What changed in this filing

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Item 1. Financial Statements

2024-05-14 compared with 2023-11-14 · 246 added, 355 removed, 410 unchanged (59% of the section changed)

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars In Thousands, Except Par Value Amounts)

September 30,

(In thousands, except share and par value amounts)

2024 December 31,

9 unchanged sentences

Right of Use Assets - Financing, net 1,762 1,903

Intangible Asset, net 10,897 —

Intangible Assets, net 10,621 10,759

Goodwill 921 921

8 unchanged sentences

Deferred License Revenue - Current 46 46

Term Loan - Current - Net of Issuance Costs 5,631 1,631

Insurance Financing Note Payable — 244

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Total Liabilities 30,080 30,882

September 30,

2024 December 31,

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

15,000 shares issued and outstanding at September 30, 2023 and December 31, 2022

15,000 shares issued and outstanding at March 31, 2024 and December 31, 2023

Common Stock, $ 0.0001 par value;

170,000,000 shares authorized;

28,489,663 and 12,163,673 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

29,556,474 and 29,130,607 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Additional Paid-in Capital 419,545 418,487

Accumulated Deficit ( 398,929 ) ( 397,198 )

Accumulated Other Comprehensive Income 68 163

Accumulated Other Comprehensive Income (Loss) 24 ( 1 )

Total Stockholders’ Equity 20,643 21,291

5 unchanged sentences

(In thousands, except share and per share amounts)

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

Net Sales $ 22,676 $ 19,668

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Operating Loss ( 1,324 ) ( 1,427 )

Other (Expense) Income

Realized Gain on Settlement of Investments 220 — 220 4

Other Expense:

Interest Expense ( 431 ) ( 387 )

Interest and Other Income (Expense) - net 56 ( 6 ) 169 ( 10 )

Interest Income 24 64

Total Other Expense, net ( 407 ) ( 323 )

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Basic and Diluted Weighted Average Shares Outstanding 29,327,204 18,359,940

* See Note 3 for more detail related to Basic and Diluted Weighted Average Shares Outstanding

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

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(In thousands)

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

Net Loss $ ( 1,731 ) $ ( 1,750 )

Unrealized (Loss) Gain on Available-for-Sale Investments ( 69 ) 5 ( 90 ) 5

Unrealized Gain (Loss) on Available-for-Sale Investments 25 ( 3 )

Foreign Currency Translation Adjustments — ( 4 )

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Dollars in Thousands)

(In thousands, except share amounts)

PREFERRED STOCK COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED

5 unchanged sentences

Net Loss — — — — — ( 1,731 ) — ( 1,731 )

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

Foreign Currency Translation Adjustments — — — — — — ( 4 ) ( 4 )

Issuance of Common Stock upon exercise of Pre-Funded Warrants — — 389,000 — — — — —

Stock-based Compensation — — — — 193 — — 193

Balance as of March 31, 2023 15,000 — 12,552,673 1 402,894 ( 390,509 ) 156 12,542

Net Loss — — — — — ( 3,305 ) — ( 3,305 )

Unrealized Loss on Available-for-Sale Investments — — — — — — ( 18 ) ( 18 )

Foreign Currency Translation Adjustments — — — — — — ( 1 ) ( 1 )

Issuance of Common Stock upon exercise of Pre-Funded Warrants — — 4,118,000 1 — — — 1

Unrealized Gain on Available-for-Sale Investments — — — — — — 25 25

Issuance of Common Stock, net of offering costs/At-The-Market — — 358,210 — 560 — — 560

Vesting of Restricted Stock Units Issued, net of taxes withheld — — 67,657 — — — — —

Stock-based Compensation — — — — 309 — — 309

Balance as of June 30, 2023 15,000 — 16,795,673 2 403,203 ( 393,814 ) 137 9,528

Net Loss — — — — — ( 1,872 ) — ( 1,872 )

Unrealized Loss on Available-for-Sale Investments — — — — — — ( 69 ) ( 69 )

Issuance of Common Stock in connection with exercise of Prior Warrant and Pre-Funded Warrants, net of offering costs — — 11,693,990 1 13,718 — — 13,719

Issuance of Warrant in connection with the Third Amendment (Note 11)

— — — — 247 — — 247

Stock-based Compensation — — — — 251 — — 251

Balance as of September 30, 2023 15,000 $ — 28,489,663 $ 3 $ 417,133 $ ( 395,686 ) $ 68 $ 21,518

Balance as of March 31, 2024 15,000 $ — 29,556,474 $ 3 $ 419,545 $ ( 398,929 ) $ 24 $ 20,643

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

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AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(Dollars in Thousands)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In thousands, except share amounts)

PREFERRED STOCK COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED

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STOCKHOLDERS'

EQUITY (DEFICIT)

SHARES AMOUNT SHARES AMOUNT

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Net Loss — — — — — ( 1,750 ) — ( 1,750 )

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

Foreign Currency Translation Adjustments — — — — — — ( 4 ) ( 4 )

Issuance of Common Stock upon exercise of Pre-Funded Warrants — — 389,000 — — — — —

Stock-based Compensation — — — — 193 — — 193

Balance as of March 31, 2023 15,000 $ — 12,552,673 $ 1 $ 402,894 $ ( 390,509 ) $ 156 $ 12,542

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

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

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

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

Issuance of Preferred Stock, net of offering costs 15,000 — — — 14,916 — — 14,916

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

Stock-based Compensation — — — — 97 — — 97

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

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

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

Issuance of Common Stock, net of offering costs/Public Offering — — 1,745,377 — — — — —

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

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

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

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

Nine Months Ended

September 30, 2023 Nine Months Ended

September 30, 2022

(In thousands)

Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023

Cash Flows From Operating Activities:

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Stock-based Compensation 251 193

Increase in Inventory Reserves 1,098 307

Non-cash Lease Expense from Right of Use Assets 519 485

Amortization of Debt Financing Costs and Accretion of Debt Discount 276 276

Loss (Gain) on Disposal of Assets 1 ( 3 )

Realized Gain on Sale of Investments ( 220 ) ( 4 )

Amortization of Debt Financing Costs and Accretion of Debt Discount and Premium 219 92

Loss on Disposal of Assets — 1

Changes in Operating Assets and Liabilities:

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Lease Liabilities ( 395 ) ( 336 )

Other Liabilities ( 1,033 ) 756

Accrued and Other Liabilities ( 1,938 ) ( 3,295 )

Deferred License Revenue ( 11 ) ( 1,537 )

Cash Used In Operating Activities ( 9,369 ) ( 16,817 )

Net Cash Used In Operating Activities ( 2,380 ) ( 3,876 )

Cash Flows From Investing Activities:

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Purchase of Equipment ( 139 ) ( 145 )

Cash Paid in Connection with Evoqua Asset Acquisition

Cash Used In Investing Activities ( 5,053 ) ( 5,614 )

Net Cash (Used In) Provided by Investing Activities ( 139 ) 5,302

Cash Flows From Financing Activities:

Payments on Debt ( 500 ) ( 6,750 )

