What changed in this filing

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Item 1. Financial Statements

2024-11-12 compared with 2024-08-08 · 172 added, 143 removed, 565 unchanged (36% of the section changed)

4 unchanged sentences

(In thousands, except share and par value amounts)

September 30,

2024 December 31,

30 unchanged sentences

Total Liabilities 27,949 30,882

September 30,

2024 December 31,

1 unchanged sentence

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

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

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

Common Stock, $ 0.0001 par value;

170,000,000 shares authorized;

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

32,318,806 and 29,130,607 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional Paid-in Capital 426,046 418,487

Accumulated Deficit ( 396,922 ) ( 397,198 )

Accumulated Other Comprehensive Loss ( 5 ) ( 1 )

Accumulated Other Comprehensive Income (Loss) 8 ( 1 )

Total Stockholders’ Equity 29,135 21,291

5 unchanged sentences

(In thousands, except share and per share amounts)

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

Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023

Net Sales $ 28,316 $ 23,771 $ 76,824 $ 61,519

20 unchanged sentences

(In thousands)

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

Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023

Net Income (Loss) $ 1,664 $ ( 1,872 ) $ 276 $ ( 6,927 )

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

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

Unrealized Gain (Loss) on Available-for-Sale Investments 13 ( 69 ) 38 ( 90 )

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

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

Net Income — — — — — 1,664 — 1,664

Unrealized Gain on Available-for-Sale Investments — — — — — — 13 13

Issuance of Common Stock, net of offering costs/At-the-Market Offering — — 1,282,546 — 3,630 — — 3,630

Issuance of Common Stock upon Exercise of Options — — 6,042 — 9 — — 9

Stock-based Compensation — — — — 321 — — 321

Balance as of September 30, 2024 15,000 $ — 32,318,806 $ 3 $ 426,046 $ ( 396,922 ) $ 8 $ 29,135

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

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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 the Prior Warrant and Pre-Funded Warrants, net of offering costs — — 11,693,990 1 13,718 — — 13,719

Stock-based Compensation — — — — 212 — — 212

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

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

3 unchanged sentences

(In thousands)

Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2024 Nine Months Ended

September 30, 2023

Cash Flows From Operating Activities:

Net Loss $ ( 1,388 ) $ ( 5,055 )

Adjustments To Reconcile Net Loss To Net Cash Used In Operating Activities:

Net Income (Loss) $ 276 $ ( 6,927 )

Adjustments To Reconcile Net Income (Loss) To Net Cash Provided By (Used In) Operating Activities:

Depreciation and Amortization 1,637 894

Stock-based Compensation 910 714

Increase in Inventory Reserves 314 1,098

Non-cash Lease Expense from Right of Use Assets 1,446 1,529

Amortization of Debt Financing Costs and Accretion of Debt Discount and Premium 337 276

Loss on Disposal of Assets — 1

Realized Gain on Sale of Investments ( 51 ) ( 220 )

Changes in Operating Assets and Liabilities:

Accounts Receivable, net 61 848

Accounts Receivable 2,024 ( 3,102 )

Inventory ( 331 ) 1,561

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Deferred License Revenue ( 34 ) ( 3,798 )

Net Cash Used In Operating Activities ( 938 ) ( 5,616 )

Net Cash Provided By (Used In) Operating Activities 3,337 ( 9,369 )

Cash Flows From Investing Activities:

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Purchase of Equipment ( 616 ) ( 241 )

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

Cash Paid in Connection with Evoqua Asset Acquisition

Net Cash Used In Investing Activities ( 4,534 ) ( 5,053 )

Cash Flows From Financing Activities:

Payments on Debt — ( 500 )

Payments on Insurance Financing Note Payable ( 445 ) ( 748 )

1 unchanged sentence

Proceeds from Issuance of Common Stock 6,393 13,763

Net Cash Provided by (Used In) Financing Activities 2,243 ( 761 )

Offering Costs from Issuance of Common Stock — ( 43 )

Deferred Consideration Paid in Connection with Evoqua Asset Acquisition

Net Cash Provided By Financing Activities 4,556 12,084

Effect of Exchange Rate Changes on Cash and Cash Equivalents ( 4 ) ( 5 )

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

Proceeds from Issuance of Common Stock Upon Exercise of Options in Accounts Receivable, net $ 9 $ —

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 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.

Additionally, in July 2023, the Company purchased customer relationships, equipment and inventory from Evoqua Water Technologies LLC ("Evoqua") 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 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.

As of September 30, 2024, Rockwell had approximately $ 18.3 million of cash, cash equivalents and investments available-for-sale, and working capital of $ 20.0 million.

Net cash provided by operating activities for the nine months ended September 30, 2024 was approximately $ 3.3 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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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.

