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Item 1. Financial Statements

2024-08-08 compared with 2024-05-14 · 176 added, 124 removed, 532 unchanged (36% of the section changed)

39 unchanged sentences

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

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

15,000 shares issued and outstanding at June 30, 2024 and December 31, 2023

Common Stock, $ 0.0001 par value;

170,000,000 shares authorized;

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

31,030,218 and 29,130,607 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional Paid-in Capital 422,086 418,487

Accumulated Deficit ( 398,586 ) ( 397,198 )

Accumulated Other Comprehensive Income (Loss) 24 ( 1 )

Accumulated Other Comprehensive Loss ( 5 ) ( 1 )

Total Stockholders’ Equity 23,498 21,291

5 unchanged sentences

(In thousands, except share and per share amounts)

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

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

Net Sales $ 25,832 $ 18,080 $ 48,508 $ 37,748

4 unchanged sentences

General and Administrative 3,449 3,295 7,225 6,545

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

Operating Income (Loss) 515 ( 2,959 ) ( 809 ) ( 4,386 )

Other Expense:

Realized gain on Available-for-Sale Investments 51 — 51 —

Interest Expense ( 232 ) ( 395 ) ( 663 ) ( 782 )

1 unchanged sentence

Total Other Expense, net ( 172 ) ( 346 ) ( 579 ) ( 669 )

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

Basic and Diluted Net Loss per Share $ ( 0.06 ) $ ( 0.10 )

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

Net Income (Loss) $ 343 $ ( 3,305 ) $ ( 1,388 ) $ ( 5,055 )

Basic Net Income (Loss) per Share $ 0.01 $ ( 0.18 ) $ ( 0.05 ) $ ( 0.27 )

Diluted Net Income (Loss) per Share $ 0.01 $ ( 0.18 ) $ ( 0.05 ) $ ( 0.27 )

Basic Weighted Average Shares Outstanding 30,451,622 18,496,640 29,889,413 18,480,248

Diluted Weighted Average Shares Outstanding 32,033,776 18,496,640 29,889,413 18,480,248

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

1 unchanged sentence

AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

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

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

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

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

Net Income (Loss) $ 343 $ ( 3,305 ) $ ( 1,388 ) $ ( 5,055 )

Reclassification of Realized Gain on Available-for-Sale Investments Included in Net Income ( 25 ) — ( 25 ) —

Unrealized (Loss) Gain on Available-for-Sale Investments — ( 18 ) 25 ( 21 )

Foreign Currency Translation Adjustments ( 4 ) ( 1 ) ( 4 ) ( 4 )

Comprehensive Loss $ ( 1,706 ) $ ( 1,757 )

Comprehensive Income (Loss) $ 314 $ ( 3,324 ) $ ( 1,392 ) $ ( 5,080 )

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

6 unchanged sentences

COMPREHENSIVE

(LOSS) INCOME TOTAL

STOCKHOLDERS'

9 unchanged sentences

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

Net Income — — — — — 343 — 343

Reclassification of Realized Gains on Available-for-Sale Debt Instrument Investments Included in Net Income — — — — — — ( 25 ) ( 25 )

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

Issuance of common stock, net of offering costs/At-the-Market Offering — — 1,350,169 — 2,203 — — 2,203

Vesting of Restricted Stock Units Issued, net of taxes withheld — — 123,575 — — — — —

Stock-based Compensation — — — — 338 — — 338

Balance as of June 30, 2024 15,000 $ — 31,030,218 $ 3 $ 422,086 $ ( 398,586 ) $ ( 5 ) $ 23,498

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

13 unchanged sentences

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

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

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, net of offering costs/Public Offering — — 4,118,000 1 — — — 1

Vesting of Restricted Stock Units Issued, net of taxes withheld — — 125,000 — — — — —

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

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

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

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(In thousands)

Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023

Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023

Cash Flows From Operating Activities:

5 unchanged sentences

Amortization of Debt Financing Costs and Accretion of Debt Discount and Premium 249 184

Loss on Disposal of Assets — 1

Realized Gain on Sale of Investments ( 51 ) —

Changes in Operating Assets and Liabilities:

11 unchanged sentences

Purchase of Equipment ( 425 ) ( 225 )

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

Net Cash Provided by Investing Activities 1,578 5,238

Cash Flows From Financing Activities:

4 unchanged sentences

Effect of Exchange Rate Changes on Cash and Cash Equivalents ( 3 ) ( 4 )

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

Net Increase (Decrease) in Cash and Cash Equivalents 2,880 ( 1,143 )

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

4 unchanged sentences

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 )

Right of Use Assets - Operating obtained in exchange for Lease Liabilities - Operating $ 1,549 $ —

Change in Unrealized Gain (Loss) on Investments Available-for-Sale $ — $ ( 21 )

Increase in Prepaid Assets from Insurance Financing Note Payable $ 670 $ 733

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

8 unchanged sentences

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.

