What changed in this filing

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Item 1. Financial Statements

2022-08-15 compared with 2022-05-16 · 272 added, 223 removed, 450 unchanged (52% of the section changed)

17 unchanged sentences

Total Assets $ 59,116 $ 48,574

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts Payable $ 2,942 $ 3,739

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Total Liabilities 38,971 46,039

Stockholders’ (Deficit) Equity:

Stockholders’ Equity:

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

no shares issued and outstanding at March 31, 2022 and December 31, 2021

15,000 and nil shares issued and outstanding at June 30, 2022 and December 31, 2021

Common Stock, $ 0.0001 par value;

170,000,000 shares authorized;

8,544,225 shares issued and outstanding at March 31, 2022 and December 31, 2021

9,407,296 and 8,544,225 shares issued and outstanding at June 30, 2022 and December 31, 2021

Additional Paid-in Capital 402,304 372,562

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Accumulated Other Comprehensive Income 49 52

Total Stockholders’ (Deficit) Equity ( 4,807 ) 2,535

Total Stockholders’ Equity 20,145 2,535

Total Liabilities and Stockholders’ Equity $ 59,116 $ 48,574

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(In Thousands, Except Shares and Per Share Amounts)

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

Net Sales $ 18,682 $ 15,137 $ 34,806 $ 30,611

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(In Thousands)

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

Net Loss $ ( 4,967 ) $ ( 8,400 ) $ ( 12,128 ) $ ( 16,152 )

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(Dollars in Thousands)

COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED

PREFERRED STOCK COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED

DEFICIT ACCUMULATED

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STOCKHOLDERS'

SHARES AMOUNT

SHARES AMOUNT SHARES AMOUNT

Balance as of January 1, 2022 — $ — 8,544,225 $ 1 $ 372,562 $ ( 370,080 ) $ 52 $ 2,535

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Balance as of March 31, 2022 — $ — 8,544,225 $ 1 $ 372,383 $ ( 377,242 ) $ 51 $ ( 4,807 )

Net Loss — — — — — ( 4,967 ) — ( 4,967 )

Foreign Currency Translation Adjustments — — — — — — ( 2 ) ( 2 )

Issuance of common stock, net of offering costs/Public Offering — — 844,613 — 14,893 — — 14,893

Issuance of common stock, net of offering costs/At-the-Market Offering — — 7,500 — 15 — — 15

Issuance of preferred stock, net of offering costs 15,000 — — — 14,916 — — 14,916

Vesting of Restricted Stock Units Issued, net of taxes withheld — — 10,958 — — — — —

Stock-based Compensation and modification expense — — — — 97 — — 97

Balance as of June 30, 2022 15,000 $ — 9,407,296 $ 1 $ 402,304 $ ( 382,209 ) $ 49 $ 20,145

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

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(Dollars in Thousands)

COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED

PREFERRED STOCK COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED

DEFICIT ACCUMULATED

1 unchanged sentence

STOCKHOLDERS'

SHARES AMOUNT

SHARES AMOUNT SHARES AMOUNT

Balance as of January 1, 2021 — $ — 8,506,651 $ 1 $ 371,518 $ ( 337,406 ) $ 57 $ 34,170

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Balance as of March 31, 2021 — $ — 8,509,047 $ 1 $ 371,282 $ ( 345,158 ) $ 53 $ 26,178

Net Loss — — — — — ( 8,400 ) — ( 8,400 )

Unrealized Loss on Available-for-Sale Investments — — — — — — ( 1 ) ( 1 )

Vesting of Restricted Stock Units Issued, net of taxes withheld — — 19,260 — ( 7 ) — — ( 7 )

Stock-based Compensation — — — — 433 — — 433

Balance as of June 30, 2021 — $ — 8,528,307 $ 1 $ 371,708 $ ( 353,558 ) $ 52 $ 18,203

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

3 unchanged sentences

(Dollars in Thousands)

For the three months ended March 31, 2022 and 2021

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

For the six months ended June 30, 2022 and 2021

Six Months Ended

June 30, 2022 Six Months Ended

June 30, 2021

Cash Flows From Operating Activities:

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Amortization of Debt Financing Costs and Accretion of Debt Discount 184 184

Loss on Disposal of Assets — 6

Realized Gain on Sale of Investments Available-for-Sale ( 4 ) —

(Gain) Loss on Disposal of Assets ( 2 ) 8

Realized (Gain) Loss on Sale of Investments Available-for-Sale ( 4 ) 1

Foreign Currency Translation Adjustment ( 3 ) 3

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Decrease in Prepaid and Other Assets 1,275 1,293

Increase (Decrease) in Accounts Payable 485 ( 848 )

(Decrease) Increase in Accounts Payable ( 797 ) 777

Decrease in Lease Liability ( 969 ) ( 839 )

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Purchase of Equipment ( 80 ) ( 281 )

Cash Provided By (Used In) Investing Activities 9,133 ( 512 )

Cash Provided By Investing Activities 9,082 1,135

Cash Flows From Financing Activities:

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Payments on Short Term Note Payable ( 439 ) —

Cash Used In Financing Activities ( 2,687 ) —

Decrease in Cash and Cash Equivalents ( 3,366 ) ( 13,007 )

Proceeds from the Issuance of Common Stock 15,016 —

Offering Costs from the Issuance of Common Stock ( 106 ) —

Proceeds from the Issuance of Preferred Shares 15,000 —

Offering Costs from the Issuance of Preferred Stock ( 85 ) —

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

Cash Provided by (Used In) Financing Activities 24,136 ( 6 )

Increase (Decrease) in Cash and Cash Equivalents 17,500 ( 16,304 )

Cash and Cash Equivalents at Beginning of Period 13,280 48,682

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Rockwell Medical, Inc.

("Rockwell Medical," "Rockwell", or the "Company") is a commercial-stage, biopharmaceutical company developing and commercializing our next-generation parenteral iron technology platform, ferric pyrophosphate citrate (“FPC”), which we believe has significant potential to lead to transformative treatments for iron deficiency in multiple disease states, that we believe could reduce healthcare costs and improve patients’ lives.

