, the Company has performed all required obligations under the settlement agreement.

Rockwell has contracts for anticipated future obligations through December 31, 2022 of approximately $ 32.6 million, which include $ 31.2 million for concentrate manufacturing and $ 1.4 million in ancillary supplies.

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, 2018 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 Chief 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.

Shareholder Class Action Lawsuits

On July 27, 2018, Plaintiff Ah Kit Too filed a putative class action lawsuit in the United States District Court in the Eastern District of New York against the Company and former officers, Robert Chioini and Thomas Klema (the "Too Complaint").

The Too Complaint is a federal securities class action purportedly brought on behalf of a class consisting of all persons and entities, other than Defendants, who purchased or otherwise acquired the publicly traded securities of the Company between March 16, 2018 and June 26, 2018.

The Too Complaint alleges that the Company and Messrs.

Chioini and Klema violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).

Specifically, the Too Complaint alleges that defendants filed reports with the SEC that contained purported inaccurate and misleading statements regarding the potential for the Company’s drug, Triferic, to quality for separate reimbursement status by the CMS.

On September 4, 2018, Plaintiff Robert Spock filed a similar putative class action lawsuit in the United States District Court in the Eastern District of New York against the Company and Messrs.

Chioini and Klema (the "Spock Complaint").

The Spock Complaint is a federal securities class action purportedly brought on behalf of a class consisting of persons who purchased the Company’s securities between November 8, 2017 and June 26, 2018.

This complaint alleges that the Company and Messrs.

Chioini and Klema violated the Exchange Act in that the Company was aware the CMS would not pursue the Company’s proposal for separate reimbursement for Triferic;

misstated reserves in the Company’s quarterly report for the first quarter of 2018;

had a material weakness its internal controls over financial reporting, which rendered those controls ineffective;

Chioini withheld material information regarding Triferic from the Company’s auditor, corporate counsel, and independent directors of the Board;

and, as a result of these alleged issues, statements about the Company’s business were materially false and misleading.

On September 25, 2018, four Company stockholders filed motions to appoint lead plaintiffs, lead counsel, and to consolidate the Ah Kit Too v.

Rockwell securities class action with the Spock v.

Rockwell securities class action.

On October 10, 2018, the court issued an order consolidating the two actions, appointing co-lead plaintiffs and co-lead counsel.

On December 10, 2018, lead Plaintiffs filed a consolidated amended complaint, which included the same allegations as the initial complaints and asserted claims on behalf of a putative class consisting of person who purchased the Company’s securities

between November 8, 2017 and June 26, 2018.

On February 18, 2019, the Company answered the consolidated amended complaint.

On August 7, 2019, all parties to the class action entered into a settlement of the consolidated class action.

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.

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 December 31, 2020.

The remainder of the settlement amount was funded by the Company’s director and officer insurance carrier.

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

Shareholder Derivative Actions

Plaintiff Bill Le Clair filed a Verified Stockholder Derivative Complaint on April 23, 2019 in Case No.

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 “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.

The Derivative Complaints allege the Individual Defendants breached duties by, among other things, permitting alleged misstatements to be made in public filings regarding the status of separate reimbursement for Triferic from CMS, the adequacy of the Company's reserves and internal controls.

The Derivative Complaints demand a jury trial, seeking monetary damages, corporate governance and internal procedure reform, injunctive relief on the Individual Directors’ trading activities, restitution, and attorneys’ fees.

The cases were consolidated.

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' settlement of the Derivative Complaints.

A hearing occurred before the court on August 10, 2020 and the court issued a final order approving the settlement.

The Company's director and officer insurance carrier has funded the settlement on behalf of the Company.

As a follow up to certain prior inquiries, the Company received a subpoena from the SEC during the Company’s quarter ended September 30, 2018 requesting, among other things, certain information and documents relating to the status of the Company’s request to the Centers for Medicare & Medicaid Services 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 Chief Executive Officer, Robert Chioini, and former Chief Financial Officer, Thomas Klema, in 2018.

On January 31, 2022, the Company received a letter from the United States Securities and Exchange Commission (the "Commission") concluding it’s investigation and stating that it does not intend to recommend an enforcement action by the Commission against the Company.

Loan and Security Agreement

On March 16, 2020, Rockwell Medical, Inc.

and Rockwell Transportation, Inc., as Borrowers, entered into a Loan and Security Agreement (the "Loan Agreement") with Innovatus Life Sciences Lending Fund I, LP ("Innovatus"), as collateral agent and the lenders party thereto, pursuant to which Innovatus, as a lender, agreed to make certain term loans to the Company in the aggregate principal amount of up to $ 35.0 million (the "Term Loans").

