QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
No.
|
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer
Identification No.)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
|
|
Smaller reporting company
|
|
Emerging growth company
|
Page Number
|
||
PART I—FINANCIAL INFORMATION
|
||
Item 1
|
3 |
|
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
Item 2
|
13 | |
Item 3
|
20
|
|
Item 4
|
20 | |
PART II—OTHER INFORMATION
|
||
Item 1
|
20 |
|
Item 1A
|
20 | |
Item 2
|
21 | |
Item 3
|
21 | |
Item 4
|
21 | |
Item 5
|
21 | |
Item 6
|
21 |
June 30,
2022
|
December 31,
2021
|
|||||||
ASSETS
|
(unaudited)
|
|||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Accounts receivable
|
|
|
||||||
Inventories
|
|
|
||||||
Other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Property, plant and equipment, net
|
|
|
||||||
Operating lease right-of-use asset
|
|
|
||||||
Other assets
|
|
|
||||||
TOTAL ASSETS
|
$
|
|
$
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$
|
|
$
|
|
||||
Accrued compensation
|
|
|
||||||
Current portion of operating lease liability
|
|
|
||||||
Current portion of finance lease liability
|
|
|
||||||
Other current liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Operating lease liability
|
|
|
||||||
Finance lease liability
|
|
|
||||||
Other long-term liability
|
||||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies
|
||||||||
Stockholders’ equity
|
||||||||
Series A junior participating preferred stock as of June 30,
2022 and December 31,
2021, par value $
|
|
|
||||||
Series F convertible preferred stock as of both June 30,
2022 and December 31,
2021, par value $
|
|
|
||||||
Preferred stock as of both June 30, 2022 and December 31, 2021, par value $
|
|
|
||||||
Common stock as of June 30, 2022 and December 31, 2021, par value $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Accumulated other comprehensive income:
|
||||||||
Foreign currency translation adjustment
|
(
|
)
|
(
|
)
|
||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
|
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
|
$
|
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2022
|
2021
|
2022 | 2021 | |||||||||||||
Net sales
|
$
|
|
$
|
|
$ | $ | ||||||||||
Cost of goods sold
|
|
|
||||||||||||||
Gross profit
|
|
|
||||||||||||||
Operating expenses:
|
||||||||||||||||
Selling, general and administrative
|
|
|
||||||||||||||
Research and development
|
|
|
||||||||||||||
Total operating expenses
|
|
|
||||||||||||||
Loss from operations
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Other income (expense), net
|
|
(
|
)
|
( |
) | ( |
) | |||||||||
Loss before income taxes
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Income tax expense
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | ||||
Basic and diluted loss per share
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | ||||
Weighted average shares outstanding – basic and diluted
|
|
|
||||||||||||||
Other comprehensive loss:
|
||||||||||||||||
Foreign currency translation adjustments
|
$
|
|
$
|
|
$ | ( |
) | $ | ( |
) | ||||||
Total comprehensive loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) |
Outstanding
Shares of
Common Stock
|
Common
Stock
|
Additional
Paid in
Capital
|
Accumulated
Other
Comprehensive
Income
|
Accumulated
Deficit
|
Stockholders’
Equity
|
|||||||||||||||||||
Balance December 31, 2020
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||
Net loss
|
—
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Unrealized foreign currency translation adjustment
|
—
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Stock-based compensation, net
|
|
|
|
|
|
|
||||||||||||||||||
Issuance of common, net
|
|
|
|
|
|
|
||||||||||||||||||
Exercise of warrants
|
|
|
|
|
|
|
||||||||||||||||||
Balance March 31, 2021
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||
Net loss
|
— |
( |
) | ( |
) | |||||||||||||||||||
Foreign currency translation adjustment
|
— |
|||||||||||||||||||||||
Stock-based compensation, net
|
||||||||||||||||||||||||
Issuance costs related to common stock offerings
|
— | ( |
) | ( |
) | |||||||||||||||||||
Exercise of warrants
|
||||||||||||||||||||||||