We are also one of the two major suppliers of life saving hemodialysis concentrate products to kidney dialysis clinics in the United States.

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

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

In late 2021, we filed an IND with the United States 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 the home infusion setting is a natural path for expansion of our platform as many of the patients suffer from diseases 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 this reputation, which is based on over 25 years of service to 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 Going Concern Considerations

Since inception, the Company 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 March 31, 2022, Rockwell had an accumulated deficit of approximately $ 377.2 million and a stockholders' deficit of $ 4.8 million.

As of March 31, 2022, Rockwell had approximately $ 9.9 million of cash and cash equivalents and working capital of $ 5.2 million.

Net cash used in operating activities for the three months ended March 31, 2022 was approximately $ 9.8 million.

The Company has experienced significant inflationary pressures in its dialysis concentrates business, particularly within the last six months, which have resulted in an accelerated operating loss associated with this business line.

These factors raise substantial doubt about the Company’s ability to continue as a going concern and depend, in part, on the degree of success in the Company's ability to address inflationary pressures affecting the 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.

Managements plans are described below.

On April 6, 2022, the Company entered into an amendment to one of its supply agreements to restructure 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 an investment of up to $ 15 million 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.

("Rockwell Medical," "Rockwell," or the "Company") is a commercial healthcare company focused on providing life-sustaining products for patients suffering from blood disorders and diseases associated with the kidney.

Rockwell is a revenue-generating business and the second largest supplier of acid and bicarbonate concentrates for dialysis patients in the United States.

Hemodialysis is the most common form of end-stage renal disease treatment and is usually performed at a freestanding outpatient dialysis center, at a hospital-based outpatient center, or at the patient’s home.

We manufacture our hemodialysis concentrates under cGMP regulations at our three facilities in Michigan, Texas, and South Carolina totaling approximately 175,000 square feet, from which we deliver these products to dialysis clinics throughout the United States with our own delivery fleet as well as third parties.

We also manufacture mixers that are used by clinics in our Iowa facility.

Rockwell has developed a core expertise in manufacturing and delivering hemodialysis concentrates, and has built a longstanding reputation for reliability, quality, and excellent customer service.

Rockwell commercializes Triferic in the United States, an FDA-approved treatment indicated for the replacement of iron to maintain hemoglobin in adult patients with hemodialysis-dependent chronic kidney disease.

Rockwell also has a number of partnerships with companies seeking to develop and commercialize Triferic outside the United States.

Rockwell is working closely with these partners to progress these programs.

We have an emerging portfolio of drug development candidates we are pursuing.

Rockwell is developing a next-generation, proprietary parenteral iron technology platform, Ferric Pyrophosphate Citrate (“FPC”).

We believe our FPC platform has several advantages over other parenteral iron therapies by immediately providing bioavailable iron for critical body processes once it is administered.

Rockwell is moving product candidates derived from this platform into the clinic to treat iron-deficiency anemia in the home infusion setting and for acute heart failure.

Together, with our dedicated employees and deep expertise in manufacturing and logistics and pharmaceutical development and commercialization.

Rockwell is well-positioned to realize sustainable business growth and support our mission to provide life-sustaining products for patients suffering from blood disorders and diseases associated with the kidney.

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Liquidity and Capital Resources

As of June 30, 2022, Rockwell had approximately $ 30.8 million of cash and cash equivalents and working capital of $ 28.7 million.

Net cash used in operating activities for the six months ended June 30, 2022 was approximately $ 15.7 million.

Based on the currently available working capital and capital raises described below, 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.

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, under which the Company supplies DaVita with certain dialysis concentrates.

Under the Amendment, the Company and DaVita agreed to certain price increases, 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 of $ 10 million, or we will be in default under the Products Purchase Agreement.

An event of default could result in termination of that agreement.

On April 6, 2022, the Company and DaVita entered into a Securities Purchase Agreement (the “SPA”), pursuant to which the Company issued $ 15 million of preferred stock to DaVita in two separate tranches.

The Company initially issued 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 $ 7.5 million.

On June 15, 2022, the Company issued to DaVita an additional 7,500 shares of Series X Preferred Stock in a second closing (the “Second Tranche”) for an additional $ 7.5 million.

The Second Tranche was conditioned upon the Company raising an additional $ 15 million in capital within a certain timeline, which took place on June 2, 2022.

On April 8, 2022, the Company entered into a sales agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co.

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333-259923) (the “Registration Statement”), which was originally filed with the Securities and Exchange Commission (“SEC”) on September 30, 2021 and declared effective by the SEC on October 8, 2021, the base prospectus contained within the Registration Statement, and a prospectus supplement that was filed with the SEC on April 8, 2022.

The Company has started to implement cost cutting measures as noted in previous filings focusing mainly within sales and marketing.

The Company expects it will require additional capital to sustain its operations and make the investments it

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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 or obtain additional equity or debt financing, the Company intends to implement further cost cutting measure which may include headcount reduction across multiple areas and reductions in general and administrative expenses.

Based on these plans, Management believes the substantial doubt about the Company’s ability to continue as a going concern has been alleviated.

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.

As of June 30, 2022, the Company sold 7,500 shares of its common stock pursuant to the Sales Agreement for gross proceeds of $ 15,135 , at a weighted average selling price of approximately $ 2.02 The Company paid $ 378 in commissions and offering fees.

Approximately $ 12.2 million remains available for sale under the ATM facility.

On May 30, 2022, the Company entered into a Securities Purchase Agreement (the “RD Purchase Agreement”) with the purchaser named therein (the “Purchaser”), pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “Offering”), 844,613 shares of its common stock at price of $ 1.39 per share, and prefunded warrants to purchase up to an aggregate of 7,788,480 shares of common stock (the “Pre-Funded Warrants” and the shares of common stock underlying the Pre-Funded Warrants, the “Warrant Shares”).

