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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 8, 2017

CHF Solutions, Inc.
(Exact name of registrant as specified in its charter)
 
 
Delaware
 001-35312
68-0533453
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)

12988 Valley View Road
Eden Prairie, Minnesota  55344
(Address of principal executive offices) (Zip Code)

(952) 345-4200
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

  ☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02
Results of Operations and Financial Condition.

On August 8, 2017, CHF Solutions, Inc. (the “Company”) issued a press release reporting its financial results for the quarter ended June 30, 2017.  A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information included in this Current Report on Form 8-K (including Exhibit 99.1) is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

Item 9.01
Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.
  
Description
99.1
  
Press Release, dated August 8, 2017, reporting the Company’s financial results for the quarter ended June 30, 2017
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 8, 2017
CHF SOLUTIONS, INC.
  
       
 
By:
/s/ Claudia Drayton
  
 
Name:
Claudia Drayton
  
 
Title:
Chief Financial Officer
  
 
EXHIBIT INDEX

Exhibit Number
  
Description
 
Press Release, dated August 8, 2017, reporting the Company’s financial results for the quarter ended June 30, 2017


Exhibit 99.1
 
 
CHF Solutions, Inc. Announces 18% Revenue Growth for its Second Quarter and Provides Company Update

Eden Prairie, MN: August 8, 2017: CHF Solutions, Inc. (NASDAQ: CHFS) announced today its second quarter results for the period ending June 30, 2017, which included the following highlights:

•
Revenue for second quarter ended June 30, 2017 increased 18% compared to the same period in 2016 when the business was under previous ownership.

•
New sales leadership on board focusing on building a direct field organization, increasing account penetration and utilization, driven by strong account training and servicing.

•
Stanford University FDA approval for IDE clinical trial using Aquadex FlexFlow System to treat pediatric patients.

•
Transition of Aquadex FlexFlow System manufacturing from Baxter to in-house operations. Manufacturing in house expected to commence in the fourth quarter of 2017.

•
Completed an underwritten public equity offering for net proceeds of approximately $8.0 million. Reduced operating expenses by 31% compared to the same quarter of 2016. Ended quarter with cash on hand of $5.6 million.

•
Announced a name change from Sunshine Heart, Inc. to CHF Solutions, Inc. to capitalize on brand recognition and goodwill, and to more appropriately reflect the direction of the business.

“We are pleased with our second quarter results in both revenue growth and operational accomplishments,” said John Erb, Chairman and CEO. “We have supported our account penetration goals with the addition of a growing direct salesforce and a focused effort to reengage with dormant accounts who stand to realize improved patient care and cost efficiencies with our Aquadex system.  We are excited to bring our manufacturing in-house which provides numerous advantages for CHF Solutions and enables us to better control our supply chain and potential margin improvements as well. Our focus remains on serving the large number of heart failure patients with fluid overload who can benefit from our Aquadex therapy. We continue to be very optimistic about our future and look forward to further developments in the coming quarters in support of achieving our growth and business objectives,” Mr. Erb added.
 
FINANCIALS

CHF SOLUTIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Loss
 (Unaudited and in thousands, except per share amounts)

   
Three months ended
June 30,
    
Six months ended
June 30,
  
   
2017
    
2016
    
2017
    
2016
  
Net sales
  
$
864
    
$
-
    
$
1,765
    
$
-
  
Costs and expenses:
                                
Cost of goods sold
    
616
      
-
      
1,130
      
-
  
Selling, general and administrative
    
2,420
      
1,412
      
4,807
      
2,761
  
Research and development
    
327
      
2,570
      
635
      
5,776
  
Total costs and expenses
    
3,363
      
3,982
      
6,572
      
8,537
  
Loss from operations
    
(2,499
)
    
(3,982
)
    
(4,807
)
    
(8,537
)
Other income (expense):
                                
Interest expense
    
-
      
(207
)
    
-
      
(436
)
Other income (expense), net
    
5
      
(1
)
    
11
      
-
  
Warrant valuation expense
    
-
      
-
      
(67
)
    
-
  
Change in fair value of warrant liability
    
37
      
-
      
1,466
      
-
  
Total other income (expense)
    
