What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-14 compared with 2022-08-15 · 157 added, 131 removed, 591 unchanged (33% of the section changed)

4 unchanged sentences

(Dollars In Thousands)

September 30,

2022 December 31,

27 unchanged sentences

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

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

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

Common Stock, $ 0.0001 par value;

170,000,000 shares authorized;

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

11,152,673 and 8,544,225 shares issued and outstanding at September 30, 2022 and December 31, 2021

Additional Paid-in Capital 402,480 372,562

8 unchanged sentences

(In Thousands, Except Shares and Per Share Amounts)

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

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021 Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Net Sales $ 18,691 $ 15,988 $ 53,497 $ 46,599

Cost of Sales 17,914 16,317 51,760 46,788

Gross (Loss) Profit 1,745 ( 262 ) 960 140

Gross Profit (Loss) 777 ( 329 ) 1,737 ( 189 )

Research and Product Development 469 1,221 2,963 5,445

15 unchanged sentences

(In Thousands)

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

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021 Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Net Loss $ ( 4,190 ) $ ( 7,581 ) $ ( 16,317 ) $ ( 23,733 )

25 unchanged sentences

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

Net Loss — — — — — ( 4,190 ) — ( 4,190 )

Unrealized Gain on Available-for-Sale Investments — — — — — — 5 5

Issuance of common stock, net of offering costs/Public Offering — 1,745,377 — — — — —

Stock-based Compensation expense — — — — 176 — — 176

Balance as of September 30, 2022 15,000 $ — 11,152,673 $ 1 $ 402,480 $ ( 386,399 ) $ 54 $ 16,136

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

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

Net Loss — — — — — ( 7,581 ) — ( 7,581 )

Unrealized Gain on Available-for-Sale Investments — — — — — — 4 4

Issued shares for services — — 14,090 — 107 — — 107

Stock-based Compensation — — — — 361 — — 361

Balance as of September 30, 2021 — $ — 8,542,397 $ 1 $ 372,176 $ ( 361,139 ) $ 56 $ 11,094

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

3 unchanged sentences

(Dollars in Thousands)

For the six months ended June 30, 2022 and 2021

Six Months Ended

June 30, 2022 Six Months Ended

June 30, 2021

For the nine months ended September 30, 2022 and 2021

Nine Months Ended

September 30, 2022 Nine Months Ended

September 30, 2021

Cash Flows From Operating Activities:

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Decrease in Lease Liability ( 1,435 ) ( 1,266 )

Decrease in Other Liabilities ( 385 ) ( 1,163 )

Increase (Decrease) in Other Liabilities 756 ( 825 )

Decrease in Deferred License Revenue ( 1,427 ) ( 1,485 )

5 unchanged sentences

Purchase of Equipment ( 197 ) ( 408 )

Cash Provided By Investing Activities 9,082 1,135

Cash Used In Investing Activities ( 5,614 ) ( 229 )

Cash Flows From Financing Activities:

3 unchanged sentences

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

Proceeds from the Issuance of Preferred Shares 15,000 —

Proceeds from the Issuance of Preferred Stock 15,000 —

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

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

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

Cash Provided by (Used In) Financing Activities 22,134 ( 555 )

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

Decrease in Cash and Cash Equivalents ( 300 ) ( 25,292 )

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

12 unchanged sentences

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.

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

This represents a large market opportunity for which Rockwell's products are well-positioned to meet the needs of patients.

Rockwell manufactures hemodialysis concentrates under cGMP regulations at its three facilities in Michigan, Texas, and South Carolina totaling approximately 175,000 square feet, and manufactures mixers in its Iowa facility.

Rockwell delivers the majority of its hemodialysis concentrates products and mixers to dialysis clinics throughout the United States and internationally utilizing its own delivery trucks and third-party carriers.

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 has a proprietary parenteral iron product, TRIFERIC ® (ferric pyrophosphate citrate, "FPC"), which is indicated to maintain hemoglobin in adult patients with hemodialysis-dependent chronic kidney disease.

The Company has established several international partnerships with companies seeking to develop and commercialize TRIFERIC ® outside the United States and is working closely with these international partners to develop and commercialize TRIFERIC ® in their respective regions.

Rockwell continues to evaluate the viability of its FPC platform and FPC's potential to treat iron deficiency and iron deficiency anemia and for acute heart failure.