The purchase price of each Pre-Funded Warrant was equal to the price at which a share of common stock was sold to the public in the Offering, minus $ 0.0001 , and the exercise price of each Pre-Funded Warrant is $ 0.0001 per share.

Also on May 30, 2022, concurrently with the Offering, the Company entered into a Securities Purchase Agreement with the Purchaser (the “PIPE Purchase Agreement”) relating to the offering and sale (the “Private Placement”) of warrants to purchase up to a total of 9,900,990 shares of common stock and pre-funded warrants to purchase up to a total of 1,267,897 shares of common stock (the “PIPE Warrants”).

Each warrant was sold at a price of $ 0.125 per underlying warrant share and is exercisable at an exercise price of $ 1.39 per share.

The Offering and the Private Placement closed on June 2, 2022.

The net proceeds to the Company from the Offering and the Private Placement were approximately $ 14.9 million, after deducting fees and expenses.

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 attempts to obtain additional debt or equity financing, the Company cannot assume 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.

As previously reported, on June 11, 2021, the Company received written notice (the "Notification Letter") from the Nasdaq Stock Market ("Nasdaq") notifying the Company 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.

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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.

On December 9, 2021, the Company received a written notice from Nasdaq indicating 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.

Also on December 9, 2021, the Company received written notice that Nasdaq has determined the Company was 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.

On May 13, 2022, the Company effected a reverse stock split in order to regain compliance with the minimum bid price requirement (see Note 3 for further detail).

On May 13, 2022, the Company effected a reverse stock split and on May 31, 2022 Nasdaq notified the Company it had regained compliance with the minimum bid price requirement (see Note 3 for further detail).

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

As of the date of this report, the Company believes it will either be able to satisfy such covenants or, in the event of a breached covenant, exercise cure provisions to avoid an event of default.

If Rockwell is unable to avoid an event of default, any required repayments could have an adverse effect on its liquidity (See Note 14 for further detail).

The COVID-19 pandemic and resulting global disruptions, particularly in the supply chain and labor market, among other areas, have adversely affected our business and operations, including, but not limited to, our sales and marketing efforts and our research and development activities, our plant and transportation operations and the operations of third parties upon whom we rely.

Further, any vaccine hesitancy among our labor force could disrupt our business if workers become ill or need to quarantine due to illness or exposure to the virus.

As of the date of this report, the Company is in compliance with all covenants (See Note 14 for further detail).

The COVID-19 pandemic and resulting domestic and global disruptions, particularly in the supply chain and labor market, among other areas, have adversely affected our business and operations, including, but not limited to, our sales and marketing efforts and our research and development activities, our plant and transportation operations and the operations of third parties upon whom we rely.

The Company's international business development activities may also continue to be negatively impacted by COVID-19.

The COVID-19 pandemic, the domestic and international surge in infections and resulting global disruptions have caused significant volatility in financial and credit markets.

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

Rockwell has utilized a range of financing methods to fund its operations in the past;

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

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

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

GAAP”) for interim financial information and pursuant to

ROCKWELL MEDICAL, INC.

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Notes to Condensed Consolidated Financial Statements

the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.

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

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

GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.

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

The condensed consolidated balance sheet at March 31, 2022, condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021, condensed consolidated statements of comprehensive loss for the three months ended March 31, 2022 and 2021, condensed consolidated statement of changes in stockholders' equity for the three months ended March 31, 2022 and 2021, and condensed consolidated statements of cash flows for the three months ended March 31, 2022 and 2021 are unaudited, but include all adjustments, consisting of normal recurring adjustments, the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The results for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022 or for any future interim period.

The condensed consolidated balance sheet at June 30, 2022, condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021, condensed consolidated statements of comprehensive loss for the three and six months ended June 30, 2022 and 2021, condensed consolidated statement of changes in stockholders' equity for the three and six months ended June 30, 2022 and 2021, and condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 are unaudited, but include all adjustments, consisting of normal recurring adjustments, the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The results for the three and six months ended June 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022 or for any future interim period.

The condensed consolidated balance sheet at December 31, 2021 has been derived from audited financial statements, however, it does not include all of the information and notes required by U.S.

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The reverse stock split resulted in an adjustment to the Series X convertible preferred stock conversion prices to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion.

All share and per share data in these condensed consolidated financial statements and related notes hereto have been retroactively adjusted to the account for the effect of the reverse stock split for the three month periods ended March 31, 2022 and 2021, respectively, and the balance sheet at March 31, 2022 and December 31, 2021.

All share and per share data in these condensed consolidated financial statements and related notes hereto have been retroactively adjusted to account for the effect of the reverse stock split for the three and six month periods ended June 30, 2022 and 2021, respectively, and the balance sheet at June 30, 2022 and December 31, 2021.

Use of Estimates

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Loss Per Share

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Notes to Condensed Consolidated Financial Statements

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

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

Diluted net loss per share of common stock reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity unless inclusion of such shares would be anti-dilutive.

The Company has only incurred losses, therefore, basic and diluted net loss per share is the same.

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

As of March 31,

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents.

Diluted net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period determined using the treasury-stock and if-converted methods.

For purposes of the diluted net loss per share calculation, common stock warrants, unvested restricted stock units and stock options are considered to be potentially dilutive securities but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive, and therefore, basic and diluted net loss per share were the same for all periods presented.

The following table sets forth the outstanding potentially dilutive securities that have been excluded from the calculation of diluted net loss per share for the six months ended June 30, 2022 and 2021, respectively, because to do so would be anti-dilutive (in common equivalent shares):

As of June 30,

Options to purchase common stock 423,317 551,891

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Unvested restricted stock units 125,000 31,146

Preferred stock conversion to common stock 1,363,636 —

Warrants to purchase common stock 21,359,809 2,402,442

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The Company continually assesses new accounting pronouncements to determine their applicability.

When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a review to determine the consequences of the change to its consolidated financial statements and assures that there are sufficient controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change.

When it is determined a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a review to determine the consequences of the change to its consolidated financial statements and assures there are sufficient controls in place to ascertain the Company’s consolidated financial statements properly reflect the change.

