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Item 9A. Controls and Procedures

2023-03-30 compared with 2022-04-08 · 320 added, 291 removed, 737 unchanged (45% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure material information required to be disclosed in our reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure.

We maintain disclosure controls and procedures that are designed to ensure material information required to be disclosed in our reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate, to allow timely decisions regarding required financial disclosure.

In designing and evaluating the disclosure controls and procedures, we recognized that a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

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Management necessarily was required to apply its judgment in evaluating the cost‑benefit relationship of possible controls and procedures.

Under the supervision of and with the participation of our management, including the Company’s Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2021.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2021.

Additionally, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, has concluded that the consolidated financial statements included in this Annual Report are fairly stated, in all material respects, in accordance with generally accepting accounting principles in the United States for each of the periods presented herein.

Under the supervision of and with the participation of our management, including the Company’s Chief Executive Officer, we evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2022.

Based upon that evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures were effective as of December 31, 2022.

Additionally, the Company’s management, including the Chief Executive Officer, has concluded that the consolidated financial statements included in this Annual Report are fairly stated, in all material respects, in accordance with generally accepting accounting principles in the United States for each of the periods presented herein.

Management’s Report on Internal Control over Financial Reporting

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Therefore, internal control over financial reporting determined to be effective provides only reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2021.

Therefore, internal control over financial reporting determined to be effective provides only reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Under the supervision and with the participation of our Chief Executive Officer, our management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2022.

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

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Directors, Executive Officers and Corporate Governance.

The information required by this Item 10 is incorporated herein by reference to information in our proxy statement for our 2022 Annual Meeting of Stockholders (the “2022 Proxy Statement”), which we expect to be filed with the SEC within 120 days of the end of our fiscal year ended December 31, 2021, including under headings “Election of Directors,” “Executive Officers,” “Corporate Governance” and, as applicable, "Delinquent Section 16(a) Reports."

The information required by this Item 10 is incorporated herein by reference to information in our proxy statement for our 2023 Annual Meeting of Stockholders (the “2023 Proxy Statement”), which we expect to be filed with the SEC within 120 days of the end of our fiscal year ended December 31, 2022, including under headings “Election of Directors,” “Directors Continuing in Office,” “Executive Officers,” “Corporate Governance” and, as applicable, "Delinquent Section 16(a) Reports."

Code of Business Conduct and Ethics

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Item 12 is incorporated herein by reference to information in our 2022 Proxy Statement, including under heading “Voting Securities and Principal Holders.”

The information required by this Item 12 is incorporated herein by reference to information in our 2023 Proxy Statement, including under heading “Security Ownership of Certain Beneficial Owners and Management.”

Securities Authorized for Issuance Under Equity Compensation Plans

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Total 1,332,796 $ 8.32 107,335

(1) Consists of 4,964,506 stock options with a weighted average exercise price of $3.15, 322,182 restricted stock units and 78,300 restricted stock awards.

(1) Consists of 662,724 stock options with a weighted average exercise price of $12.29, 125,000 restricted stock units issued at $1.47 and 891 restricted stock awards issued at $62.70.

(2) Consists of 544,181 stock options with a weighted average exercise price of $3.50.

Certain Relationships and Related Transactions and Director Independence.

The information required by this Item 13 is incorporated herein by reference to information in our 2022 Proxy Statement, including under headings “Independence” and “Related Party Transactions.”

The information required by this Item 13 is incorporated herein by reference to information in our 2023 Proxy Statement, including under headings “Independence” and “Certain Relationships and Related Party Transactions.”

Principal Accounting Fees and Services.

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

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

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

4.1 Form of Common Stock Warrant, dated October 17, 2018 (Company’s Form 8-K filed October 19, 2018).

4.2 Description of Securities

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

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

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

3.1 Certificate of Incorporation, dated as of August 28, 2019 ( Ex hibit 3.3 to the Company’s Form 8-K filed August 30, 2019).

3.2 Certificate of Amendment to Certificate of Incorporation of Rockwell Medical, Inc.

related to the Reverse Stock Split, dated May 12, 2022 (Exhibit 3.1 to the Company’s Form 8-K filed on May 13, 2022).

3.3 Certificate of Designation of Preferences, Rights and Limitations of Series X Convertible Preferred Stock (Exhibit 3.1 to the Company’s Form 8-K filed on April 8, 2022).

3.4 Amended and Restated Bylaws (Exhibit 3.1 to the Company’s Form 10-Q filed November 14, 2022).

4.1 Form of Common Stock Warrant, dated October 17, 2018 ( Exhibit 4.1 to the Company’s Form 8-K filed October 19, 2018).

4.2 Description of Securities (Exhibit 4.2 to the Company's Form 10-K filed on April 8, 2022)

4.3 Form of Warrant ( Exhibit 4.1 to the Company's Form 8-K filed on September 25, 2020).

4.4 Form of Pre-Funded Warrant ( Exhib it 4.2 to the Company's Form 8-K filed on September 25, 2020).

4.5 Form of Warrant to Purchase Common Stock for Innovatus ( Exhibit 4.1 to the Company's Form 8-K filed March 20, 2020).