Rockwell’s strategy is focused on growing the Company's revenue-generating business, which currently includes hemodialysis concentrates and international partnerships for TRIFERIC ® and achieving profitability in 2024 to put the Company in a stronger and more stable financial position.

ROCKWELL MEDICAL, INC.

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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.

As of September 30, 2022, Rockwell had approximately $ 27.6 million of cash, cash equivalents and investments available-for-sale, and working capital of $ 23.0 million.

Net cash used in operating activities for the nine months ended September 30, 2022 was approximately $ 16.8 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.

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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.

The Amendment contains certain covenants with respect to the Company’s ongoing operations, including a minimum cash covenant of $ 10 million, or the Company will be in default under the Products Purchase Agreement.

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

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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.

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.

During the three months ended September 30, 2022, the Company did not make any sales pursuant to the Sales Agreement.

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

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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.

The Company may require additional capital to sustain its operations and make the investments it needs to execute its strategic plan.

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 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 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 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 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).

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

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

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

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

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

The condensed consolidated balance sheet at June 30, 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 September 30, 2022, condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021, condensed consolidated statements of comprehensive loss for the three and nine months ended September 30, 2022 and 2021, condensed consolidated statement of changes in stockholders' equity for the three and nine months ended September 30, 2022 and 2021, and condensed consolidated statements of cash flows for the nine months ended September 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 nine months ended September 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.

6 unchanged sentences

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.

On May 9, 2022, the stockholders of the Company authorized the 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.

2 unchanged sentences

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 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.

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 nine month periods ended September 30, 2022 and 2021, respectively, and the balance sheet at September 30, 2022 and December 31, 2021.

Use of Estimates

16 unchanged sentences

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,

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 nine months ended September 30, 2022 and 2021, respectively, because to do so would be anti-dilutive (in common equivalent shares):

As of September 30,

Options to purchase common stock 1,311,691 533,784

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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.

Early adoption is permitted.

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

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

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

Drug and dialysis concentrates 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.

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In thousands of U.S.

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

dollars ($) Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

Products By Geographic Area Total U.S.

5 unchanged sentences

Total Drug Products 258 193 65 1,026 561 465

Concentrate Products

Concentrates Products

Product Sales – Point-in-time 17,953 16,619 1,334 51,035 46,334 4,701

3 unchanged sentences

In thousands of U.S.

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

dollars ($) Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

Products By Geographic Area Total U.S.

5 unchanged sentences

Total Drug Products 279 217 62 835 656 179

Concentrate Products

Concentrates Products

Product Sales – Point-in-time 15,224 13,541 1,683 44,308 39,768 4,540

5 unchanged sentences

In thousands of U.S.

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

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

Receivables, which are included in "Trade and other receivables" $ 7,367 $ 5,913

Contract liabilities $ 6,729 $ 8,157

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.

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

For the three and nine months ended September 30, 2022 and September 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 September 30, 2022 and December 31, 2021.

The Company does not generally accept returns of its concentrates products and no material reserve for returns of concentrates products was established as of September 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 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.

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

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

1 unchanged sentence

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

Unfulfilled 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.

Unfulfilled minimum commitments related to the Baxter Agreement are product sales of $ 3.8 million as of September 30, 2022, which is amortized ratably through expiration of the Baxter Agreement on October 2, 2024.

ROCKWELL MEDICAL, INC.

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Investments - Available-for-Sale

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):

Investments available-for-sale consisted of the following as of September 30, 2022 and December 31, 2021 (table in thousands):

September 30, 2022

Amortized Cost Unrealized Gain Unrealized Loss Accrued Interest Fair Value

Available-for-Sale Securities

Bonds $ 14,578 $ 6 $ ( 1 ) $ 1 $ 14,584

December 31, 2021

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

As of 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 June 30, 2022 and December 31, 2021 are as follows (table in thousands):

As of September 30, 2022 and 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 September 30, 2022 and December 31, 2021 are as follows (table in thousands):

September 30,

2022 December 31,

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Total $ 6,213 $ 5,599

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.

As of September 30, 2022, the Company classified $ 1.2 million of inventory as non-current, all of which was related to the active pharmaceutical ingredient and raw materials for TRIFERIC ® .

As of September 30, 2022, the total TRIFERIC ® inventory net of reserve was $ 1.2 million.

The $ 1.2 million net value of TRIFERIC ® inventory consisted of $ 0.3 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.