Payments on Insurance Financing Note Payable ( 244 ) ( 503 )

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Proceeds from Issuance of Common Stock 560 —

Offering Costs from Issuance of Common Stock ( 43 ) ( 106 )

Proceeds from Issuance of Preferred Stock — 15,000

Offering Costs from Issuance of Preferred Stock — ( 85 )

Cash Provided by Financing Activities 12,084 22,134

Net Cash Provided by (Used In) Financing Activities 178 ( 631 )

Effect of Exchange Rate Changes on Cash and Cash Equivalents — ( 3 )

Net Decrease in Cash and Cash Equivalents ( 2,343 ) ( 300 )

Net (Decrease) Increase in Cash and Cash Equivalents ( 2,341 ) 792

Cash and Cash Equivalents at Beginning of Period 8,983 10,102

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Cash Paid for Interest $ 234 $ 295

Supplemental Disclosure of Non-cash Operating, Investing and Financing Activities:

Supplemental Disclosure of Non-cash Investing and Financing Activities:

Issuance of Warrant in connection with the Third Amendment as Debt Issuance Costs $ 247 $ —

Change in Unrealized (Loss) Gain on Investments Available-for-Sale $ 25 $ ( 3 )

Increase in Prepaid Assets from Insurance Financing Note Payable $ 733 $ —

Deferred Consideration from Evoqua Asset Acquisition

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

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(the "Company", "Rockwell", "we", or "us") 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 liquid and powder 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 typically performed at freestanding outpatient dialysis centers, hospital-based outpatient centers, skilled nursing facilities, or in a patient’s home.

Rockwell provides the hemodialysis community with products controlled by a Quality Management System regulated by the U.S.

Food and Drug Administration ("FDA").

Rockwell is the largest supplier of liquid bicarbonate concentrates and the second largest supplier of acid and dry 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.

Rockwell manufactures hemodialysis concentrates at its facilities in Michigan, South Carolina, and Texas totaling approximately 175,000 square feet, and manufactures its dry acid concentrate mixers at its facility in Iowa.

Additionally, in July 2023, the Company purchased customer relationships, equipment and inventory from Evoqua Water Technologies related to manufacturing and sale of hemodialysis concentrates products, all of which are manufactured under a contract manufacturing agreement with a third-party organization in Minnesota.

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.

On July 10, 2023, the Company executed and consummated the transactions contemplated by an Asset Purchase Agreement (the “Purchase Agreement”) with Evoqua Water Technologies LLC ("Evoqua") (the "Evoqua Acquisition").

Subject to the terms and conditions of the Purchase Agreement, at the closing of the transaction (the “Closing”), the Company purchased customer relationships, equipment and inventory from Evoqua, which were related to its manufacturing and selling of hemodialysis concentrates products, all of which are manufactured under a contract manufacturing agreement with a third-party organization.

See Note 4 for further detail.

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 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.

During the third quarter of 2023, the ongoing Triferic development effort was terminated resulting in an acceleration of the corresponding deferred license revenue (see Note 10) and a reserve on the non-current inventory (see Note 7).

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.

The Company operates in a single segment.

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

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Liquidity and Capital Resources

As of September 30, 2023, Rockwell had approximately $ 11.7 million of cash, cash equivalents and investments available-for-sale, and working capital of $ 6.8 million.

Net cash used in operating activities for the nine months ended September 30, 2023 was approximately $ 9.4 million.

Based on the currently available working capital, 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.

As of March 31, 2024, Rockwell had approximately $ 8.6 million of cash, cash equivalents, and investments available-for-sale, and working capital of $ 11.7 million.

Net cash used in operating activities for the three months ended March 31, 2024 was approximately $ 2.4 million.

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

The Company continues to review its operational plans and execute on the acquisition of new customers, and has implemented cost containment activities.

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

Additionally, the Company's operational plans include raising capital, if needed, by using its at-the-market ("ATM") facility or other methods or forms of financings, subject to existing limitations.

Additionally, the Company's operational plans include raising capital, if needed, by using the remaining $ 10.4 million available under its at-the-market ("ATM") facility or other methods or forms of financings, subject to existing limitations.

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

In 2023, the Company is no longer subject to the "baby shelf" limitations under Form S-3, which limit the amount the Company may offer pursuant to its registration statement on Form S-3.

The Company is subject to certain covenants and cure provisions under its Loan Agreement with Innovatus.

As of the date of this report, the Company is in compliance with all covenants (See Note 15 for further detail).

The Company is subject to certain covenants and cure provisions under its Loan Agreement with Innovatus, which, on January 2, 2024, was amended to include, among other things, an interest-only period for 30 months, or up to 36 months if certain conditions are met, and to extend the maturity date to January 1, 2029 (See Note 15 for further detail).

As of March 31, 2024, the Company is in compliance with all covenants.

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, recent bank failures in the United States, supply chain weaknesses, and instability in the geopolitical environment, including as a result of the Russian invasion of Ukraine, Israel-Hamas conflict and other political tensions, and lingering effects of the COVID-19 pandemic.

trade tariffs and trade disputes with other countries, instability in the global capital and credit markets, recent bank failures in the United States, supply chain weaknesses, and instability in the geopolitical environment, including as a result of the Russian invasion of Ukraine, the Israel-Hamas conflict and other political tensions, and the occurrence of natural disasters and public health crises.

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

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

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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

The condensed consolidated balance sheet at September 30, 2023, and the condensed consolidated statements of operations, comprehensive loss, and changes in stockholders' equity for the three and nine months ended September 30, 2023 and cash flows for the nine months ended September 30, 2023 are unaudited, but include all adjustments, consisting of normal recurring adjustments the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The results for the three and nine months ended September 30, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023 or for any future interim period.

The condensed consolidated balance sheet at December 31, 2022 has been derived from audited financial statements, however, it does not include all of the information and notes required by U.S.

The condensed consolidated balance sheet at March 31, 2024, and the condensed consolidated statements of operations, comprehensive loss, and changes in stockholders' equity, and cash flows for the three months ended March 31, 2024 and 2023 are unaudited, but include all adjustments, consisting of normal recurring adjustments the Company considers necessary for a fair presentation of the financial position, operating results, and cash flows for the periods presented.

The results for the three months ended March 31, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024 or for any future interim period.

The condensed consolidated balance sheet at December 31, 2023 has been derived from audited financial statements;

however, it does not include all of the information and notes required by U.S.

GAAP for complete financial statements.

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The preparation of the condensed consolidated financial statements in conformity with 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 financial statements and reported amounts of expenses during the reporting period.

Actual results could differ from those estimates.

Restatement of Loss Per Share

Loss per share for the three and nine months ended September 30, 2022 have been recalculated and restated and is presented on a comparable basis with the three and nine months ended September 30, 2023.

In the first quarter of 2023, the Company determined it should have included pre-funded warrants issued in the second quarter of 2022 in the earnings per share calculation in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC") 260-10-45-13, which treats shares of common stock exercisable for little to no consideration as included in the denominator of both the basic and diluted earnings per share calculations.