4.6 Form of Pre-Funded Warrant (Exhibit 4.1 to the Company’s Form 8-K filed on June 2, 2022).

4.7 Form of PIPE Warrant (Exhibit 4.2 to the Company’s Form 8-K filed on June 2, 2022).

4.8 Form of PIPE Pre-Funded Warrant (Exhibit 4.3 to the Company’s Form 8-K filed on June 2, 2022).

10.1 Registration Rights Agreement, dated October 17, 2018 (Exhibit 10.83 to the Company’s Form 8-K filed October 19, 2018).

10.2 Loan and Security Agreement, dated March 16, 2020, by and among the Company, Innovatus Life Sciences Lending Fund I, LP and the lenders party thereto (Exhibit 10.1 to the Company’s Form 10-Q filed on May 11, 2020).

10.3 First Amendment to Loan and Security Agreement, dated September 24, 2021, by and among the Company, Innovatus Life Sciences Lending Fund I, LP and the lenders party thereto (Exhibit 10.1 to the Company’s Form 8-K filed on September 30, 2021)

10.4 Second Amendment to Loan and Security Agreement dated November 10, 2022 by and among the Company, Innovatus Life Sciences Lending Fund I, LP and the lenders party thereto (Exhibit 10.3 to the Company’s Form 10-Q filed on November 14, 2022).

10.5 Sales Agreement, dated April 8, 2022, between Rockwell Medical, Inc.

and Cantor Fitzgerald & Co.

(Exhibit 1.1 to the Company’s Form 8-K filed on April 8, 2022).

10.6 Securities Purchase Agreement, dated April 6, 2022, by and between the Company and DaVita, Inc.

(Exhibit 10.1 to the Company’s Form 10-Q filed on May 16, 2022).

10.7 RD Securities Purchase Agreement, dated May 30, 2022, by and between the Company and the Purchaser signatory therein (Exhibit 10.1 to the Company’s Form 8-K filed on June 2, 2022).

10.8 PIPE Securities Purchase Agreement, dated May 30, 2022, by and between the Company and the Purchaser signatory therein (Exhibit 10.2 to the Company’s Form 8-K filed on June 2, 2022).

10.9 Registration Rights Agreement, dated June 2, 2022, by and between the Company and the Holder signatory thereto (Exhibit 10.3 to the Company’s Form 8-K filed on June 2, 2022).

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

(f/k/a DaVita Healthcare Partners Inc.) (Exhibit 10.1 to the Company’s Form 10-Q filed November 12, 2019).

10.11+ Amendment One to Products Purchase Agreement, dated April 6, 2022, by and between the Company and DaVita, Inc.

(Exhibit 10.2 to the Company’s Form 10-Q filed on May 16, 2022).

10.12 Exclusive Distribution Agreement, dated October 2, 2014, by and between the Company and Baxter Healthcare Corporation (with certain portions redacted pursuant to a confidential treatment order) (Exhibit 10.57 to the Company’s Form 10‑K filed March 3, 2015).

10.13 Investment Agreement, dated October 2, 2014, by and between the Company and Baxter Healthcare Corporation ( Exhibit 10.58 to the Company’s Form 10‑K filed March 3, 2015).

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

10.15+# Distribution Termination and Acquisition Agreement dated November 8, 2022 between the Company and Baxter Healthcare Corporation.

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

Ajay Gupta (with certain portions of the exhibit redacted pursuant to a confidential treatment order) (Company’s Form 10‑KSB filed April 1, 2002).

Ajay Gupta (Exhibit 10.18 to the Company’s Form 10‑KSB filed April 1, 2002).

10.17 Amending Agreement, dated January 16, 2006, by and among the Company, Charak LLC and Dr.

Ajay Gupta (Company’s Form 10‑KSB filed March 21, 2006).

10.3 Exclusive Distribution Agreement, dated October 2, 2014, by and between the Company and Baxter Healthcare Corporation (with certain portions redacted pursuant to a confidential treatment order) (Company’s Form 10‑K filed March 3, 2015).

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

*10.5 Rockwell Medical, Inc.

Amended and Restated 2007 Long Term Incentive Plan, as amended effective May 21, 2015 (Company’s Proxy Statement for the 2015 Annual Meeting of Shareholders filed on April 13, 2015).

*10.6 Rockwell Medical, Inc.

2018 Long Term Incentive Plan (Company’s Proxy Statement for the 2018 Annual Meeting of Shareholders filed on April 30, 2018).

*10.7 Form of Nonqualified Stock Option Agreement (2007 Long Term Incentive Plan) (Director Version) (Company’s Form 8‑K filed December 20, 2007).