Balance June 30, 2021
|
$ | $ | $ | ( |
) | $ | ( |
) | $ |
Outstanding
Shares of
Common Stock
|
Common
Stock
|
Additional
Paid in
Capital
|
Accumulated
Other
Comprehensive
Income
|
Accumulated
Deficit
|
Stockholders’
Equity
|
|||||||||||||||||||
Balance December 31, 2021
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||
Net loss
|
—
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Unrealized foreign currency translation adjustment
|
—
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Stock-based compensation, net
|
|
|
|
|
|
|
||||||||||||||||||
Balance March 31, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||
Net loss
|
— |
( |
) | ( |
) | |||||||||||||||||||
Unrealized foreign currency translation adjustment
|
— |
|||||||||||||||||||||||
Stock-based compensation, net
|
||||||||||||||||||||||||
Balance June 30, 2022
|
$ | $ | $ | ( |
) | $ | ( |
) | $ |
Six months ended
June 30,
|
||||||||
2022
|
2021
|
|||||||
Operating Activities:
|
||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Adjustments to reconcile net loss to cash flows used in operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Stock-based compensation expense, net
|
|
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(
|
)
|
(
|
)
|
||||
Inventory
|
(
|
)
|
|
|||||
Other current assets
|
|
(
|
)
|
|||||
Other assets and liabilities
|
(
|
)
|
|
|||||
Accounts payable and accrued expenses
|
|
|
||||||
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
Investing Activities:
|
||||||||
Purchases of property and equipment
|
(
|
)
|
(
|
)
|
||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
Financing Activities:
|
||||||||
Proceeds from public stock offerings, net
|
|
|
||||||
Proceeds from warrant exercises
|
|
|
||||||
Payments on finance lease liability
|
(
|
)
|
(
|
)
|
||||
Net cash provided (used in) by financing activities
|
(
|
)
|
|
|||||
Effect of exchange rate changes on cash
|
(
|
)
|
(
|
)
|
||||
Net increase (decrease) in cash and cash equivalents
|
(
|
)
|
|
|||||
Cash and cash equivalents - beginning of period
|
|
|
||||||
Cash and cash equivalents - end of period
|
$
|
|
$
|
|
||||
Supplemental cash flow information
|
||||||||
Inventory transferred to property, plant and equipment
|
$
|
|
$
|
|
(in thousands)
|
June 30,
2022
|
December 31, 2021
|
||||||
Finished Goods
|
$
|
|
$
|
|
||||
Work in Process
|
|
|
||||||
Raw Materials
|
|
|
||||||
Total
|
$
|
|
$
|
|
June 30,
|
||||||||
2022
|
2021
|
|||||||
Stock options
|
|
|
||||||
Warrants to purchase common stock
|
|
|
||||||
Series F convertible preferred stock
|
|
|
||||||
Total
|
|
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
(in thousands, except per share amounts)
|
||||||||||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Deemed dividend to preferred shareholders (see note 3)
|
|
|
|
(
|
)
|
|||||||||||
Net loss after deemed dividend
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Weighted average shares outstanding
|
|
|
|
|
||||||||||||
Basic and diluted loss per share
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Three months ended
June 30,
|
Six
months ended
June 30,
|
|||||||||||||||
(in thousands)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Selling, general and administrative expense
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Research and development expense
|
|
|
|
|
||||||||||||
Total stock-based compensation expense
|
$
|
|
$
|
|
$
|
|
$
|
|
ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Three Months Ended
June 30, 2022
|
Three Months Ended
June 30, 2021
|
Increase (Decrease)
|
% Change
|
|||||||||||
$
|
2,213
|
$
|
2,508
|
$
|
(295
|
)
|
(11.8
|
)%
|
(in thousands)
|
Three Months Ended
June 30, 2022 |
Three Months Ended
June 30, 2021 |
Increase (Decrease)
|
% Change
|
||||||||||||
Cost of goods sold
|
$
|
1,150
|
$
|
997
|
$
|
153
|
15.3
|
%
|
||||||||
Selling, general and administrative
|
$
|
4,257
|
$
|
5,063
|
$
|
(806
|
)
|
(15.9
|
)%
|
|||||||
Research and development
|
$
|
1,107
|
$
|
1,174
|
$
|
(67
|
)
|
(5.7
|
)%
|
Six Months Ended
June 30, 2022
|
Six Months Ended
June 30, 2021
|
Increase (Decrease)
|
% Change
|
|||||||||||
$
|
4,139
|
$
|
4,426
|
$
|
(287
|
)
|
(6.5
|
)%
|
(in thousands)