In August 2020, the FASB issued ASU No.

2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which simplifies the accounting for convertible instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or do not result in substantial premiums accounted for as paid-in capital.

By removing the separation model, a convertible debt instrument will be reported as a single liability instrument with no separate accounting for embedded conversion features.

This new standard also removes certain settlement conditions required for contracts to qualify for equity classification and simplifies the diluted earnings per share calculations by requiring an entity use the if-converted method and the effect of potential share settlement be included in diluted earnings per share calculations.

This new standard will be effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.

The Company is currently assessing the impact of adopting this standard on the consolidated financial statements.

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Revenue Recognition

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

The consideration, including any discounts, is allocated between separate

ROCKWELL MEDICAL, INC.

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Notes to Condensed Consolidated Financial Statements

products and services based on their stand-alone selling prices.

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

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

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

In instances where regulatory approval of the product has not been established and the Company does not have sufficient experience with the foreign regulatory body to conclude that regulatory approval is probable, the revenue for the performance obligation is recognized over the term of the license agreement (over time recognition).

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.

In instances where regulatory approval of the product has not been established and the Company does not have sufficient experience with the foreign regulatory body to conclude regulatory approval is probable, the revenue for the performance obligation is recognized over the term of the license agreement (over time recognition).

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

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

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("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.

("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 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 the estimated product sales under the agreement occur.

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

6 unchanged sentences

In thousands of U.S.

dollars ($) Three Months Ended March 31, 2022

dollars ($) Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

Products By Geographic Area Total U.S.

Rest of World Total U.S.

Rest of World

8 unchanged sentences

Net Revenue $ 18,682 $ 16,595 $ 2,087 $ 34,806 $ 31,039 $ 3,767

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

In thousands of U.S.

dollars ($) Three Months Ended March 31, 2021

dollars ($) Three Months Ended June 30, 2021 Six Months Ended June 30, 2021

Products By Geographic Area Total U.S.

Rest of World Total U.S.

Rest of World

11 unchanged sentences

In thousands of U.S.

dollars ($) March 31, 2022 December 31, 2021

dollars ($) June 30, 2022 December 31, 2021

Receivables, which are included in "Trade and other receivables" $ 8,090 $ 5,913

Contract liabilities $ 7,274 $ 8,157

There were no impairment losses recognized related to any receivables arising from the Company’s contracts with customers for the three months ended March 31, 2022 and 2021.

For the three months ended March 31, 2022 and March 31, 2021, the Company did not recognize any material bad-debt expense.

There were no material contract assets recorded on the condensed consolidated balance sheet as of March 31, 2022 and December 31, 2021.

The Company does not generally accept returns of its concentrate products and no material reserve for returns of concentrate products was established as of March 31, 2022 or December 31, 2021.

There were no impairment losses recognized related to any receivables arising from the Company’s contracts with customers for the three and six months ended June 30, 2022 and 2021.

For the three and six months ended June 30, 2022 and June 30, 2021, the Company did not recognize any material bad-debt expense.

There were no material contract assets recorded on the condensed consolidated balance sheet as of June 30, 2022 and December 31, 2021.

The Company does not generally accept returns of its concentrate products and no material reserve for returns of concentrate products was established as of June 30, 2022 or December 31, 2021.

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

Transaction price allocated to remaining performance obligations

For the three months ended March 31, 2022, revenue recognized from performance obligations related to prior periods was not material.

Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, totaled $ 7.6 million as of March 31, 2022.

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.

For the three and six months ended June 30, 2022, revenue recognized from performance obligations related to prior periods was not material.

Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced, and contracts with variable consideration related to undelivered performance obligations, totaled $ 7.3 million as of June 30, 2022.

The amount relates primarily to upfront payments and consideration received from customers 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 having original expected durations of one year or less.

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

Unfulfilled minimum commitments related to the Baxter Agreement are product sales of $ 4.8 million as of March 31, 2022, which is amortized ratably through expiration of the Baxter Agreement on October 2, 2024.

Unfulfilled minimum commitments related to the Baxter Agreement are product sales of $ 4.3 million as of June 30, 2022, which is amortized ratably through expiration of the Baxter Agreement on October 2, 2024.

ROCKWELL MEDICAL, INC.

2 unchanged sentences

Investments - Available-for-Sale

As of March 31, 2022, all investment available-for-sale securities have been liquidated.

As of June 30, 2022, all investment available-for-sale securities have been liquidated.

Investments available-for-sale consisted of the following as of December 31, 2021 (table in thousands):

5 unchanged sentences

As of December 31, 2021, the amortized cost and estimated fair value of our available-for-sale securities were due within one year.

Components of inventory, net of reserves, as of March 31, 2022 and December 31, 2021 are as follows (table in thousands):

Components of inventory, net of reserves, as of June 30, 2022 and December 31, 2021 are as follows (table in thousands):

2022 December 31,

3 unchanged sentences

Total $ 6,652 $ 5,599

As of March 31, 2022, the Company classified $ 1.5 million of inventory as non-current, all of which was related to Triferic or the active pharmaceutical ingredient and raw materials for Triferic.

As of March 31, 2022, the total Triferic inventory net of reserve was $ 1.6 million.

As of June 30, 2022, the Company classified $ 1.5 million of inventory as non-current, all of which was related to TRIFERIC ® or the active pharmaceutical ingredient and raw materials for TRIFERIC ® .

As of June 30, 2022, the total TRIFERIC ® inventory net of reserve was $ 1.5 million.

The $ 1.5 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 an estimated useful life extending through 2023, and $ 0.9 million of raw materials for TRIFERIC ® with an estimated useful life of 25 years.

Property and Equipment

As of March 31, 2022 and December 31, 2021, the Company’s property and equipment consisted of the following (table in thousands):

As of June 30, 2022 and December 31, 2021, the Company’s property and equipment consisted of the following (table in thousands):

2022 December 31,

5 unchanged sentences

Property and Equipment, net $ 2,289 $ 2,486

Depreciation expense for three months ended June 30, 2022 and 2021 was $ 0.1 million and $ 0.2 million, respectively.