*10.8 Form of Nonqualified Stock Option Agreement (2007 Long Term Incentive Plan) (Employee Version) (Company’s Form 8-K filed December 20, 2007).

*10.9 Form of Restricted Stock Award Agreement (2007 Long Term Incentive Plan) (Director Version) (Company’s Form 10 - K filed February 29, 2016).

*10.10 Form of Restricted Stock Award Agreement (2007 Long Term Incentive Plan) (Executive Version) (Company’s Form 10‑Q filed May 12, 2014).

*10.11 Form of Performance Share Award Agreement March 2017 (Executive Version) (Company’s Form 10-Q filed May 9, 2017).

*10.12 Form of Performance Share Award Agreement March 2017 (Director Version) (Company’s Form 10-Q filed May 9, 2017).

*10.13 Form of Stock Option Agreement (2018 Long Term Incentive Plan) (Employee Version) (Company’s Form 10-K filed March 15, 2019).

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

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

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

10.17 Stock Appreciation Right Agreement, dated September 5, 2017, by and between the Company and John G.

Cooper (Company’s Form 10-Q filed November 8, 2017).

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

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

Ajay Gupta (Exhibit 10.13 to the Company’s Form 10‑KSB filed March 21, 2006).

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

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

Ajay Gupta (Exhibit 10.34 Company's Form 10-K filed on March 18, 2019).

10.19 Amendment to License Agreement, dated October 7, 2018, by and among the Company, Charak, LLC and Dr.

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

Ajay Gupta (Exhibit 10.35 to the Company's Form 10-K filed on March 18, 2019).

10.20 Commercialization and Technology License Agreement IV Triferic, dated October 7, 2018, by and among the Company, Charak, LLC and Dr.

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

Ajay Gupta (Exhibit 10.36 to the Company's Form 10-K filed on March 18, 2019).

10.21 Technology License Agreement TPN Triferic, dated October 7, 2018, by and among the Company, Charak, LLC and Dr.

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

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

(f/k/a DaVita Healthcare Partners Inc.) (Company’s Form 10-Q filed November 12, 2019).

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

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

Ajay Gupta (Exhibit 10.37 to the Company's Form 10-K filed on March 18, 2019).

10.22* Rockwell Medical, Inc.

Amended and Restated 2018 Long Term Incentive plan (Company’s Form 8-K filed on May 21, 2020).

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

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

Amended and Restated 2007 Long Term Incentive Plan, as amended effective May 21, 2015 ( Appendix to the Company’s Proxy Statement for the 2015 Annual Meeting of Shareholders filed on April 13, 2015).

10.23* Form of Nonqualified Stock Option Agreement (2007 Long Term Incentive Plan) (Director Version) ( Exhibit 10.22 to the Company’s Form 8‑K filed December 20, 2007).

10.24* Form of Nonqualified Stock Option Agreement (2007 Long Term Incentive Plan) (Employee Version) ( Exhibit 10.2 3 to the Company’s Form 8-K filed December 20, 2007).

10.25* Form of Restricted Stock Award Agreement (2007 Long Term Incentive Plan) (Director Version) ( Exhibit 10.62 to the Company’s Form 10-K filed February 29, 2016).

10.26* Form of Restricted Stock Award Agreement (2007 Long Term Incentive Plan) (Executive Version) ( Exhibit 10.54 to the Company’s Form 10‑Q filed May 12, 2014).

10.27* Form of Performance Share Award Agreement March 2017 (Executive Version) ( Exhibit 10.64 to the Company’s Form 10-Q filed May 9, 2017).

10.28* Form of Performance Share Award Agreement March 2017 (Director Version) ( Exhibit 10 .65 to the Company’s Form 10-Q filed May 9, 2017).

10.29* Rockwell Medical, Inc.

Amended and Restated 2018 Long Term Incentive Plan (Exhibit 10.8 to the Company’s Form 10-Q filed on August 15, 2022).

10.30* Form of Stock Option Agreement (2018 Long Term Incentive Plan) ( Exhibit 10.2 to the Company’s Form 10- Q filed on Nov ember 14, 2022 ).

10.31* Form of Contingent Option Agreement for Directors (2018 Long Term Incentive Plan) ( Exhibit 1 0.76 to the Company’s Form 8-K filed March 21, 2018).

10.32*# Form of Restricted Stock Unit Award Agreement Employee Version (2018 Long Term Incentive Plan).

10.33*# Form of Restricted Stock Unit Award Agreement Director Version (2018 Long Term Incentive Plan).

10.34* Rockwell Medical, Inc.

Short Term Incentive Plan (Exhibit 10.1 to the Company’s Form 10-Q filed on November 14, 2022).

10.35* Form of Indemnification Agreement ( Exhibit 10.1 to the Company’s Form 8-K filed August 30, 2019).

10.36* Stock Appreciation Right Agreement, dated September 5, 2017, by and between the Company and John G.

Cooper ( Exhibit 1 0.71 to the Company’s Form 10-Q filed November 8, 2017).