|
Six Months Ended
June 30, 2022 |
Six Months Ended
June 30, 2021 |
Increase (Decrease)
|
% Change
|
||||||||||||
Cost of goods sold
|
$
|
1,974
|
$
|
1,949
|
$
|
25
|
1.3
|
%
|
||||||||
Selling, general and administrative
|
$
|
8,669
|
$
|
10,300
|
$
|
(1,631
|
)
|
(15.8
|
)%
|
|||||||
Research and development
|
$
|
2,213
|
$
|
2,121
|
$
|
92
|
4.3
|
%
|
ITEM 1. |
LEGAL PROCEEDINGS
|
ITEM 1A. |
RISK FACTORS
|
ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 3. |
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4. |
MINE SAFETY DISCLOSURES
|
ITEM 5. |
OTHER INFORMATION
|
ITEM 6. |
EXHIBITS
|
Incorporated By Reference
|
|||||||||||||
Exhibit
Number |
Exhibit Description
|
Form
|
File
Number |
Date of First Filing
|
Exhibit
Number |
Filed
Herewith |
Furnished Herewith
|
||||||
|
Fourth Amended and Restated Certificate of Incorporation
|
10
|
001-35312
|
February 1, 2012
|
3.1
|
||||||||
|
Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation
|
8-K
|
001-35312
|
January 13, 2017
|
3.1
|
||||||||
|
Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation
|
8-K
|
001-35312
|
May 23, 2017
|
3.1
|
||||||||
|
Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation
|
8-K
|
001-35312
|
October 12, 2017
|
3.1
|
||||||||
Certificate of Amendment to Fourth Amended and Restated Certificate of Incorporation
|
8-K/A
|
001-35312
|
October 16, 2020
|
3.1
|
|||||||||
Certificate of Amendment to Fourth Amended and Restated Certificate of Incorporation
|
8-K
|
001-35312
|
January 2, 2019
|
3.1
|
|||||||||
Certificate of Amendment to Fourth Amended and Restated Certificate of Incorporation
|
8-K
|
001-35312
|
April 27, 2021
|
3.1
|
|||||||||
Form of Certificate of Designation of Series A Junior Participating Preferred Stock
|
8-K
|
001-35312
|
June 14, 2013
|
3.1
|
|||||||||
Form of Certificate of Designation of Preferences, Rights and Limitations of Series F Convertible Preferred Stock
|
S-1/A
|
333-221010
|
November 17, 2017
|
3.7
|
|||||||||
Certificate of Designation of Preferences, Rights and Limitations of Series G Convertible Preferred Stock
|
8-K
|
001-35312
|
March 13, 2019
|
3.1
|
|||||||||
Certificate of Designation of Preferences, Rights and Limitations of Series H Convertible Preferred Stock
|
8-K
|
001-35312
|
January 29, 2020
|
3.1
|
|||||||||
Second Amended and Restated Bylaws
|
8-K
|
001-35312
|
April 27, 2021
|
3.2
|
|||||||||
First Amendment to the 2021 Inducement Plan
|
8-K
|
001-35312
|
April 21, 2022
|
10.1
|
Incorporated By Reference
|
|||||||||||||
Exhibit
Number |
Exhibit Description
|
Form
|
File
Number |
Date of First Filing
|
Exhibit
Number |
Filed
Herewith |
Furnished Herewith
|
||||||
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
X
|
||||||||||||
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
X
|
||||||||||||
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
X
|
||||||||||||
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
X
|
||||||||||||
101.INS
|
Inline XBRL Instance Document
|
X
|
|||||||||||
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
X
|
|||||||||||
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
X
|
|||||||||||
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
X
|
|||||||||||
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
X
|
|||||||||||
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
X
|
|||||||||||
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
X
|
Nuwellis, Inc.
|
|||
Date: August 11, 2022
|
By:
|
/s/ Nestor Jaramillo, Jr.
|
|
Nestor Jaramillo, Jr.
|
|||
Chief Executive Officer
|
|||
Date: August 11, 2022
|
By:
|
/s/ George Montague
|
|
George Montague
|
|||
Chief Financial Officer
|
1. |
I have reviewed this Quarterly Report on Form 10-Q of Nuwellis, Inc. for the quarterly period ended June 30, 2022;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
|
Nestor Jaramillo, Jr.
|
|
Chief Executive Officer
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ George Montague
|
|
George Montague
|
|
Chief Financial Officer
|
/s/ Nestor Jaramillo, Jr.
|
|
Nestor Jaramillo, Jr.
|
|
Chief Executive Officer
|
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ George Montague
|
|
George Montague
|
|
Chief Financial Officer
|