Additionally, in July 2023, the Company purchased customer relationships, equipment and inventory from Evoqua Water Technologies related to the 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.

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Liquidity and Capital Resources

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.

As of June 30, 2024, Rockwell had approximately $ 11.9 million of cash and cash equivalents, and working capital of $ 14.9 million.

Net cash used in operating activities for the six months ended June 30, 2024 was approximately $ 0.9 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.

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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.

As of June 30, 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.

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

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

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

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

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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 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 June 30, 2024, and the condensed consolidated statements of operations, comprehensive income (loss), and changes in stockholders' equity, and cash flows for the three and six months ended June 30, 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 and six months ended June 30, 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;

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Actual results could differ from those estimates.

Loss Per Share

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

Income (Loss) Per Share

Basic and diluted net income (loss) per share for the three and six months ended June 30, 2024 and 2023 was calculated as follows:

Three Months Ended

June 30, Six Months Ended

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

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

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 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.

Net Income (Loss) $ 343 $ ( 3,305 ) $ ( 1,388 ) $ ( 5,055 )

Undistributed Earnings to Participating Securities ( 58 ) — — —

Net Income (Loss) Attributable to Common Stockholders $ 285 $ ( 3,305 ) $ ( 1,388 ) $ ( 5,055 )

Weighted Average Number of Shares of Common Stock Outstanding - Basic 30,451,622 18,496,640 29,889,413 18,480,248

Incremental Shares Attributable to the Assumed Exercise of Outstanding Options to Purchase Common Stock 35,185 — — —

Incremental Shares Attributable to the Assumed Vesting of Unvested Restricted Stock Units 183,333 — — —

Incremental Shares Attributable to the Assumed Conversion of Preferred Stock 1,363,636 — — —

Weighted Average Number of Shares of Common Stock Outstanding - Diluted 32,033,776 18,496,640 29,889,413 18,480,248

Net Loss per Share Attributable to Common Stockholders - Basic $ 0.01 $ ( 0.18 ) $ ( 0.05 ) $ ( 0.27 )

Net Loss per Share Attributable to Common Stockholders - Diluted $ 0.01 $ ( 0.18 ) $ ( 0.05 ) $ ( 0.27 )

Income (loss) per share (“EPS”) is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities.

Diluted EPS gives effect to the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, using the more dilutive of the two- class method and the if-converted method in the period of earnings.

The two class method is an earnings allocation method that determines income (loss) per share (when there are earnings) for common stock and participating securities.

The if-converted method assumes all convertible securities are converted into common stock.

Diluted EPS excludes all dilutive potential shares of common stock if their effect is anti-dilutive.

Included within the weighted average shares of common stock outstanding for the three and six months ended June 30, 2023 are 1,793,000 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 during each of the three and six months ended June 30, 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 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,

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 income (loss) per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

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

10 unchanged sentences

Early adoption is permitted.

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

The Company is in the process of determining the effect this ASU will have on the disclosures contained in the notes to 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.

2 unchanged sentences

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.

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

Asset Acquisition

1 unchanged sentence

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.

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”).

On July 12, 2024, the Company and Evoqua executed an amendment to the Purchase Agreement (the "First Amendment"), which stipulated that the first deferred payment would be partially offset by $ 0.3 million to reimburse the Company for certain expenses incurred following the close of the Evoqua Acquisition and split the first deferred payment into four quarterly installments to be paid through April 2025.

The First Amendment also split the second deferred payment into four quarterly installments to be paid from July 2025 through April 2026.

The first deferred payment is included as Deferred Consideration - Current the Company's condensed consolidated balance sheets.

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 .

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

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):

During the three and six months ended June 30, 2024, the Company recorded amortization of its customer relationship intangible asset of $ 0.1 million and $ 0.3 million, respectively, resulting in a net intangible asset of $ 10.5 million as of June 30, 2024.

Estimated future amortization expense on the Company's customer relationships intangible asset as of June 30, 2024 is as follows (table in thousands):

Year ended December 31:

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

("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.

("DaVita"), at approximately 44 % and 50 % of total net product sales for the six months ended June 30, 2024 and 2023, respectively, and 45 % and 51 % of total net product sales for the three months ended June 30, 2024 and 2023, respectively.

Rockwell's accounts receivable from this customer were approximately 35 % of the total net consolidated accounts receivable balance at each of June 30, 2024 and December 31, 2023.

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

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

three months ended June 30, 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.

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

In thousands Three Months Ended March 31, 2024

In thousands Three Months Ended June 30, 2024 Six Months Ended June 30, 2024

Products By Geographic Area Total U.S.