While the Company has determined the impact of including the pre-funded warrants in the earnings per share calculations does not have a material impact on previously issued financial statements, the Company has recalculated and restated amounts presented on a comparative and consistent basis with current period results.

The table below summarizes previously reported and restated amounts on a comparative basis.

See the table presentation of loss per share calculations as of September 30, 2023 and 2022 in the "Loss Per Share" section below.

Three Months Ended September 30, Nine Months Ended September 30,

As Previously Reported:

Net loss per share attributable to common stockholders - basic and diluted $ ( 0.40 ) $ ( 1.75 )

Weighted average number of shares of common stock outstanding - basic and diluted 10,528,148 9,299,788

Net loss per share attributable to common stockholders - basic and diluted $ ( 0.23 ) $ ( 1.26 )

Weighted average number of shares of common stock outstanding - basic and diluted 18,463,673 12,902,890

Loss Per Share

Basic and diluted net loss per share for the three and nine months ended September 30, 2023 and 2022, after giving effect to the restatement discussed above, was calculated as follows:

Basic and diluted net loss per share for the three months ended March 31, 2024 and 2023 was calculated as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

(In thousands, except share and per share amounts) 2024 2023

Net loss $ ( 1,731 ) $ ( 1,750 )

Net loss attributable to common stockholders for basic and diluted loss per share $ ( 1,872 ) $ ( 4,190 ) $ ( 6,927 ) $ ( 16,317 )

Net loss attributable to common stockholders $ ( 1,731 ) $ ( 1,750 )

Weighted average number of shares of common stock outstanding - basic and diluted 29,327,204 18,359,940

Net loss per share attributable to common stockholders - basic and diluted $ ( 0.06 ) $ ( 0.10 )

Included within the weighted average shares of common stock outstanding for the three and nine months ended September 30, 2022 are 7,311,000 shares of common stock issuable upon the exercise of pre-funded warrants (See Note 11), as the warrants are exercisable at any time for nominal consideration and, as such, the shares are considered outstanding for the purpose of calculating basic and diluted net loss per share attributable to common stockholders.

Included within the weighted average shares of common stock outstanding for the three months ended March 31, 2023 are 5,911,000 shares of common stock issuable upon the exercise of certain pre-funded warrants, as the warrants were exercisable at any time for nominal consideration and, as such, the shares were considered outstanding for the purpose of calculating basic and diluted net loss per share attributable to common stockholders.

There were no unexercised pre-funded warrants as of March 31, 2024.

The Company’s potentially dilutive securities include stock options, restricted stock awards and units, convertible preferred stock and warrants.

These securities were excluded from the computations of diluted net loss per share for the three and nine months ended September 30, 2023 and 2022, as the effect would be to reduce the net loss per share.

The following table includes the potential shares of common stock, presented based on amounts outstanding at each period end, that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

As of September 30,

These securities were excluded from the computations of diluted net loss per share for the three months ended March 31, 2024 and 2023, as the effect would be to reduce the net loss per share.

The following table includes the potential shares of common stock, presented based on amounts outstanding at each period end, that were excluded from the

computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

As of March 31,

Warrants to Purchase Common Stock 3,984,484 10,196,268

Options to Purchase Common Stock 1,876,031 1,194,202

Unvested Restricted Stock Awards 891 891

Unvested Restricted Stock Units 287,400 125,000

Convertible Preferred Stock 1,363,636 1,363,636

Warrants to Purchase Common Stock 4,045,278 17,507,268

Unvested Restricted Stock Units 441,218 125,000

Unvested Restricted Stock Awards 891 891

Total 7,666,260 12,879,997

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

In June 2016, the FASB issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326) , which introduced an impairment model that is based on expected credit losses, rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g., loan commitments).

The expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual term.

Financial instruments with similar risk characteristics may be grouped together when estimating expected credit losses.

In addition, ASC 326 requires expected credit related losses for trade accounts receivable, as well as available-for-sale debt securities, which are to be recorded through an allowance for credit losses, while non-credit related losses will continue to be recognized through other comprehensive income.

The Company adopted the new guidance, as of January 1, 2023, and it did not have a material impact on the condensed consolidated financial statements.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures , which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is in the process of determining the effect this ASU will have on the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures , which updates income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

This ASU also includes certain other amendments to improve the effectiveness of income tax disclosures.

The amendments in this ASU are effective for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The Company is in the process of determining the effect this ASU will have on the consolidated financial statements.

Asset Acquisition

On July 10, 2023, the Company completed the Evoqua Acquisition.

At the Closing, the Company purchased customer relationships, equipment and inventory from Evoqua, which were related to manufacturing and selling of hemodialysis concentrates products, all of which are manufactured under a contract manufacturing agreement with a third-party organization.

Pursuant to the Purchase Agreement, total consideration was $ 17.4 million, comprising a cash payment at Closing of $ 12.4 million (inclusive of transaction costs) and two $ 2.5 million deferred payments, the first to be paid on the one-year anniversary of the Closing, which is included as a current liability on the Company's condensed consolidated balance sheet, and the second to be paid on the second anniversary of the Closing (collectively, the “deferred consideration”).

The transaction was accounted for as an asset acquisition, as the acquired assets did not meet the definition of a business as defined by ASC 805, Business Combinations .

The transaction was accounted for as an asset acquisition, as the acquired assets did not meet the definition of a business as defined by Accounting Standards Codification ("ASC") 805, Business Combinations .

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

The purchase price was allocated, on a relative fair value basis, to the assets acquired at the July 10, 2023 acquisition date as follows (table in thousands):

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Customer relationships are being amortized over a period of 20 years.

Given the recency of the purchase of the equipment in which the assets were recorded at fair value, the Company determined the fair value of the equipment using a cost approach, which considered

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

assumptions over the equipment's current replacement cost and useful life.

Given that the acquired equipment had been recently purchased and recorded at fair value, the Company determined the fair value of the equipment using a cost approach, which considered assumptions over the equipment's current replacement cost and useful life.

Inventory was purchased directly from the contract manufacturer holding the inventory, which approximated fair value.

During the three and nine months ended September 30, 2023, the Company recorded amortization of its customer relationship intangible asset of $ 0.1 million, resulting in a net intangible asset of $ 10.9 million as of September 30, 2023.

Estimated future amortization expense on the Company's customer relationships intangible asset as of September 30, 2023 is as follows (table in thousands):

During the three months ended March 31, 2024, the Company recorded amortization of its customer relationship intangible asset of $ 0.1 million, resulting in a net intangible asset of $ 10.6 million as of March 31, 2024.

Estimated future amortization expense on the Company's customer relationships intangible asset as of March 31, 2024 is as follows (table in thousands):

Year ended December 31:

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Revenue Recognition

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers.

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers , issued by the FASB .

The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.

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Recognize revenue when the company satisfies a performance obligation

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by Rockwell from a customer, are excluded from revenue.

Shipping and handling costs associated with outbound freight related to contracts with customers are accounted for as a fulfillment cost and are included in cost of sales when control of the goods transfers to the customer.

Nature of goods and services

The following is a description of principal activities from which the Company generates its revenue.

