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Item 7. Management’s Discussion and Analysis

2023-03-30 compared with 2022-04-08 · 103 added, 91 removed, 121 unchanged (62% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview and Recent Developments

Rockwell Medical is a commercial-stage, biopharmaceutical company developing and commercializing our next-generation parenteral iron technology platform, Ferric Pyrophosphate Citrate ("FPC"), which we believe has the potential to lead to transformative treatments for iron deficiency in multiple disease states, 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 Stated Food and Drug Administration ("FDA") with the goal to advance our FPC platform strategy by starting a Phase II trial in the second half of 2022 for the treatment of iron deficiency anemia in patients outside of dialysis, who are receiving intravenous ("IV") medications in the home infusion setting.

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

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

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

At Rockwell Medical, we are dedicated to enhancing the currently sub-optimal standard of care for treatment of iron deficiency in acute and chronic disease by leveraging our proprietary FPC platform technology.

Our proprietary drug platform, FPC, is a next-generation parenteral iron therapeutic.

We believe our FPC platform has several advantages over other parenteral iron therapies.

Importantly, it provides iron that is immediately bioavailable for critical body processes once it is administered.

It has been demonstrated to be safe and well-tolerated, with a safety profile similar to placebo in clinical trials.

Rockwell Medical is a healthcare company that develops, manufactures, commercializes, and distributes a portfolio of hemodialysis products for dialysis providers worldwide.

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 kidney disease treatment and is usually performed at freestanding outpatient dialysis centers, at hospital-based outpatient centers, at skilled nursing facilities, 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 Current Good Manufacturing Practices ("cGMP") regulations at its three facilities in Michigan, Texas, and South Carolina totaling approximately 175,000 square feet, and manufactures its dry acid concentrate mixers at its facility in Iowa.

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.

In addition to its primary focus on hemodialysis concentrates, Rockwell also 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.

While Rockwell has discontinued commercialization of Triferic in the United States, 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.

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

Reverse Stock Split

On May 9, 2022, the Company's stockholders authorized the Company's Board of Directors to effect a reverse stock split of all outstanding shares of common stock, warrants and options.

The Board of Directors subsequently approved the implementation of a reverse stock split at 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.

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 periods ended December 31, 2022 and 2021, respectively.

Results of Operations

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Net sales of hemodialysis concentrates to dialysis providers and distributors in the United States and abroad were $71.7 million for the year ended December 31, 2022 comp ared to $60.8 million f or the year ended December 31, 2021.

Net sales of Triferic (dialysate) remained flat at approximately $1.1 million for the years ended December 31, 2021 and 2020.

On April 6, 2022, the Company and DaVita entered into an amendment (the "DaVita Amendment") to the Products Purchase Agreement, dated July 1, 2019 under which the Company supplies DaVita with certain dialysis concentrates.

Under the DaVita Amendment, the Company and DaVita agreed to a price increase, effective May 1, 2022.

Based the DaVita Amendment and assuming steady sales volumes, the Company expects a double digit increase in concentrates revenue year-over-year.

Net sales of Triferic (dialysate) were $1.2 million and $1.1 million for the years ended December 31, 2022 and 2021, respectively.

The increase of $10.9 million is primarily related to the amendment of our supply agreement with DaVita and increased pricing to other customers.

During 2022, the Company made a strategic decision to discontinue its NDAs for Triferic and Triferic AVNU in the United States.

Cost of Sales and Gross Profit

Cost of sales during the year ended December 31, 2021 was $64.4 million, resulting in gross loss of $2.4 million, compared to cost of sales of $59.5 million and a gross profit of $2.7 million during the year ended December 31, 2020.

Gross profit decreased by $5.1 million during the year ended December 31, 2021 compared to the year ended December 31, 2020 due to significant inflationary pressures related to the concentrates segment.

The Company has sought to mitigate these inflationary pressures by increasing product costs and by renegotiating certain terms of its supply contract with DaVita in the DaVita Amendment, one of the Company's largest customers, to be able to pass through a significant portion of inflationary costs.

As a result of these changes, the Company expects an improvement in margins in 2022

Cost of sales during the year ended December 31, 2022 was $68.7 million, resulting in gross profit of $4.1 million, compared to cost of sales of $64.4 million and a gross loss of $2.4 million during the year ended December 31, 2021.

Gross profit increased by $6.4 million during the year ended December 31, 2022 compared to the year ended December 31, 2021 due to price increases for all business during the year including the amended products purchase agreement with DaVita, offset by volume reductions and increased distribution costs.

Research and Product Development Expense

Research and product development expenses were $3.1 million for the year ended December 31, 2022 compared with $6.8 million during the year ended December 31, 2021.