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 June 30, 2024, the Company is in compliance with all covenants.

The Company is subject to certain covenants and cure provisions under its Loan Agreement with Innovatus Life Sciences Lending Fund I, LP ("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 September 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.

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.

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 Middle East 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.

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

At this time, the Company is unable to quantify the potential effects, if any, of this economic and political instability on its future operations.

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

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

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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.

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

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

2 unchanged sentences

Net Income (Loss) Attributable to Common Stockholders $ 1,431 $ ( 1,872 ) $ 236 $ ( 6,927 )

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

Basic Weighted Average Number of Shares of Common Stock Outstanding 31,551,805 27,521,088 30,447,588 21,526,978

Incremental Shares Attributable to the Assumed Exercise of Outstanding Options to Purchase Common Stock 489,193 — 271,382 —

Incremental Shares Attributable to the Assumed Vesting of Unvested Restricted Stock Units 318,046 — 282,340 —

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.

Incremental Shares Attributable to the Assumed Exercise of Warrants 61,124 — 12,154 —

Diluted Weighted Average Number of Shares of Common Stock Outstanding 32,420,168 27,521,088 31,013,464 21,526,978

Basic Net Income (Loss) per Share Attributable to Common Stockholders $ 0.05 $ ( 0.07 ) $ 0.01 $ ( 0.32 )

Diluted Net Income (Loss) per Share Attributable to Common Stockholders $ 0.04 $ ( 0.07 ) $ 0.01 $ ( 0.32 )

Basic 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.

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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.

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

The following table includes the potential shares of common stock that were excluded from the computation of diluted EPS per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

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

2024 2023 2024 2023

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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 November 2024, the FASB issued ASC 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expense s, which is intended to provide more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the consolidated statement of operations.

This new standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The amendments may be applied either (1) prospectively to financial statements issued for periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the consolidated financial statements.

The Company is currently assessing the impact this ASU will have on the consolidated financial statements and footnote disclosures.

Asset Acquisition

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").

On July 10, 2023, the Company executed and consummated the transactions contemplated by an Asset Purchase Agreement (the “Purchase Agreement”) with 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.

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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.

During the three and nine months ended September 30, 2024, the Company paid the first installment of the first deferred payment of $ 0.6 million.

The remaining installments due within the next twelve months are included as Deferred Consideration - Current on 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 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:

During the three and nine months ended September 30, 2024, the Company recorded amortization of its customer relationship intangible asset of $ 0.1 million and $ 0.4 million, respectively, resulting in a net intangible asset of $ 10.3 million as of September 30, 2024.

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

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

Year ending December 31:

2024 (remainder of year) $ 138

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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 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.

("DaVita"), at approximately 52 % and 50 % of total net product sales for the three months ended September 30, 2024 and 2023, respectively, and 47 % and 50 % of total net product sales for the nine months ended September 30, 2024 and 2023, respectively.

Rockwell's accounts receivable from this customer were approximately 40 % of the total net consolidated accounts receivable balance at each of September 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.

three months ended June 30, 2023, all remaining deferred revenue relating to the Baxter agreement was recognized as revenue.

nine months ended September 30, 2023, all remaining deferred revenue relating to the Wanbang and Baxter agreements 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.

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 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.

DaVita will have the right, in its sole discretion upon written notice to the Company given no later than September 30, 2024, to further extend the term through December 31, 2025.

In the event of such an extension, product pricing will be increased for the extended term.

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

While the Company received written notice from DaVita in September 2024 that notified the Company that DaVita extends the term of the Amended Agreement through December 31, 2025 ("Extension Term"), there can be no assurance of any further extensions.

Product pricing will be increased for the Extension Term.

DaVita has indicated to Rockwell that DaVita expects volumes to decline during the Extension Term.

DaVita is required to provide a twelve-month binding forecast on or before December 15, 2024.

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;

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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.

As of the date of this filing, the Company has received no such notification.

Disaggregation of revenue

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

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

In thousands Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024

Products By Geographic Area Total U.S.

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Net Revenue $ 28,316 $ 26,247 $ 2,069 $ 76,824 $ 70,390 $ 6,434

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

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

Products By Geographic Area Total U.S.

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

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

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

Accounts Receivable, net $ 8,886 $ 10,901 $ 6,259

Contract Liabilities, which are included in deferred license revenue $ 487 $ 521 $ 4,331

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.

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

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 June 30, 2024.

For the nine months ended September 30, 2024 and 2023, the Company recognized an immaterial amount and $ 3.8 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.