Rest of World Total U.S.

Rest of World

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Net Revenue $ 25,832 $ 23,209 $ 2,623 $ 48,508 $ 44,143 $ 4,365

In thousands Three Months Ended March 31, 2023

In thousands Three Months Ended June 30, 2023 Six Months Ended June 30, 2023

Products By Geographic Area Total U.S.

Rest of World Total U.S.

Rest of World

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

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

In thousands June 30, 2024 December 31, 2023 January 1, 2023

Accounts Receivable, net $ 10,840 $ 10,901 $ 6,259

Contract Liabilities, which are included in deferred license revenue $ 498 $ 521 $ 4,331

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.

There were no other material contract assets recorded on the condensed consolidated balance sheets as of June 30, 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 June 30, 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.

For the six months ended June 30, 2024 and 2023, the Company recognized an immaterial amount and $ 1.6 million as revenue from amounts classified as contract liabilities (i.e., deferred license revenue) as of December 31, 2023 and 2022, respectively.

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.

1 unchanged sentence

Investments - Available-for-Sale

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

Available-for-Sale Securities

Debt securities $ 1,948 $ 29 $ — $ — $ 1,977

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

December 31, 2023

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

As of December 31, 2023, the Company's available-for-sale securities were all due within one year.

During the three and six months ended June 30, 2024, the Company sold these investments for a realized gain of $ 0.1 million, which is included in realized gain on available-for-sale investments on the condensed consolidated statements of operations.

ROCKWELL MEDICAL, INC.

1 unchanged sentence

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):

Components of inventory, net of reserves, as of June 30, 2024 and December 31, 2023 are as follows (table in thousands):

2024 December 31,

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Total Inventory $ 6,061 $ 6,049

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.

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 August 2023 as a result of the failure to demonstrate efficacy when compared with a placebo in its phase III clinical studies.

As of June 30, 2024 and December 31, 2023, Rockwell had total current concentrate inventory aggregating $ 5.9 million and $ 5.9 million, respectively, against which Rockwell had reserved $ 25,000 at each of June 30, 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):

As of June 30, 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 $ 6,009 $ 6,402

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

Depreciation and amortization expense for the three months ended June 30, 2024 and 2023 was $ 0.4 million and $ 0.2 million, respectively.

Depreciation and amortization expense for the six months ended June 30, 2024 and 2023 was $ 0.8 million and $ 0.3 million.

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Accrued Liabilities

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

Accrued liabilities as of June 30, 2024 and December 31, 2023 consisted of the following (table in thousands):

2024 December 31,

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Total Accrued Liabilities $ 6,168 $ 7,149

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Deferred License Revenue

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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.

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.

The Company recognized the remaining revenue of $ 1.5 million during the six months ended June 30, 2023.

Stockholders’ Equity

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

As of June 30, 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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In addition, any debt financing is limited by the terms of our Securities Purchase Agreement with DaVita.

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

Specifically, until DaVita owns less than 50 % of its investment, the Company may only incur

additional debt in the form of a purchase money loan, a working capital line of up to $ 5 million, or to refinance existing debt, unless DaVita consents.

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

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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 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,

As of each of June 30, 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 June 30, 2024 and December 31, 2023, there were 170,000,000 shares of common stock, $ 0.0001 par value per share, authorized and 31,030,218 and 29,130,607 shares issued and outstanding, respectively.

As of June 30, 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 June 30,

Common Stock and Common Stock Equivalents:

8 unchanged sentences

Total 38,808,569 32,033,132

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.

During the three months ended June 30, 2024 and 2023, nil and 4,118,000 Pre-Funded Warrants were exercised, respectively.

During the six months ended June 30, 2024 and 2023, nil and 4,507,000 Pre-Funded Warrants were exercised, respectively.

During the three and six months ended June 30, 2024 and 2023, no vested employee stock options were exercised.

Controlled Equity Offering

2 unchanged sentences

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

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.

During the six months ended June 30, 2024, 1,708,379 shares were sold pursuant to the Sales Agreement for net proceeds of $ 2.8 million.

Approximately $ 8.2 million remains available for sale under the ATM facility.

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The terms of the Reload Warrant and Letter Agreement provide for customary resale registration rights.

The Letter Agreement also provides that for a period of 45 days after the issuance of the Reload Warrant, the Company’s may not sell shares of Common Stock pursuant to its sales agreement with Cantor Fitzgerald & Co., dated as of April 8, 2022, at price per share less than $ 6.25 .

The Reload Warrant may be exercised at all times prior to the 54 months month anniversary of its issuance date.