On March 16, 2020, Rockwell and Rockwell Transportation, Inc., as Borrowers, entered into a Loan and Security Agreement (the "Loan Agreement") with Innovatus Life Sciences Lending Fund I, LP ("Innovatus"), as collateral agent and the lenders party thereto, pursuant to which Innovatus, as a lender, agreed to make certain term loans to the Company in the aggregate principal amount of up to $ 35.0 million (the "Term Loans").

Funding of the first $ 22.5 million tranche was completed on March 16, 2020.

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For example, the Loan Agreement contains certain financial covenants relating to sales and, as a result of the ongoing COVID-19 pandemic and its effect on our sales activities, among other factors, we may not be able to satisfy such covenants in the future.

Based on our Triferic sales for the year ended December 31, 2020, we did not satisfy this covenant as of December 31, 2020.

The Company utilized the cure provision to regain compliance,

which Innovatus accepted.

As of December 31, 2020, the Company is 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).

If the Company is unable to comply with the covenants under the Loan Agreement, it would pursue all available cure options in order to regain compliance.

The Company previously failed to satisfy a revenue covenant for the period ended December 31, 2020 and then subsequently agreed to an appropriate remedy during the applicable cure period.

However, the Company may not be able to mutually agree with Innovatus on appropriate remedies to cure a future breach of a covenant, which could give rise to an event of default.

If the Company is unable to avoid an event of default, any required repayments could have an adverse effect on its liquidity.

The financial statements for December 31, 2021 have been prepared with the assumption that the Company will be able to agree to an appropriate remedy during the applicable cure period for any future breaches of operating covenants.

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).

The Warrants may be exercised on a cashless basis and are immediately exercisable through the seventh anniversary of the applicable funding date.

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The Company calculated the fair value of the warrant using the Black-Scholes model.

As of December 31, 2020, the outstanding balance of the Term Loan was $ 20.9 million, net of unamortized issuance costs and unaccreted discount of $ 1.6 million.

In September 2021, the Company entered into an amendment to the Loan Agreement in which the Company, in exchange for Innovatus lowering the sales covenants, agreed to (i) prepay an aggregate principal amount of $ 7,500,000 in ten installments commencing on December 1, 2021;

(ii) pay an additional prepayment premium of 5 % on prepaid amounts if the Company elects to prepay all outstanding term loans on or before September 24, 2023 and (iii) maintain minimum liquidity of no less than $ 5,000,000 if the aggregate principal amount of term loans is greater than $ 15,000,000 pursuant to the liquidity covenant in the Loan Agreement.

As of December 31, 2021, the Company was in compliance with its financial covenants and was not in compliance with its reporting covenant related to the delivery of the financial statements.

As disclosed in Note 18, the Company and Innovatus entered into an agreement to waive this non-compliance.

As of December 31, 2021, the outstanding balance of the Term Loan was $ 20.6 million, net of unamortized issuance costs and discount of $ 1.2 million.

The following table reflects the schedule of principal payments on the Term Loan as of December 31, 2021 (in thousands):

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In assessing the potential for realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized upon the generation of future taxable income during the periods in which those temporary differences become deductible.

We recognized no income tax expense or benefit for the years ended December 31, 2020, and 2019.

While we anticipate generating income within the next year or two, we expect to incur operating losses until our drug products are marketed and generating sufficient profits to offset our operating expenses.

Considered together with our limited history of operating income and our net losses in 2020 and 2019, management has placed a full valuation allowance against the net deferred tax assets as of December 31, 2020 and 2019.

The Company recognized no income tax expense or benefit for the years ended December 31, 2021, and 2020.

While the Company anticipates generating income within the next year or two, it expects to incur operating losses until its drug products are marketed and generating sufficient profits to offset its operating expenses.

Considered together with the Company's limited history of operating income and its net losses in 2021 and 2020, management has placed a full valuation allowance against the net deferred tax assets as of December 31, 2021 and 2020.

The portion of the valuation allowance resulting from excess tax benefits on share based compensation that would be credited directly to contributed capital if recognized in subsequent periods is $ 4.2 million.

We account for our uncertain tax positions in accordance with ASC 740‑10, Income Taxes and the amount of unrecognized tax benefits related to tax positions is not significant at December 31, 2020 and 2019.

We have not been under tax examination in any jurisdiction for the years ended December 31, 2020 and 2019.