10.37* Employment Agreement, dated June 21, 2022, between Rockwell Medical, Inc.

and Mark Strobeck (Exhibit 10.7 to the Company’s Form 10-Q filed on August 15, 2022).

10.38* Russell Ellison Employment Agreement, dated April 17, 2020 ( Exhibit 10.1 to the Company’s Form 8-K filed on April 20, 2020).

10.39* Russell Skibsted Employment Agreement, dated September 15, 2020 ( Exhibit 10.1 to the Company’s Form 8-K filed on September 16, 2020).

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

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31.1# Certification of Chief Executive Officer Pursuant to Rule 13a‑14(a).

31.2 Certification of Chief Financial Officer Pursuant to Rule 13a‑14(a).

32.1 Certification of the Chief Executive Officer and Chief Financial Officer, Pursuant to 18 U.S.C.

32.1# Certification Pursuant to 18 U.S.C.

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.

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+ Certain confidential portions of this exhibit were omitted by means of marking such portions with asterisks because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.

# Filed herewith

Form 10-K Summary.

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ROCKWELL MEDICAL, INC.

/s/ Russell Ellison

Russell Ellison

/s/ Mark Strobeck

Mark Strobeck

President and Chief Executive Officer

April 8, 2022

March 30, 2023

POWER OF ATTORNEY

KNOW BY ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Russell Ellison and Russell Skibsted, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file, any and all documents in connection therewith, with the Securities and Exchange commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their and his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

KNOW BY ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mark Strobeck and Megan Timmins, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file, any and all documents in connection therewith, with the Securities and Exchange commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their and his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of registrant and in the capacities and on the dates indicated.

SIGNATURE TITLE DATE

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

Russell Ellison

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

Russell Skibsted

McGarry Principal Accounting Officer April 8, 2022

Cooper Director April 8, 2022

/s/ Mark Strobeck President, Chief Executive Officer and Director (Principal Executive Officer and Principal Financial Officer) March 30, 2023

Mark Strobeck

/s/ Paul McGarry Senior Vice President, Finance and Chief Accounting Officer March 30, 2023

Cooper Director March 30, 2023

/s/ Robert S.

Radie Director April 8, 2022

/s/ Allen Nissenson Director April 8, 2022

Radie Director March 30, 2023

/s/ Allen Nissenson Director March 30, 2023

Allen Nissenson

/s/ Andrea Heslin Smiley Director April 8, 2022

/s/ Andrea Heslin Smiley Director March 30, 2023

Andrea Heslin Smiley

Ravich Director April 8, 2022

Ravich Director March 30, 2023

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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Notes to the Consolidated Financial Statements

F- 10 – F- 30

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

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

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

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

Evaluation of Going Concern

As disclosed in Note 2 to the consolidated financial statements, the Company has experienced significant net losses since inception, has an accumulated deficit and has used significant cash flows for operations during 2022, which caused management to evaluate if those factors raised substantial doubt about the Company’s ability to continue as a going concern which could be mitigated through Management’s plan.

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

Management’s plan as disclosed in Note 2

includes increasing prices with some of its customers, entering into new distribution and purchase agreements with former Baxter customers, restructuring the Company’s contract with its largest customer in the concentrates business, and implementing certain cost cutting and containment measures, all of which are significant assumptions in the Company’s projections used in its evaluation of going concern.

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

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

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

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

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

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

• We examined the executed Amendment to the Products Purchase Agreement and analyzed the terms in the agreement to the projected financial information, such as the projected revenue and gross margins.

• We evaluated and tested management’s assumptions, including, but not limited to, projected price increases to subsequent customer activity to validate the significant assumptions in the projected financial information, such as the projected revenue, gross margins, growth rates and operating expenses.

• We examined the executed Distribution Termination and Acquisition Agreement and analyzed the terms in the agreement to the significant assumptions in the projected financial information, such as the projected revenue and gross margins from customers reacquired under this agreement.

• We examined the executed Second Amendment to the Loan and Security Agreement and tested management’s inputs and calculations of compliance with the projected required financial covenants, such as, concentrate revenue and minimum cash requirements.

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

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

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Chicago, Illinois

April 8, 2022

March 30, 2023

ROCKWELL MEDICAL, INC.