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Investments - Available-for-Sale

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

Investments available-for-sale consisted of the following as of September 30, 2024 and December 31, 2023 (table in thousands):

September 30, 2024

Amortized Cost Unrealized Gain Unrealized Loss Accrued Interest Fair Value

Available-for-Sale Securities

Debt securities $ 5,921 $ 13 $ — $ — $ 5,934

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 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.

During the nine months ended September 30, 2024, the Company sold the investments outstanding as of December 31, 2023 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.

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Notes to Condensed Consolidated Financial Statements

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

As of September 30, 2024, the Company's remaining available-for-sale securities are all due within one year.

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

September 30,

2024 December 31,

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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.

As of September 30, 2024 and December 31, 2023, Rockwell had total current concentrate inventory aggregating $ 6.2 million and $ 5.9 million, respectively, against which Rockwell had reserved $ 0.3 million and $ 25,000 at September 30, 2024 and December 31, 2023, respectively.

Property and Equipment

As of June 30, 2024 and December 31, 2023, the Company’s property and equipment consisted of the following (table in thousands):

As of September 30, 2024 and December 31, 2023, the Company’s property and equipment consisted of the following (table in thousands):

September 30,

2024 December 31,

Leasehold Improvements $ 1,542 $ 1,423

Machinery and Equipment $ 11,598 $ 11,131

Information Technology & Office Equipment 1,845 1,845

Leasehold Improvements 1,542 1,423

Laboratory Equipment 807 807

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Property and Equipment, net $ 5,795 $ 6,402

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.

Depreciation and amortization expense for each of the three months ended September 30, 2024 and 2023 was $ 0.4 million.

Depreciation and amortization expense for the nine months ended September 30, 2024 and 2023 was $ 1.2 million and $ 0.8 million, respectively.

ROCKWELL MEDICAL, INC.

2 unchanged sentences

Accrued Liabilities

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

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

September 30,

2024 December 31,

1 unchanged sentence

Accrued Unvouchered Receipts 2,214 1,663

Accrued Manufacturing Expense 902 1,064

Accrued Workers Compensation 340 254

Accrued Manufacturing Expense — 1,064

Other Accrued Liabilities 1,082 1,755

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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 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.

On November 9, 2022, Rockwell incurred a fee to Baxter, 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.

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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 six months ended June 30, 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 June 30, 2024 and December 31, 2023.

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

Stockholders’ Equity

5 unchanged sentences

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

As of June 30, 2024, the Series X Preferred Stock accreted a total $ 0.2 million.

As of September 30, 2024, the Series X Preferred Stock accreted a total of $ 0.3 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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DaVita’s right to convert to common stock is subject to a beneficial ownership limitation, which is initially set at 9.9 % of the outstanding common stock, which limitation may be reset (not to exceed 19.9 %) at DaVita’s option and upon providing prior written notice to the Company.

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

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

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

In addition, any debt financing is limited by the terms of our SPA 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 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.

1 unchanged sentence

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 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,

As of each of September 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 September 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 September 30,

Common Stock and Common Stock Equivalents:

8 unchanged sentences

Total 40,104,264 35,554,361

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.

During the three months ended September 30, 2024 and 2023, nil and 1,793,000 Pre-Funded Warrants were exercised, respectively.

During the nine months ended September 30, 2024 and 2023, nil and 6,300,000 Pre-Funded Warrants were exercised, respectively.

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

During the nine months ended September 30, 2024, 2,990,925 shares were sold pursuant to the Sales Agreement for net proceeds of $ 6.4 million.

Approximately $ 4.5 million remains available for sale under the ATM facility.

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Eastern Time on July 10, 2028 (the “End Date”).

In addition, Armistice would receive a “reload” warrant (the “Reload Warrant”) to purchase 3,750,000 shares of Common Stock with an exercise price of $ 5.13 per share, the closing price as reported by the Nasdaq Capital Market on July 7, 2023.

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 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 .

on July 7, 2023.

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

1 unchanged sentence

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.

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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 %

3 unchanged sentences

Stock-Based Compensation

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):

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

3 unchanged sentences

Total $ 321 $ 212 $ 910 $ 714

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 six months ended June 30, 2024 is as follows:

A summary of the Company’s performance based restricted stock awards during the nine months ended September 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 June 30, 2024 891 $ 62.70

Unvested at September 30, 2024 891 $ 62.70

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

As of September 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 six months ended June 30, 2024 is as follows:

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

Service Based Restricted Stock Units Number of Shares Weighted Average

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Vested ( 191,232 ) 2.18

Unvested at June 30, 2024 534,309 $ 1.48

Unvested at September 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 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.

As of September 30, 2024, the unrecognized stock-based compensation expense was $ 0.5 million, which is expected to be recognized over the next 1.4 years.