The decrease of $0.3 million is related to timing of costs for clinical trials and other product development expenses for our FPC platform.

We are continuing to invest in our medical and scientific programs to support the advancement of our FPC technology platform.

The decrease of $3.7 million is related to headcount reductions and the decision to put all research related to our FPC for Home Infusion program on hold due to the significant capital expenditure and resources to support additional re-formulation work and conduct a Phase 2 study.

Selling and Marketing Expense

Selling and marketing expenses were $2.1 million during the year ended December 31, 2022 compared with $5.7 million during the year ended December 31, 2021.

The decrease of $2.1 million is du e a decrease in marketing spend for our Triferic products and a headcount reduction.

The decrease of $3.6 million is du e to a decrease in marketing spend for our Triferic products and a headcount reduction.

General and Administrative Expense

General and administrative expenses were $15.6 million during the year ended December 31, 2022 compared with $15.3 million during the year ended December 31, 2021.

The $0.9 million decrease was driven primarily by a decrease in labor of $0.8 million, recruiting of $0.3 million and legal costs of $0.4 million, partially offset by increases to D&O insurance premiums of $0.3 million, FDA fees of $0.2 million, and investor relation costs of $0.1 million.

The $0.3 million increase was driven primarily by increases in executive severance expenses of $1.4 million, legal costs of $0.2 million and travel expense of $0.1 million, offset by decreases in employee incentives of $0.6 million, various cost cutting measures of $0.5 million, and FDA fees of $0.2 million.

Other Income (Expense)

Other income for the year ended December 31, 2021 consisted of $22,000 of interest income.

Ot her income for the year ended December 31, 2020 was $246,000, consisting of interest income of $238,000 and $8,000 of realized gains on investments.

Other expense for the year ended December 31, 2021 w as $2.4 million, consisting of interest expense related to our debt facility (see Note 15 to the financial statements for more information on our debt facility).

Other expense for the year ended December 31, 2020 was $2.7 million, consisting of warrant modification expense of $0.8 million and i nterest expense of $1.9 million related to our debt facility (see Note 15 to the financial statements for more information on our debt facility).

Other income consisted of interest income of $33,000 and $22,000 for the years ended December 31, 2022 and December 31, 2021, respectively.

Other expense consisted of interest expense related to our debt facility (see Note 16 to the financial statements for more information on our debt facility) totaling $1.9 million and $2.4 million for the years ended December 31, 2022 and December 31, 2021, respectively.

Liquidity and Capital Resources

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Net cash used in operating activities for the year ended December 31, 2022 was approximately $17.4 million.

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

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

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

On April 6, 2022, the Company entered into the DaVita Amendment, which restructures the supply relationship with DaVita, which management expects to result in improved financial performance of the Company’s concentrates business.

The Company also entered into a securities purchase agreement with DaVita, which provides 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 to be funded subject to the Company raising $15 million in additional capital by June 30, 2022.

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

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

If the Company is unable to generate sufficient cash flows from operations as described above, the Company will need to obtain additional equity or debt financing.

In particular, the DaVita Amendment provides that the Company must raise an additional $15 million equity investment by June 30, 2022 and maintain a minimum cash balance of $10 million, or we will be in default under the Products Purchase Agreement.

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

During the year ended December 31, 2022, the Company continued to experience significant inflationary pressures in its dialysis concentrates business, which has resulted in operating losses associated with this business line.

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

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 certain price increases, effective May 1, 2022, as well as the pass-through of certain inflationary costs, determined on a quarterly basis.

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 the Company will be in default under the Products Purchase Agreement.

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

The Company cannot assume that any additional equity or debt financing will be available on favorable terms, if at all.

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.

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

As of the date of this report, the Company believes that 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 we are unable to avoid an event of default, any required repayments could have an adverse effect on our liquidity (See Note 16 to the financial statements for more information on our debt facility).

The COVID-19 pandemic and resulting domestic and global disruptions have adversely affected our business and operations, including, but not limited to, our sales and marketing efforts and our research and development activities, and the

operations of third parties upon whom we rely.

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

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

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

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

On April 6, 2022, the Company and DaVita entered into 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 $15.0 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.

(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.

During the quarter ended December 31, 2022, no sales were made pursuant to the Sales Agreement.

Subject to restrictions under General Instruction I.B.6 to Form S-3, 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 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.

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.

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) prepaid 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 (see Note 16 to the consolidated financial statements included elsewhere in this Form 10-K for more information on our debt facility).

Management evaluated it's going concern by reviewing the Company's operational plans which include executing on the projected financial information including price increases, acquisition of new customers, projected growth of margins and cost containment activities.