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Property and Equipment

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

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

September 30,

2022 December 31,

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Property and Equipment, net $ 2,264 $ 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.

Depreciation expense for both the three months ended September 30, 2022 and 2021 was $ 0.1 million.

Depreciation expense for nine months end September 30, 2022 and 2021 was $ 0.4 million and $ 0.5 million, respectively.

ROCKWELL MEDICAL, INC.

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Accrued Liabilities

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

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

September 30,

2022 December 31,

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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 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.

The Company recognized revenue of approximately $ 0.5 million and $ 1.4 million for the three and nine months ended September 30, 2022, respectively.

The Company recognized revenue of approximately $ 0.5 million and $ 1.5 million for the three and nine month ended September 30, 2021, respectively.

Deferred revenue related to the Baxter Agreement totaled $ 3.8 million as of September 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 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.

The Company recognized revenue of approximately $ 0.1 million and $ 0.2 million during each of the three and nine months ended September 30, 2022 and 2021, respectively.

Deferred revenue related to the Wanbang Agreement totaled $ 2.3 million as of September 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.

1 unchanged sentence

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

The Company recognized revenue of approximately $ 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.

The Company recognized revenue of approximately $ 2,500 and $ 7,500 for each of the three and nine months ended September 30, 2022 and 2021, respectively.

Deferred revenue related to the Sun Pharma Agreement totaled $ 72,500 and $ 80,000 as of September 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.

2 unchanged sentences

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.

The Company recognized revenue of $ 5,200 and $ 13,000 for the three and nine months ended September 30, 2022, respectively, and $ 2,500 and $ 7,500 for the three and nine months ended September 30, 2021, respectively.

Deferred revenue related to the Jeil Pharma Agreement totaled approximately $ 0.4 million and $ 0.2 million as of September 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.

1 unchanged sentence

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.

The Company recognized revenue of $ 3,750 and $ 11,250 for each of the three and nine months ended September 30, 2022 and 2021, respectively.

Deferred revenue related to the Drogsan Agreements totaled approximately $ 0.13 million and $ 0.15 million as of September 30, 2022 and December 31, 2021, respectively.

ROCKWELL MEDICAL, INC.

3 unchanged sentences

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.

On May 9, 2022, the stockholders of the Company authorized the 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.

16 unchanged sentences

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.

As of September 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 September 30, 2022 and December 31, 2021, there were 170,000,000 shares of common stock, $ 0.0001 par value per share, authorized and 11,152,673 and 8,544,225 shares issued and outstanding, respectively.

Controlled Equity Offering

11 unchanged sentences

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.

A total of 7,311,000 Pre-Funded Warrants remained outstanding as of September 30, 2022.

Private Placement

2 unchanged sentences

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 prefunded warrant is $ 0.0001 per share.

As of September 30, 2022 9,900,990 PIPE Warrants and no Pre-Funded PIPE Warrants remained outstanding.

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”).

4 unchanged sentences

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

The amount allocated to common stock was $ 2.0 million.

5 unchanged sentences

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):

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

9 unchanged sentences

Performance Based Restricted Stock

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

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

Number of Shares Weighted Average

1 unchanged sentence

Forfeited ( 6,227 ) $ 62.70

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:

Unvested at September 30, 2022 891 $ 62.70

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

Number of Shares Weighted Average

1 unchanged sentence

Forfeited ( 6,227 ) $ 62.70

Unvested at June 30, 2021 7,118 $ 62.70

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

As of September 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.

As of September 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.

4 unchanged sentences

Service-Based Restricted Stock Units

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

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

Number of Shares Weighted Average

3 unchanged sentences

Forfeited ( 5,774 ) 19.00

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:

Unvested at September 30, 2022 125,000 $ 1.47

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

Number of Shares Weighted Average

3 unchanged sentences

Forfeited ( 1,073 ) 52.91

Unvested at June 30, 2021 31,146 $ 12.87

Unvested at September 30, 2021 31,115 $ 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 $ 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.

Stock-based compensation expense of $ 46,193 and $ 83,607 was recognized for the three and nine months ended September 30, 2022, respectively.

Stock-based compensation expense of $ 0.1 million and $ 0.3 million was recognized for the three and nine months ended September 30, 2021, respectively.