Depreciation expense for six months end June 30, 2022 and 2021 was $ 0.3 million and $ 0.4 million, respectively.

ROCKWELL MEDICAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

Depreciation expense for three months ended March 31, 2022 and 2021 was $ 0.1 million and $ 0.2 million, respectively.

Accrued Liabilities

Accrued liabilities as of March 31, 2022 and December 31, 2021 consisted of the following (table in thousands):

Accrued liabilities as of June 30, 2022 and December 31, 2021 consisted of the following (table in thousands):

2022 December 31,

8 unchanged sentences

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.

The Company recognized revenue of approximately $ 0.5 million for each of the three months ended March 31, 2022 and 2021.

Deferred revenue related to the Baxter Agreement totaled $ 4.8 million as of March 31, 2022 and $ 5.2 million as of December 31, 2021.

The Company recognized revenue of approximately $ 0.5 million and $ 1.0 million for each of the three and six months ended June 30, 2022 and 2021, respectively.

Deferred revenue related to the Baxter Agreement totaled $ 4.3 million as of June 30, 2022 and $ 5.2 million as of December 31, 2021.

In 2016, the Company entered into a distribution agreement with Wanbang (the "Wanbang 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 $ 0.1 million during each of the three months ended March 31, 2022 and 2021.

Deferred revenue related to the Wanbang Agreement totaled $ 2.5 million as of March 31, 2022 and December 31, 2021.

The Company recognized revenue of approximately $ 0.1 million during each of the three and six months ended June 30, 2022 and 2021.

Deferred revenue related to the Wanbang Agreement totaled $ 2.4 million as of June 30, 2022 and $ 2.5 million as of December 31, 2021.

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.

In consideration for the license, the Company received an upfront fee of $ 0.1 million, and will be eligible for milestone payments and royalties on net sales.

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

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

In consideration for the license, the Company received an upfront fee of $ 0.1 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 $ 2,500 for each of the three months ended March 31, 2022 and 2021.

Deferred revenue related to the Sun Pharma Agreement totaled $ 77,500 and $ 80,000 as of March 31, 2022 and December 31, 2021, respectively.

The Company recognized revenue of approximately $ 2,500 and $ 5,000 for each of the three and six months ended June 30, 2022 and 2021, respectively.

Deferred revenue related to the Sun Pharma Agreement totaled $ 75,000 and $ 80,000 as of June 30, 2022 and December 31, 2021, 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.

In consideration for the license, the Company received an upfront fee of $ 0.2 million, and will be eligible for milestone payments and royalties on net sales.

A Joint Alliance Committee, comprised of members from the Company and Jeil Pharma, will guide the development and execution for Triferic (dialysate) in South Korea.

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 Company recognized revenue of $ 2,500 for each of the three months ended March 31, 2022 and 2021.

Deferred revenue related to the Jeil Pharma Agreement totaled approximately $ 0.2 million as of March 31, 2022 and December 31, 2021.

In consideration for the license, the Company received an upfront fee of $ 0.2 million.

In May 2022, Jeil Pharma obtained regulatory approval in South Korea and paid the Company $ 0.2 million in consideration of reaching the milestone.

The upfront fee and milestone payments were recorded as deferred revenue and are being recognized as revenue based on the agreement term.

The Company recognized revenue of $ 2,500 and $ 7,800 for the three and six months ended June 30, 2022, respectively, and $ 2,500 and $ 5,000 for the three and six months ended June 30, 2021, respectively.

Deferred revenue related to the Jeil Pharma Agreement totaled approximately $ 0.4 million and $ 0.2 million as of June 30, 2022 and December 31, 2021 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

In consideration for the license, the Company received an upfront fee of $ 0.15 million.

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

The Company recognized revenue of $ 3,750 and $ 7,500 for the three and six months ended June 30, 2022 and 2021, respectively.

Deferred revenue related to the Drogsan Agreements totaled approximately $ 0.14 million as of each of June 30, 2022 and December 31, 2021.

ROCKWELL MEDICAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

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 $ 3,750 and nil for the three months ended March 31, 2022 and 2021, respectively.

Deferred revenue related to the Drogsan Agreements totaled approximately $ 0.14 million as of March 31, 2022 and December 31, 2021.

Stockholders’ Equity

Reverse Stock Split

On May 9, 2022, the stockholders of the Company authorized our Board of Directors to effect a reverse stock split of all outstanding shares of common stock.

The Board of Directors subsequently approved the implementation of a reverse stock split as a ratio of one-for-eleven shares, which became effective on May 13, 2022.

The Company’s outstanding stock options were also adjusted to reflect the one-for-eleven reverse stock split of the Company’s common stock.

Outstanding stock options were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased.

Preferred Stock

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

("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.

On April 6, 2022, the Company issued 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 $ 7.5 million.

The Company will issue an additional 7,500 shares of Series X Preferred Stock to DaVita in a second closing (the "Second Tranche") for an additional $ 7.5 million 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.

On April 6, 2022, the Company and DaVita entered into the SPA, which provided for the issuance by the Company of up to $ 15 million of preferred stock to DaVita.

On April 6, 2022, the Company issued 7,500 shares of Series X Preferred Stock for gross proceeds of $ 7.5 million.

On June 2, 2022, the Company met the conditions for the Second Tranche through a Registered Direct and Private Placement Offering by raising $ 15 million in additional capital.

As a result, on June 16, 2022 the Company issued an additional 7,500 shares of the Series X Preferred Stock to DaVita for gross proceeds of $ 7.5 million.

The Series X Preferred Stock was issued for a price of $ 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 $ 22.00 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 $ 11.00 per share (subject to adjustment for stock splits, reverse stock splits and similar recapitalization events).

The Series X Convertible Preferred Stock is convertible to common stock at rate equal to the Face Amount, divided by a conversion price of $ 11.00 per share (subject to adjustment for future stock splits, reverse stock splits and similar recapitalization events).