Additionally, the Company's operational plans also include raising capital, if needed, by using our ATM facility or other methods or forms of financings, subject to existing limitations.

Based on the currently available working capital, expectation of the ability of management to execute on the Company's operational plans noted above, management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of the filing of this report.

Accordingly, management believes that the factors noted above which raised substantial doubt about the Company’s ability to continue as a going concern have been alleviated .

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.

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

As of December 31, 2022, the Company is in compliance with all financial covenants (See Note 16 to the consolidated financial statements included elsewhere in this Form 10-K for more information on our debt facility).

Global Economic Considerations

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

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

In addition, the global macroeconomic environment is uncertain, and could be negatively affected by, among other things, increased U.S.

trade tariffs and trade disputes with other countries, instability in the global capital and credit markets, supply chain weaknesses, and instability in the geopolitical environment, including as a result of the Russian invasion of Ukraine and other political tensions, and lingering effects of the COVID-19 pandemic.

Such challenges have caused, and may continue to cause, recession fears, rising interest rates, foreign exchange volatility and inflationary pressures.

At this time, we are unable to quantify the potential effects of this economic instability on our future operations.

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

however, current conditions in the financial and credit markets may limit the availability of funding, refinancing, or increase the cost of funding.

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

The actual amount of cash that we will need to execute our business strategy is subject to many factors, including, but not limited to, the expenses and revenue associated with the commercial operations in the United States and internationally (with partners);

the timing and magnitude of cash received from drug product sales;

the timing and expenditures associated with the development programs including our FPC technology for home infusion and potentially acute heart failure;

and the costs associated with our manufacturing and transportation operations related to our concentrate business.

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.

The actual amount of cash that we will need to execute our business strategy is subject to many factors, including, but not limited to the costs associated with our manufacturing and transportation operations related to our concentrate business.

We may elect to raise capital in the future through one or more of the following:

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and (ii) strategic transactions, including potential alliances and collaborations focused on markets outside the United States, as well as potential combinations (including by merger or acquisition) or other corporate transactions.

We believe that our ability to fund our activities in the long term will be highly dependent upon 1) our ability to execute on the development of the FPC platform for new therapies, 2) our ability to restructure our other significant commercial contract within our concentrate business, and 3) our ability to find a commercial partner to commercialize and increase adaptation of Triferic (dialysate) and Triferic AVNU.

All of these strategies are subject to significant risks and uncertainties such that there can be no assurance that we will be successful is achieving approval of FPC in a new therapeutic area, that we will be successful in restructuring our commercial agreements in our concentrate business or that we will be able to find a commercial partner and have sustained commercial success with Triferic (dialysate) and Triferic AVNU.

If our planned clinical program is delayed or fails or our other significant commercial contract in the concentrate business cannot be restructured in way that is beneficial to Rockwell or our if ability to find a commercial partner for Triferic (dialysate) and/or Triferic AVNU should fail, we may be forced to implement cost-saving measures that may potentially have a negative impact on our activities and potentially the results of our research and development programs.

If we are unable to raise the required capital, we may be forced to curtail all of our activities and, ultimately, cease operations.

We believe our ability to fund our activities in the long term will be highly dependent upon (i) our ability to execute on the growth strategy of our hemodialysis concentrates business, (ii) our ability to achieve profitability, and (iii) our ability to identify, develop, in-license, or acquire new products in developing our renal care product portfolio.

All of these strategies are subject to significant risks and uncertainties such that there can be no assurance we will be successful in achieving them.

If we are unsuccessful in executing our business plan and we are unable to raise the required capital, we may be forced to curtail all of our activities and, ultimately, cease operations.

Even if we are able to raise sufficient capital, such financings may only be available on unattractive terms, or result in significant dilution of stockholders’ interests and, in such event, the market price of our common stock may decline.

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Net cash used in operating activities was $17.4 million for the year ended December 31, 2022.

The net loss for this period was less than net cash used in operating activities by $0.9 million, which was primarily attributable to non-cash expenses of $4.0 million, consisting primarily of $1.8 million of amortization of the right to use assets, $0.7 million of depreciation and amortization, $0.9 million of stock-based compensation, $0.1 million of inventory reserves, $0.4 million of debt financing cost amortization and accretion of discount, and a $4.8 million net change in assets and liabilities.

The net loss for this period was higher than net cash used in operating activities by $1.3 million, which was primarily attributable to non-cash expenses of $3.9 million, consisting primarily of $2.0 million of amortization of the right to use assets, $0.6 million of depreciation and amortization, $0.6 million of inventory reserves, $0.4 million of debt financing cost amortization and accretion of discount, $0.3 million of stock-based compensation, and a $2.6 million net change in assets and liabilities.