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Customer Deposits 66 144

Other Current Liability - Related Party — 131

Total Current Liabilities 17,691 20,966

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Stockholders’ Equity:

Preferred Stock, $ 0.0001 par value, 2,000,000 shares authorized, no shares issued and outstanding at December 31, 2021 and 2020

Preferred Stock, $ 0.0001 par value, 2,000,000 shares authorized, 15,000 and nil shares issued and outstanding at December 31, 2022 and 2021, respectively

Common Stock, $ 0.0001 par value, 170,000,000 shares authorized, 12,163,673 and 8,544,225 shares issued and outstanding at December 31, 2022 and 2021, respectively

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Realized Gain on Investments 4 —

Warrant Modification Expense — ( 837 )

Interest Expense ( 1,936 ) ( 2,360 )

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Net Loss $ ( 18,679 ) $ ( 32,674 )

Unrealized Loss on Available-for-Sale Investments ( 6 ) ( 3 )

Unrealized Gain (Loss) on Available-for-Sale Investments 114 ( 6 )

Foreign Currency Translation Adjustments ( 3 ) 1

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(Dollars in Thousand)

COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED

PREFERRED STOCK COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED

DEFICIT ACCUMULATED

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STOCKHOLDERS'

SHARES AMOUNT

SHARES AMOUNT SHARES AMOUNT

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

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Foreign Currency Translation Adjustments — — — — — — 1 1

Issuance of Common Stock — — — — — —

Vesting of Restricted Stock Units Issued, net of taxes withheld — — 23,483 — ( 6 ) — — ( 6 )

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

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

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

Warrant Modification Expense — — 14,091 — 107 — — 107

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

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

Issuance of Common Stock, net of Issuance Costs / Public offering — — 844,613 — 14,893 — — 14,893

Issuance of Common Stock, net of Issuance Costs / At-the-market offerings — — 7,500 — 15 — — 15

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

Issuance of common stock upon exercise of prefunded warrants — — 2,756,377 — — — — —

Stock-based Compensation — — — — 315 — — 315

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Stock-based Compensation 315 943

Warrant Modification Expense — 837

Increase in Inventory Reserves 610 146

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Changes in Assets and Liabilities:

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

Increase in Accounts Receivable, net ( 346 ) ( 1,742 )

Increase in Inventory ( 2,101 ) ( 656 )

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(Decrease) Increase in Accounts Payable 314 ( 416 )

Decrease in Settlement Payable — ( 104 )

Decrease in Lease Liability ( 1,903 ) ( 1,771 )

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Purchase of Equipment ( 281 ) ( 522 )

Cash Provided By Investing Activities 311 3,212

Cash (Used In) Provided By Investing Activities ( 2,396 ) 311

Cash Flows From Financing Activities:

Proceeds from Term Loan — 22,500

Debt Issuance Costs — ( 1,343 )

Payments on Short Term Note Payable ( 1,443 ) ( 1,530 )

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

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

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

Cash Provided By (Used in) Financing Activities 16,632 ( 2,179 )

Decrease In Cash and Cash Equivalents ( 3,178 ) ( 35,402 )

Cash and Cash Equivalents At Beginning Of Period 13,280 48,682

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Description of Business

Rockwell Medical, Inc.

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

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

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

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

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

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

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

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

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

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

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.

Rockwell was incorporated in the state of Michigan in 1996 and re-domiciled to the state of Delaware in 2019.

Rockwell's headquarters is located at 30142 Wixom Road, Wixom, Michigan 48393.

Liquidity and Going Concern Considerations

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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

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

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

Certain costs are subject to a cap.

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

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

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

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

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

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 $ 7,500,000 .

Tranche was conditioned upon the Company raising an additional $ 15,000,000 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 year ended December 31, 2022, the Company sold 7,500 shares of its common stock pursuant to the Sales Agreement for gross proceeds of $ 15,135 , at a weighted average selling price of approximately $ 2.02 The Company paid $ 378 in commissions and offering fees.

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

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

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

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

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

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

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

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 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.

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

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

As of the date of this report, the Company believes 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 Rockwell is unable to avoid an event of default, any required repayments could have an adverse effect on its liquidity (See Note 16 for further detail).

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

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

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

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

As of December 31, 2022, the Company is in compliance with all financial covenants (See Note 16 for further detail).

Global Economic Conditions

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.

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, the Company is 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;

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and Rockwell Medical India Private Limited.

Rockwell Medical India Private

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

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

All intercompany balances and transactions have been eliminated in consolidation.

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

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

On November 9, 2022, Rockwell reacquired its distribution rights to its hemodialysis concentrates products from Baxter and 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 terminated December 31, 2022.

Rockwell agreed to provide certain services to a group of Baxter customers until March 31, 2023.Remaining upfront fees will continue to be recognized through March 31, 2023 as Rockwell continues to have product sales obligations to a group of specific Baxter customers.

For the majority of the Company’s international customers, the Company recognizes revenue at the shipping point, which is generally the Company’s plant or warehouse.

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

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Product Sales – Point-in-time 69,162 62,715 6,447

License Fee – Point-in-time 1,942 1,942 —

License Fee – Over time 2,489 2,489 —

Total Concentrate Products 71,651 65,204 6,447

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Product Sales – Point-in-time 58,913 52,614 6,299

License Fee – Point-in-time 1,961 1,961 —

License Fee – Over time 1,942 1,942 —

Total Concentrate Products 60,855 54,556 6,299

Net Revenue $ 61,931 $ 55,391 $ 6,540

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

For the years ended December 31, 2022 and 2021, license fee revenue was $ 2.7 million and 2.2 million respectively.