As of September 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 six months ended June 30, 2022 were based on the following assumptions:

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

September 30,

Exercise price $ 1.28 - $ 1.66

5 unchanged sentences

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:

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

Options Weighted

6 unchanged sentences

Expired ( 85,466 ) 82.09 — —

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:

Outstanding at September 30, 2022 1,311,691 $ 8.23 9.1 $ —

Exercisable at September 30, 2022 243,973 $ 29.31 6.9 $ —

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

Options Weighted

6 unchanged sentences

Expired ( 121,202 ) 78.76 — —

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

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

Outstanding at September 30, 2021 533,784 $ 32.45 7.7 $ —

Exercisable at September 30, 2021 230,858 $ 54.56 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 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.

During the nine months ended September 30, 2022, the Company granted stock options to purchase up to 898,659 shares of common stock to certain employees.

During the nine months ended September 30, 2022, 30,093 shares were forfeited and 85,466 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 $ 0.1 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.

Stock-based compensation expense recognized for service-based stock options was $ 0.1 million and $ 0.4 million for the three and nine months ended September 30, 2022, respectively.

Stock-based compensation expense recognized for service-based stock options was $ 0.3 million and $ 1.0 million for the three and nine months ended September 30, 2021, respectively.

As of September 30, 2022, total stock-based compensation expense related to unvested options not yet recognized totaled approximately $ 1.4 million, which is expected to be recognized over an estimated weighted average remaining term of 3.6 years.

ROCKWELL MEDICAL, INC.

7 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 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.

As of September 30, 2022, the Company has accrued $ 85,400 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.

10 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 June 30, 2022.

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

ROCKWELL MEDICAL, INC.

7 unchanged sentences

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

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 September 30, 2022, the Company had operating and finance lease liabilities of $ 7.2 million and right-of-use assets of $ 6.9 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):

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

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021 Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Operating leases

46 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 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.

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

For the nine months ended September 30, 2022 and 2021, interest expense amounted to $ 1.2 million and $ 1.8 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 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):

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

As of September 30, 2022, the outstanding balance of the Term Loan was $ 14.1 million, net of unamortized issuance costs and discount of $ 0.9 million.

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

Principal Payments

5 unchanged sentences

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

As of September 30, 2022, the Company's insurance note payable balance was $ 1.0 million.

Subsequent Events

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.

On October 28, 2022, 480,000 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 $ 48.00 (See Note 10 for more detail on the SPA).

On November 9, 2022, Rockwell reacquired its distribution rights to its hemodialysis concentrates products from Baxter and has agreed to terminate the exclusive distribution agreement dated October 2, 2014.

Exclusivity and other provisions associated with the distribution agreement terminated November 9, 2022 and the remaining operational elements of the agreement terminate December 31, 2022.

Under the exclusive distribution agreement, Baxter distributed and commercialized Rockwell’s hemodialysis concentrates products and provided customer service and order delivery to nearly all United States customers.

Following the reacquisition of these rights, Rockwell will now be able to sell its hemodialysis concentrates products to dialysis clinics throughout the United States and around the world.

Rockwell will pay Baxter a fee for the reacquisition of its distribution rights.

This fee will be payable in two equal installments on January 1, 2023 and April 1, 2023.

To ensure that customer needs continue to be met after January 1, 2023, Baxter and Rockwell are working closely together to transition customers’ purchases of Rockwell’s hemodialysis concentrates from Baxter to Rockwell.

On November 10, 2022, the Company entered into a Second Amendment to the Loan and Security Agreement (the “Second Amendment”) dated as of November 14, 2022 with Innovatus, which amended the Loan Agreement.

Pursuant to the Second Amendment, the Company (i) shall prepay an aggregate principal amount of $ 5.0 million in Term Loans (as defined in the Loan Agreement) in one installment on November 14, 2022;

(ii) shall pay interest only payments until September 2023 at which time will resume scheduled debt payments.

Separation of Chief Financial Officer

On November 10, 2022, the Board of Directors of Rockwell terminated the employment of Russell Skibsted as Chief Financial Officer of the Company, effective immediately.

The termination of employment of Mr.

Skibsted by the Company without cause entitles Mr.

Skibsted to severance in accordance with the Employment Agreement, dated September 15, 2020, by and between the Company and Mr.

Skibsted (the “Employment Agreement”).

The severance benefits under the Employment Agreement are subject to the execution and non-revocation of a release of claims in favor of the Company.

In connection with Mr.

Skibsted’s termination, the Board of Directors appointed Mark Strobeck, the Company’s Chief Executive Officer, as interim principal financial officer.

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