As a result, each share of Series X Preferred Stock will initially convert into approximately 91 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 $ 11.00 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.

As of March 31, 2022 and December 31, 2021, there were 2,000,000 shares of preferred stock, $ 0.0001 par value per share, authorized and no shares of preferred stock issued and outstanding.

As of March 31, 2022 and December 31, 2021, there were 170,000,000 shares of common stock, $ 0.0001 par value per share, authorized and 8,544,225 and 8,544,225 shares issued and outstanding, respectively.

Stock-Based Compensation

The Company recognized total stock-based compensation expense during the three months ended March 31, 2022 and 2021 as follows (table in thousands):

Additionally, the Series X Preferred Stock has a deemed liquidation event and redemption clause which could be triggered if the sale of all or substantially all of the Company's assets relating to the Company's dialysis concentrates business line.

Since the Series X Preferred Stock may be redeemed if certain assets are sold at the option of the holder, but is not mandatorily redeemable, the preferred stock has been classified as permanent equity and initially recognized at fair value of $ 15 million (the proceeds on the date of issuance) less issuance costs of $ 0.1 million, resulting in an initial value of $ 14.9 million.

The Company will assess at each reporting period whether conditions have changed to now meet the mandatorily redemptive definition which could trigger liability classification.

As of June 30, 2022 and December 31, 2021, there were 2,000,000 shares of preferred stock, $ 0.0001 par value per share, authorized and 15,000 and nil shares of preferred stock issued and outstanding, respectively.

As of June 30, 2022 and December 31, 2021, there were 170,000,000 shares of common stock, $ 0.0001 par value per share, authorized and 9,407,296 and 8,544,225 shares issued and outstanding, respectively.

Controlled Equity Offering

On April 8, 2022, the Company entered into the Sales Agreement with Cantor Fitzgerald & Co.

as Agent, pursuant to which the Company may offer and sell from time to time up to $ 12,200,000 of shares of Company’s common stock through the Agent.

The offering and sale of such shares has been registered under the Securities Act of 1933, as amended, pursuant to the Company’s Registration Statement on Form S-3 (File No.

333-259923) (the “Registration Statement”), which was originally filed with the SEC on September 30, 2021 and declared effective by the SEC on October 8, 2021, the base prospectus contained within the Registration Statement, and a prospectus supplement that was filed with the SEC on April 8, 2022.

In May 2022, the Company sold 7,500 shares of its common stock pursuant to the Sales Agreement for gross proceeds of $ 15,135 , at a weighted average selling price of approximately $ 2.02 .

The Company paid $ 378 in commissions and offering fees related to the sale of shares of common stock.

Under the RD Purchase Agreement and the PIPE Purchase Agreement discussed below, the Company has agreed not to make any sales under any at-the-market offering facility, including pursuant to the Sales Agreement, until at least January 1, 2023 (or until such later time when the Company is permitted to make additional sales under Instruction I.B.6 to Form S-3).

Registered Direct Offering

On May 30, 2022, the Company entered into the RD Purchase Agreement with the Purchaser named therein, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “Offering”), 844,613 shares of its common stock at price of $ 1.39 per share, and pre-funded warrants to purchase up to an aggregate of 7,788,480 shares of common stock (the “Pre-Funded Warrants” and the shares of common stock underlying the Pre-Funded Warrants, the “Warrant Shares”).

The purchase price of each Pre-Funded Warrant is equal to the price at which a share of common stock was sold to the public in the Offering, minus $ 0.0001 , and the exercise price of each Pre-Funded Warrant is $ 0.0001 per share.

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

The RD Purchase Agreement contains customary representations and warranties and agreements of the Company and the Purchaser and customary indemnification rights and obligations of the parties.

Private Placement

Also on May 30, 2022, concurrently with the Offering, the Company entered into the PIPE Purchase Agreement relating to the offering and sale (the “Private Placement”) of warrants to purchase up to a total of 9,900,990 shares of common stock and pre-funded warrants to purchase up to a total of 1,267,897 shares of common stock (the “PIPE Warrants”).

Each warrant was sold at a price of $ 0.125 per underlying warrant share and is exercisable at an exercise price of $ 1.39 per share.

In connection with the Private Placement, the Company entered into a Registration Rights Agreement with the Purchaser, dated as of June 2, 2022 (the “RRA”).

Pursuant to the RRA, the Company was required to prepare and file a registration statement with the SEC no later than July 1, 2022, and to use its reasonable best efforts to have the registration statement declared effective as promptly as possible, subject to certain specified penalties if timely effectiveness is not achieved.

The Company filed a registration statement on June 22, 2022 which became effective on July 5, 2022.

The Offering and the Private Placement closed on June 2, 2022.

The net proceeds to the Company from the Offering and the Private Placement were approximately $ 14.9 million, after deducting fees and expenses.

Subject to certain ownership limitations, the PIPE Warrants are exercisable upon issuance.

The Company has accounted for the common stock related to the Offering and Private Placement as equity on the accompanying consolidated balance sheets as of June 30, 2022.

The amount allocated to common stock was $ 2.0 million.

This allocation is equal to the total proceeds of $ 15.0 million less the amount allocated to Warrants of $ 12.9 million and is also net of the direct and incremental costs associated with the Offering and Private Placement of $ 0.1 million.

The Black-Scholes pricing model was used to calculate the value of Warrants relating to the Offering and Private Placement.