Rockwell accounts for its uncertain tax positions in accordance with ASC 740‑10, Income Taxes and the amount of unrecognized tax benefits related to tax positions is not significant at December 31, 2021 and 2020.

The Company has not been under tax examination in any jurisdiction for the years ended December 31, 2021 and 2020.

Tax examination years of 2017 to 2020 remain open.

Subsequent Events

Effective January 19, 2021, as authorized by the Board of Directors of Rockwell Medical, Inc., the Company terminated the employment of Ajay Gupta, M.D.

as the Company’s Chief Scientific Officer.

On March 14, 2022, Raymond Pratt notified the Company of his decision to resign as the Company’s Chief Development Officer, effective as of March 25, 2022.

On March 20, 2022, John P.

McLaughlin notified the board of directors (the “Board”) of the Company of his intent to resign as a member of the Board and as Chairman of the Board effective as of April 1, 2022.

The size of the Board will be reduced to six directors effective upon Mr.

McLaughlin’s resignation.

The Board intends to appoint a replacement for Mr.

McLaughlin on the Audit Committee of the Board prior to the effective date of his resignation.

McLaughlin’s decision was

not the result of any dispute or disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

On March 31, 2022, the Company requested the Collateral Agent and Lenders to consent to the delivery to Collateral Agent and Lenders of its annual audited financial statements for the fiscal year 2021, as required pursuant to Debt Agreement, by April 15, 2022 as opposed to within 90 days of the December 31, 2021 and Collateral Agent and Lenders agreed to such request.

Amended Supply Agreement

The Company has been working to renegotiate certain terms of its supply contracts with the Company’s two largest customers in an effort to allow the Company to stabilize its concentrates business.

On April 6, 2022, the Company and DaVita Inc.

("DaVita") entered into an amendment (the "Amendment") to the Products Purchase Agreement, dated July 1, 2019 (the "Supply Agreement") under which the Company supplies DaVita with certain dialysis concentrates.

Under the Amendment, the Company and DaVita agreed to a price increase, effective May 1, 2022, as well as the pass-through of certain inflationary costs, determined on a quarterly basis.

Certain costs are subject to a cap.

The Amendment also requires the Company to implement certain cost containment and cost-cutting measures.

The Amendment contains certain covenants with respect to the Company’s ongoing operations, including a minimum cash covenant, and the requirement to raise $ 15 million in additional capital by June 30, 2022.

The Amendment also establishes a joint committee that will oversee certain efficiency and cost-savings activities to be undertaken by the Company.

Certain cost savings that are realized by the Company will be shared with DaVita in the manner set forth in the Amendment.

Securities Purchase Agreement

Also on April 6, 2022, the Company and DaVita entered into a Securities Purchase Agreement (the "SPA"), pursuant to which the Company will issue up to $ 15 million of preferred stock to DaVita.

The Company initially issue 7,500 shares of a newly designated series of preferred stock, which is designated “Series X Convertible Preferred Stock” (the "Series X Preferred Stock") for gross proceeds of $ 7,500,000 .

The Company will issue to DaVita an additional 7,500 shares of Series X Preferred Stock in a second closing (the "Second Tranche") for an additional $ 7,500,000 if the Company raises $ 15 million in additional capital by June 30, 2022.

The Series X Preferred Stock will be issued for a price $ 1,000 per share (the "Face Amount"), subject to accretion at a rate of 1 % per annum, compounded annually.

If the Company’s common stock trades above $ 2.00 for a period of 30 calendar days, the accretion will thereafter cease.

The Series X Convertible Preferred Stock is convertible to common stock at rate equal to the Face Amount, divided by a conversion price of $ 1.00 per share (subject to adjustment for stock splits, reverse stock splits and similar recapitalization events).

As a result, each share of Series X Preferred Stock will initially convert into 1,000 shares of common stock.

DaVita’s right to convert to common stock is subject to a beneficial ownership limitation, which is initially set at 9.9 % of the outstanding common stock, which limitation may be reset (not to exceed 19.9 %) at DaVita’s option and upon providing prior written notice to the Company.

The shares issued in the Second Tranche will have a lower conversion price if the Company raises capital through the issuance of convertible preferred stock prior to the closing of the Second Tranche and the conversion price of the securities sold in such preferred stock offerings is below $ 1.00 per share.

In addition, any debt financing is limited by the terms of our Securities Purchase Agreement with DaVita.

Specifically, until DaVita owns less than 50% of its investment, the Company may only incur additional debt in the form of a purchase money loan, a working capital line of up to $5 million or to refinance existing debt, unless DaVita consents.

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-K

Item 9A. Controls and Procedures