For the years ended December 31, 2022 and 2021, product sales revenue was $ 70.1 million and $ 59.7 million, respectively.

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

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

As of December 31, 2021 unfulfilled performance obligations related to the Baxter Agreement are product sales totaling $ 5.2 million, which will be amortized through expiration of the agreement on October 2, 2024.

Reverse Stock Split

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.

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 account for the effect of the reverse stock split for the periods ended December 31, 2022 and 2021, respectively.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period.

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period.

Actual results could differ from those estimates.

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Investments – Available for Sale

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

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

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

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

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

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Deferred Revenue

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

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

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

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

Under the 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 is 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.

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

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

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

Deferred revenue related to the Distribution Agreement totaled $ 1.5 million and $ 5.2 million as of December 31, 2022 and 2021, respectively.

During the year ended December 31, 2016, the Company entered into a distribution agreement with Wanbang Biopharmaceuticals (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 $ 0.2 million during the years ended December 31, 2021 and 2020, respectively.

The Company recognized revenue of approximately $ 0.2 million during each of the years ended December 31, 2022 and 2021.

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

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

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

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

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

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

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

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

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

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

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

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

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

In September 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 $ 0.4 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.

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

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

The Company recognized revenue of $ 18,158 and $ 10,000 during the years 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.

In 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 years 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.

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

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

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

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

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

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

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Basic EPS excludes dilution.

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

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

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

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

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Unvested restricted stock units 125,000 29,289

Convertible Preferred Stock 1,363,636 —

Common stock issuable under pre-funded warrants 6,300,000 —

Warrants to purchase common stock 10,196,268 2,402,442

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Accumulated other comprehensive income refers to revenues, expenses, gains and losses that are included in comprehensive income, but excluded from net income as these amounts are recorded directly as an adjustment to stockholders’ equity.

Accumulated other comprehensive income consists of unrealized gains and losses on available‑for‑sale investment securities and foreign currency translation adjustments.

Accumulated other comprehensive income consists of unrealized gains and losses on available‑for‑sale investment debt securities and foreign currency translation adjustments.

Adoption of Recent Accounting Pronouncements

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

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

When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study

to determine the consequences of the change to its consolidated financial statements and assures that there are proper controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change.

Investments - Available-for-Sale

Investments available-for-sale consisted of the following as of December 31, 2021 and 2020 (table in thousands):

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

December 31, 2022

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One customer, DaVita, Inc.

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

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

("DaVita"), accounted for 46 % of Rockwell's sales in 2022 and 47 % of its sales in 2021 (see Note 12).

Rockwell's accounts receivable from DaVita were $ 1.9 million and $ 1.0 million as of December 31, 2022 and 2021, respectively.

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

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

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

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

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

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.

Rockwell agreed to provide certain services to a group of Baxter customers until March 31, 2023.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.

For 2022 and 2021, Rockwell's direct sales to Baxter aggregated approximately 29 % and 26 % of sales, respectively, and the Company had a receivable from Baxter of $ 2.3 million and $ 3.5 million as of December 31, 2022 and 2021, respectively.

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

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

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

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

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

Rockwell's sales to foreign customers and distributors accounted for approximately 9 % and 10 % of its total sales in 2022 and 2021, respectively.

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

One international customer, Nipro Medical Corporation, accounted for 7 % and 8 % of its total sales for 2022 and 2021, respectively.

Distribution Agreement

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

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

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

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

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

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

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

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

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

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

The minimum purchase levels increase each year over the term of the Distribution Agreement.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rockwell intends to vigorously defend against any such claim.

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

We recognized revenue associated with the upfront fee totaling $ 1.9 million and $ 2.0 million for the years ended December 31, 2021, and 2020, respectively.

The Distribution Agreement may be extended for an additional five years by Baxter if Baxter achieves a specified sales target and pays an extension fee of $ 7.5 million.

If the first extension occurs, the Distribution Agreement term may later be extended an additional five years at Baxter’s option at no additional cost.

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

Rockwell recognized revenue associated with the upfront fee totaling $ 2.5 million and $ 1.9 million for the years ended December 31, 2022, and 2021, respectively.

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

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.

Rockwell agreed to provide certain services to a group of Baxter customers until March 31, 2023.Under the 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 is 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 is payable in two equal installments on January 1, 2023 and April 1, 2023.

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

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Total $ 7,090 $ 5,599

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

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

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

As of December 31, 2022 and 2021, the Company classified $ 1.3 million and $ 1.5 million, respectively, of inventory as non-current all of which was related to Triferic raw materials.

This Triferic inventory will be utilized for the Company's international partnerships.

The Company has discontinued its NDAs for Triferic and Triferic AVNU in the United States.

As a result, Rockwell reserved an additional $ 606,000 representing all remaining API and finished goods related to Triferic.