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

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

Rockwell's customer mix is diverse, with most customer sales concentrations under 10% and one customer, DaVita, Inc.

("DaVita"), at approximately 50 % of total net product sales for each of the three and nine months ended September 30, 2023.

Rockwell's accounts receivable from this customer were approximately 31 % and 30 % of the total net consolidated accounts receivable balance at September 30, 2023 and December 31, 2022, respectively.

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

("DaVita"), at approximately 44 % and 48 % of total net product sales for the three months ended March 31, 2024 and 2023, respectively.

Rockwell's accounts receivable from this customer were approximately 19 % of the total net consolidated accounts receivable balance at each of March 31, 2024 and December 31, 2023.

See below and Note 10 for additional information regarding the Company's contracts with DaVita.

Product Sales

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

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

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

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

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

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

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

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

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

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

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

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

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.

The amount of revenue recognized is based on the purchase order less returns and adjusted for any rebates, discounts, chargebacks or other amounts paid to customers estimated at the time of sale.

Customers typically pay for the product based on customary business practices with payment terms averaging 30 days, while a small subset of customers have payment terms averaging 60 days.

Deferred License Revenue

The Company received upfront fees under five distribution and license agreements that have been deferred as a contract liability and presented on the accompanying condensed consolidated balance sheets as deferred license revenue.

The amounts received from Wanbang Biopharmaceuticals Co., Ltd.

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

("Jeil Pharma") and Drogsan Pharmaceuticals ("Drogsan Pharma") are recognized as revenue over the estimated term of the applicable distribution and license agreement as regulatory approval was not received and the Company did not have sufficient experience in China, India, South Korea and Turkey, respectively, to determine regulatory approval was probable as of the execution of the agreement.

("Jeil Pharma") and Drogsan Pharmaceuticals ("Drogsan Pharma") are recognized as revenue over the estimated term of the applicable distribution and license agreement as regulatory approval was not received and the Company did not have sufficient experience in China, India, South Korea and Turkey, respectively, to determine that regulatory approval was probable as of the execution of the agreement.

The amounts received from Baxter Healthcare Corporation (“Baxter”) were deferred and recognized as revenue at the point in time the estimated product sales under the agreement occurred.

During the three months ended September 30, 2023, the amounts received from Wanbang were accelerated out of deferred license revenue and into revenue upon notice that the development effort was terminated (see Note 10).

In November 2022, Rockwell reacquired its distribution rights to its hemodialysis concentrates products from Baxter and terminated the exclusive distribution agreement.

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

Following the reacquisition of these rights, Rockwell is now unrestricted in its ability to sell its hemodialysis concentrates products to dialysis clinics throughout the U.S.

and around the world.

For additional information, see Note 10.

Rockwell agreed to pay Baxter a fee for the reacquisition of its distribution rights which was reflected as an expense at that time.

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

As of September 30, 2023, all payments were completed.

On September 18, 2023, the Company and its long-time partner, DaVita, a leading provider of kidney care, entered into an Amended and Restated Products Purchase Agreement (the "Amended Agreement"), which amends and restates the Product Purchase Agreement, dated July 1, 2019, as amended, under which the Company supplies DaVita with certain dialysis concentrates.

Under the Amended Agreement, the Company and DaVita agreed to an increase in product pricing, effective September 1, 2023 and a one-time payment to Rockwell on or after December 1, 2023.

During the three months ended March 31, 2023, all remaining deferred revenue relating to the Baxter agreement was recognized as revenue.

For additional information related to the Company's deferred license revenue, see Note 10.

Product Purchase Agreements

On September 18, 2023, the Company and its long-time partner, DaVita, Inc.

("DaVita"), a leading provider of kidney care, entered into an Amended and Restated Products Purchase Agreement (the "Amended Agreement"), which amends and restates the Product Purchase Agreement, dated July 1, 2019, as amended, under which the Company supplies DaVita with certain dialysis concentrates.

Under the Amended Agreement, the Company and DaVita agreed to an increase in product pricing, effective September 1, 2023 and a one-time payment of $ 0.4 million to Rockwell on or after December 1, 2023, which was recorded as revenue recognized during the fourth quarter of 2023.

The term of the Amended Agreement will expire on December 31, 2024.

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In addition, DaVita is required to provide the Company with nine-month purchasing forecasts and a commitment to purchase at least the forecasted amounts.

In the event that DaVita does not meet its forecasts, it is required to pay the Company for the amount forecasted, purchase additional product, or the Company may terminate the Amended Agreement.

Upon expiration or termination of the Amended Agreement, and upon request by DaVita, the Company has agreed to provide transition services to DaVita during a transition period.

Additionally during the third quarter of 2023, the Company entered into several long-term product purchase agreements, which include supply and purchasing commitments from certain parties.

For the majority of the Company’s U.S.

and 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.

The amount of revenue recognized is based on the purchase order less returns and adjusted for any rebates, discounts, chargebacks or other amounts paid to customers estimated at the time of sale.

There were no such adjustments for the periods reported.

Customers typically pay for the product based on customary business practices with payment terms averaging 30 days, while a small subset of customers have payment terms averaging 60 days.

In the event that DaVita does not meet its forecasts, it is required to pay the Company for the amount forecasted or purchase additional product;

otherwise, the Company may terminate the Amended Agreement.

Upon expiration or termination of the Amended Agreement, and upon request by DaVita, the Company has agreed it would provide transition services to DaVita during a transition period.

Disaggregation of revenue

Revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition.

In thousands Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

In thousands Three Months Ended March 31, 2024

Products By Geographic Area Total U.S.

Rest of World Total U.S.

Rest of World

Drug Revenues

Product Sales – Point-in-time $ — $ — $ — $ — $ — $ —

License Fee – Over time $ 11 $ — $ 11

Total Drug Products 11 — 11

Concentrates Products

Concentrate Products

Product Sales – Point-in-time 22,665 20,934 1,731

License Fee – Over time — — — 1,472 1,472 —

Total Concentrate Products 22,665 20,934 1,731

Net Revenue $ 22,676 $ 20,934 $ 1,742

In thousands Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

In thousands Three Months Ended March 31, 2023

Products By Geographic Area Total U.S.

Rest of World Total U.S.

Rest of World

Drug Revenues

Product Sales – Point-in-time $ 193 $ 193 $ — $ 834 $ 561 $ 273

License Fee – Over time $ 65 $ — $ 65

Total Drug Products 65 — 65

Concentrates Products

Concentrate Products

Product Sales – Point-in-time 18,131 16,459 1,672

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The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers.

In thousands September 30, 2023 December 31, 2022

In thousands March 31, 2024 December 31, 2023 January 1, 2023

Accounts Receivable, net $ 11,094 $ 10,901 $ 6,259

Contract Liabilities, which are included in deferred license revenue $ 510 $ 521 $ 4,331

There were no other material contract assets recorded on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022.

The Company does not generally accept returns of its concentrates products and no material reserve for returns of concentrates products was established as of September 30, 2023 or December 31, 2022.

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

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

There were no other material contract assets recorded on the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023.