ROCKWELL MEDICAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

Stock-Based Compensation

The Company recognized total stock-based compensation expense during the three and six months ended June 30, 2022 and 2021 as follows (table in thousands):

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Service-based awards:

1 unchanged sentence

Stock option awards 72 344 272 735

98 422 309 917

Performance-based awards:

3 unchanged sentences

Total $ 98 $ 433 $ ( 82 ) $ 197

Restricted Stock

A summary of the Company’s restricted stock awards during the three months ended March 31, 2022 is as follows:

Performance Based Restricted Stock

A summary of the Company’s restricted stock awards during the six months ended June 30, 2022 is as follows:

Number of Shares Weighted Average

1 unchanged sentence

Forfeited ( 6,227 ) $ 62.70

Unvested at March 31, 2022 891 $ 62.70

A summary of the Company’s restricted stock awards during the three months ended March 31, 2021 is as follows:

Unvested at June 30, 2022 891 $ 62.70

A summary of the Company’s restricted stock awards during the six months ended June 30, 2021 is as follows:

Number of Shares Weighted Average

1 unchanged sentence

Forfeited ( 6,227 ) $ 62.70

Unvested at March 31, 2021 7,118 $ 62.70

Unvested at June 30, 2021 7,118 $ 62.70

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

As of March 31, 2022, unvested restricted stock awards of 891 were related to performance-based awards.

As of June 30, 2022, unvested restricted stock awards of 891 were related to performance-based awards.

The forfeited performance-based restricted stock awards of 6,227 was due to the resignation of the Company's Chief Development Officer on March 25, 2022.

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

As of June 30, 2021, unvested restricted stock awards of 7,118 were related to performance-based awards.

The forfeited performance-based restricted stock awards of 6,227 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.

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Service-Based Restricted Stock Units

A summary of the Company’s service-based restricted stock units during the three months ended March 31, 2022 is as follows:

A summary of the Company’s service-based restricted stock units during the six months ended June 30, 2022 is as follows:

Number of Shares Weighted Average

Unvested at January 1, 2022 29,289 $ 12.87

Granted 125,000 1.47

Vested ( 23,515 ) 11.33

Forfeited ( 5,774 ) 19.00

Unvested at March 31, 2022 28,066 $ 11.11

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

A summary of the Company’s service-based restricted stock units during the three months ended March 31, 2021 is as follows:

Unvested at June 30, 2022 125,000 $ 1.47

A summary of the Company’s service-based restricted stock units during the six months ended June 30, 2021 is as follows:

Number of Shares Weighted Average

3 unchanged sentences

Forfeited ( 20,134 ) 26.18

Unvested at March 31, 2021 21,612 $ 27.39

Unvested at June 30, 2021 31,146 $ 12.87

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

The vesting periods range from 1 to 3 years.

Stock-based compensation expense of $ 12,000 and $ 104,000 was recognized for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the unrecognized stock-based compensation expense was $ 0.1 million, which is expected to be recognized over an estimated weighted average remaining term of less than 1 year.

Stock-based compensation expense of $ 25,554 and $ 37,417 was recognized for the three and six months ended June 30, 2022, respectively.

Stock-based compensation expense of $ 0.1 million and $ 0.2 million was recognized for the three and six months ended June 30, 2021, respectively.

As of June 30, 2022, the unrecognized stock-based compensation expense was $ 0.1 million, which is expected to be recognized over an estimated weighted average remaining term of less than 1 year.

Service-Based Stock Options

The fair value of the service-based stock options granted for the three months ended March 31, 2022 were based on the following assumptions:

The fair value of the service-based stock options granted for the six months ended June 30, 2022 were based on the following assumptions:

Exercise price $ 4.12

2 unchanged sentences

Term (years) 6.5

A summary of the Company’s service-based stock option activity for the three months ended March 31, 2022 is as follows:

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

A summary of the Company’s service-based stock option activity for the six months ended June 30, 2022 is as follows:

Options Weighted

6 unchanged sentences

Expired ( 81,695 ) 83.32 — —

Outstanding at March 31, 2022 511,116 $ 32.01 7.0 $ 1

Exercisable at March 31, 2022 236,720 $ 52.14 5.0 $ —

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

A summary of the Company’s service-based stock option activity for the three months ended March 31, 2021 is as follows:

Outstanding at June 30, 2022 423,317 $ 23.03 7.8 $ —

Exercisable at June 30, 2022 227,412 $ 31.19 7.2 $ —

A summary of the Company’s service-based stock option activity for the six months ended June 30, 2021 is as follows:

Options Weighted

6 unchanged sentences

Expired ( 115,141 ) 80.85 — —

Outstanding at March 31, 2021 490,235 $ 48.95 6.1 $ —

Exercisable at March 31, 2021 251,180 $ 73.48 3.2 $ —

Outstanding at June 30, 2021 517,800 $ 33.77 7.8 $ 5,000

Exercisable at June 30, 2021 217,040 $ 57.75 5.8 $ —

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

During the three months ended March 31, 2022, the Company granted stock options to purchase up to 909 shares of common stock to certain employees.

During the three months ended March 31, 2022, 14,839 shares were forfeited and 3,545 shares expired.

During the six months ended June 30, 2022, the Company granted stock options to purchase up to 909 shares of common stock to certain employees.

During the six months ended June 30, 2022, 24,488 shares were forfeited and 81,695 shares expired.

Forfeitures are recorded in the period of occurrence;

compensation expense is adjusted accordingly.

Stock-based compensation expense recognized for service-based stock options was $ 0.2 million and $ 0.4 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, total stock-based compensation expense related to unvested options not yet recognized totaled approximately $ 1.0 million, which is expected to be recognized over an estimated weighted average remaining term of 3.1 years.

Stock-based compensation expense recognized for service-based stock options was $ 0.1 million and $ 0.3 million for the three and six months ended June 30, 2022, respectively.

Stock-based compensation expense recognized for service-based stock options was $ 0.3 million and $ 0.7 million for the three and six months ended June 30, 2021, respectively.

As of June 30, 2022, total stock-based compensation expense related to unvested options not yet recognized totaled approximately $ 0.7 million, which is expected to be recognized over an estimated weighted average remaining term of 3.3 years.

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Licensing Agreements

4 unchanged sentences

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 of March 31, 2022, the Company has accrued $ 86,400 relating to certain IP reimbursement expenses and certain sublicense royalty fees and is included within accrued liabilities on the condensed consolidated balance sheet.

As of June 30, 2022, the Company has accrued $ 77,900 relating to certain IP reimbursement expenses and certain sublicense royalty fees and is included within accrued liabilities on the condensed consolidated balance sheet.