As of December 31, 2022 and 2021, Rockwell had total Concentrate inventory aggregating $ 5.8 million and $ 4.0 million, respectively, against which Rockwell had reserved $ 25,000 and $ 21,000 , respectively.

Property and Equipment

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Goodwill and Intangible Assets

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

Total goodwill was $ 0.9 million at each of December 31, 2022 and 2021.

Rockwell completed its annual impairment tests as of December 31, 2022 and 2021, and determined that no adjustment for impairment of goodwill was required during the years ended December 31, 2022 and 2021.

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On July 3, 2022, the Company entered into a short-term note payable for $ 2.0 million, bearing interest at 5.40 % per annum to finance various insurance policies.

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

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

As of December 31, 2022, the Company's insurance note payable balance was $ 0.5 million.

Stockholders’ Equity

Reverse Stock Split

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.

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

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

Preferred Stock

As of December 31, 2021 and 2020, there were 2,000,000 shares of preferred stock, $ 0.0001 par value per share, authorized and no shares of preferred stock issued or outstanding.

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

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

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

As a result, on June 16, 2022 the

Company issued an additional 7,500 shares of the Series X Preferred Stock to DaVita for gross proceeds of $ 7.5 million (by virtue of this transaction, DaVita rises to the level of related party).

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

If the Company’s common stock trades above $ 22.00 for a period of 30 calendar days, the accretion will thereafter cease.

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

As a result, each share of Series X Preferred Stock will initially convert into approximately 91 shares of common stock.

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

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.

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

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

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

As of December 31, 2022 and 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 or outstanding, respectively.

As of December 31, 2022 and 2021, there were 170,000,000 shares of common stock, $ 0.0001 par value per share, authorized and 12,163,673 and 8,544,225 shares issued and outstanding, respectively.

As of December 31, 2022 and 2021, the Company has reserved for issuance the following shares of common stock related to the potential exercise of employee stock options, unvested restricted stock, convertible preferred stock, pre-funded warrants and all other warrants:

As of December 31,

Options to purchase common stock 1,206,905 528,591

Unvested restricted stock awards 891 7,118

Unvested restricted stock units 125,000 29,289

Convertible Preferred Stock 1,363,636 —

Common stock issuable under pre-funded warrants 6,300,000 —

Warrants to purchase common stock 10,196,268 2,402,442

Total 19,192,700 2,967,440

During the years ended December 31, 2022 and 2021, 2,756,377 and nil pre-funded warrants were exercised, respectively.

During the years ended December 31, 2022 and 2021, no vested employee stock options were exercised.

Controlled Equity Offering

On March 22, 2019, 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 shares of the Company’s common stock through the Agent.

The offering and sale of up to $ 40.0 million of the shares has been registered under the Securities Act of 1933, as amended, pursuant to the Company’s registration statement on Form S-3 (File No.

333-227363), which was originally filed with the SEC on September 14, 2018 and declared effective by the SEC on October 1, 2018.

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

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

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

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

as Agent, pursuant to which the Company may offer and sell from time to time up to $ 12,200,000 of shares of Company’s common stock through the Agent (subject to restrictions under General Instruction I.B.6 to Form S-3) .

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

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

Registered Direct Offering

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

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

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

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

A total of 6,300,000 Pre-Funded Warrants remained outstanding as of December 31, 2022.

Private Placement

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

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

The warrants to purchase up to a total of 9,900,990 shares of common stock which expire in November 2027 contain certain valuation provisions on unexercised outstanding warrants if the Company were to experience a fundamental transaction as described in section 3(d) of the warrant agreement.

As of December 31, 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”).

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

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

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

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

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

The Company has accounted for the common stock related to the Offering and Private Placement as equity on the accompanying consolidated balance sheets as of December 31, 2022.

The amount allocated to common stock was $ 2.0 million.

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

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

Stock-Based Compensation

The Board of Directors adopted the Rockwell Medical, Inc., 2007 Long Term Incentive Plan (“2007 LTIP”) on April 11, 2007.

The 2007 LTIP expired on April 11, 2017 and no equity awards were granted under the 2007 LTIP following its expiration.

The 2007 LTIP expired on April 11, 2017 and no equity awards were granted under the 2007 LTIP following its

There were 1,045,455 shares of common stock reserved for issuance under the 2007 LTIP.

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On May 18, 2020, at the 2020 Annual Meeting, the Company’s stockholders approved the amendment and restatement of the Rockwell Medical, Inc.

2018 Long Term Incentive Plan to increase the number of shares of common stock issuable thereunder by 263,636 and on May 9,2022, at the 2021 Annual Meeting, the Company's stockholders approved the amended and restatement of the Rockwell Medical, Inc.

2018 Long Term Incentive Plan to increase the number of shares of common stock issuable thereunder by 454,546 shares bringing common stock reserve for issuance up to 1,018,182 under the 2018 LTIP.