The Company does not generally accept returns of its concentrate products and no material reserve for returns of concentrates products was established as of March 31, 2024 or December 31, 2023.

The contract liabilities primarily relate to upfront fees under distribution and license agreements with Wanbang, Sun Pharma, Jeil Pharma, and Drogsan Pharma.

Transaction price allocated to remaining performance obligations

For the three months ended March 31, 2024 and 2023, the Company recognized an immaterial amount and $ 1.5 million as revenue from amounts classified as contract liabilities (i.e., deferred license revenue) as of December 31, 2023 and 2022, respectively.

Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, totaled $ 0.5 million as of March 31, 2024.

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

The Company applies the practical expedient in 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.

Investments - Available-for-Sale

Investments available-for-sale consisted of the following as of September 30, 2023 and December 31, 2022 (table in thousands):

September 30, 2023

Investments available-for-sale consisted of the following as of March 31, 2024 and December 31, 2023 (table in thousands):

March 31, 2024

Amortized Cost Unrealized Gain Unrealized Loss Accrued Interest Fair Value

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

As of September 30, 2023 and December 31, 2022, all of our available-for-sale securities were all due within one year.

Components of inventory, net of reserves, as of September 30, 2023 and December 31, 2022 are as follows (table in thousands):

September 30,

As of March 31, 2024 and December 31, 2023, our available-for-sale securities were all due within one year.

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Components of inventory, net of reserves, as of March 31, 2024 and December 31, 2023 are as follows (table in thousands):

2024 December 31,

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Total Inventory $ 6,251 $ 6,049

Represents inventory related to Triferic raw materials.

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

In September 2022, the Company discontinued its New Drug Applications ("NDAs") for Triferic (dialysate) and Triferic AVNU in the United States.

During the three months ended September 30, 2023, the Company reserved $ 1.1 million of long-term inventory as a result of the termination of the Wanbang development effort.

As of September 30, 2023 and December 31, 2022, Rockwell had total current concentrate inventory aggregating $ 5.5 million and $ 5.8 million, respectively, against which Rockwell had reserved $ 25,000 at both September 30, 2023 and December 31, 2022.

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Property and Equipment, net

As of September 30, 2023 and December 31, 2022, the Company’s property and equipment consisted of the following (table in thousands):

September 30,

Represents inventory related to Triferic raw materials, which is expected to be utilized for the Company's international partnerships, net of a reserve of $ 1.1 million related to the termination of the development of Triferic in Wanbang in 2023 as a result of the failure to demonstrate efficacy when compared with a placebo in its phase III clinical studies.

As of March 31, 2024 and December 31, 2023, Rockwell had total current concentrate inventory aggregating $ 6.1 million and $ 5.9 million, respectively, against which Rockwell had reserved $ 25,000 at each of March 31, 2024 and December 31, 2023, respectively.

Property and Equipment

As of March 31, 2024 and December 31, 2023, the Company’s property and equipment consisted of the following (table in thousands):

2024 December 31,

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Property and Equipment, net $ 6,134 $ 6,402

Depreciation and amortization expense for the three months ended September 30, 2023 and 2022 was $ 0.4 million and $ 0.1 million, respectively.

Depreciation and amortization expense for the nine months ended September 30, 2023 and 2022 was $ 0.8 million and $ 0.4 million, respectively.

Depreciation and amortization expense for the three months ended March 31, 2024 and 2023 was $ 0.4 million and $ 0.2 million, respectively.

Accrued Liabilities

Accrued liabilities as of September 30, 2023 and December 31, 2022 consisted of the following (table in thousands):

September 30,

Accrued liabilities as of March 31, 2024 and December 31, 2023 consisted of the following (table in thousands):

2024 December 31,

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Accrued Workers Compensation 219 254

Accrued Research & Development Expense — 43

Other Accrued Liabilities 1,536 1,755

Total Accrued Liabilities $ 5,253 $ 7,149

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Deferred License Revenue

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

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

The upfront fee was recorded as deferred license revenue and was 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.

On November 9, 2022, Rockwell paid Baxter a fee, which was reflected as a reduction to revenue on the consolidated statements of operations, and was payable in two equal installments on January 1, 2023 and April 1, 2023, to reacquire 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 terminated December 31, 2022.

Rockwell agreed to provide certain services to a group of Baxter's 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.

To ensure that customer needs continued to be met after January 1, 2023, Rockwell agreed to provide certain services to a group of Baxter's customers until March 31, 2023, and Baxter and Rockwell worked together to transition customers’ purchases of Rockwell’s hemodialysis concentrates through that date.

Following the reacquisition of these rights, Rockwell is now unrestricted in its ability to sell its hemodialysis concentrates products to dialysis clinics throughout the United States and around the world.

The Company recognized the remaining revenue of $ 1.5 million during the three months ended March 31, 2023.

In 2016, the Company entered into a distribution agreement with Wanbang (the "Wanbang Agreement") and received an upfront fee of $ 4.0 million.

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

On August 7, 2023, Rockwell was informed by Wanbang that the main efficacy results of Wanbang’s clinical trial for Triferic (dialysate) compared with placebo were not obtained and Wanbang will not bring the product forward to registration.

As a result, the Company recognized all remaining revenue under the Wangbang Agreement of approximately $ 2.2 million during the third quarter of 2023.

Additionally, in connection with these events, the Company

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

established a reserve for related Triferic long-term inventory of $ 1.1 million, resulting in a net increase in gross profit of $ 1.1 million.

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) in India.

In consideration for the license, the Company received an upfront fee of $ 0.1 million.

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

The Company recognized revenue of approximately $ 2,500 and $ 7,500 for the three and nine months ended September 30, 2023 and 2022, respectively.

Deferred license revenue related to the Sun Pharma Agreement totaled $ 62,500 and $ 70,000 as of September 30, 2023 and December 31, 2022, 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.

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

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

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

The Company recognized revenue of $ 5,200 and $ 15,600 for the three and nine months ended September 30, 2023 and 2022, respectively.

Deferred license revenue related to the Jeil Agreement totaled approximately $ 0.4 million as of both September 30, 2023 and December 31, 2022.

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.

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

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

The Company recognized revenue of $ 3,750 and $ 11,250 for the three and nine months ended September 30, 2023 and 2022, respectively.

Deferred license revenue related to the Drogsan Agreements totaled approximately $ 0.1 million as of each of September 30, 2023 and December 31, 2022.

In April 2023, Drogsan submitted a Marketing Authorization application and GMP application for Triferic AVNU to the Turkish Medicines and Medical Devices Agency, for which Drogsan received priority status and high priority status, respectively.

Drogsan is responsible for all regulatory approval and commercialization activities.

The remaining agreements with Sun Pharma, Jeil Pharmaceutical, and Drogsan Pharmaceuticals comprise the current and long-term portions of deferred license revenue on the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023.

Stockholders’ Equity

The Company held its annual meeting of stockholders on May 23, 2023 (the “Annual Meeting”).

At the 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 1,600,000 shares (the “Amended 2018 Plan”).