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

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

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

exists a valid claim, on a country-by-country basis, and be no less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis.

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

7 unchanged sentences

The Company shall also pay to Charak a percentage of any sublicense income received during the term of the TPN Agreement, which amount shall not be less than a minimum royalty on 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.

The potential milestone payments are not yet considered probable, and no milestone payments have been accrued at March 31, 2022.

The potential milestone payments are not yet considered probable, and no milestone payments have been accrued at June 30, 2022.

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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 .

The lease terms range from monthly to six years .

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.

In addition, Rockwell occupied 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.

At March 31, 2022, the Company had operating and finance lease liabilities of $ 7.4 million and right-of-use assets of $ 7.2 million, which are included in the consolidated balance sheet.

At June 30, 2022, the Company had operating and finance lease liabilities of $ 6.9 million and right-of-use assets of $ 6.7 million, which are included in the consolidated balance sheet.

At December 31, 2021, the Company had operating lease liabilities of $ 7.9 million and right-of-use assets of $ 7.7 million, which are included in the consolidated balance sheet.

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

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

Operating leases

29 unchanged sentences

Operating and finance lease liabilities $ 4,028 $ 2,854

Loan and Security Agreement

On March 16, 2020, the Company 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.

The Company is no longer eligible to draw on a second tranche of $ 5.0 million, which was tied to the achievement of certain milestones by a specific date.

The Company may be eligible to draw on a third tranche of $ 7.5 million

ROCKWELL MEDICAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

upon the achievement of certain additional milestones, including the achievement of certain Triferic sales thresholds.

Loan and Security Agreement

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

The Company is no longer eligible to draw on a second tranche of $ 5.0 million or a third tranche of $ 7.5 million, which were tied to the achievement of certain milestones by a specific date.

Net draw down proceeds were $ 21.2 million with closing costs of $ 1.3 million.

8 unchanged sentences

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

For the three months ended March 31, 2022 and 2021, interest expense amounted to $ 0.4 million and $ 0.6 million, respectively.

For the three months ended June 30, 2022 and 2021, interest expense amounted to $ 0.4 million and $ 0.6 million, respectively.

For the six months ended June 30, 2022 and 2021, interest expense amounted to $ 0.8 million and $ 1.2 million, respectively.

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

10 unchanged sentences

On March 31, 2022, the Collateral Agent and Lenders consented to the delivery to Collateral Agent and Lenders of its annual audited financial statements for the fiscal year 2021 by April 15, 2022 as opposed to within 90 days of December 31, 2021, as required pursuant to Loan Agreement.

As of March 31, 2022, the Company was in compliance with all covenants under the Loan Agreement.

As of March 31, 2022, the outstanding balance of the Term Loan was $ 18.4 million, net of unamortized issuance costs and discount of $ 1.1 million.

The following table reflects the schedule of principal payments on the Term Loan as of March 31, 2022 (in thousands):

As of June 30, 2022, the Company was in compliance with all covenants under the Loan Agreement.

As of June 30, 2022, the outstanding balance of the Term Loan was $ 15.5 million, net of unamortized issuance costs and discount of $ 1.0 million.

The following table reflects the schedule of principal payments on the Term Loan as of June 30, 2022 (in thousands):

Principal Payments

ROCKWELL MEDICAL, INC.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

Principal Payments

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.

On June 2, 2022, the Company entered into a short-term note payable for $ 1.5 million, bearing interest at 5.40 % per annum to finance various insurance policies.

Principal and interest payments related to this note began on July 3, 2022 and were paid on a straight-line amortization over 9 months with the final payment due on March 3, 2023.

As of March 31, 2022, the Company's insurance note payable was paid in full.

As of June 30, 2022, the Company's insurance note payable balance was $ 1.5 million.

Subsequent Events

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 entered into an amendment (the "Amendment") to the Products Purchase Agreement, dated July 1, 2019 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.

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

On April 8, 2022, the Company entered into a sales agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co.

(the “Agent”), pursuant to which the Company may offer and sell from time to time up to $ 12,200,000 of shares of Company’s common stock through the Agent.

The offering and sale of such shares has been registered under the Securities Act of 1933, as amended, pursuant to the Company’s Registration Statement on Form S-3 (File No.

Reverse Stock Split

On May 9, 2022, the Company's Board of Directors approved the reverse stock split at the ratio of 1-for-11 shares.

The reverse stock split was approved by the Company's stockholders at the annual meeting of stockholders held on May 9, 2022 at a ratio ranging from 1-for-2 up to a ratio of 1-for-15, such ratio to be determined by the Board of Directors and included in a public announcement.

The reverse stock split will became effective at 12:01 a.m.

Eastern Time on May 13, 2022.

Rockwell Medical's common stock is expected to begin trading on the Nasdaq Capital Market on a split-adjusted basis on May 13, 2022.

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

The reverse stock split is primarily intended to bring the Company into compliance with the minimum bid price requirements for maintaining its listing on the Nasdaq Capital Market.

The new CUSIP number following the reverse stock split will be 774374300.

On July 14, 2022, 952,897 Pre-Funded Warrants to purchase common stock pursuant the SPA entered into on May 30, 2022 were exercised.

The exercise price of each Pre-Funded Warrant is $ 0.0001 per share and resulted in gross proceeds of $ 95.29 (See Note 10 for more detail on the SPA).

On July 14, 2022, the Company filed a Registration Statement on Form S-3 under the Securities Act of 1933 to register the shares of common stock underlying the shares of Series X Preferred Stock issued to DaVita on April 6, 2022 and June 16, 2022.

The Form S-3 was declared effective by the SEC on July 22, 2022 (See Note 10 for more detail).

On August 10, 2022, 315,000 Pre-Funded Warrants to purchase common stock pursuant the SPA entered into on May 30, 2022 were exercised.

The exercise price of each Pre-Funded Warrant is $ 0.0001 per share and resulted in gross proceeds of $ 31.50 (See Note 10 for more detail on the SPA).

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

What changed 10-Q

Item 1. Financial Statements