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Restricted stock awards $ ( 390 ) $ ( 390 )

Restricted stock units — ( 1,148 )

Stock option awards — ( 364 )

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Unvested at January 1, 2021 13,345 $ 62.70

Forfeited ( 6,227 ) $ 62.70

Unvested at December 31, 2021 7,118 62.70

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

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

As of December 31, 2022, all unvested restricted stock awards were related to performance based awards.

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

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

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

Stock-based compensation expense of nil was recognized for each of the years ended December 31, 2022 and 2021.

As of December 31, 2022, there is no unrecognized stock-based compensation expense related to restricted stock awards.

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The vesting periods range from 1 - 3 years.

Stock-based compensation expense of 0.3 million and $ 0.4 million was recognized during the year ended December 31, 2021 and 2020, respectively.

Stock-based compensation expense of $ 0.1 million was recognized for each of the years ended December 31, 2022 and 2021.

As of December 31, 2022, the unrecognized stock-based compensation expense was $ 0.1 million over the next 12 months.

Performance Based Restricted Stock Units

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

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

Number of Shares Weighted Average

Unvested at January 1, 2020 988,958 $ 4.48

Forfeited ( 988,958 ) 4.48

Unvested at December 31, 2020 — $ —

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

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

As of December 31, 2022, there were no issued or outstanding performance-based restricted stock units.

As a result, there was no unrecognized stock-based compensation expense related to performance-based restricted stock units.

Service Based Stock Options

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Performance Based Stock Options

A summary of the performance based stock options granted for the year ended December 31, 2021, is as follows:

Number of Shares Weighted Average

Outstanding at January 1, 2020 388,125 $ 4.70

Granted 750,000 2.20

Forfeited ( 388,125 ) ( 4.70 )

Outstanding at December 31, 2020 750,000 $ 2.20

Cancelled ( 750,000 ) 2.20

Outstanding at December 31, 2021 — $ —

Exercisable at December 31, 2021 — $ —

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

As of December 31, 2022, there were no performance based stock options outstanding.

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

License Agreements

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

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

Also pursuant to the Charak MSA, the Company and Charak entered into a Technology License Agreement TPN Triferic, dated as of October 7, 2018 (the “TPN Agreement”), pursuant to which Charak granted the Company an exclusive, sublicensable, royalty-bearing license to SFP for the purpose of commercializing worldwide certain TPN products incorporating SFP.

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Year ending December 31, 2025 937 676

Year ending December 31, 2025 637 676

Year Ended December 31, 2026 310 666

Year Ended December 31, 2027 121 311

Remaining future payments — —

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

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

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

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

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

In September 2021, the Company entered into an amendment to the Loan Agreement in which the Company, in exchange for Innovatus lowering the sales covenants, agreed to (i) prepay an aggregate principal amount of $ 7.5 million in ten installments commencing on December 1, 2021;

(ii) pay an additional prepayment premium of 5 % on prepaid amounts if the Company elects to prepay all outstanding term loans on or before September 24, 2023 and (iii) maintain minimum liquidity of no less than $ 5.0 million if the aggregate principal amount of term loans is greater than $ 15.0 million pursuant to the liquidity covenant in the Loan Agreement.

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.

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

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

As of December 31, 2022, the Company was in compliance with its financial and reporting covenants.

As of December 31, 2022, the outstanding balance of the Term Loan was $ 9.2 million, net of unamortized issuance costs and discount of $ 0.8 million.

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Book over Tax Depreciation — 6

Research & Experimental Expenses 371 —

Other Deferred Tax Assets 1,274 865

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Deferred Tax Liabilities:

Book over Tax Depreciation 8 —

Goodwill & Intangible Assets 224 183

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Deferred tax assets result primarily from net operating loss carryforwards.

For federal tax purposes, we have net operating loss carryforwards of approximately $ 294.8 million that expire between 2022 and 2038.

For federal tax purposes, we have net operating loss carryforwards of approximately $ 311.6 million of which approximately $ 165.3 million expire between 2023 and 2038.

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

The Company recognized no income tax expense or benefit for the years ended December 31, 2022, and 2021.

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

Considered together with the Company's limited history of operating income and its net losses in 2022 and 2021, management has placed a full valuation allowance against the net deferred tax assets as of December 31, 2022 and 2021.

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Subsequent Events

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

On March 20, 2022, John P.

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

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

McLaughlin’s resignation.

The Board intends to appoint a replacement for Mr.

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

McLaughlin’s decision was

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

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

Amended Supply Agreement

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

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

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

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

Certain costs are subject to a cap.

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

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

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

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

Securities Purchase Agreement

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

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

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

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

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

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

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

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

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

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

On January 25, 2023, 389,000 of Pre-Funded Warrants were exercised.

The exercise price of each Pre-Funded Warrant is $ 0.0001 per share.

(See Note 12 for more detail on the Pre-Funded Warrants).

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

What changed 10-K

Item 9A. Controls and Procedures