42
      
(208
)
    
1,410
      
(436
)
Loss before income taxes
    
(2,457
)
    
(4,190
)
    
(3,397
)
    
(8,973
)
Income tax benefit (expense), net
    
(1
)
    
2
      
(1
)
    
(1
)
Net loss
  
$
(2,458
)
  
$
(4,188
)
  
$
(3,398
)
  
$
(8,974
)
                                 
Basic and diluted loss per share
  
$
(0.47
)
  
$
(6.83
)
  
$
(1.39
)
  
$
(14.64
)
                                 
Weighted average shares outstanding – basic and diluted
    
7,430
      
613
      
4,505
      
613
  
                                 
Other comprehensive income:
                                
Foreign currency translation adjustments
  
$
(5
)
  
$
(2
)
  
$
(6
)
  
$
(6
)
Total comprehensive loss
  
$
(2,463
)
  
$
(4,190
)
  
$
(3,404
)
  
$
(8,980
)
 
CHF SOLUTIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)

   
June 30,
2017
(unaudited)
    
December
31, 2016
  
ASSETS
            
Current assets
            
Cash and cash equivalents
  
$
5,558
    
$
1,323
  
Accounts receivable
    
618
      
282
  
Inventory
    
864
      
677
  
Other current assets
    
129
      
137
  
Total current assets
    
7,169
      
2,419
  
Property, plant and equipment, net
    
446
      
540
  
Intangible assets, net
    
3,980
      
4,302
  
Goodwill
    
189
      
189
  
Other assets
    
21
      
21
  
TOTAL ASSETS
  
$
11,805
    
$
7,471
  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities
                
Accounts payable and accrued expenses
  
$
1,520
    
$
2,351
  
Accrued compensation
    
644
      
909
  
Total current liabilities
    
2,164
      
3,260
  
Common stock warrant liability
    
10
      
1,843
  
Other liabilities
    
126
      
126
  
Total liabilities
    
2,300
      
5,229
  
Commitments and contingencies
    
—
      
—
  
                 
Temporary Stockholders’ Equity
                
Series D convertible preferred stock as of June 30, 2017 and December 31, 2016, par value $0.0001 per share; authorized 0 and 900 shares, respectively, issued and outstanding 0 and 700, respectively
    
—
      
485
  
                 
Stockholders’ equity
                
Series A junior participating preferred stock as of June 30, 2017 and December 31, 2016, par value $0.0001 per share; authorized 30,000 shares, none outstanding
    
—
      
—
  
Series B-1 convertible preferred stock as of June 30, 2017 and December 31, 2016, par value $0.0001 per share; authorized 0 and 1,824.4 shares, respectively, issued and outstanding 0 and 1,824.4, respectively
    
—
      
—
  
Series C convertible preferred stock as of June 30, 2017 and December 31, 2016, par value $0.0001 per share; authorized 0 and 2,900 shares, respectively, issued and outstanding 0 and 2,900, respectively
    
—
      
—
  
Preferred stock as of June 30, 2017 and December 31, 2016, par value $0.0001 per share; authorized 39,970,000 and 39,964,375.6 shares, respectively, none outstanding
    
—
      
—
  
Common stock as of June 30, 2017 and December 31, 2016, par value $0.0001 per share; authorized 100,000,000 shares, issued and outstanding 12,321,238 and 777,238, respectively
    
1
      
—
  
Additional paid‑in capital
    
180,647
      
169,496
  
Accumulated other comprehensive income:
                
Foreign currency translation adjustment
    
1,229
      
1,235
  
Accumulated deficit
    
(172,372
)
    
(168,974
)
Total stockholders’ equity
    
9,505
      
1,757
  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  
$
11,805
    
$
7,471
  
 
CHF SOLUTIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)

   
Six months ended
June 30,
  
   
2017
    
2016
  
Operating Activities:
            
Net loss
  
$
(3,398
)
  
$
(8,974
)
Adjustments to reconcile net loss to cash flows used in operating activities:
                
Depreciation and amortization expense
    
436
      
152
  
Stock-based compensation expense, net
    
281
      
499
  
Amortization of debt discount and financing fees
    
-
      
162
  
Change in fair value of warrant liability
    
(1,466
)
    