The Letter Agreement also provides that for a period of 45 days after the issuance of the Reload Warrant, the Company may not sell shares of Common Stock pursuant to its sales agreement with Cantor Fitzgerald & Co., dated as of April 8, 2022, at a price per share less than $ 6.25 .

The Reload Warrant may be exercised at all times prior to the 54 months anniversary of its issuance date.

The Prior Warrant and the Reload Warrant both provide that a holder (together with its affiliates) may not exercise any portion of the Prior Warrant or the Reload Warrant to the extent that 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 such warrant.

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.

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

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.

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Stock-Based Compensation

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

The Company recognized total stock-based compensation expense during the three and six months ended June 30, 2024 and 2023 as follows (table in thousands):

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Service-based awards:

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Total $ 338 $ 309 $ 589 $ 502

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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:

A summary of the Company’s performance based restricted stock awards during the six months ended June 30, 2024 is as follows:

Performance Based Restricted Stock Awards Number of Shares Weighted Average

Unvested at January 1, 2024 891 $ 62.70

Unvested at March 31, 2024 891 $ 62.70

Unvested at June 30, 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.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

As of June 30, 2024, there is no unrecognized stock-based compensation expense related to performance based restricted stock awards.

Service Based Restricted Stock Units

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

A summary of the Company’s service-based restricted stock units during the six months ended June 30, 2024 is as follows:

Service Based Restricted Stock Units Number of Shares Weighted Average

2 unchanged sentences

Vested ( 191,232 ) 2.18

Unvested at March 31, 2024 441,218 $ 1.65

Unvested at June 30, 2024 534,309 $ 1.48

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.

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.

As of June 30, 2024, the unrecognized stock-based compensation expense was $ 0.7 million, which is expected to be recognized over the next 1.7 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

The fair value of the service-based stock option awards granted for the six months ended June 30, 2024 and 2023 were based on the following assumptions:

Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

Exercise Price $ 1.39 - $ 1.80

$ 1.37 - $ 2.83

Expected Stock Price Volatility 81.8 %

81.6 % - 81.9 %

Risk-free Interest Rate 4.31 % - 4.45 %

3.41 % - 3.55 %

Term (years) 5.61 - 5.62

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

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

A summary of the Company’s service-based stock option activity for the six months ended June 30, 2024 is as follows:

Service Based Stock Option Awards Shares

8 unchanged sentences

Forfeited ( 2,500 ) 2.29

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 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.

Expired ( 250 ) 2.83

Outstanding at June 30, 2024 1,895,031 $ 4.08 8.5 $ 529,694

Exercisable at June 30, 2024 455,511 $ 11.57 7.2 $ 88,240

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

The weighted average grant date fair value for service based stock option awards granted during the six months ended June 30, 2024 and 2023 was $ 0.99 and $ 1.03 , respectively.

As of June 30, 2024, total stock-based compensation expense related to unvested options not yet recognized totaled approximately $ 0.9 million, which is expected to be recognized over the next 3.2 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 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.

As of June 30, 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 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.

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 can 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.

1 unchanged sentence

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

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

The Company shall also

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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

2 unchanged sentences

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

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

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

During the six months ended June 30, 2024, the lease for the Wixom facilities was extended by three years to August 2027, which was accounted for as a modification.

As a result of the modification, the operating lease right of use asset and lease liabilities increased by $ 1.5 million.

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.

1 unchanged sentence

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

Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

Operating Leases

31 unchanged sentences

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 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 maturity.

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

34 unchanged sentences

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.

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.

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

However, as of June 30, 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.

1 unchanged sentence

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

The effective interest rate is 12.0 % as of June 30, 2024.

For the three months ended June 30, 2024 and 2023, interest expense amounted to $ 0.2 million and $ 0.3 million, respectively.

For the six months ended June 30, 2024 and 2023, interest expense amounted to $ 0.5 million and $ 0.6 million, respectively.

As of June 30, 2024, the outstanding balance of the Term Loan was $ 8.3 million, net of unamortized issuance costs and discount of $ 0.6 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 $ 0.1 million.

The following table reflects the schedule of principal payments on the Term Loan as of June 30, 2024 (in thousands):

June 30, 2024

2024 (remaining) $ —

4 unchanged sentences

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.

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

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 .

During the six months ended June 30, 2024, the Company's insurance financing note payable balance was paid in full.

On June 24, 2024, the Company entered into a short-term note payable with a principal amount of $ 0.7 million, bearing interest at a rate of 7.89 % per annum to finance various insurance policies, which required an upfront payment of $ 0.2 million.

Principal and interest payments related to this note began on July 3, 2024 and will be paid in 10 equal monthly payments of $ 0.1 million, with the final payment due on April 3, 2025.

As of June 30, 2024, the balance of the insurance financing note payable was $ 0.7 million.

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