Preferred Stock

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

As of September 30, 2023, the Series X Preferred Stock accreted a total $ 150,000 .

As of March 31, 2024, the Series X Preferred Stock accreted a total $ 0.2 million.

The Series X Convertible Preferred Stock is convertible to common stock at a 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).

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

As of both September 30, 2023 and December 31, 2022, there were 2,000,000 shares of preferred stock, $ 0.0001 par value per share, authorized and 15,000 shares of preferred stock issued and outstanding.

As of September 30, 2023 and December 31, 2022, there were 170,000,000 shares of common stock, $ 0.0001 par value per share, authorized and 28,489,663 and 12,163,673 shares issued and outstanding, respectively.

As of September 30, 2023 and 2022, the Company 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 (collectively, "common stock equivalents"):

As of September 30,

As of each of March 31, 2024 and December 31, 2023, there were 2,000,000 shares of preferred stock, $ 0.0001 par value per share, authorized and 15,000 shares of preferred stock issued and outstanding.

As of March 31, 2024 and December 31, 2023, there were 170,000,000 shares of common stock, $ 0.0001 par value per share, authorized and 29,556,474 and 29,130,607 shares issued and outstanding, respectively.

As of March 31, 2024 and 2023, the Company 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 (collectively, "common stock equivalents"):

As of March 31,

Common stock and common stock equivalents:

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Total 37,222,734 31,343,670

During the three months ended September 30, 2023 and 2022, 1,793,000 and 477,480 pre-funded warrants were exercised, respectively.

During the nine months ended September 30, 2023 and 2022, 6,300,000 and 477,480 pre-funded warrants were exercised, respectively.

During the three and nine months ended September 30, 2023 and 2022, no vested employee stock options were exercised.

During the three months ended March 31, 2024 and 2023, nil and 389,000 Pre-Funded Warrants were exercised, respectively.

During the three months ended March 31, 2024 and 2023, no vested employee stock options were exercised.

Controlled Equity Offering

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The offering and sale of such shares has been registered under the Securities Act of 1933, as amended.

During the quarter ended September 30, 2023, no sales were made pursuant to the Sales Agreement.

During the three months ended March 31, 2024, 358,210 shares were sold pursuant to the Sales Agreement for net proceeds of $ 0.6 million.

Approximately $ 10.4 million remains available for sale under the ATM facility.

Registered Direct Offering

On May 30, 2022, the Company entered into the Registered Direct Purchase Agreement (the "Agreement") with the Purchaser, pursuant to which the Company issued and sold, 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 Agreement contains customary representations and warranties and agreements of the Company and the Purchaser and customary indemnification rights and obligations of the parties.

On July 5, 2023, all of the remaining Pre-Funded Warrants to purchase 1,793,000 shares of common stock were exercised.

The exercise price of each Pre-Funded Warrant was $ 0.0001 per share and resulted in gross proceeds to the Company of $ 179 .

Private Placement

Also on May 30, 2022, concurrent with the Offering, the Company entered into the private investment in public equity "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 (the "PIPE Warrants") and pre-funded warrants to purchase up to a total of 1,267,897 shares of common stock (the “Pre-Funded PIPE Warrants”).

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

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

As of December 2022, all Pre-Funded PIPE Warrants have been exercised.

On July 10, 2023, the Company entered into a letter agreement (the “Letter Agreement”) with Armistice Capital Master Fund Ltd.

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To the extent the exercise of the Prior Warrant would result in Armistice holding more than 9.99 % of the Company’s outstanding Common Stock, such shares of Common Stock in excess of 9.99 % will be held in abeyance.

The Letter Agreement amended the Prior Warrant to extend the expiration date thereof to one year following the original expiration date set forth therein.

Armistice exercised the Prior Warrant on July 10, 2023, and the Company received gross proceeds of approximately $ 13.8 million from the exercise of the Prior Warrant as a result of such exercise pursuant to the terms of the Letter Agreement.

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Agreement amended the Prior Warrant to extend the expiration date thereof to one year following the original expiration date set forth therein.

Armistice exercised the Prior Warrant on July 10, 2023, and the Company received gross proceeds of approximately $ 13.8 million.

Third Amendment

In connection with the execution of the Third Amendment, as defined and described in Note 15 , on January 2, 2024, the Company issued to Innovatus a warrant to purchase 191,096 shares of the Company’s common stock with an exercise price of $ 1.83 per share.

The warrant may be exercised on a cashless basis, and is immediately exercisable through January 2, 2029.

The number of shares of common stock for which the warrant is exercisable and the exercise price are subject to certain proportional adjustments as set forth in the Third Amendment.

The warrant is equity-classified with a fair value of approximately $ 0.2 million at issuance, which was treated as a debt issuance cost and will be amortized through interest expense over the remaining contractual term of the Term Loan.

The fair value of the warrant at the issuance date was calculated using the Black-Scholes pricing model and include the following assumptions:

Stock price per share $ 1.86

Expected stock price volatility 85.00 %

Risk-free interest rate 3.93 %

Term (years) 5.0

Dividend yield — %

Stock-Based Compensation

The Company recognized total stock-based compensation expense during the three and nine months ended September 30, 2023 and 2022 as follows (table in thousands):

The Company recognized total stock-based compensation expense during the three months ended March 31, 2024 and 2023 as follows (table in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Service-based awards:

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Stock Option Awards 133 148

Total Service Based Awards 212 176 714 485

Performance-based awards:

Restricted Stock Awards — — — ( 391 )

Total $ 251 $ 193

Performance Based Restricted Stock

A summary of the Company’s restricted stock awards during the nine months ended September 30, 2023 is as follows:

Number of Shares Weighted Average

Unvested at January 1, 2023 891 $ 62.70

Unvested at September 30, 2023 891 $ 62.70

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

Number of Shares Weighted Average

Performance Based Restricted Stock Awards

A summary of the Company’s performance based restricted stock awards during the three months ended March 31, 2024 is as follows:

Performance Based Restricted Stock Awards Number of Shares Weighted Average

Unvested at January 1, 2024 891 $ 62.70

Forfeited (1) ( 6,227 ) $ 62.70

Unvested at September 30, 2022 891 $ 62.70

These forfeited awards were due to the resignation of the Company's Chief Development Officer on March 25, 2022 and reduced stock-based compensation expense by $ 0.4 million in 2022.

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

Unvested at March 31, 2024 891 $ 62.70

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

As of March 31, 2024, there is no unrecognized stock-based compensation expense related to performance based restricted stock awards.

ROCKWELL MEDICAL, INC.

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Service Based Restricted Stock Units

A summary of the Company’s service-based restricted stock units during the nine months ended September 30, 2023 is as follows:

Number of Shares Weighted Average

Unvested at January 1, 2023 125,000 $ 1.47

Granted 313,065 1.87

Vested ( 125,000 ) 1.47

Forfeited ( 25,665 ) 1.37

Unvested at September 30, 2023 287,400 $ 1.85

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

Number of Shares Weighted Average

A summary of the Company’s service-based restricted stock units during the three months ended March 31, 2024 is as follows:

Service Based Restricted Stock Units Number of Shares Weighted Average

Unvested at January 1, 2024 258,885 $ 1.83

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Vested ( 67,657 ) 1.37

Forfeited ( 5,774 ) 19.00

Unvested at September 30, 2022 125,000 $ 1.47

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

Unvested at March 31, 2024 441,218 $ 1.65

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

The vesting periods range from 1 to 3 years.