Service Based Stock Option Awards

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

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

Nine Months Ended

September 30, 2024 Nine Months Ended

September 30, 2023

Exercise Price $ 1.39 - $ 1.80

5 unchanged sentences

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 six months ended June 30, 2024 is as follows:

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

Service Based Stock Option Awards Shares

7 unchanged sentences

Granted 569,160 1.40

Exercised ( 6,042 ) 1.49

Forfeited ( 15,073 ) 1.83

Expired ( 1,937 ) 4.79

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

Outstanding at September 30, 2024 1,874,729 $ 4.10 8.2 $ 4,068

Exercisable at September 30, 2024 632,600 $ 8.73 7.2 $ 1,105

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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.

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

As of September 30, 2024, total stock-based compensation expense related to unvested options not yet recognized totaled approximately $ 0.7 million, which is expected to be recognized over the next 2.9 years.

License Agreements

Product License Agreements

The Company is a party to a Licensing Agreement between the Company and Charak, LLC ("Charak") dated January 7, 2002 (the "2002 Agreement") that grants the Company exclusive worldwide rights to certain patents and information related to our Triferic product.

On October 7, 2018, the Company entered into a Master Services and IP Agreement (the “Charak MSA”) with Charak and Dr.

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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 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.

As of September 30, 2024 and December 31, 2023, the Company has accrued $ 0.1 million 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.

4 unchanged sentences

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

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.

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

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

1 unchanged sentence

During the term of the TPN Agreement, the Company is liable to pay Charak a base royalty 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 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 June 30, 2024 and December 31, 2023.

ROCKWELL MEDICAL, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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 September 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.

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.

During the nine months ended September 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.

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

In addition, Rockwell occupied 4,100 square feet of office space in Hackensack, New Jersey.

This lease was subleased on December 15, 2021 and expired on October 31, 2024.

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

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

Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023

Operating Leases

27 unchanged sentences

Loan and Security Agreement

On March 16, 2020, the Company and Rockwell Transportation, Inc., as Borrowers, entered into a Loan and Security Agreement (the "Loan Agreement") with Innovatus Life Sciences Lending Fund I, LP ("Innovatus"), as collateral agent and the lenders party thereto, pursuant to which Innovatus, as a lender, agreed to make certain term loans to the Company in the aggregate principal amount of up to $ 35.0 million (the "Term Loans").

On March 16, 2020, the Company and Rockwell Transportation, Inc., as Borrowers, entered into a Loan and Security Agreement (the "Loan Agreement") with Innovatus, as collateral agent and the lenders party thereto, pursuant to which Innovatus, as a lender, agreed to make certain term loans to the Company in the aggregate principal amount of up to $ 35.0 million (the "Term Loans").

Funding of the first $ 22.5 million tranche was completed on March 16, 2020.

11 unchanged sentences

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.

and contains customary representations and warranties and covenants, subject to customary carve outs, and initially included financial covenants related to liquidity and sales of Triferic.

In September 2021, the Company entered into an amendment to the Loan Agreement in which the Company, in exchange for Innovatus lowering the sales covenants, agreed to:

(i) prepay an aggregate principal amount of $ 7.5 million in ten installments commencing on December 1, 2021;

(ii) pay an additional prepayment premium of 5 % on prepaid amounts if the Company elects to prepay all outstanding Term Loans on or before September 24, 2023;

and (iii) maintain minimum liquidity of no less than $ 5.0 million if the aggregate principal amount of Term Loans is greater than $ 15 million pursuant to the liquidity covenant in the Loan Agreement.

(ii) pay an additional prepayment premium of 5 % on prepaid amounts if the Company elected 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 was 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.

5 unchanged sentences

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 Company will make equal monthly payments of principal, together with applicable interest, in arrears, starting either August 1, 2026 or February 1, 2027, depending on whether the interest only period is extended to 36 months after the Effective Date.

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 %.

Effective on January 1, 2024, the Term Loans 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.

10 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 June 30, 2024, the Company was in compliance with all covenants under the Third Amendment.

However, as of September 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 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

The effective interest rate is 11.5 % as of September 30, 2024.

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

For the nine months ended September 30, 2024 and 2023, interest expense amounted to $ 0.7 million and $ 0.9 million, respectively.

As of September 30, 2024, the outstanding balance of the Term Loan was $ 8.4 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 Loan Agreement is secured by all assets of the Company and Rockwell Transportation, Inc.

and contains customary representations and warranties and covenants, subject to customary carve outs, and initially included financial covenants related to liquidity and sales of Triferic.

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

September 30, 2024

2024 (remaining) $ —

6 unchanged sentences

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

During the nine months ended September 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.

As of September 30, 2024, the balance of the insurance financing note payable was $ 0.5 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