-
  
Warrant valuation expense
    
67
      
-
  
Changes in operating assets and liabilities:
                
Accounts receivable
    
(336
)
    
-
  
Inventory
    
(187
)
    
-
  
Other current assets
    
8
      
197
  
Other assets
    
-
      
25
  
Accounts payable and accrued expenses
    
(1,103
)
    
(1,197
)
Net cash used in operations
    
(5,698
)
    
(9,136
)
                 
Investing Activities:
                
Purchases of property and equipment
    
(20
)
    
(29
)
Net cash used in investing activities
    
(20
)
    
(29
)
                 
Financing Activities:
                
Net proceeds from public stock offering
    
8,002
      
-
  
Net proceeds from exercise of warrants
    
1,768
      
-
  
Net proceeds from the sale of preferred stock and warrants
    
184
      
-
  
Repayments on borrowings on long-term debt
    
-
      
(1,895
)
Net cash (used in) provided by financing activities
    
9,954
      
(1,895
)
                 
Effect of exchange rate changes on cash
    
(1
)
    
(4
)
Net increase (decrease) in cash and cash equivalents
    
4,235
      
(11,064
)
Cash and cash equivalents - beginning of period
    
1,323
      
23,113
  
Cash and cash equivalents - end of period
  
$
5,558
    
$
12,049
  
                 
Supplement schedule of non-cash activities
                
Warrants issued as inducement to warrant exercise
  
$
509
    
$
-
  
Conversion of temporary equity to permanent equity
  
$
485
    
$
-
  
                 
Supplemental cash flow information
                
Interest paid on debt borrowings
  
$
-
    
$
257
  
 
The Company will host a conference call and webcast at 9:00 AM ET today to discuss its financial results and provide an update on the Company’s performance.

To access the live webcast, please visit the Investors page of the CHF Solutions website at www.chf-solutions.com. Alternatively, you may access the live conference call by dialing (877) 303-9826 (U.S.) or (224) 357-2194 (international) and using conference ID 61351748. An audio archive of the webcast and a transcript of the call will be available following the call on the Investor page at www.chf-solutions.com.

About CHF Solutions

CHF Solutions, Inc. (NASDAQ:CHFS) is an early-stage medical device company focused on commercializing the Aquadex FlexFlow system for Aquapheresis® therapy. The Aquadex FlexFlow system, is indicated for temporary (up to eight hours) ultrafiltration treatment of patients with fluid overload who have failed diuretic therapy, and extended (longer than 8 hours) ultrafiltration treatment of patients with fluid overload who have failed diuretic therapy and require hospitalization. All treatments must be administered by a healthcare provider, under physician prescription, both of whom having received training in extracorporeal therapies.  The company's objective is to improve the quality of life for patients with heart failure and related conditions. CHF Solutions is a Delaware corporation headquartered in Minneapolis with wholly owned subsidiaries in Australia and Ireland. The company has been listed on the NASDAQ Capital Market since February 2012.

Forward-Looking Statements

Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements regarding building a direct field organization, increasing account penetration and utilization, driven by strong account training and servicing, commencement of in-house manufacturing, and the sufficiency of cash on hand.  Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this release, including, without limitation, those risk associated with our ability to execute on our recently announced strategic realignment, the possibility that we may be unable to raise sufficient funds necessary for our anticipated operations, our post-market clinical data collection activities, benefits of our products to patients, our expectations with respect to product development and commercialization efforts, our ability to increase market and physician acceptance of our products, potentially competitive product offerings, intellectual property protection, our ability to integrate acquired businesses, our expectations regarding anticipated synergies with and benefits from acquired businesses, and other risks and uncertainties described in our filings with the SEC. Forward-looking statements speak only as of the date when made. CHF Solutions does not assume any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For further information, please contact:

Claudia Napal Drayton
Investor Relations
Chief Financial Officer
CHF Solutions, Inc.
CHF Solutions, Inc.
ir@chf-solutions.com
T: +1-952-345-4205
  

-or-
 
Bret Shapiro
Managing Partner
CORE IR
516 222 2560
brets@coreir.com
www.coreir.com