Stock-based compensation expense of $ 0.1 million and $ 46,000 was recognized for the three months ended September 30, 2023 and 2022, respectively.

Stock-based compensation expense of $ 0.3 million and $ 0.1 million was recognized for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, the unrecognized stock-based compensation expense was $ 0.4 million, which is expected to be recognized over an estimated weighted average remaining term of less than 1.4 years.

Service-Based Stock Options

The fair value of the service-based stock options granted for the nine months ended September 30, 2023 were based on the following assumptions:

Nine Months Ended September 30, 2023

As of March 31, 2024, the unrecognized stock-based compensation expense was $ 0.4 million, which is expected to be recognized over the next 2.5 years.

Service Based Stock Option Awards

The fair value of the service-based stock option awards granted for the three months ended March 31, 2024 were based on the following assumptions:

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

Exercise price $ 1.39

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Term (years) 5.61 - 5.62

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

A summary of the Company’s service-based stock option activity for the nine months ended September 30, 2023 is as follows:

A summary of the Company’s service-based stock option activity for the three months ended March 31, 2024 is as follows:

Service Based Stock Option Awards Shares

Options Weighted

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Intrinsic Value

in years in thousands

Outstanding at January 1, 2023 1,206,905 $ 8.32

Granted 382,745 1.48

Forfeited ( 143,430 ) 2.82

Expired ( 78,727 ) 26.74

Outstanding at September 30, 2023 1,367,493 $ 5.93 8.4 $ 680

Exercisable at September 30, 2023 444,836 $ 14.64 7 $ 114

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

Options Weighted

Average Exercise

Price Weighted

(in $1,000's)

Outstanding at January 1, 2024 1,328,621 $ 5.22

1 unchanged sentence

Forfeited ( 1,750 ) 2.06

Expired ( 85,466 ) 82.09 —

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

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

Outstanding at March 31, 2024 1,876,031 $ 4.10 8.7 $ 380,399

Exercisable at March 31, 2024 430,662 $ 12.14 7.4 $ 57,960

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

The intrinsic value of the outstanding options as of September 30, 2022 was not significant.

Stock-based compensation expense recognized for service-based stock options was $ 0.1 million and $ 0.1 million for the three months ended September 30, 2023 and 2022, respectively.

Stock-based compensation expense recognized for service-based stock options was $ 0.4 million and $ 0.4 million for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, total stock-based compensation expense related to unvested options not yet recognized totaled approximately $ 0.7 million, which is expected to be recognized over an estimated weighted average remaining term of 3.2 years.

Forfeitures are recorded in the period of occurrence and compensation expense is adjusted accordingly.

Licensing Agreements

The weighted average grant date fair value for service based stock option awards granted during the three months ended March 31, 2024 was $ 0.98 .

No service based stock option awards were granted during the three months ended March 31, 2023.

As of March 31, 2024, total stock-based compensation expense related to unvested options not yet recognized totaled approximately $ 1.1 million, which is expected to be recognized over the next 3.3 years.

License Agreements

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Product License Agreements

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

As of September 30, 2023 and December 31, 2022, the Company has accrued $ 85,400 relating to

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

certain IP reimbursement expenses and certain sublicense royalty fees, which is included within accrued liabilities on the condensed consolidated balance sheet.

As of March 31, 2024 and December 31, 2023, the Company has accrued $ 87,900 relating to certain IP reimbursement expenses and certain sublicense royalty fees, which is included within accrued liabilities on the condensed consolidated balance sheets.

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

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

Additionally, the Company is required to pay Charak a percentage of any sublicense income during the term of the agreement, which amount cannot be less than a minimum specified percentage of net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and be no less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis.

Also pursuant to the Charak MSA, the Company and Charak entered into a Commercialization and Technology License Agreement I.V.

Triferic dated as of October 7, 2018 (the “IV Agreement”), under which Charak granted the Company an exclusive, sub-licensable, royalty-bearing license to SFP for the purpose of commercializing certain intravenous-delivered products incorporating SFP for the treatment of iron disorders worldwide for a term that expires on the later of February 1, 2034 or upon the expiration or termination of a valid claim of a licensed patent.

Additionally, the Company is required to pay Charak a percentage of any sublicense income during the term of the agreement, which cannot be less than a minimum specified percentage of net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and be no less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis.

Also pursuant to the Charak MSA, the Company and Charak entered into a Commercialization and Technology License Agreement IV Triferic dated as of October 7, 2018 (the “IV Agreement”), under which Charak granted the Company an exclusive, sub-licensable, royalty-bearing license to SFP for the purpose of commercializing certain intravenous-delivered products incorporating SFP for the treatment of iron disorders worldwide for a term that expires on the later of February 1, 2034 or upon the expiration or termination of a valid claim of a licensed patent.

The Company was liable to pay Charak royalties on net sales by the Company of products developed under the license at a specified rate until December 31, 2021.

5 unchanged sentences

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

The potential sub-license milestone payments are not yet considered probable, and no milestone payments have been accrued as of September 30, 2023 and December 31, 2022.

The potential milestone payments are not yet considered probable, and no milestone payments have been accrued as of March 31, 2024 and December 31, 2023.

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

1 unchanged sentence

Rockwell occupies a 51,000 square foot facility and a 17,500 square foot facility in Wixom, Michigan under a lease expiring in August 2027.

Rockwell also occupies two other manufacturing facilities, a 51,000 square foot facility in Grapevine, Texas under a lease expiring in December 2025, and a 57,000 square foot facility in Greer, South Carolina under a lease expiring February 2026.

Rockwell also occupies two other manufacturing facilities, a 51,000 square foot facility in Grapevine,

Texas under a lease expiring in December 2025, and a 57,000 square foot facility in Greer, South Carolina under a lease expiring February 2026.

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

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

At September 30, 2023, the Company had operating and finance lease liabilities of $ 5.4 million and right-of-use assets of $ 5.1 million, which are included in the condensed consolidated balance sheet.

At December 31, 2022, the Company had operating and finance lease liabilities of $ 6.7 million and right-of-use assets of $ 6.4 million, which are included in the condensed consolidated balance sheet.

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

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023

Operating leases

3 unchanged sentences

Finance leases

Non-cash lease expense from right-of-use assets 142 141 424 424

Amortization of right-of-use assets 141 141

Interest on lease obligations 32 39

1 unchanged sentence

Short-term lease rent expense 5 4

Total lease expense $ 716 $ 701 $ 2,166 $ 2,150

Total rent expense $ 720 $ 703

Other information

Payments for principal from operating leases $ 461 $ 427 $ 1,363 $ 1,338

Payments for interest from finance leases $ 37 $ 44 $ 114 $ 136

Payments for principal from finance leases $ 130 $ 121 $ 388 $ 359

Operating cash flows from operating leases $ 437 $ 424

Operating cash flows from finance leases $ 32 $ 39

Financing cash flows from finance leases $ 138 $ 128

Weighted-average remaining lease term – operating leases 2.2 2.8

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

The Company also owes an additional fee equal to 4.375 % of the funded amount of the Term Loans, or $ 1.0 million (such additional fee, the "Final Fee") at

The Company is accreting up to this Final Fee premium with a charge against interest expense on the accompanying condensed consolidated statements of operations.

In connection with each funding of the Term Loans, the Company was required to issue to Innovatus a warrant (the “Warrants”) to purchase a number of shares of the Company’s common stock equal to 3.5 % of the principal amount of the relevant Term Loan funded divided by the exercise price.

4 unchanged sentences

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

The Term Loans mature on March 16, 2025, and bear interest at the greater of (i) Prime Rate (as defined in the Loan Agreement) and (ii) 4.75 %, plus 4.00 %, with an initial interest rate of 8.75 % per annum and an effective interest rate of 12.5 % as of September 30, 2023.

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

For the three months ended September 30, 2023 and 2022, interest expense amounted to $ 0.3 million and $ 0.4 million, respectively.

For the nine months ended September 30, 2023 and 2022, interest expense amounted to $ 0.9 million and $ 1.2 million, respectively.

The Term Loan was scheduled to mature on March 16, 2025, and bore interest at the greater of (i) Prime Rate (as defined in the Loan Agreement) and (ii) 4.75 %, plus 4.00 %, with an initial interest rate of 8.75 % per annum.

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

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

2 unchanged sentences

(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 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, which amended the Loan Agreement.

(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 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 additional aggregate principal amount of $ 5.0 million in Term Loans in one installment on November 14, 2022;

(ii) paid interest only payments until September 2023, at which time it resumed scheduled debt payments.

The financial covenant related to the sales of Triferic was replaced with the trailing 6 months revenue of our concentrates products.

The Company cannot assure that it can maintain compliance with the covenants under our Loan Agreement, which may result in an event of default.

The Company's ability to comply with these covenants may be adversely affected by events beyond its control.

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

and (ii) paid interest only payments until September 2023, at which time it resumed scheduled debt payments.

The financial covenant related to the sales of Triferic was replaced with the trailing 6 months revenue of the Company's concentrates products.

On January 2, 2024, the Company entered into the Third Amendment to and Restatement of the Loan and Security Agreement (the "Third Amendment") with Innovatus, dated January 1, 2024.

The Third Amendment provides for the continuation of term loans initially borrowed under the Loan Agreement amounting to $ 8.0 million as of January 1, 2024.

The Company will make interest-only payments on the Term Loans for 30 months, or up to 36 months if certain conditions are met.

The Term Loans will mature on January 1, 2029, unless earlier repaid.

Effective on January 1, 2024, the Term Loans will bear interest equal to the sum of (i) the greater of (a) Prime Rate (as defined in the Third Amendment) and (b) 7.50 % plus (ii) 3.50 %.

At the Company's option, 2.00 % of the interest due on any applicable interest payment date during the interest-only period may be paid in-kind by adding such amount to the then outstanding principal balance of the Term Loans.

The Term Loans may be voluntarily prepaid in full (but not partially) at any time, upon at least seven business days’ prior notice.

In connection with any voluntary prepayment or satisfaction of the Term Loans prior to the maturity date (including any acceleration), the Company will pay all accrued and unpaid interest and all other amounts due in connection with the Term Loans, together with (x) a prepayment fee (the “Prepayment Fee”) equal to:

(i) 6.0 % of the principal amount of the Term Loans prepaid if the payment is made before January 1, 2025;

(ii) 2.0 % of the principal amount of the Term Loans prepaid if the payment is made after January 1, 2025 but on or before January 1, 2026;

(iii) 1.0 % of the principal amount of the Term Loans prepaid if the payment is made after January 1, 2026 but on or before January 1, 2027;

or (iv) 0 % of the principal amount of the Term Loans prepaid if the payment is made after January 1, 2027 through maturity, and (y) the Final Fee.

The Term Loans will be mandatorily prepaid upon a change in control of the Company, or upon any early termination/acceleration of the Term Loans.

In the event of a mandatory prepayment of the Term Loans, the Company shall be required to pay the Prepayment Fee (if applicable), as well as the Final Fee.

The Third Amendment Final Fee shall be due and payable at maturity if it has not previously been paid in full in connection with a prepayment of the Term Loans.

The Third Amendment was treated as a modification for accounting purposes.

The Third Amendment contains various financial covenants and customary representations and warranties and affirmative and negative covenants, subject to exceptions as described in the Third Amendment.

The Company's ability to comply with the covenants under the Third Amendment may be adversely affected by events beyond its control.

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

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

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

As of September 30, 2023, the Company was in compliance with all covenants under the Loan Agreement.

As of September 30, 2023, the outstanding balance of the Term Loan was $ 9.0 million, net of unamortized issuance costs and discount of $ 0.5 million.

The following table reflects the schedule of principal payments on the Term Loan as of September 30, 2023 (in thousands):

Principal Payments

However, as of March 31, 2024, the Company was in compliance with all covenants under the Third Amendment.

In connection with the execution of the Third Amendment, on January 2, 2024, the Company issued a warrant to purchase shares of the Company’s common stock.

The warrant is equity-classified with a fair value of $ 0.2 million at issuance, which was treated as a debt issuance cost and will be amortized through interest expense over the remaining contractual term of the Term Loan.

For additional information, see Note 11.

The effective interest rate is 12.0 % as of March 31, 2024.

For the three months ended March 31, 2024 and 2023, interest expense amounted to $ 0.2 million and $ 0.4 million, respectively.

As of March 31, 2024, the outstanding balance of the Term Loan was $ 8.3 million, net of unamortized issuance costs and discount of $ 0.7 million, and including $ 0.8 million of premium accretion, $ 0.1 million related to a fee resulting from the Third Amendment, and paid-in-kind interest of $ 40 thousand.

The following table reflects the schedule of principal payments on the Term Loan as of March 31, 2024 (in thousands):

March 31, 2024

2024 (remaining) $ —

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

2029 (inclusive of Final Fee) 1,254

Total debt maturities 9,098

Unamortized issuance costs, discount and premium, net ( 833 )

Term Loan - Long-Term, net of issuance costs $ 8,265

Insurance Financing Note Payable

On June 3, 2023, the Company entered into a short-term note payable for $ 0.7 million, bearing interest at 9.59 % per annum to finance various insurance policies.

Principal and interest payments related to this note began on July 3, 2023 and will be paid on a straight-line amortization over nine months with the final payment due on March 3, 2024.

As of September 30, 2023, the outstanding balance was $ 0.5 million.

Principal and interest payments related to this note began on July 3, 2023 and were paid on a straight-line amortization over nine months with the final payment due on March 3, 2024.

During the three months ended March 31, 2024, the Company's insurance financing note payable balance was paid in full .

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

What changed 10-Q

Item 1. Financial Statements