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

The net loss for this period was higher than net cash used in operating activities by $1.3 million, which was primarily attributable to non-cash expenses of $4.2 million, consisting primarily of $1.5 million of amortization of the right to use assets, $0.8 million of depreciation and amortization, $0.8 million of warrant modification expense, $0.5 million of stock-based compensation, $0.3 million of inventory reserves, $0.3 million of debt financing cost amortization and accretion of discount, and a $3.0 million net change in assets and liabilities.

Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities was $0.3 million during the year ended December 31, 2021 .

Net cash used in investing activities was $2.4 million during the year ended December 31, 2022 .

The net cash provided was primarily due to the purchase of investments available-for-sale of $21.3 million, offset by $19.2 million sale of our available-for-sale investments and $0.3 million for the purchase of equipment.

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Cash (Used in) Provided by Financing Activities

Net cash used in financing activities was $2.2 million during the year ended December 31, 2021.

The net cash used in was primarily due to payments on the Company's debt and short term note payable.

Net cash provided by financing activities was $16.6 million during the year ended December 31, 2022.

The net cash provided was primarily due to net proceeds of $40.7 million and $2.3 million from the sale of our common stock in our public offerings and our at-the market offerings, respectively, net proceeds of $21.2 million from our term loan, partially offset by payment of $0.8 million related to a short term note payable.

The net cash provided by financing activities was primarily due to proceeds from issuance of equity securities of $29.8 million offset by payments on the Company's debt and short term note payable of $13.2 million.

Net cash used in financing activities was $2.2 million during the year ended December 31, 2021.

The net cash used in financing activities was primarily due to payments on the Company's debt and short term note payable.

Critical Accounting Estimates and Judgments

Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America.

These accounting principles require us to make estimates, judgments and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities, and contingencies.

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Actual results could differ from these estimates.

Changes in estimates are reflected in our financial statements in the period of change based upon on‑going actual experience, trends, or subsequent realization depending on the nature and predictability of the estimates and contingencies.

Changes in estimates are

reflected in our financial statements in the period of change based upon on‑going actual experience, trends, or subsequent realization depending on the nature and predictability of the estimates and contingencies.

Interim changes in estimates are generally applied prospectively within annual periods.

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

We review outstanding trade accounts receivable balances and based on our assessment of expected collections, we estimate the portion, if any, of the

balance that may not be collected as well as a general valuation allowance for other accounts receivable based primarily on historical experience.

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

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

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

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

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

For the years ended December 31, 2022 and 2021, there were no impairments of long-lived assets.

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Deferred Revenue

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

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

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

On November 9, 2022, Rockwell reacquired its distribution rights to its hemodialysis concentrates products from Baxter and terminated the Distribution Agreement.

The Company recognized revenue of approximately $2.5 million and $1.9 million related to the Baxter agreement for each of the years ended December 31, 2022 and 2021, respectively.

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Deferred revenue related to the Wanbang Agreement totaled $2.3 million and $2.5 million for the years ended December 31, 2022 and 2021, respectively.

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

On January 14, 2020, the Company entered into license and supply agreements with Sun Pharma (the "Sun Pharma Agreements"), for the rights to commercialize Triferic (dialysate) in India.

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

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The Company recognized revenue of approximately $10,000 for both of the years ended December 31, 2022 and 2021.

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

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

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.

Deferred revenue related to the Sun Pharma Agreement totaled $0.1 million as of December 31, 2022 and 2021, respectively.

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

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

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.

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

Jeil Pharmaceutical 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 $10,000 and $2,500 during the year ended December 31, 2021 and 2020, respectively.

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

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

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

The Company recognized revenue of $18,158 and $10,000 during the year ended December 31, 2022 and

2021, respectively.

Deferred revenue related to the Jeil Agreement totaled $0.4 million and $0.2 million as of December 31, 2022 and 2021, respectively.

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

Under the terms of the Drogsan Agreements, Drogsan Pharmaceuticals 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.

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

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

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

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

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

The Company recognized revenue of $15,000 and $7,500 during the year ended December 31, 2022 and 2021, respectively.

Deferred revenue related to the Drogsan Agreements totaled approximately $0.1 million as of December 31, 2022 and 2021 respectively.

Stock-Based Compensation

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Per §229.305 of Regulation S-K, the Company, designated a Smaller Reporting Company as defined in §229.10(f)(1) of Regulation S-K, is not required to provide the disclosure required by this Item.

Financial Statements and Supplementary Data.

The Consolidated Financial Statements of the Registrant and other information required by this item are set forth beginning on page F‑1 immediately following the signature page hereof and incorporated herein by reference.

Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis