0001041024false12-312021Q300010410242021-01-012021-09-30xbrli:shares00010410242021-11-12iso4217:USD00010410242021-09-3000010410242020-12-31iso4217:USDxbrli:shares00010410242021-07-012021-09-3000010410242020-07-012020-09-3000010410242020-01-012020-09-300001041024us-gaap:CommonStockMember2020-12-310001041024us-gaap:AdditionalPaidInCapitalMember2020-12-310001041024us-gaap:RetainedEarningsMember2020-12-310001041024us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001041024us-gaap:RetainedEarningsMember2021-01-012021-03-3100010410242021-01-012021-03-310001041024us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001041024us-gaap:CommonStockMember2021-01-012021-03-310001041024us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001041024us-gaap:CommonStockMember2021-03-310001041024us-gaap:AdditionalPaidInCapitalMember2021-03-310001041024us-gaap:RetainedEarningsMember2021-03-310001041024us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-3100010410242021-03-310001041024us-gaap:RetainedEarningsMember2021-04-012021-06-3000010410242021-04-012021-06-300001041024us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001041024us-gaap:CommonStockMember2021-04-012021-06-300001041024us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001041024us-gaap:CommonStockMember2021-06-300001041024us-gaap:AdditionalPaidInCapitalMember2021-06-300001041024us-gaap:RetainedEarningsMember2021-06-300001041024us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-3000010410242021-06-300001041024us-gaap:RetainedEarningsMember2021-07-012021-09-300001041024us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001041024us-gaap:CommonStockMember2021-07-012021-09-300001041024us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001041024us-gaap:CommonStockMember2021-09-300001041024us-gaap:AdditionalPaidInCapitalMember2021-09-300001041024us-gaap:RetainedEarningsMember2021-09-300001041024us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300001041024us-gaap:CommonStockMember2019-12-310001041024us-gaap:AdditionalPaidInCapitalMember2019-12-310001041024us-gaap:RetainedEarningsMember2019-12-310001041024us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-3100010410242019-12-310001041024us-gaap:RetainedEarningsMember2020-01-012020-03-3100010410242020-01-012020-03-310001041024us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001041024rmti:BoughtDealMemberus-gaap:CommonStockMember2020-01-012020-03-310001041024rmti:BoughtDealMemberus-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001041024rmti:BoughtDealMember2020-01-012020-03-310001041024us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001041024us-gaap:CommonStockMember2020-03-310001041024us-gaap:AdditionalPaidInCapitalMember2020-03-310001041024us-gaap:RetainedEarningsMember2020-03-310001041024us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-3100010410242020-03-310001041024us-gaap:RetainedEarningsMember2020-04-012020-06-3000010410242020-04-012020-06-300001041024us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300001041024rmti:AtTheMarketOfferingMemberus-gaap:CommonStockMember2020-04-012020-06-300001041024rmti:AtTheMarketOfferingMemberus-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001041024rmti:AtTheMarketOfferingMember2020-04-012020-06-300001041024us-gaap:CommonStockMember2020-04-012020-06-300001041024us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001041024us-gaap:CommonStockMember2020-06-300001041024us-gaap:AdditionalPaidInCapitalMember2020-06-300001041024us-gaap:RetainedEarningsMember2020-06-300001041024us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-3000010410242020-06-300001041024us-gaap:RetainedEarningsMember2020-07-012020-09-300001041024us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001041024rmti:PublicOfferingMemberus-gaap:CommonStockMember2020-07-012020-09-300001041024rmti:PublicOfferingMemberus-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001041024rmti:PublicOfferingMember2020-07-012020-09-300001041024rmti:AtTheMarketOfferingMemberus-gaap:CommonStockMember2020-07-012020-09-300001041024rmti:AtTheMarketOfferingMemberus-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001041024rmti:AtTheMarketOfferingMember2020-07-012020-09-300001041024us-gaap:CommonStockMember2020-07-012020-09-300001041024us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001041024us-gaap:CommonStockMember2020-09-300001041024us-gaap:AdditionalPaidInCapitalMember2020-09-300001041024us-gaap:RetainedEarningsMember2020-09-300001041024us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-3000010410242020-09-300001041024rmti:PublicOfferingMember2021-01-012021-09-300001041024rmti:PublicOfferingMember2020-01-012020-09-300001041024rmti:AtTheMarketOfferingMember2021-01-012021-09-300001041024rmti:AtTheMarketOfferingMember2020-01-012020-09-3000010410242020-01-012020-12-31rmti:employee0001041024us-gaap:SubsequentEventMember2021-07-012021-12-080001041024us-gaap:SubsequentEventMember2021-12-08rmti:businessDay0001041024us-gaap:EmployeeStockOptionMember2021-01-012021-09-300001041024us-gaap:EmployeeStockOptionMember2020-01-012020-09-300001041024us-gaap:RestrictedStockMember2021-01-012021-09-300001041024us-gaap:RestrictedStockMember2020-01-012020-09-300001041024us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-09-300001041024us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-300001041024us-gaap:WarrantMember2021-01-012021-09-300001041024us-gaap:WarrantMember2020-01-012020-09-30rmti:agreement0001041024us-gaap:TransferredAtPointInTimeMemberrmti:DrugProductSalesMember2021-07-012021-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:DrugProductSalesMembercountry:US2021-07-012021-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:DrugProductSalesMemberus-gaap:NonUsMember2021-07-012021-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:DrugProductSalesMember2021-01-012021-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:DrugProductSalesMembercountry:US2021-01-012021-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:DrugProductSalesMemberus-gaap:NonUsMember2021-01-012021-09-300001041024rmti:DrugLicenseFeeMemberus-gaap:TransferredOverTimeMember2021-07-012021-09-300001041024rmti:DrugLicenseFeeMemberus-gaap:TransferredOverTimeMembercountry:US2021-07-012021-09-300001041024rmti:DrugLicenseFeeMemberus-gaap:TransferredOverTimeMemberus-gaap:NonUsMember2021-07-012021-09-300001041024rmti:DrugLicenseFeeMemberus-gaap:TransferredOverTimeMember2021-01-012021-09-300001041024rmti:DrugLicenseFeeMemberus-gaap:TransferredOverTimeMembercountry:US2021-01-012021-09-300001041024rmti:DrugLicenseFeeMemberus-gaap:TransferredOverTimeMemberus-gaap:NonUsMember2021-01-012021-09-300001041024rmti:DrugRevenueMember2021-07-012021-09-300001041024country:USrmti:DrugRevenueMember2021-07-012021-09-300001041024us-gaap:NonUsMemberrmti:DrugRevenueMember2021-07-012021-09-300001041024rmti:DrugRevenueMember2021-01-012021-09-300001041024country:USrmti:DrugRevenueMember2021-01-012021-09-300001041024us-gaap:NonUsMemberrmti:DrugRevenueMember2021-01-012021-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:ConcentrateProductSalesMember2021-07-012021-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:ConcentrateProductSalesMembercountry:US2021-07-012021-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:ConcentrateProductSalesMemberus-gaap:NonUsMember2021-07-012021-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:ConcentrateProductSalesMember2021-01-012021-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:ConcentrateProductSalesMembercountry:US2021-01-012021-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:ConcentrateProductSalesMemberus-gaap:NonUsMember2021-01-012021-09-300001041024rmti:ConcentrateProductLicenseFeeMemberus-gaap:TransferredOverTimeMember2021-07-012021-09-300001041024rmti:ConcentrateProductLicenseFeeMemberus-gaap:TransferredOverTimeMembercountry:US2021-07-012021-09-300001041024rmti:ConcentrateProductLicenseFeeMemberus-gaap:TransferredOverTimeMemberus-gaap:NonUsMember2021-07-012021-09-300001041024rmti:ConcentrateProductLicenseFeeMemberus-gaap:TransferredOverTimeMember2021-01-012021-09-300001041024rmti:ConcentrateProductLicenseFeeMemberus-gaap:TransferredOverTimeMembercountry:US2021-01-012021-09-300001041024rmti:ConcentrateProductLicenseFeeMemberus-gaap:TransferredOverTimeMemberus-gaap:NonUsMember2021-01-012021-09-300001041024rmti:ConcentrateProductsMember2021-07-012021-09-300001041024rmti:ConcentrateProductsMembercountry:US2021-07-012021-09-300001041024rmti:ConcentrateProductsMemberus-gaap:NonUsMember2021-07-012021-09-300001041024rmti:ConcentrateProductsMember2021-01-012021-09-300001041024rmti:ConcentrateProductsMembercountry:US2021-01-012021-09-300001041024rmti:ConcentrateProductsMemberus-gaap:NonUsMember2021-01-012021-09-300001041024country:US2021-07-012021-09-300001041024us-gaap:NonUsMember2021-07-012021-09-300001041024country:US2021-01-012021-09-300001041024us-gaap:NonUsMember2021-01-012021-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:DrugProductSalesMember2020-07-012020-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:DrugProductSalesMembercountry:US2020-07-012020-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:DrugProductSalesMemberus-gaap:NonUsMember2020-07-012020-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:DrugProductSalesMember2020-01-012020-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:DrugProductSalesMembercountry:US2020-01-012020-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:DrugProductSalesMemberus-gaap:NonUsMember2020-01-012020-09-300001041024rmti:DrugLicenseFeeMemberus-gaap:TransferredOverTimeMember2020-07-012020-09-300001041024rmti:DrugLicenseFeeMemberus-gaap:TransferredOverTimeMembercountry:US2020-07-012020-09-300001041024rmti:DrugLicenseFeeMemberus-gaap:TransferredOverTimeMemberus-gaap:NonUsMember2020-07-012020-09-300001041024rmti:DrugLicenseFeeMemberus-gaap:TransferredOverTimeMember2020-01-012020-09-300001041024rmti:DrugLicenseFeeMemberus-gaap:TransferredOverTimeMembercountry:US2020-01-012020-09-300001041024rmti:DrugLicenseFeeMemberus-gaap:TransferredOverTimeMemberus-gaap:NonUsMember2020-01-012020-09-300001041024rmti:DrugRevenueMember2020-07-012020-09-300001041024country:USrmti:DrugRevenueMember2020-07-012020-09-300001041024us-gaap:NonUsMemberrmti:DrugRevenueMember2020-07-012020-09-300001041024rmti:DrugRevenueMember2020-01-012020-09-300001041024country:USrmti:DrugRevenueMember2020-01-012020-09-300001041024us-gaap:NonUsMemberrmti:DrugRevenueMember2020-01-012020-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:ConcentrateProductSalesMember2020-07-012020-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:ConcentrateProductSalesMembercountry:US2020-07-012020-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:ConcentrateProductSalesMemberus-gaap:NonUsMember2020-07-012020-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:ConcentrateProductSalesMember2020-01-012020-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:ConcentrateProductSalesMembercountry:US2020-01-012020-09-300001041024us-gaap:TransferredAtPointInTimeMemberrmti:ConcentrateProductSalesMemberus-gaap:NonUsMember2020-01-012020-09-300001041024rmti:ConcentrateProductLicenseFeeMemberus-gaap:TransferredOverTimeMember2020-07-012020-09-300001041024rmti:ConcentrateProductLicenseFeeMemberus-gaap:TransferredOverTimeMembercountry:US2020-07-012020-09-300001041024rmti:ConcentrateProductLicenseFeeMemberus-gaap:TransferredOverTimeMemberus-gaap:NonUsMember2020-07-012020-09-300001041024rmti:ConcentrateProductLicenseFeeMemberus-gaap:TransferredOverTimeMember2020-01-012020-09-300001041024rmti:ConcentrateProductLicenseFeeMemberus-gaap:TransferredOverTimeMembercountry:US2020-01-012020-09-300001041024rmti:ConcentrateProductLicenseFeeMemberus-gaap:TransferredOverTimeMemberus-gaap:NonUsMember2020-01-012020-09-300001041024rmti:ConcentrateProductsMember2020-07-012020-09-300001041024rmti:ConcentrateProductsMembercountry:US2020-07-012020-09-300001041024rmti:ConcentrateProductsMemberus-gaap:NonUsMember2020-07-012020-09-300001041024rmti:ConcentrateProductsMember2020-01-012020-09-300001041024rmti:ConcentrateProductsMembercountry:US2020-01-012020-09-300001041024rmti:ConcentrateProductsMemberus-gaap:NonUsMember2020-01-012020-09-300001041024country:US2020-07-012020-09-300001041024us-gaap:NonUsMember2020-07-012020-09-300001041024country:US2020-01-012020-09-300001041024us-gaap:NonUsMember2020-01-012020-09-300001041024rmti:ConcentrateProductsMember2021-09-300001041024rmti:ConcentrateProductsMember2020-12-310001041024rmti:BaxterHealthcareOrganizationMember2021-09-300001041024rmti:TrifericInventoryMember2021-09-300001041024rmti:TrifericDialysateMember2021-09-300001041024rmti:TrifericAPIMember2021-09-300001041024us-gaap:LeaseholdImprovementsMember2021-09-300001041024us-gaap:LeaseholdImprovementsMember2020-12-310001041024us-gaap:MachineryAndEquipmentMember2021-09-300001041024us-gaap:MachineryAndEquipmentMember2020-12-310001041024us-gaap:OfficeEquipmentMember2021-09-300001041024us-gaap:OfficeEquipmentMember2020-12-310001041024us-gaap:OtherMachineryAndEquipmentMember2021-09-300001041024us-gaap:OtherMachineryAndEquipmentMember2020-12-310001041024rmti:BaxterHealthcareOrganizationMember2014-10-012014-10-310001041024rmti:BaxterHealthcareOrganizationMember2021-07-012021-09-300001041024rmti:BaxterHealthcareOrganizationMember2021-01-012021-09-300001041024rmti:BaxterHealthcareOrganizationMember2020-01-012020-09-300001041024rmti:BaxterHealthcareOrganizationMember2020-07-012020-09-300001041024rmti:BaxterHealthcareOrganizationMember2020-12-31xbrli:pure0001041024rmti:WanbangBiopharmaceuticalMember2016-01-012016-12-310001041024rmti:WanbangBiopharmaceuticalMember2021-01-012021-09-300001041024rmti:WanbangBiopharmaceuticalMember2021-07-012021-09-300001041024rmti:WanbangBiopharmaceuticalMember2020-07-012020-09-300001041024rmti:WanbangBiopharmaceuticalMember2020-01-012020-09-300001041024rmti:WanbangBiopharmaceuticalMember2021-09-300001041024rmti:WanbangBiopharmaceuticalMember2020-12-310001041024rmti:SunPharmaAgreementsMember2020-01-012020-01-310001041024rmti:SunPharmaAgreementsMember2021-07-012021-09-300001041024rmti:SunPharmaAgreementsMember2021-01-012021-09-300001041024rmti:SunPharmaAgreementsMember2020-01-012020-09-300001041024rmti:SunPharmaAgreementsMember2020-07-012020-09-300001041024rmti:SunPharmaAgreementsMember2021-09-300001041024rmti:SunPharmaAgreementsMember2020-12-310001041024rmti:JeilPharmaAgreementsMember2020-09-012020-09-300001041024rmti:JeilPharmaAgreementsMember2021-07-012021-09-300001041024rmti:JeilPharmaAgreementsMember2020-07-012020-09-300001041024rmti:JeilPharmaAgreementsMember2021-01-012021-09-300001041024rmti:JeilPharmaAgreementsMember2020-01-012020-09-300001041024rmti:JeilPharmaAgreementsMember2021-09-300001041024rmti:JeilPharmaAgreementsMember2020-12-310001041024rmti:DrogsanAgreementsMember2021-06-012021-06-300001041024rmti:DrogsanAgreementsMember2021-07-012021-09-300001041024rmti:DrogsanAgreementsMember2021-09-300001041024rmti:AtTheMarketOfferingMembersrt:MaximumMember2019-03-222019-03-220001041024rmti:AtTheMarketOfferingMember2021-07-012021-09-300001041024rmti:ServiceBasedRestrictedStockUnitsMember2021-07-012021-09-300001041024rmti:ServiceBasedRestrictedStockUnitsMember2020-07-012020-09-300001041024rmti:ServiceBasedRestrictedStockUnitsMember2021-01-012021-09-300001041024rmti:ServiceBasedRestrictedStockUnitsMember2020-01-012020-09-300001041024rmti:ServiceBasedStockOptionAwardsMember2021-07-012021-09-300001041024rmti:ServiceBasedStockOptionAwardsMember2020-07-012020-09-300001041024rmti:ServiceBasedStockOptionAwardsMember2021-01-012021-09-300001041024rmti:ServiceBasedStockOptionAwardsMember2020-01-012020-09-300001041024rmti:ServiceBasedAwardsMember2021-07-012021-09-300001041024rmti:ServiceBasedAwardsMember2020-07-012020-09-300001041024rmti:ServiceBasedAwardsMember2021-01-012021-09-300001041024rmti:ServiceBasedAwardsMember2020-01-012020-09-300001041024rmti:PerformanceBasedRestrictedStockAwardsMember2021-07-012021-09-300001041024rmti:PerformanceBasedRestrictedStockAwardsMember2020-07-012020-09-300001041024rmti:PerformanceBasedRestrictedStockAwardsMember2021-01-012021-09-300001041024rmti:PerformanceBasedRestrictedStockAwardsMember2020-01-012020-09-300001041024rmti:PerformanceBasedRestrictedStockUnitsMember2021-07-012021-09-300001041024rmti:PerformanceBasedRestrictedStockUnitsMember2020-07-012020-09-300001041024rmti:PerformanceBasedRestrictedStockUnitsMember2021-01-012021-09-300001041024rmti:PerformanceBasedRestrictedStockUnitsMember2020-01-012020-09-300001041024rmti:PerformanceBasedStockOptionAwardsMember2021-07-012021-09-300001041024rmti:PerformanceBasedStockOptionAwardsMember2020-07-012020-09-300001041024rmti:PerformanceBasedStockOptionAwardsMember2021-01-012021-09-300001041024rmti:PerformanceBasedStockOptionAwardsMember2020-01-012020-09-300001041024rmti:PerformanceBasedAwardsMember2021-07-012021-09-300001041024rmti:PerformanceBasedAwardsMember2020-07-012020-09-300001041024rmti:PerformanceBasedAwardsMember2021-01-012021-09-300001041024rmti:PerformanceBasedAwardsMember2020-01-012020-09-300001041024us-gaap:RestrictedStockMember2021-01-012021-09-300001041024us-gaap:RestrictedStockMember2020-12-310001041024us-gaap:RestrictedStockMember2021-09-300001041024us-gaap:RestrictedStockMember2019-12-310001041024us-gaap:RestrictedStockMember2020-09-300001041024rmti:PerformanceBasedRestrictedStockAwardsMember2021-09-300001041024rmti:ServiceBasedRestrictedStockUnitsMember2020-12-310001041024rmti:ServiceBasedRestrictedStockUnitsMember2021-09-300001041024rmti:ServiceBasedRestrictedStockUnitsMember2019-12-310001041024rmti:ServiceBasedRestrictedStockUnitsMember2020-09-300001041024rmti:ServiceBasedRestrictedStockUnitsMembersrt:MinimumMember2021-01-012021-09-300001041024rmti:ServiceBasedRestrictedStockUnitsMembersrt:MaximumMember2021-01-012021-09-300001041024rmti:PerformanceBasedRestrictedStockUnitsMember2021-09-300001041024rmti:PerformanceBasedRestrictedStockUnitsMember2019-12-310001041024rmti:PerformanceBasedRestrictedStockUnitsMember2020-09-300001041024rmti:ServiceBasedStockOptionAwardsMembersrt:MinimumMember2021-09-300001041024rmti:ServiceBasedStockOptionAwardsMembersrt:MaximumMember2021-09-300001041024rmti:ServiceBasedStockOptionAwardsMembersrt:MinimumMember2021-01-012021-09-300001041024rmti:ServiceBasedStockOptionAwardsMembersrt:MaximumMember2021-01-012021-09-300001041024rmti:ServiceBasedStockOptionAwardsMember2020-12-310001041024rmti:ServiceBasedStockOptionAwardsMember2020-01-012020-12-310001041024rmti:ServiceBasedStockOptionAwardsMember2021-09-300001041024rmti:ServiceBasedStockOptionAwardsMember2019-12-310001041024rmti:ServiceBasedStockOptionAwardsMember2019-01-012019-12-310001041024rmti:ServiceBasedStockOptionAwardsMember2020-09-300001041024rmti:PerformanceBasedStockOptionAwardsMember2020-12-310001041024rmti:PerformanceBasedStockOptionAwardsMember2021-09-300001041024rmti:PerformanceBasedStockOptionAwardsMember2019-12-310001041024rmti:PerformanceBasedStockOptionAwardsMember2020-09-3000010410242018-10-072018-10-070001041024rmti:ExecutiveVicePresidentAndChiefScientificOfficerMember2018-10-07rmti:installment0001041024rmti:ExecutiveVicePresidentAndChiefScientificOfficerMember2018-10-072018-10-070001041024rmti:ExecutiveVicePresidentAndChiefScientificOfficerMember2019-01-150001041024rmti:ExecutiveVicePresidentAndChiefScientificOfficerMember2018-10-150001041024rmti:ExecutiveVicePresidentAndChiefScientificOfficerMember2019-07-150001041024rmti:ExecutiveVicePresidentAndChiefScientificOfficerMember2019-04-150001041024rmti:ExecutiveVicePresidentAndChiefScientificOfficerMember2019-01-012019-12-310001041024rmti:ExecutiveVicePresidentAndChiefScientificOfficerMember2019-12-310001041024srt:MaximumMember2021-09-30utr:sqft0001041024stpr:MIrmti:WixomMichiganPropertyOneMember2021-09-300001041024rmti:WixomMichiganPropertyTwoMemberstpr:MI2021-09-300001041024stpr:TX2021-09-300001041024stpr:SC2021-09-300001041024stpr:NJ2021-09-300001041024rmti:TermLoanMemberus-gaap:MediumTermNotesMember2020-03-310001041024rmti:TermLoanTrancheOneMemberus-gaap:MediumTermNotesMember2020-03-160001041024us-gaap:MediumTermNotesMemberrmti:TermLoanTrancheTwoMember2020-03-160001041024us-gaap:MediumTermNotesMemberrmti:TermLoanTrancheThreeMember2020-03-160001041024rmti:TermLoanTrancheOneMemberus-gaap:MediumTermNotesMember2020-03-162020-03-160001041024rmti:TermLoanMemberus-gaap:MediumTermNotesMembersrt:MinimumMember2020-03-162020-03-160001041024rmti:TermLoanMemberus-gaap:MediumTermNotesMembersrt:MaximumMember2020-03-162020-03-160001041024rmti:TermLoanMemberus-gaap:MediumTermNotesMember2020-03-160001041024rmti:TermLoanMemberus-gaap:MediumTermNotesMember2020-03-162020-03-160001041024rmti:TermLoanMemberus-gaap:MediumTermNotesMember2021-07-012021-09-300001041024rmti:TermLoanMemberus-gaap:MediumTermNotesMember2020-07-012020-09-300001041024rmti:TermLoanMemberus-gaap:MediumTermNotesMember2021-01-012021-09-300001041024rmti:TermLoanMemberus-gaap:MediumTermNotesMember2020-01-012020-09-300001041024rmti:TermLoanTrancheTwoAndTrancheThreeMemberus-gaap:MediumTermNotesMembersrt:MaximumMember2020-03-160001041024rmti:TermLoanTrancheTwoAndTrancheThreeMemberus-gaap:MediumTermNotesMember2020-03-162020-03-160001041024rmti:TermLoanMemberus-gaap:MediumTermNotesMember2021-09-240001041024rmti:TermLoanMemberus-gaap:MediumTermNotesMember2021-09-242021-09-240001041024rmti:TermLoanMemberus-gaap:MediumTermNotesMember2021-09-300001041024rmti:A3925NotePayableMemberus-gaap:NotesPayableToBanksMember2021-07-030001041024rmti:A3925NotePayableMemberus-gaap:NotesPayableToBanksMember2021-07-032021-07-03

United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
__________________________________________________
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                              to                              
Commission File Number: 000-23661
ROCKWELL MEDICAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 38-3317208
(State or other jurisdiction of
incorporation or organization) 		(I.R.S. Employer
Identification No.)
30142 S. Wixom Road, Wixom, Michigan
48393
(Address of principal executive offices) (Zip Code)
(248) 960-9009
(Registrant’s telephone number, including area code)


Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes    ☐  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☒  Yes    ☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
  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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ☐  Yes  ☒
  No
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Trading Symbol Name of each exchange on which registered:
Common Stock, par value $0.0001 RMTI Nasdaq Global Market
The number of shares of common stock outstanding as of November 12, 2021 was 93,966,381.


Rockwell Medical, Inc. and Subsidiaries
Index to Form 10-Q
Page
3
4
5
6
7
8
27
36
36
37
37
44
45
2

PART I – FINANCIAL INFORMATION
Item 1.  Financial Statements
ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
September 30,
2021 		December 31,
2020
(Unaudited)
ASSETS
Cash and Cash Equivalents $ 23,390  $ 48,682 
Investments Available-for-Sale 9,813  9,997 
Accounts Receivable, net 6,036  4,171 
Inventory, net 4,028  3,913 
Prepaid and Other Current Assets 2,815  2,706 
Total Current Assets 46,082  69,469 
Property and Equipment, net 2,507  2,642 
Inventory, Non-Current 1,526  1,176 
Right of Use Assets, net 6,934  2,911 
Goodwill 921  921 
Other Non-Current Assets 729  629 
Total Assets $ 58,699  $ 77,748 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts Payable $ 4,834  $ 4,155 
Accrued Liabilities 4,371  5,013 
Lease Liability - Current 1,832  1,167 
Deferred License Revenue - Current 2,176  2,175 
Term Loan - Net of Issuance Costs 7,131  — 
Insurance Financing Note Payable 1,312  — 
Customer Deposits 100  152 
Other Current Liability - Related Party —  131 
Total Current Liabilities 21,756  12,793 
Lease Liability - Long-Term 5,226  1,821 
Term Loan, Net of Issuance Costs 14,094  20,949 
Deferred License Revenue - Long-Term 6,529  8,015 
Total Liabilities 47,605  43,578 
Commitments and Contingencies (See Note 14)
Stockholders’ Equity:
Preferred Stock, $0.0001 par value, 2,000,000 shares authorized; no shares issued and outstanding at September 30, 2021 and December 31, 2020
—  — 
Common Stock, $0.0001 par value; 170,000,000 shares authorized; 93,966,381 and 93,573,165 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
9  9 
Additional Paid-in Capital 372,168  371,510 
Accumulated Deficit (361,139) (337,406)
Accumulated Other Comprehensive Income 56  57 
Total Stockholders’ Equity 11,094  34,170 
Total Liabilities and Stockholders’ Equity $ 58,699  $ 77,748 
The accompanying notes are an integral part of the condensed consolidated financial statements.
3

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020
Net Sales $ 15,988  $ 15,280  $ 46,599  $ 47,033 
Cost of Sales 16,317  14,934  46,788  44,693 
Gross (Loss) Profit (329) 346  (189) 2,340 
Research and Product Development 1,221  1,745  5,445  5,183 
Selling and Marketing 1,541  1,669  4,860  5,738 
General and Administrative 3,881  3,622  11,483  11,767 
Operating Loss (6,972) (6,690) (21,977) (20,348)
Other (Expense) Income
Realized (Loss) Gain on Investments —  4  (1) 8 
Warrant Modification Expense —  —  —  (837)
Interest Expense (609) (666) (1,772) (1,289)
Interest Income —  2  17  239 
Total Other Expense (609) (660) (1,756) (1,879)
Net Loss $ (7,581) $ (7,350) $ (23,733) $ (22,227)
Basic and Diluted Net Loss per Share $ (0.08) $ (0.10) $ (0.26) $ (0.32)
Basic and Diluted Weighted Average Shares Outstanding 93,882,142  71,811,322  93,726,629  69,594,167 
The accompanying notes are an integral part of the condensed consolidated financial statements.
4

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Dollars in Thousands)
Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020
Net Loss $ (7,581) $ (7,350) $ (23,733) $ (22,227)
Unrealized Gain (Loss) on Available-for-Sale Debt Instrument Investments 4  2  (4) (11)
Foreign Currency Translation Adjustments —  1  3  8 
Comprehensive Loss $ (7,577) $ (7,347) $ (23,734) $ (22,230)
The accompanying notes are an integral part of the condensed consolidated financial statements.
5

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in Thousands)
COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED
DEFICIT 		ACCUMULATED
OTHER
COMPREHENSIVE
INCOME 		TOTAL
STOCKHOLDERS'
EQUITY
SHARES AMOUNT
Balance as of January 1, 2021 93,573,165  $ 9  $ 371,510  $ (337,406) $ 57  $ 34,170 
Net Loss —  —  —  (7,752) —  (7,752)
Unrealized Loss on Available-for-Sale Investments —  —  —  —  (7) (7)
Foreign Currency Translation Adjustments —  —  —  —  3  3 
Stock-based Compensation 26,354  —  (236) —  —  (236)
Balance as of March 31, 2021 93,599,519  $ 9  $ 371,274  $ (345,158) $ 53  $ 26,178 
Net Loss —  —  —  (8,400) —  (8,400)
Unrealized Loss on Available-for-Sale Investments —  —  —  —  (1) (1)
Vesting of Restricted Stock Units Issued, net of taxes withheld 211,862  —  (7) —  —  (7)
Stock-based Compensation expense —  —  433  —  —  433 
Balance as of June 30, 2021 93,811,381  $ 9  $ 371,700  $ (353,558) $ 52  $ 18,203 
Net Loss —  —  —  (7,581) —  (7,581)
Unrealized Gain on Available-for-Sale Investments —  —  —  —  4  4 
Issued shares for services 155,000  —  107  —  —  107 
Stock-based Compensation expense —  —  361  —  —  361 
Balance as of September 30, 2021 93,966,381  $ 9  $ 372,168  $ (361,139) $ 56  $ 11,094 

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

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in Thousands)
COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUMULATED
DEFICIT 		ACCUMULATED
OTHER
COMPREHENSIVE
INCOME 		TOTAL
STOCKHOLDERS'
EQUITY
SHARES AMOUNT
Balance as of January 1, 2020 65,378,890  $ 7  $ 326,777  $ (306,516) $ 52  $ 20,320 
Net Loss —  —  —  (7,984) —  (7,984)
Unrealized Loss on Available-for-Sale Investments —  —  —  —  (7) (7)
Foreign Currency Translation Adjustments —  —  —  —  6  6 
Issuance of common stock, net of offering costs/Bought Deal 3,670,212  —  8,003  —  —  8,003 
Issuance of Warrants related to Debt Financing —  —  501  —  —  501 
Stock-based Compensation —  —  935  —  —  935 
Balance as of March 31, 2020 69,049,102  $ 7  $ 336,216  $ (314,500) $ 51  $ 21,774 
Net Loss —  —  —  (6,893) —  (6,893)
Unrealized Loss on Available-for-Sale Investments —  —  —  —  (6) (6)
Foreign Currency Translation Adjustments —  —  —  —  1  1 
Issuance of common stock, net of offering costs/At-the-Market Offering 987,716  —  1,978  —  —  1,978 
Vesting of Restricted Stock Units Issued, net of taxes withheld 120,104  —  (19) —  —  (19)
Warrant Modification Expense —  —  837  —  —  837 
Stock-based Compensation —  —  (1,461) —  —  (1,461)
Balance as of June 30, 2020 70,156,922  $ 7  $ 337,551  $ (321,393) $ 46  $ 16,211 
Net Loss —  —  —  (7,350) —  (7,350)
Unrealized Gain on Available-for-Sale Investments —  —  —  —  2  2 
Foreign Currency Translation Adjustments —  —  —  —  1  1 
Issuance of common stock, net of offering costs/Public Offering 23,178,809  2  32,675  —  —  32,677 
Issuance of common stock, net of offering/At-the-Market Offering 140,892  —  284  —  —  284 
Vesting of Restricted Stock Units Issued, net of taxes withheld 96,542  —  —  —  —  — 
Stock-based Compensation —  —  250  —  —  250 
Balance as of September 30, 2020 93,573,165  $ 9  $ 370,760  $ (328,743) $ 49  $ 42,075 
The accompanying notes are an integral part of the condensed consolidated financial statements.

6

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
For the nine months ended September 30, 2021 and 2020
2021 2020
Cash Flows From Operating Activities:
Net Loss $ (23,733) $ (22,227)
Adjustments To Reconcile Net Loss To Net Cash Used In Operating Activities:
Depreciation and Amortization 535  614 
Stock-based Compensation 558  (276)
Warrant Modification Expense —  837 
Increase in Inventory Reserves 89  305 
Amortization of Right of Use Asset 1,312  1,090 
Amortization of Debt Financing Costs and Accretion of Debt Discount 276  200 
Loss on Disposal of Assets 7  7 
Realized Loss (Gain) on Sale of Investments Available-for-Sale 1  (8)
Foreign Currency Translation Adjustment 3  7 
Changes in Assets and Liabilities:
(Increase) Decrease in Accounts Receivable, net (1,865) 74 
Increase in Inventory (554) (953)
Decrease in Prepaid and Other Assets 1,760  161 
Increase in Accounts Payable 679  1,172 
Decrease in Settlement Payable —  (104)
Decrease in Lease Liability (1,266) (1,056)
(Decrease) Increase in Other Liabilities (825) 423 
Decrease in Deferred License Revenue (1,485) (1,338)
Changes in Assets and Liabilities (3,556) (1,621)
Cash Used In Operating Activities (24,508) (21,072)
Cash Flows From Investing Activities:
Purchase of Investments Available-for-Sale (19,107) (23,531)
Sale of Investments Available-for-Sale 19,286  27,076 
Purchase of Equipment (408) (970)
Cash (Used In) Provided By Investing Activities (229) 2,575 
Cash Flows From Financing Activities:
Proceeds from Term Loan —  22,500 
Debt Issuance Costs —  (1,343)
Payments on Short Term Note Payable (656) (763)
Proceeds from the Issuance of Common Stock / Public Offering —  43,148 
Offering Costs from the Issuance of Common Stock / Public Offering —  (2,469)
Proceeds from the Issuance of Common Stock / At-the-Market Offering —  2,325 
Offering Costs from the Issuance of Common Stock / At-the-Market Offering —  (63)
Proceeds from the Issuance of Common Stock for payment related to services provided 107  — 
Repurchase of Common Stock to Pay Employee Withholding Taxes (6) (18)
Cash (Used In) Provided By Financing Activities (555) 63,317 
(Decrease) Increase in Cash and Cash Equivalents (25,292) 44,820 
Cash and Cash Equivalents at Beginning of Period 48,682  11,794 
Cash and Cash Equivalents at End of Period $ 23,390  $ 56,614 
Supplemental Disclosure of Cash Flow Information:
Cash Paid for Interest $ 1,318  $ 906 
Supplemental Disclosure of Noncash Investing and Financing Activities:
Change in Unrealized Loss on Marketable Securities Available-for-Sale $ (4) $ (11)
Fair Value of Warrants issued related to Debt Financing $ —  $ 501 
The accompanying notes are an integral part of the condensed consolidated financial statements.
7

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)

1.  Description of Business
    
Rockwell Medical, Inc. ("Rockwell Medical," "Rockwell", the "Company" or "We") is a commercial-stage, biopharmaceutical company developing and commercializing our next-generation parenteral iron technology platform, ferric pyrophosphate citrate (“FPC”), which we believe has the potential to lead to transformative treatments for iron deficiency in multiple disease states, reduce healthcare costs and improve patients’ lives. We are also one of the two major suppliers of life saving hemodialysis concentrate products to kidney dialysis clinics in the United States.

The Company has two novel, FDA approved therapies, Triferic and Triferic AVNU, which are the first two products developed from our FPC platform. The Company is target marketing both products to kidney dialysis centers for their patients receiving dialysis and working to find a commercial partner to expand our commercial efforts within the United States. In 2021, Rockwell has been working to advance our FPC platform strategy outside of dialysis by starting a Phase II trial for the treatment of iron deficiency anemia in patients, who are receiving long-term and or chronic intravenous medications for various therapeutic needs in the home infusion setting. In the Company's R&D pipeline, we are also exploring FPC’s impact in the treatment of hospitalized patients with acute heart failure, with the potential to begin another Phase II trial in these patients in 2022.

Rockwell Medical is the second largest supplier of hemodialysis concentrates in the United States generating approximately $60 million in annual revenue. The Company's reputation for excellent service, quality, and reliability is based on over 25 years of service to kidney dialysis centers. The Company's approximately 300 dedicated employees, as well as a management team with experience in manufacturing, logistics, pharmaceutical development and commercialization provides Rockwell with a solid foundation upon which to grow.
2.  Liquidity and Capital Resources
Since inception, Rockwell has incurred significant net losses and has funded its operations primarily through revenue from commercial products, proceeds from the issuance of debt and equity securities and payments from partnerships. At September 30, 2021, Rockwell had an accumulated deficit of approximately $361.1 million and stockholders' equity of $11.1 million. As of September 30, 2021, Rockwell had approximately $33.2 million of cash, cash equivalents and investments available-for-sale, and working capital of $24.3 million. Net cash used in operating activities for the nine months ended September 30, 2021 was approximately $24.5 million. Based on the currently available working capital, the adjustments made to sales and marketing efforts for Triferic and Triferic AVNU and the implementation of key efficiency initiatives within our concentrates business, management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of the filing of this report.

The Company expects it will require additional capital to sustain its operations and make the investments it needs to execute its strategic plan developing FPC for iron deficiency anemia in patients undergoing home infusion and for progressing our pipeline development program of new indications for its FPC platform. If the Company is unable to generate sufficient revenue from sales of its commercial products and from partnerships, the Company will need to obtain additional equity or debt financing. Currently, because the Company's public float is less than $75 million, we are subject to the baby shelf limitations under our current registration statement on Form S-3, which limit the amount we may offer under our Form S-3. This could limit our ability to raise capital under this registration statement. Additionally, the Company has received a delisting notification letter from the Nasdaq Stock Market ("Nasdaq") regarding compliance with minimum bid requirements. The notification letter states that the Company has 180 calendar days, or until December 8, 2021, to regain compliance with Nasdaq Listing Rule 5450(a)(1). To regain compliance, the closing bid price of the Company’s common stock must be at least $1.00 per share for a minimum of 10 consecutive business days at any time prior to December 8, 2021. In the event that the Company does not regain compliance by December 8, 2021, the Company may be eligible for additional time to reach compliance with the minimum bid price requirement. The Company is working on a plan to meet the minimum compliance requirements set forth by Nasdaq. Based on the above, if the Company attempts to obtain additional debt or equity financing, the Company cannot assume that such financing will be available on favorable terms, if at all.

In addition, the Company is subject to certain covenants and cure provisions under its Loan Agreement with Innovatus. As of the date of this report, the Company is in compliance with all covenants. (See Note 15 for further detail).

8

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The COVID-19 pandemic and resulting domestic and global disruptions in the supply chain and labor market, among other areas, have adversely affected Rockwell's business and operations, including, but not limited to, our sales and marketing efforts, research and development activities, our plant and transportation operations and the operations of third parties upon whom the Company relies. Quarantines, shelter-in-place, executive and similar government orders and the recent surge in infections domestically may continue to negatively impact Rockwell's business, including with regard to the Company’s manufacturing and transportation and remaining sales and marketing activities. The Company's international business development activities may also continue to be negatively impacted by COVID-19, especially with the recent surge in infections internationally, ongoing international travel restrictions and quarantines or shelter-in-place orders.

The COVID-19 pandemic, the domestic and international surge in infections and resulting global disruptions have caused significant volatility in financial and credit markets. Rockwell has utilized a range of financing methods to fund its operations in the past; however, current conditions in the financial and credit markets may limit the availability of funding, refinancing or increase the cost of funding. Due to the continued 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.
3.  Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

The accompanying condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U. S. Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements.

The condensed consolidated balance sheet at September 30, 2021, condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020, condensed consolidated statements of comprehensive loss for the three and nine months ended September 30, 2021 and 2020, condensed consolidated statement of changes in stockholders' equity for the three and nine months ended September 30, 2021 and 2020, and condensed consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020 are unaudited, but include all adjustments, consisting of normal recurring adjustments, that 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, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021 or for any future interim period. The condensed consolidated balance sheet at December 31, 2020 has been derived from audited financial statements, however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2020 and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed with the SEC on March 31, 2021. The Company’s consolidated subsidiaries consisted of its wholly-owned subsidiaries, Rockwell Transportation, Inc. and Rockwell Medical India Private Limited.

The accompanying condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Leases
The Company accounts for its leases under Accounting Standards Codification (“ASC”) 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the consolidated balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. Variable lease expenses, if any, are recorded when incurred.
9

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
In calculating the right-of-use asset and lease liability, the Company elects to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term.
Loss Per Share
ASC 260, Earnings Per Share, requires dual presentation of basic and diluted earnings per share (“EPS”), with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that are then sharing in the earnings of the entity.
Basic net loss per share of common stock excludes dilution and is computed by dividing the net loss by the weighted average number of shares outstanding during the period. Diluted net loss per share of common stock reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity unless inclusion of such shares would be anti-dilutive. The Company has only incurred losses, therefore, basic and diluted net loss per share is the same. Securities that could potentially dilute net income per share in the future that were not included in the computation of diluted loss per share were as follows:
As of September 30,
2021 2020
Options to purchase common stock 5,871,620  6,682,192 
Unvested restricted stock awards 78,300  146,800 
Unvested restricted stock units 342,271  245,405 
Warrants to purchase common stock 26,426,863  26,426,863 
Total 32,719,054  33,501,260 
Adoption of Recent Accounting Pronouncements
The Company continually assesses new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a review to determine the consequences of the change to its consolidated financial statements and assures that there are sufficient controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change.
In April 2021, the Financial Accounting Standards Board ("FASB") recently issued Accounting Standards Update ("ASU") 2021-04 to codify the final consensus reached by the Emerging Issues Task Force (EITF) on how an issuer should account for modifications made to equity-classified written call options (hereafter referred to as a warrant to purchase the issuer’s common stock). The guidance in the ASU requires the issuer to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange of the original warrant for a new warrant. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the warrant or as termination of the original warrant and issuance of a new warrant. The Company is evaluating the impact of this guidance on its condensed consolidated financial statements.
4.  Revenue Recognition

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

•Step 1: Identify the contract with the customer
•Step 2: Identify the performance obligations in the contract
•Step 3: Determine the transaction price
•Step 4: Allocate the transaction price to the performance obligations in the contract
10

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
•Step 5: Recognize revenue when the company satisfies a performance obligation
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue.
Shipping and handling costs associated with outbound freight related to contracts with customers are accounted for as a fulfillment cost and are included in cost of sales when control of the goods transfers to the customer.
Nature of goods and services
The following is a description of principal activities from which the Company generates its revenue.
Product sales –The Company accounts for individual products and services separately if they are distinct (i.e., if a product or service is separately identifiable from other items and if a customer can benefit from it on its own or with other resources that are readily available to the customer). The consideration, including any discounts, is allocated between separate products and services based on their stand-alone selling prices. The stand-alone selling prices are determined based on the cost plus margin approach.
Drug and dialysis concentrate products are sold directly to dialysis clinics and to wholesale distributors in both domestic and international markets. Distribution and license agreements for which upfront fees are received are evaluated upon execution or modification of the agreement to determine if the agreement creates a separate performance obligation from the underlying product sales.  For all existing distribution and license agreements, the distribution and license agreement is not a distinct performance obligation from the product sales.  In instances where regulatory approval of the product has not been established and the Company does not have sufficient experience with the foreign regulatory body to conclude that regulatory approval is probable, the revenue for the performance obligation is recognized over the term of the license agreement (over time recognition). Conversely, when regulatory approval already exists or is probable, revenue is recognized at the point in time that control of the product transfers to the customer.
The Company received upfront fees under five distribution and license agreements that have been deferred as a contract liability.  The amounts received from Wanbang Biopharmaceuticals Co., Ltd. (“Wanbang”), Sun Pharmaceutical Industries Ltd. ("Sun Pharma"), Jeil Pharmaceutical Co., Ltd. ("Jeil Pharma") and Drogsan Pharmaceuticals ("Drogsan Pharma") are recognized as revenue over the estimated term of the applicable distribution and license agreement as regulatory approval was not received and the Company did not have sufficient experience in China, India and South Korea, respectively, to determine that regulatory approval was probable as of the execution of the agreement.  The amounts received from Baxter Healthcare Corporation (“Baxter”) are recognized as revenue at the point in time that the estimated product sales under the agreement occur. 
For the business under the Company’s Distribution Agreement with Baxter (the “Baxter Agreement”), and for the majority of the Company’s international customers, the Company recognizes revenue at the shipping point, which is generally the Company’s plant or warehouse. For other business, the Company recognizes revenue based on when the customer takes control or receipt of the product. The amount of revenue recognized is based on the purchase order less returns and adjusted for any rebates, discounts, chargebacks or other amounts paid to customers. There were no such adjustments for the periods reported. Customers typically pay for the product based on customary business practices with payment terms averaging 30 days, while distributor payment terms average 45 days.
Disaggregation of revenue
Revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition.
11

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
In thousands of U.S. dollars ($)  Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
Products By Geographic Area Total U.S. Rest of World Total U.S. Rest of World
Drug Revenues
Product Sales – Point-in-time $ 217  $ 217  $ —  $ 656  $ 656  $ — 
License Fee – Over time 62  —  62  179  —  179 
Total Drug Products 279  217  62  835  656  179 
Concentrate Products
Product Sales – Point-in-time 15,224  13,541  1,683  44,308  39,768  4,540 
License Fee – Over time 485  485  —  1,456  1,456  — 
Total Concentrate Products 15,709  14,026  1,683  45,764  41,224  4,540 
Net Revenue $ 15,988  $ 14,243  $ 1,745  $ 46,599  $ 41,880  $ 4,719 
In thousands of U.S. dollars ($) Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020
Products By Geographic Area Total U.S. Rest of World Total U.S. Rest of World
Drug Revenues
Product Sales – Point-in-time $ 228  $ 228  $ —  $ 609  $ 609  $ — 
License Fee – Over time 56  —  56  167  —  167 
Total Drug Products 284  228  56  776  609  167 
Concentrate Products
Product Sales – Point-in-time 14,506  13,470  1,036  44,786  40,295  4,491 
License Fee – Over time 490  490  —  1,471  1,471  — 
Total Concentrate Products 14,996  13,960  1,036  46,257  41,766  4,491 
Net Revenue $ 15,280  $ 14,188  $ 1,092  $ 47,033  $ 42,375  $ 4,658 
Contract balances
The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers.
In thousands of U.S. dollars ($) September 30, 2021 December 31, 2020
Receivables, which are included in "Trade and other receivables" $ 6,036  $ 4,171 
Contract liabilities $ 8,705  $ 10,190 
There were no material losses recognized related to any receivables arising from the Company’s contracts with customers for the three and nine months ended September 30, 2021 and 2020.
For the three and nine months ended September 30, 2021 and September 30, 2020, the Company did not recognize any material bad-debt expense. There were no material contract assets recorded on the condensed consolidated balance sheet as of September 30, 2021 and December 31, 2020.  The Company does not generally accept returns of its concentrate products and no material reserve for returns of concentrate products was established as of September 30, 2021 or December 31, 2020. 
The contract liabilities primarily relate to upfront payments and consideration received from customers that are received in advance of the customer assuming control of the related products
Transaction price allocated to remaining performance obligations
For the three and nine months ended September 30, 2021, revenue recognized from performance obligations related to prior periods was not material.
12

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
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 $8.7 million as of September 30, 2021. The amount relates primarily to upfront payments and consideration received from customers that are received in advance of the customer assuming control of the related products. The Company applies the practical expedient in paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. The Baxter Agreement includes minimum commitments of product sales over the duration of the agreement. Unfulfilled minimum commitments related to the Baxter Agreement are product sales of $5.7 million as of September 30, 2021, which is amortized ratably through expiration of the Baxter Agreement on October 2, 2024.
5.  Investments - Available-for-Sale
Investments available-for-sale consisted of the following as of September 30, 2021 and December 31, 2020 (table in thousands):
September 30, 2021
Amortized Cost Unrealized Gain Unrealized Loss Accrued Interest Income Fair Value
Available-for-Sale Securities
Bonds $ 9,805  $ 1  $ —  $ 7  $ 9,813 
December 31, 2020
Amortized Cost Unrealized Gain Unrealized Loss Accrued Interest Fair Value
Available-for-Sale Securities
Bonds $ 9,987  $ 3  $ —  $ 7  $ 9,997 
The fair value of investments available-for-sale are determined using quoted market prices from daily exchange-traded markets based on the closing price as of the balance sheet date and are classified as a Level 1 measurement under ASC 820 Fair Value Measurements.
As of September 30, 2021 and December 31, 2020, the amortized cost and estimated fair value of our available-for-sale securities were due within one year.
6.  Inventory
Components of inventory, net of reserves, as of September 30, 2021 and December 31, 2020 are as follows (table in thousands):
September 30,
2021 		December 31,
2020
Raw Materials $ 3,507  $ 3,112 
Work in Process 266  172 
Finished Goods 1,781  1,805 
Total $ 5,554  $ 5,089 
As of September 30, 2021, the Company classified $1.5 million of inventory as non-current, all of which was related to Triferic or the active pharmaceutical ingredient and raw materials for Triferic. As of September 30, 2021, the total Triferic inventory net of reserve was $1.6 million.
The $1.6 million net value of Triferic inventory consisted of $0.4 million of Triferic (dialysate) finished goods with expiration dates ranging from September 2021 to December 2023, $0.4 million of Triferic API with estimated remaining shelf life extending beyond 2022, and $0.9 million of raw materials for Triferic with estimated remaining shelf life extending beyond 2025.
13

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
7.  Property and Equipment
As of September 30, 2021 and December 31, 2020, the Company’s property and equipment consisted of the following (table in thousands):
September 30,
2021 		December 31,
2020
Leasehold Improvements $ 1,196  $ 1,196 
Machinery and Equipment 5,794  5,475 
Information Technology & Office Equipment 1,846  1,831 
Laboratory Equipment 676  676 
9,512  9,178 
Accumulated Depreciation (7,005) (6,536)
Property and Equipment, net $ 2,507  $ 2,642 
Depreciation expense for three months ended September 30, 2021 and 2020 was $0.1 million and $0.2 million, respectively. Depreciation expense for the nine months end September 30, 2021 and 2020 was $0.5 million and $0.6 million, respectively.
8.  Accrued Liabilities
Accrued liabilities as of September 30, 2021 and December 31, 2020 consisted of the following (table in thousands):
September 30,
2021 		December 31,
2020
Accrued Research & Development Expense $ 181  $ 232 
Accrued Compensation and Benefits 2,193  2,500 
Accrued Unvouchered Receipts 622  755 
Accrued Workers Compensation 434  395 
Other Accrued Liabilities 941  1,131 
Total Accrued Liabilities $ 4,371  $ 5,013 
9.  Deferred Revenue
In October 2014, the Company entered into the Baxter Agreement with Baxter and received an upfront fee of $20 million. The upfront fee was recorded as deferred revenue and is 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 Baxter Agreement, which expires in October 2024 and is subject to extension. The Company recognized revenue of approximately $0.5 million and $1.5 million for each of the three and nine months ended September 30, 2021 and 2020. Deferred revenue related to the Baxter Agreement totaled $5.7 million as of September 30, 2021 and $7.2 million as of December 31, 2020.
If a “Refund Trigger Event” occurs under the Baxter Agreement prior to December 31, 2021, Rockwell would be obligated to repay 25% of the upfront fee.
In 2016, the Company entered into a distribution and license agreement with Wanbang (the "Wanbang Agreement") and received an upfront fee of $4.0 million. The upfront fee was recorded as deferred revenue and is being recognized as revenue based on the agreement term. The Company recognized approximately $53,000 and $0.2 million revenue for each of the three and nine months ended September 30, 2021 and 2020. Deferred revenue related to the Wanbang Agreement totaled $2.6 million as of September 30, 2021 and $2.7 million as of December 31, 2020.

In January 2020, the Company entered into license and supply agreements with Sun Pharma (the "Sun Pharma Agreements"), for the rights to commercialize Triferic (dialysate) (ferric pyrophosphate citrate) in India. Under the terms of the Sun Pharma Agreements, Sun Pharma will be the exclusive development and commercialization partner for Triferic (dialysate) in India, and the Company will supply the product to Sun Pharma. In consideration for the license, the Company received an upfront fee of $0.1 million, and will be eligible for milestone payments and royalties on net sales. A Joint Alliance Committee,
14

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
comprised of members from the Company and Sun Pharma, will guide the development and execution for Triferic (dialysate) in India. Sun Pharma will be responsible for all clinical and regulatory approval, as well as commercialization activities. The upfront fee was recorded as deferred revenue and is being recognized as revenue based on the agreement term. The Company recognized revenue of approximately $2,500 and $7,500 for each of the three and nine months ended September 30, 2021 and 2020. Deferred revenue related to the Sun Pharma Agreement totaled $82,500 and $90,000 as of September 30, 2021 and December 31, 2020, respectively.

In September 2020, the Company entered into a license and supply agreements with Jeil Pharma (the "Jeil Pharma Agreements"), for the rights to commercialize Triferic (dialysate) (ferric pyrophosphate citrate) in South Korea. Under the terms of the Jeil Pharma Agreements, Jeil Pharma will be the exclusive development and commercialization partner for Triferic (dialysate) in South Korea, and the Company will supply the product to Jeil Pharma. In consideration for the license, the Company received an upfront fee of $0.2 million, and will be eligible for milestone payments and royalties on net sales. A Joint Alliance Committee, comprised of members from the Company and Jeil Pharma, will guide the development and execution for Triferic (dialysate) in South Korea. Jeil Pharma will be responsible for all clinical and regulatory approval, as well as commercialization activities. The upfront fee was recorded as deferred revenue and is being recognized as revenue based on the agreement term. The Company recognized revenue of $2,500 and nil for the three months ended September 30, 2021 and 2020, respectively, and $7,500 and nil for the nine months ended September 30, 2021 and 2020, respectively. Deferred revenue related to the Jeil Pharma Agreement totaled approximately $0.2 million as of September 30, 2021 and December 31, 2020.

In June 2021, the Company entered into license and supply agreements with Drogsan Pharma (the "Drogsan Agreements"), for the rights to commercialize Triferic (dialysate) and Triferic AVNU in Turkey. Under the terms of the Drogsan Agreements, Drogsan Pharma will be the exclusive commercialization partner for Triferic (dialysate) and Triferic AVNU in Turkey. In consideration for the license, the Company received an upfront fee of $0.15 million, and will be eligible for milestone payment and royalties on net sales. A Joint Alliance Committee, comprised of members from the Company and Drogsan Pharma, will guide the execution for Triferic (dialysate) and Triferic AVNU in Turkey. Drogsan Pharma will be responsible for all regulatory approval and commercialization activities, and the Company will supply the product to Drogsan Pharma for Turkey. The upfront fee will be recorded as deferred revenue and will be recognized as revenue based on the agreement term. The Company recognized revenue of $3,750 for the three months ended September 30, 2021. Deferred revenue related to the Drogsan Agreements totaled approximately $0.15 million as of September 30, 2021.
10.  Stockholders’ Equity

Preferred Stock
As of September 30, 2021 and December 31, 2020, there were 2,000,000 shares of preferred stock, $0.0001 par value per share, authorized and no shares of preferred stock issued or outstanding.
Common Stock
As of September 30, 2021 and December 31, 2020, there were 170,000,000 shares of common stock, $0.0001 par value per share, authorized and 93,966,381 and 93,573,165 shares issued and outstanding, respectively.
Controlled Equity Offering (or "At the Market" Offering)
On March 22, 2019, the Company entered into a sales agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (the “Agent”), pursuant to which the Company may offer and sell from time to time shares of the Company’s common stock through the Agent. The offering and sale of up to $40.0 million of the shares has been registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to the Company’s registration statement on Form S-3 (File No. 333-227363), which was originally filed with the SEC on September 14, 2018 and declared effective by the SEC on October 1, 2018, the base prospectus contained within the registration statement, and a prospectus supplement that was filed with the SEC on March 22, 2019. The registration statement on Form S-3 expired on October 1, 2021 and no further sales may be made under the Sales Agreement.

During the three and nine months ended September 30, 2021, the Company has not sold shares of its common stock pursuant to the Sales Agreement. Approximately $32.3 million remained available for sale under this facility as of September 30, 2021.
15

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
11.  Stock-Based Compensation
The Company recognized total stock-based compensation expense during the three and nine months ended September 30, 2021 and 2020 as follows (table in thousands):
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
Service-based awards:
Restricted stock units $ 81  $ 9  $ 263  $ 243 
Stock option awards 315  243  1,050  1,019 
396  252  1,313  1,262 
Performance-based awards:
Restricted stock awards —  —  (391) — 
Restricted stock units —  (123) —  (1,148)
Stock option awards (35) 121  (364) (390)
(35) (2) (755) (1,538)
Total $ 361  $ 250  $ 558  $ (276)
Restricted Stock
A summary of the Company’s restricted stock awards during the nine months ended September 30, 2021 is as follows:
Number of Shares Weighted Average
Grant-Date
Fair Value
Unvested at January 1, 2021 146,800  $ 5.70 
Forfeited (68,500) $ 5.70 
Unvested at September 30, 2021 78,300  $ 5.70 
A summary of the Company’s restricted stock awards during the nine months ended September 30, 2020 is as follows:
Number of Shares Weighted Average
Grant-Date
Fair Value
Unvested at January 1, 2020 146,800  $ 5.70 
Unvested at September 30, 2020 146,800  $ 5.70 
The fair value of 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 September 30, 2021, unvested restricted stock awards of 78,300 were related to performance-based awards. The forfeited performance-based restricted stock awards of 68,500 was due to the termination of the Company's former Chief Science Officer on January 19, 2021. These forfeited awards reduced stock-based compensation expense by $0.4 million.
16

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Service-Based Restricted Stock Units
A summary of the Company’s service-based restricted stock units during the nine months ended September 30, 2021 is as follows:
Number of Shares Weighted Average
Grant-Date
Fair Value
Unvested at January 1, 2021 265,494  $ 2.60 
Granted 310,050  0.90 
Vested (221,474) 2.38 
Forfeited (11,799) 4.81 
Unvested at September 30, 2021 342,271  $ 1.17 

A summary of the Company’s service-based restricted stock units during the nine months ended September 30, 2020 is as follows:
Number of Shares Weighted Average
Grant-Date
Fair Value
Unvested at January 1, 2020 463,786  $ 4.26 
Granted 188,904  2.09 
Vested (247,561) 4.30 
Forfeited (159,724) 4.26 
Unvested at September 30, 2020 245,405  $ 2.72 
The fair value of service based restricted stock units are measured based on their fair value on the date of grant and amortized over the vesting period. The vesting periods range from 1 to 3 years. Stock-based compensation expense of $0.1 million and $0.3 million was recognized for the three and nine months ended September 30, 2021, respectively. Stock-based compensation expense of nil and $0.2 million was recognized for the three and nine months ended September 30, 2020, respectively. As of September 30, 2021, the unrecognized stock-based compensation expense was $0.2 million, which is expected to be recognized over an estimated weighted average remaining term of less than 1 year.
Performance-Based Restricted Stock Units
As of September 30, 2021, there were no outstanding performance-based restricted stock units.
A summary of the Company’s performance-based restricted stock units during the nine months ended September 30, 2020 is as follows:
Number of Shares Weighted Average
Grant-Date
Fair Value
Unvested at January 1, 2020 988,958  $ 4.48 
Forfeited (988,958) 4.48 
Unvested at Unvested at September 30, 2020 —  $ — 
Service-Based Stock Options
17

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The fair value of the service-based stock options granted for the nine months ended September 30, 2021 were based on the following assumptions:
September 30,
2021
Exercise price
$0.61 - $1.73
Expected stock price volatility
75.8% - 77.7%
Risk-free interest rate
0.47% - 1.06%
Term (years)
5.5 - 6
A summary of the Company’s service-based stock option activity for the nine months ended September 30, 2021 is as follows:
Shares
Underlying
Options 		Weighted
Average Exercise
Price 		Weighted
Average
Remaining
Contractual
Term 		Aggregate
Intrinsic
Value
Outstanding at January 1, 2021 5,717,956  $ 4.55  6.6 $ — 
Granted 1,872,162  0.89  6.0 — 
Forfeited (385,278) 2.30  —  — 
  Expired (1,333,220) 7.16  —  — 
Outstanding at September 30, 2021 5,871,620  $ 2.95  7.7 $ — 
Exercisable at September 30, 2021 2,539,438  $ 4.96  5.8 $ — 
A summary of the Company’s service-based stock option activity for the nine months ended September 30, 2020 is as follows:
Shares
Underlying
Options 		Weighted
Average Exercise
Price 		Weighted
Average
Remaining
Contractual
Term 		Aggregate
Intrinsic
Value
Outstanding at January 1, 2020 8,210,024  $ 7.06  5.1 $ 107,000 
Granted 2,252,344  1.95  5.9 — 
Forfeited (440,026) 3.96  —  — 
Expired (4,090,150) 8.24  —  — 
Outstanding at September 30, 2020 5,932,192  $ 4.54  6.7 $ — 
Exercisable at September 30, 2020 2,889,218  $ 6.95  3.8 $ — 
The aggregate intrinsic value in the table above is calculated as the difference between the closing price of the Company's common stock and the exercise price of the stock options that had strike prices below the closing price.
During the nine months ended September 30, 2021, the Company granted stock options to purchase up to 1,872,162 shares of common stock to certain employees. During the nine months ended September 30, 2021, 385,278 shares were forfeited and 1,333,220 shares expired. Forfeitures are recorded in the period of occurrence; compensation expense is adjusted accordingly.
Stock-based compensation expense recognized for service-based stock options was $0.3 million and $1.0 million for the three and nine months ended September 30, 2021, respectively. Stock-based compensation expense recognized for service-based stock options was $0.2 million and $1.0 million for the three and nine months ended September 30, 2020, respectively. As of September 30, 2021, total stock-based compensation expense related to unvested options not yet recognized totaled
18

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
approximately $1.7 million, which is expected to be recognized over an estimated weighted average remaining term of 3.0 years.
Performance-Based Stock Options
A summary of the performance-based stock options for the nine months ended September 30, 2021 is as follows:
Number of Shares Weighted Average
Exercise
Price
Outstanding at January 1, 2021 750,000  $ 2.20 
Expired (750,000) 2.20 
Outstanding at September 30, 2021 —  $ — 
Exercisable at September 30, 2021 —  $ — 
A summary of the performance-based stock options for the nine months ended September 30, 2020 is as follows:
Number of Shares Weighted Average
Exercise
Price
Outstanding at January 1, 2020 388,125  $ 4.70 
Granted 750,000  $ 2.20 
Forfeited (388,125) $ 4.70 
Outstanding at September 30, 2020 750,000  $ 2.20 
Exercisable at September 30, 2020 —  $ — 
Stock-based compensation expense recognized for performance-based stock options was nil and $(0.4) million for the three and nine months ended September 30, 2021, respectively. Stock-based compensation expense recognized for performance-based stock options was $0.1 million and $(0.4) million for the three and nine months ended September 30, 2020, respectively. The increase in expired performance-based stock options and reduction in stock-based compensation expense was due to the performance criteria of certain performance-based options granted to officers of the Company becoming non-probable as of September 30, 2021. As of September 30, 2021, there was no unrecognized stock-based compensation expense related to unvested performance-based stock options.
12.  Licensing Agreements
Product License Agreements
The Company is a party to a Licensing Agreement with 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. Ajay Gupta, a former Officer of the Company. 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. The Charak MSA provided for a payment of $1.0 million to Dr. Gupta, payable in four quarterly installments of $250,000 each on October 15, 2018, January 15, 2019, April 15, 2019 and July 15, 2019, and reimbursement for certain legal fees incurred in connection with the Charak MSA. The Company paid all four of the quarterly installments totaling $1.0 million and accrued $0.1 million for the reimbursement of certain legal expenses during the year ended December 31, 2019. As of December 31, 2020, the Company had fulfilled its reimbursement obligation of certain legal expenses. As of September 30, 2021, the Company accrued $0.2 million relating to certain IP reimbursement expenses and certain sublicense royalty fees within accrued liabilities on the condensed consolidated balance sheet.
19

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Pursuant to the Charak MSA, the aforementioned parties entered into an Amendment, dated as of October 7, 2018 (the “Charak Amendment”), to the 2002 Agreement, under which Charak granted the Company an exclusive, worldwide, non-transferable license to commercialize SFP for the treatment of patients with renal failure. The Charak Amendment amends the royalty payments due to Charak under the 2002 Agreement such that the Company is liable to pay Charak royalties on net sales by the Company of products developed under the license, which includes the Company’s Triferic® product, at a specified rate until December 31, 2021 and thereafter at a reduced rate from January 1, 2022 until February 1, 2034. Additionally, the Company shall pay Charak a percentage of any sublicense income during the term of the agreement, which amount shall not be less than a minimum specified percentage of net sales of the licensed products by the sub-licensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and be no less than a lower rate of the net sales of the licensed products by the sub-licensee in jurisdictions where there exists no valid claim, on a country-by-country basis.
Also pursuant to the Charak MSA, the Company and Charak entered into a Commercialization and Technology License Agreement I.V. Triferic® (now Triferic AVNU), dated as of October 7, 2018 (the “IV Agreement”), under which Charak granted the Company an exclusive, sub-licensable, royalty-bearing license to SFP for the purpose of commercializing certain intravenous-delivered products incorporating SFP for the treatment of iron disorders worldwide for a term that expires on the later of February 1, 2034 or upon the expiration or termination of a valid claim of a licensed patent. The Company is liable to pay Charak royalties on net sales by the Company of products developed under the license at a specified rate until December 31, 2021. From January 1, 2022 until February 1, 2034, the Company is liable to pay Charak a base royalty at a reduced rate on net sales and an additional royalty on net sales while there exists a valid claim of a licensed patent, on a country-by-country basis. The Company shall also pay to Charak a percentage of any sublicense income received during the term of the IV Agreement, which amount shall not be less than a minimum specified percentage of net sales of the licensed products by the sub-licensee 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 sub-licensee 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, sublicensable, royalty-bearing license to SFP for the purpose of commercializing worldwide certain parenteral nutritional ("TPN”) products incorporating SFP. The license grant under the TPN Agreement continues for a term that expires on the later of February 1, 2034 or upon the expiration or termination of a valid claim of a licensed patent. 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 sub-licensee 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 sub-licensee in jurisdictions where there exists no valid claim, on a country-by-country basis.
13.  Leases
The Company leases its production facilities and administrative offices as well as certain equipment used in our operations including leases on transportation equipment used in the delivery of its products. The lease terms range from monthly to five years. The Company occupies a 51,000 square foot facility and a 17,500 square foot facility in Wixom, Michigan under a lease expiring in August 2024. The Company 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 2023. In addition, the Company occupies 4,100 square feet of office space in Hackensack, New Jersey under a lease expiring on July 1, 2024. This lease is currently being offered for sublease.
At September 30, 2021, the Company had operating and finance lease liabilities of $7.1 million and right-of-use assets of $6.9 million, which are included in the consolidated balance sheet.
At December 31, 2020, the Company had operating lease liabilities of $3.0 million and right-of-use assets of $2.9 million, which are included in the consolidated balance sheet.
The following summarizes quantitative information about the Company’s operating leases (table in thousands):
20

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020
Operating leases
Operating lease cost $ 457  $ 382  $ 1,309  $ 1,228 
Variable lease cost 94  90  286  403 
Operating lease expense 551  472  1,595  1,631 
Finance leases
Amortization of right-of-use assets 73  —  184  — 
Interest on lease obligations 22  —  55  — 
Finance lease expense 95  —  239  — 
Short-term lease rent expense 4  4  12  12 
Total rent expense $ 650  $ 476  $ 1,846  $ 1,643 
Other information
Operating cash flows from operating leases $ 444  $ 393  $ 1,298  $ 1,248 
Operating cash flows from finance leases $ 22  $ —  $ 56  $ — 
Financing cash flows from finance leases $ 59  $ —  $ 152  $ — 
Right of use assets exchanged for operating lease liabilities $ 718  $ —  $ 4,089  $ — 
Right of use assets exchanged for finance lease liabilities $ 588  $ —  $ 1,365  $ — 
Weighted-average remaining lease term – operating leases 3.7 2.3 3.7 2.3
Weighted-average remaining lease term – finance leases 5.5 0.0 5.5 0.0
Weighted-average discount rate – operating leases 6.3  % 6.8  % 6.3  % 6.8  %
Weighted-average discount rate – finance leases 5.9  % —  % 5.9  % —  %
Future minimum rental payments under operating lease agreements are as follows (in thousands):
Operating Finance
Year ending December 31, 2021 (remaining) $ 470  $ 103 
Year ending December 31, 2022 1,746  418 
Year ending December 31, 2023 1,429  424 
Year ending December 31, 2024 1,076  424 
Year ending December 31, 2025 616  426 
Remaining future payments 345  526 
Total $ 5,682  $ 2,321 
Less present value discount (607) (338)
Operating and finance lease liabilities $ 5,075  $ 1,983 
14.  Commitments and Contingencies
Litigation
SEC Investigation
As a follow up to certain prior inquiries, the Company received a subpoena from the SEC during the Company’s quarter ended September 30, 2018 requesting, among other things, certain information and documents relating to the status of the Company’s request to the Centers for Medicare & Medicaid Services (the "CMS") for separate reimbursement
21

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
status for Triferic (dialysate), the Company’s reserving methodology for expiring Triferic inventory, and the basis for the Board’s termination of the former Chief Executive Officer, Robert Chioini, and former Chief Financial Officer, Thomas Klema, in 2018. The Company is cooperating with the SEC and is responding to the SEC’s requests for documents and information.
15. Loan and Security Agreement

In March 2020, Rockwell Medical, Inc. 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"). Funding of the first $22.5 million tranche was completed on March 16, 2020. The Company is no longer eligible to draw on a second tranche of $5.0 million, which was tied to the achievement of certain milestones by a specific date. The Company may be eligible to draw on a third tranche of $7.5 million upon the achievement of certain additional milestones, including the achievement of certain Triferic sales thresholds. Net draw down proceeds were $21.2 million with closing costs of $1.3 million.

The Company is entitled to make interest-only payments for thirty months, or up to thirty-six months if certain conditions are met. The Term Loans will mature on March 16, 2025, and will bear interest at the greater of (i) Prime Rate (as defined in the Loan Agreement) and (ii) 4.75%, plus 4.00% with an initial interest rate of 8.75% per annum and an effective interest rate of 11.3%. The Company has the option, under certain circumstances, to add 1.00% of such interest rate amount to the then outstanding principal balance in lieu of paying such amount in cash. For each of the three months ended September 30, 2021 and 2020, interest expense amounted to $0.6 million and $0.7 million, respectively. For the nine months ended September 30, 2021 and 2020, interest expense amounted to $1.8 million and $1.3 million, respectively.

The Loan Agreement is secured by all assets of the Company and Rockwell Transportation, Inc. Proceeds are being used for working capital purposes. The Loan Agreement contains customary representations and warranties and covenants, subject to customary carve outs, and includes financial covenants related to liquidity and trailing twelve months sales of Triferic, with the latter beginning with the period ending December 31, 2020. The Company cannot assure you that we can maintain compliance with the covenants under our Loan Agreement, which may result in an event of default. The Company's ability to comply with these covenants may be adversely affected by events beyond its control. For example, the Loan Agreement contains certain financial covenants relating to sales and, as a result of the ongoing COVID-19 pandemic and its effect on the Company's sales activities, among other factors, the Company may not be able to satisfy such covenants in the future. If the Company is unable to comply with the covenants under the Loan Agreement, it would pursue all available cure options in order to regain compliance. The Company previously failed to satisfy a revenue covenant for the period ended December 31, 2020 and then subsequently agreed to an appropriate remedy during the applicable cure period. However, the Company may not be able to mutually agree with Innovatus on appropriate remedies to cure a future breach of a covenant, which could give rise to an event of default. If the Company is unable to avoid an event of default, any required repayments could have an adverse effect on its liquidity. As of September 30, 2021, the Company is in compliance with all the reporting and financial covenants. The financial statements for September 30, 2021 have been prepared with the assumption that the Company will be able to agree to an appropriate remedy during the applicable cure period for any future breaches of operating covenants. Based on the foregoing, the Company has classified amounts payable under the Loan Agreement as a current liability. If and when the Company reaches an agreement with Innovatus to avoid an event of default, the amounts payable under the Loan Agreement will be reevaluated for its classification and presentation.

In connection with each funding of the Term Loans, the Company is required to issue to Innovatus a warrant (the “Warrants”) to purchase a number of shares of the Company’s common stock equal to 3.5% of the principal amount of the relevant Term Loan funded divided by the exercise price, which will be based on the lower of (i) the volume weighted average closing price of the Company’s stock for the 5-trading day period ending on the last trading day immediately preceding the execution of the Loan Agreement or (ii) the closing price on the last trading day immediately preceding the execution of the Loan Agreement (or for the second and third tranches only at the lower of (i) $1.65 per share or (ii) the volume weighted average closing price of the Company’s stock for the 5-trading day period ending on the last trading day immediately preceding the relevant Term Loan funding). The Warrants may be exercised on a cashless basis and are immediately exercisable through the seventh anniversary of the applicable funding date. The number of shares of common stock for which each Warrant is exercisable and the associated exercise price are subject to certain proportional adjustments as set forth in such Warrant. In connection with the first tranche of the Term Loans, the Company issued a Warrant to Innovatus, exercisable for an aggregate of 477,273 shares of the Company’s common stock at an exercise price of $1.65 per share. The Company evaluated the warrant under ASC 470, Debt, and recognized an additional debt discount of approximately $0.5 million based on the relative fair value of the base instruments and warrants. The Company calculated the fair value of the warrant using the Black-Scholes model.
22

ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)

On September 24, 2021, the Company, entered into the First Amendment to Loan and Security Agreement (the “Amendment”) with Innovatus Life Sciences Lending Fund I, LP, which amended the Loan Agreement.. Pursuant to the Amendment, the Company (i) shall prepay an aggregate principal amount of $7.5 million in Term Loans (as defined in the Loan Agreement) in ten consecutive equal monthly installments commencing on December 1, 2021; (ii) shall 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) shall maintain minimum liquidity of no less than $5.0 million if the aggregate principal amount of Term Loans is greater than $15.0 million pursuant to the liquidity covenant in the Loan Agreement.

As of September 30, 2021, the outstanding balance of the Term Loan was $21.2 million, net of unamortized issuance costs and unaccreted discount of $1.3 million.

The following table reflects the schedule of principal payments on the Term Loan as of September 30, 2021 (in thousands):
Principal Payments
2021 $ 1,500 
2022 7,500 
2023 6,000 
2024 6,000 
2025 1,500 
$ 22,500 

16. Insurance Financing Note Payable
On July 3, 2021, the Company entered into a short-term note payable for $2.0 million, bearing interest at 3.93% per annum to finance various insurance policies. Principal and interest payments related to this note will begin on July 3, 2021 and are paid on a straight-line amortization over 9 months with the final payment due on March 3, 2022. As of September 30, 2021, the Company's insurance note payable balance was $1.3 million.
23

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes in “Item 1. Condensed Consolidated Financial Statements”. References in this report to "Rockwell," the “Company,” “we,” “our” and “us” are references to Rockwell Medical, Inc. and its subsidiaries.
Forward-Looking Statements
We make forward-looking statements in this report and may make such statements in future filings with the Securities and Exchange Commission, or SEC.  We may also make forward-looking statements in our press releases or other public or shareholder communications.  Our forward-looking statements are subject to risks and uncertainties and include information about our expectations and possible or assumed future results of our operations.  When we use words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “could,” “plan,” “potential,” “predict,” “forecast,” “project,” “intend,” or similar expressions, or make statements regarding our intent, belief, or current expectations, we are making forward-looking statements. Our forward looking statements also include, without limitation, statements about our liquidity and capital resources; our plans and ability to successfully commercialize our products; our ability to successfully launch FDA-approved Triferic AVNU; our ability to develop FPC for other indications; our ability to successfully execute on our business strategy and development of new indications; and statements regarding our anticipated future financial condition, operating results, cash flows and business plans.
While we believe that our forward-looking statements are reasonable, you should not place undue reliance on any such forward-looking statements, which are based on information available to us on the date of this report or, if made elsewhere, as of the date made.  Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different.  Factors that might cause such a difference include, without limitation, the risks and uncertainties discussed in this report, “Item 1A — Risk Factors” in our Form 10-K for the year ended December 31, 2020 and from time to time in our other reports filed with the SEC, including in this Form 10-Q.
Other factors not currently anticipated may also materially and adversely affect our results of operations, cash flow and financial position.  There can be no assurance that future results will meet expectations.  Forward-looking statements speak only as of the date of this report and we expressly disclaim any intent to update or alter any statements whether as a result of new information, future events or otherwise, except as may be required by applicable law.
Overview and Recent Developments
Rockwell is a commercial-stage, biopharmaceutical company developing and commercializing our next-generation parenteral iron technology platform, Ferric Pyrophosphate Citrate ("FPC"), which we believe has the potential to lead to transformative treatments for iron deficiency in multiple disease states, reduce healthcare costs and improve patients’ lives. We are also one of the two major suppliers of life-saving hemodialysis concentrate products to kidney dialysis clinics in the United States.
The Company has two novel, FDA approved therapies, Triferic and Triferic AVNU, which are the first two products developed from our FPC platform. The Company is currently target marketing both products to kidney dialysis centers for their patients receiving dialysis and working to find a commercial partner to expand our commercial efforts within the United States. This decision was based on the dynamics of the hemodialysis ("HD") market, including provider consolidation, the effects of the CMS bundled payment system and competitive product bundling tactics. In 2021, Rockwell has been working to advance our FPC platform strategy outside of dialysis and plans to start a Phase II trial for the treatment of iron deficiency anemia in patients, who are receiving long-term and or chronic intravenous ("IV") medications for various therapeutic needs in the home infusion setting by the end of the year. In the Company's R&D pipeline, we are also exploring FPC’s impact in the treatment of hospitalized patients with acute heart failure, with the potential to begin another Phase II trial in these patients in 2022. The trend toward providing medical care, including the delivery of medicines, at home make the home infusion market a rapidly growing area of healthcare. We believe that the home infusion setting is a natural path for expansion of our platform as many of the patients suffer from chronic diseases that are associated with iron deficiency and anemia. Subsequent to our Type C and Pre-IND meeting with FDA, and incorporating their advice and feedback, we filed an IND for the treatment of iron deficiency anemia in the home-infusion setting in November 2021. Our expectations regarding the commencement of a Phase II trial by the end of 2021 are based on the FDA's statutory obligations to respond to an IND submission within 30 calendar days. In our
24

R&D pipeline, we are also investigating FPC’s impact on iron deficiency in the treatment of hospitalized patients with acute heart failure, with the potential to begin another Phase II trial in these patients in 2022.
We are the second largest supplier of hemodialysis concentrates in the United States, with a reputation for excellent service, quality, and reliability. We believe that this reputation, which is based on over 25 years of service to the kidney dialysis centers, combined with about $60 million in annual revenue, approximately 300 dedicated employees, expertise in manufacturing and logistics and the added expertise in pharmaceutical development and commercialization brought to the Company by recent additions to our management team, provides us with a solid foundation on which to grow.
At Rockwell Medical, we are dedicated to replacing the currently inadequate standard of care for treatment of iron deficiency in acute and chronic disease by leveraging our proprietary FPC platform technology. We believe that our proprietary drug platform, FPC, is a next-generation parenteral iron therapeutic that has several advantages over other parenteral iron therapies. Importantly, it provides iron that is immediately bioavailable for critical body processes once it is administered. It has been demonstrated to be safe and well-tolerated, with a safety profile similar to placebo.
Iron deficiency, which is often overlooked and undertreated in several illnesses because of the difficulty in treating them, can develop into a serious medical condition when left untreated. It is a common comorbidity in many disease states, such as end-stage kidney disease, chronic kidney disease, acute heart failure, cancer and multiple chronic gastrointestinal conditions. Iron deficiency impacts patients’ health in many ways, including through anemia, organ dysfunction, slower recovery, diminished energy and reduced quality of life.

Strategy Evolution and Overview
Rockwell Medical has evolved its strategy over the past year to develop into a more medically-, scientifically- and data-driven company. We believe future clinical, regulatory and commercial success require the right people with the right experience to navigate us to the right data. There has been an evolution of both our management and board, providing us with greater relevant experience. In particular, we have added board members and employees with significant medical and commercial experience in iron deficiency anemia and the dialysis sector, drug development and commercialization, small-cap public company finance and management and clinical nurse educator patient support. We believe these changes support an improved execution of our strategy to generate data that will support future commercial growth, fair reimbursement and regulatory approvals.
Our strategy is to accelerate Rockwell’s growth by creating and developing pharmaceutical products based on our FPC technology for disease states where patients can benefit the most from an effective treatment for iron deficiency or iron deficiency anemia, while concurrently refining our dialysis business to drive incremental growth and efficiencies. We plan to leverage and build on the foundation provided by our current dialysis business serving kidney dialysis centers by developing a pipeline of additional potential drug therapies in multiple disease states outside of nephrology. We have preliminarily identified three disease states where we believe FPC may have the biggest impact.
Dialysis Business: We are the second largest supplier, and one of the two major suppliers, of hemodialysis concentrates in the United States. We manufacture, sell and deliver hemodialysis concentrates, which are used to maintain human life by removing toxins and balancing electrolytes in the dialysis patient’s bloodstream. We have core capabilities in manufacturing hemodialysis concentrates in three facilities, totaling 159,000 square feet, located in Michigan, Texas and South Carolina. We also have core capabilities in the logistics of delivering these products to dialysis clinics throughout most of the United States.
Our first two branded products from our FPC platform, Triferic® (dialysate) and Triferic AVNU® (IV), are used to maintain hemoglobin in patients undergoing hemodialysis. We are building on our reputation and industry presence by commercializing them to medium and small dialysis organizations. We began commercializing Triferic and Triferic AVNU in the United States in the second half of 2019 and in early 2021, respectively. In April 2021, we received marketing approval for Triferic AVNU from Health Canada for the replacement of iron to maintain hemoglobin in adult patients with hemodialysis-dependent chronic kidney disease, which is the first international regulatory approval for our intravenous therapy. While we had identified a partner to commercialize the product in Canada, we recently terminated the distribution agreement with that partner and are seeking a new partner in Canada. This may delay commercial availability of Triferic AVNU in Canada. Our strategy for increasing Triferic adoption is to continue to generate data in clinics showing the benefits of Triferic in real world protocols. In addition, we expect to study Triferic use with the innovations that we believe have the potential to change future
25

medical practices (e.g. introduction and adoption of HIF-PHIs), subject to FDA approval. We believe that positive data from these studies would better position Triferic for long-term growth. As part of this initiative and due to current economic challenges, the Company has adjusted its sales and marketing efforts for Triferic and Triferic AVNU and is seeking a commercial partner within the United States. This decision was based on the dynamics of the hemodialysis market, including provider consolidation, the effects of the CMS bundled payment system and competitive product bundling tactics. Additionally, we are developing strategic alliance partners for development, regulatory approval and commercialization of Triferic outside of the United States.
Home Infusion Program: We plan to initiate a clinical trial program of FPC for the treatment of iron deficiency anemia in the home-infusion setting. Many patient groups requiring home infusion therapies suffer from chronic diseases that are associated with a high incidence of iron deficiency and anemia. Home infusion represents a large and rapidly-growing segment of healthcare where we believe FPC may have distinct advantages over currently available iron replacement therapy options.
Pipeline Development: We are investigating the use of our FPC platform for the treatment of iron deficiency in hospitalized patients with acute heart failure. We believe that FPC may deliver rapidly bioavailable iron to the heart and improve cardiac energetics. This effect could help patients recover faster, resulting in shorter hospital stays and fewer 30-day re-admissions, which would be a meaningful reduction healthcare costs and human suffering.
Our Growth Strategy
We plan to accelerate our growth by combining the solid foundation, strength and reputation of our dialysis business with the high-growth potential from therapeutics derived (or generated) from our FPC platform in multiple disease states where patients can benefit the most from an effective treatment for iron deficiency. In parallel with continually seeking to drive incremental growth and efficiencies in our dialysis business unit, our strategy is to accelerate the growth of our business in large, higher-margin markets by creating and developing pharmaceutical products based on our proprietary FPC technology that address iron deficiency in patients who are currently under-treated.
Dialysis Business
We are one of the two major suppliers of hemodialysis concentrates in the United States. Over the past 25 years we have developed a core expertise in manufacturing and delivering hemodialysis concentrates. Because these concentrates are used to maintain human life by removing toxins and balancing electrolytes in the dialysis patient’s bloodstream, we manufacture them under cGMP regulations as described below. Our concentrates are manufactured in three facilities, totaling 159,000 square feet, located in Michigan, Texas and South Carolina, from which we deliver these products to dialysis clinics throughout most of the United States. We utilize our own delivery fleet as well as third parties. We employ approximately 300 people in the concentrates unit of our dialysis business.
The “Rockwell Medical” name has earned a reputation for dependability, quality and service within our customer base. This reputation was further strengthened during the recent challenges presented, not only by the COVID-19 pandemic, but also by the multitude of recent natural disasters where our team has been challenged by hurricanes, flooding and freezing, while still meeting production demands.
Our dialysis business in concentrates and our growth opportunities with FPC technology are synergistic. We are leveraging our leadership position in the dialysis sector to commercialize our first two FPC-based products, Triferic and Triferic AVNU, which are indicated for the replacement of iron to maintain hemoglobin in adult patients with hemodialysis-dependent chronic kidney disease. We commercialize the Triferic products ourselves in the United States, and are partnering with established local pharmaceutical companies for the regulatory approval and commercialization outside of the United States.
Although we have an excellent reputation for dependability and service within the dialysis sector, with concentrates and Triferic, our growth opportunities for both in the United States dialysis market are challenged by the consolidated ownership of dialysis clinics, a capitated reimbursement model and the demographics of the patient population and the limitations of our existing distribution and purchase agreements. The two largest dialysis organizations treat approximately 73% of the patients in the United States. One manufactures its own concentrates and IV iron and we already supply concentrates to the other. Through our partnership with Baxter International, we currently supply concentrates to a significant percentage of the small and medium sized dialysis organizations. In a sector such as kidney dialysis, with capitated
26

reimbursement for the dialysis procedure and all included inputs, new product success depends on compelling data demonstrating improved patient outcomes and/or pharmacoeconomics versus the current standard of care in practice in the clinics. Once Medicare determined that Triferic and Triferic AVNU would be reimbursed under the fixed bundled rate, market adoption became more dependent on the generation of these data, which were not required for the drug's approval from the FDA.
Notwithstanding the growth limitations mentioned above, we have made progress and continue to be confident that Triferic has the potential to be the treatment of choice for the maintenance of hemoglobin in dialysis patients. To this end, we have increased our efforts in generating real world data in clinics with current protocols, which we believe will help with the adoption of Triferic and Triferic AVNU as these results are developed and disseminated over time, and have adjusted our sales and marketing efforts while seeking a commercial partner within the United States with a bigger footprint to expand commercialization of both products. In addition, we believe the hemodialysis industry may experience a great deal of change over the next several years. We plan to take the steps necessary to generate the data necessary to potentially allow Triferic and Triferic AVNU to benefit from these new innovations, such as the potential approval of a class of drugs, known as hypoxia-inducible factor prolyl hydroxylase inhibitors ("HIF-PHIs"), as well as the new, solid-state dialysis equipment in development. We are planning to study Triferic in combination with these potential new innovations as they become available.
A key element of our dialysis business strategy is to also improve the strength of our concentrates business by creating efficiencies and enhancing our manufacturing and transportation operations. We have launched projects to identify ways to improve the overall profitability of these core operations. Specifically, we are reviewing our entire supply chain to identify opportunities for improvement, prioritizing initiatives that will have the largest impact on long-term efficiency, profitability and growth.
Home Infusion
Our growth strategy is to go beyond our foundational business in dialysis by leveraging the pre-clinical, clinical pharmacology and safety data from Triferic. We are planning development of an FPC-based therapeutic for iron deficiency to be given in the home infusion setting. According to the National Home Infusion Association, the number of patients served by home infusion therapy has grown from approximately 800,000 in 2010 to over 3,000,000 in 2019. The home infusion setting is expected to continue to expand, which has been further accelerated by the COVID-19 pandemic and the desire to reduce or eliminate hospital and or clinic exposure. Many patient groups requiring home infusion therapies suffer from diseases that are associated with an incidence of iron deficiency and anemia. For example, it is estimated that 40% to 55% of all home parenteral nutrition patients have iron deficiency anemia. We believe, based on our data with hemodialysis patients, FPC as a home infusion therapy for iron deficiency anemia may have distinct advantages over currently available iron replacement therapy options.
We plan on initiating a Phase II trial in home infusion patients with iron deficient anemia by the end of 2021, subject to the clearance of our IND, to confirm the dose and duration of FPC treatment. We expect data from the trial in the second quarter of 2023.
Pipeline Development
In our R&D pipeline, we are also exploring FPC’s impact in the treatment of iron deficiency in hospitalized heart failure patients. More than one million people in the United States are hospitalized each year for acute heart failure. Clinical improvement in heart failure has already been demonstrated with older first-generation forms of IV iron in clinical trials in the outpatient setting. We believe that FPC may deliver rapidly bioavailable iron to the heart and improve cardiac energetics during hospitalization. This effect could help patients recover faster resulting in improved function, shorter hospital stays and fewer 30-day re-admissions. If so, these outcomes would translate into a meaningful reduction in healthcare costs and human suffering. We expect to communicate with the FDA in the first half of 2022 regarding a development pathway for this indication.
We continue exploring other potential patient populations for application of our technology. We are considering disease states where patients can benefit the most from an effective treatment for iron deficiency, and where the development path, cost estimates and reimbursement are the most favorable.

27

Results of Operations for the Three Months Ended September 30, 2021 and 2020
The following table summarizes our operating results for the periods presented below (dollars in thousands):
For the Three Months Ended September 30,
2021 % of Revenue 2020 % of Revenue % Change
Net Sales $ 15,988  $ 15,280  4.6  %
Cost of Sales 16,317  102.1  % 14,934  97.7  % 9.3 
Gross (Loss) Profit (329) (2.1) 346  2.3  (195.1)
Research and Product Development 1,221  7.6  1,745  11.4  (30.0)
Selling and Marketing 1,541  9.6  1,669  10.9  (7.7)
General and Administrative 3,881  24.3  3,622  23.7  7.2 
Operating Loss $ (6,972) (43.6) % $ (6,690) (43.8) % 4.2  %
Net Sales
During the three months ended September 30, 2021, our net sales were $16.0 million compared to net sales of $15.3 million during the three months ended September 30, 2020. The increase of $0.7 million was primarily due to an increase in sales of dialysis concentrates products from our international customers.
Gross Profit
Cost of sales during the three months ended September 30, 2021 was 16.3 million, resulting in gross loss of $0.3 million during the three months ended September 30, 2021, compared to cost of sales of $14.9 million and a gross profit of $0.3 million during the three months ended September 30, 2020. Gross profit decreased by $0.6 million mainly due to an increase in costs related to protocols implemented because of the ongoing COVID-19 pandemic, as well as increases in shipping, fuel and labor costs. We expect our gross profit to continue to decrease due to increasing labor and fuel costs for transportation, which we have a limited our ability to recover such costs due to the terms of our agreements with our larger customers.
Research and Product Development Expense
Research and product development expenses were $1.2 million for the three months ended September 30, 2021, compared with $1.7 million during the three months ended September 30, 2020. The decrease of $0.5 million was primarily due to timing of investments we are continuing to make in our medical and scientific programs to support the continued advancement of our FPC technology platform.
Selling and Marketing Expense
Selling and marketing expenses were $1.5 million during the three months ended September 30, 2021, compared with $1.7 million during the three months ended September 30, 2020. The decrease of $0.2 million is primarily due to a decrease in marketing costs related to Triferic (dialysate).
General and Administrative Expense
General and administrative expenses were $3.9 million during the three months ended September 30, 2021, compared with $3.6 million during the three months ended September 30, 2020. The increase of $0.3 million is due primarily to an increase in the insurance costs.
Other Income (Expense)
Other income for the three months ended September 30, 2021 was nil. Other income for the three months ended September 30, 2020 was $6,000, consisting primarily of realized gain on investments and interest income. Other expense for the three months ended September 30, 2021 was $0.6 million of interest expense related to our debt facility (see Note 15 for more
28

information on our debt facility). Other expense for the three months ended September 30, 2020 was $0.7 million of interest expense related to our debt facility.
Results of Operations for the Nine Months Ended September 30, 2021 and 2020
The following table summarizes our operating results for the periods presented below (dollars in thousands):
For the Nine Months Ended September 30,
2021 % of Revenue 2020 % of Revenue % Change
Net Sales $ 46,599  $ 47,033  (0.9) %
Cost of Sales 46,788  100.4  % 44,693  95.0  % 4.7 
Gross Profit (189) (0.4) 2,340  5.0  (108.1)
Research and Product Development 5,445  11.7  5,183  11.0  5.1 
Selling and Marketing 4,860  10.4  5,738  12.2  (15.3)
General and Administrative 11,483  24.6  11,767  25.0  (2.4)
Operating Loss $ (21,977) (47.2) % $ (20,348) (43.3) % 8.0  %
Net Sales
During the nine months ended September 30, 2021, our net sales were $46.6 million compared to net sales of $47.0 million during the nine months ended September 30, 2020. The decrease of $0.4 million was primarily due to a decrease in sales of dialysis concentrates products in the United States the resulted from the COVID-19 pandemic.
Gross Profit
Cost of sales during the nine months ended September 30, 2021 was $46.8 million, resulting in gross loss of $0.2 million during the nine months ended September 30, 2021, compared to cost of sales of a $44.7 million and a gross profit of $2.3 million during the nine months ended September 30, 2020. Gross profit decreased by $2.5 million mainly due to a decrease in concentrate sales and an increase in costs related to protocols implemented because of the ongoing COVID-19 pandemic, as well as increases in shipping, fuel and labor costs. We expect our gross profit to continue to decrease due to increasing labor and fuel costs for transportation, which we have a limited our ability to recover such costs due to the terms of our agreements with our larger customers.
Research and Product Development Expense
Research and product development expenses were $5.4 million for the nine months ended September 30, 2021, compared with $5.2 million during the nine months ended September 30, 2020. This increase of $0.2 million is primarily due to continued investments we are making in our medical and scientific programs to support the continued advancement of our FPC technology platform.
Selling and Marketing Expense
Selling and marketing expenses were $4.9 million during the nine months ended September 30, 2021, compared with $5.7 million during the nine months ended September 30, 2020. The decrease of $0.8 million is primarily due to a headcount reduction in the quarter.
General and Administrative Expense
General and administrative expenses were $11.5 million during the nine months ended September 30, 2021, compared with $11.8 million during the nine months ended September 30, 2020. The decrease of $0.3 million is due primarily to a decrease of $0.5 million from the completion of severance pay related to our former President and Chief Executive Officer (CEO), a decrease in legal costs of $0.4 million, relating to previous litigation that has since been resolved; a decrease in recruiting fees of $0.3 million; partially offset by an increase of $0.3 million in insurance premiums; and an increase of $0.9 million for stock compensation.
Other Income (Expense)
29

Other income for the nine months ended September 30, 2021 was $17,000, consisting primarily of interest income. Other income for the nine months ended September 30, 2020 was $0.2 million, consisting primarily of interest income. Other expense for the nine months ended September 30, 2021 was $1.8 million of interest expense related to our debt facility (see Note 15 for more information on our debt facility). Other expense for the nine months ended September 30, 2020 was $2.1 million, consisting of warrant modification expense of $0.8 million and interest expense of $1.3 million related to our debt facility.
30

Liquidity and Capital Resources
Since inception, Rockwell has incurred significant net losses and has funded its operations primarily through revenue from commercial products, proceeds from the issuance of debt and equity securities and payments from partnerships. At September 30, 2021, Rockwell had an accumulated deficit of approximately $361.1 million and stockholders' equity of $11.1 million. As of September 30, 2021, Rockwell had approximately $33.2 million of cash, cash equivalents and investments available-for-sale, and working capital of $24.3 million. Net cash used in operating activities for the nine months ended September 30, 2021 was approximately $24.5 million. Based on the currently available working capital, the adjustments made to sales and marketing efforts for Triferic and Triferic AVNU and the implementation of key efficiency initiatives within our concentrates business, management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of the filing of this report.

The Company expects it will require additional capital to sustain its operations and make the investments it needs to execute its strategic plan developing FPC for iron deficiency anemia in patients undergoing home infusion and for progressing our pipeline development program of new indications for its FPC platform. If the Company is unable to generate sufficient revenue from sales of its commercial products and from partnerships, the Company will need to obtain additional equity or debt financing. Currently, because the Company’s public float is less than $75 million, we are subject to the baby shelf limitations under our current registration statement on Form S-3, which limit the amount we may offer under our Form S-3. This could limit our ability to raise capital under this registration statement. Additionally, the Company has received a delisting notification letter from the Nasdaq Stock Market ("Nasdaq") regarding compliance with minimum bid requirements. The notification letter states that the Company has 180 calendar days, or until December 8, 2021, to regain compliance with Nasdaq Listing Rule 5450(a)(1). To regain compliance, the closing bid price of the Company’s common stock must be at least $1.00 per share for a minimum of 10 consecutive business days at any time prior to December 8, 2021. In the event that the Company does not regain compliance by December 8, 2021, the Company may be eligible for additional time to reach compliance with the minimum bid price requirement. The Company is working on a plan to meet the minimum compliance requirements set forth by Nasdaq. Based on the above, if the Company attempts to obtain additional debt or equity financing, the Company cannot assume that such financing will be available on favorable terms, if at all.

In addition, the Company is subject to certain covenants and cure provisions under its Loan Agreement with Innovatus. As of the date of this report, the Company is in compliance with all covenants.

General
The actual amount of cash that we will need to execute our business strategy is subject to many factors, including, but not limited to, the expenses and revenue associated with the commercial operations in the United States and internationally (with partners); the timing and magnitude of cash received from drug product sales; the timing and expenditures associated with the development programs including our FPC technology for home infusion and potentially acute heart failure; the costs associated with our manufacturing and transportation operations related to our concentrate business; any potential accelerated amortization under the Loan Agreement in the event of a failure to satisfy operating covenants..
We may elect to raise capital in the future through one or more of the following: (i) equity and debt raises through the equity and capital markets, though there can be no assurance that we will be able to secure additional capital or funding on acceptable terms, or if at all; and (ii) strategic transactions, including potential alliances and collaborations focused on markets outside the United States, as well as potential combinations (including by merger or acquisition) or other corporate transactions.
We believe that our ability to fund our activities in the long term will be highly dependent upon 1) our ability to execute on the development of the FPC platform for new therapies, 2) our ability to seek a partner to expand commercialization and increase adoption of Triferic (dialysate) and Triferic AVNU, and 3) our ability to improve profitability in our concentrate business. These strategies are subject to significant risks and uncertainties such that there can be no assurance that we will be successful is achieving approval of FPC in a new therapeutic area or that we will be able to find a suitable partner and have sustained commercial success with Triferic (dialysate) and Triferic AVNU or be able to improve our profitability due to the current economic environment and the limitations of certain agreements. If our planned clinical program is delayed or fails or if Triferic (dialysate) and/or Triferic AVNU sales fail to increase or we cannot increase the profitability of our concentrate business, we may be forced to implement cost-saving measures that may potentially have a negative impact on our activities and potentially the results of our research and development programs. Even though we began commercialization of Triferic (dialysate) and Triferic AVNU as planned, if the results are unsuccessful, we may be unable to secure the additional capital that we will require to continue our research and development activities and operations, which could have a material adverse effect on our business. If we are unable to raise the required capital, we may be forced to curtail all of our activities and, ultimately,
31

cease operations. Even if we are able to raise sufficient capital, such financings may only be available on unattractive terms, or result in significant dilution of stockholders’ interests and, in such event, the market price of our common stock may decline.
Cash Used in Operating Activities
Net cash used in operating activities was $24.5 million for the nine months ended September 30, 2021 compared to net cash used in operating activities of $21.1 million for the nine months ended September 30, 2020. The increase in cash used from operating activities during the current period was primarily due to changes in current balance sheet accounts in the ordinary course of business of approximately $3.6 million, including an increase in net accounts receivable of $1.9 million and an increase in accounts payable and accrued expense of approximately $0.2 million.
Cash Provided by Investing Activities
Net cash used in investing activities was $0.2 million during the nine months ended September 30, 2021 compared to net cash provided by investing activities of $2.6 million for the nine months ended September 30, 2020. The net cash used in investing activities during the nine months ended September 30, 2021 was primarily due to sales and purchase of available-for-sale investments during the quarter.
Cash (Used in) Provided by Financing Activities
Net cash used in financing activities was $0.6 million during the nine months ended September 30, 2021 compared to the net cash provided by financing activities of $63.3 million for the nine months ended September 30, 2020. The net cash used during the nine months ended September 30, 2021 was primarily due to the payments on the Company's short term note payable.
COVID-19 Impact

The COVID-19 pandemic and resulting global disruptions, particularly in the supply chain and labor market, among other areas, have adversely affected our business and operations, including, but not limited to, our sales and marketing efforts and our research and development activities, our plant and transportation operations and the operations of third parties upon whom we rely. Quarantines, shelter-in-place, executive and similar government orders may negatively impact our plant and transportation operations and remaining sales and marketing activities. Any vaccine hesitancy among our labor force could also disrupt our business if workers become ill or need to quarantine due to illness or exposure to the virus. The Company's international business development activities may also continue to be negatively impacted by COVID-19, especially with the recent surge in infections internationally, ongoing international travel restrictions and quarantines or shelter-in-place orders.

The COVID-19 pandemic and resulting global disruptions have caused and may continue to cause significant volatility in financial and credit markets. We have utilized a range of financing methods to fund our operations in the past; however, current conditions in the financial and credit markets may limit the availability of funding or increase the cost of funding. Due to the evolving nature of the global situation, it is not possible to predict the extent to which these conditions could adversely affect our liquidity and capital resources in the future.
Critical Accounting Policies and Significant Judgments and Estimates
Our critical accounting policies and significant estimates are detailed in our Annual Report on Form 10-K for the year ended December 31, 2020. Our critical accounting policies and significant estimates have not changed from those previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.
Recently issued and adopted accounting pronouncements:
We have evaluated all recently issued accounting pronouncements and believe such pronouncements do not have a material effect our financial statements. See Note 3 of the condensed consolidated financial statements at September 30, 2021.
Item 3.  Quantitative and Qualitative Disclosures about Market Risk

32
ROCKWELL MEDICAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Per §229.305 of Regulation S-K, the Company, designated a Smaller Reporting Company as defined in §229.10(f)(1) of Regulation S-K, is not required to provide the disclosure required by this Item.
Item 4.  Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure material information required to be disclosed in our reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure. In designing and evaluating the disclosure controls and procedures, we recognized that a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Management necessarily was required to apply its judgment in evaluating the cost‑benefit relationship of possible controls and procedures.
Under the supervision of and with the participation of our management, including the Company’s Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2021. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2021.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1.  Legal Proceedings
The disclosure set forth above in Note 14  (Commitments and Contingencies – Litigation) to our unaudited condensed consolidated financial statements is incorporated herein by reference.
Additionally, we may be involved in certain routine legal proceedings from time to time before various courts and governmental agencies. We cannot predict the final disposition of such proceedings. We regularly review legal matters and record provisions for claims that are considered probable of loss. The resolution of these pending proceedings is not expected to have a material effect on our operations or consolidated financial statements in the period in which they are resolved.
Item 1A. Risk Factors

We are subject to various risks and uncertainties that could have a material impact on our business, financial condition, results of operations and cash flows. The discussion of these risk factors is included in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2020 under “Item 1A — Risk Factors,” except for the following:

The ongoing COVID-19 pandemic has resulted in, and may continue to result in, significant disruptions to our concentrates business operations, which could have a material adverse effect on our business.

Our business and its operations have been and are expected to continue to be adversely affected by the COVID-19 pandemic. To date, our manufacturing has been viewed as an essential activity and we have not been required to pause operations based upon executive or similar governmental directives. However, we have had, and anticipate continuing to have,
33

instances where, notwithstanding the existence of a vaccine, employees of our manufacturing plants test positive for COVID-19, resulting in a disruption to our manufacturing operations. In addition, the imposition of vaccine or testing mandates on vaccine hesitant workers could result in certain workers opting to resign. These disruptions in our operations have had and could continue to have a negative impact our business, operating results and financial condition. Furthermore, it is possible that the outbreak of COVID-19 could be significant enough to force us to close the entirety of the manufacturing plant or transportation services for an extended period of time, which could result in a failure to deliver product. Such a closure or failure to deliver product could cause us to be in breach of requirements to maintain safety stock and maintain transportation and other services under our Exclusive Distribution Agreement with Baxter and/or our Products Purchase Agreement with DaVita, which would allow them to exercise various remedies under those agreements.

In addition, we may face decreased demand for our concentrates portfolio if dialysis patients are unable to travel to dialysis clinics or if dialysis patients are found to be disproportionally affected by COVID-19 due to their heightened risk associated with their disease. We have had an increase in costs associated with COVID-19 including costs associated with hazard pay, costs for PPE and costs for cleaning and increased labor costs due to the reluctance of workers to return to work. These increased costs have impacted the profitability of our concentrates portfolio. Given the uncertainty surrounding COVID-19, we may continue to incur these additional costs which in turn may have an impact upon our profitability. The COVID-19 pandemic continues to evolve rapidly. The ultimate impact of the COVID-19 pandemic or a similar public health emergency is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, our clinical trials, healthcare systems, or the global economy as a whole. However, any one or a combination of these events could have an adverse effect on the operation of and results from our clinical trials and on our other business operations, which could negatively impact our business, operating results and financial condition.

The regulatory approval processes of the FDA and comparable foreign regulatory authorities are lengthy, time-consuming and inherently unpredictable. Our inability to obtain regulatory approval for our future FPC pipeline product candidates would substantially harm our business.

The time required to obtain approval from the FDA and comparable foreign regulatory authorities is unpredictable but typically takes many years following the commencement of preclinical studies and clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s development and may vary among jurisdictions. For example, although we have filed an IND for FPC in the home infusion setting and we have an FPC product that has been approved in other settings, if the FDA were to impose additional requirements in the home infusion setting that would result in significant additional expense or a significant administrative burden, we may have to forgo our pursuit of that indication. It is possible that none of our FPC pipeline product candidates will ever obtain regulatory approval. Our future product candidates could fail to receive regulatory approval from the FDA or comparable foreign regulatory authorities for many reasons. If we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, may grant approval contingent on the performance of costly post-marketing clinical trials or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of the product candidate.

We may be affected materially and adversely by increases in raw material and transportation costs.

A significant portion of our costs relates to chemicals and other raw materials, which are subject to price volatility based on demand and are highly influenced by the overall level of economic activity in the United States and abroad. These costs have tended to rise from year to year and are likely to continue to rise in the future. Under the Distribution Agreement with Baxter, such cost inflation may result in increases in the prices we charge Baxter. If these increases exceed levels specified in the Distribution Agreement, Baxter has the option to terminate the Distribution Agreement and obtain a refund of a portion of the fees (as a Refund Trigger Event) we received from Baxter. Any such termination or refund could have a material adverse effect on our business, results of operations, financial position and cash flows.

Additionally, the Second Amendment to our Distribution Agreement with Baxter, established a cap on the percentage amount that we receive in reimbursement for transportation expenses. This reimbursement cap could result in Rockwell not being able to obtain the full amount of our transportation costs. We have also been adversely affected by a general shortage in commercial truckers in the United States and significant increases in fuel costs, both of which are subject to the cap on transportation costs. This has negatively impacted and may continue to negatively impact our profit margins as we pay higher costs to ship products to our customers. Continued increases in shipping costs, the costs of raw materials, or increases in
34

transportation costs that are not reimbursed due to the cap on expenses with Baxter has and could continue to negatively impact our profit margins, as we may be limited in our ability to pass these costs along to our customers.

In addition, one of the most expensive components of our dialysis solutions is pharmacopeia grade salt. Pharmacopeia grade salt is primarily manufactured domestically by two suppliers. It was announced in September 2020 that our primary supplier of pharmacopeia, one of our largest suppliers of pharmacopeia grade salt, is merging with the other primary manufacturer of pharmacopeia grade salt which could have an effect of our costs of raw material.

Our Loan Agreement with Innovatus contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay the outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation. The occurrence of any of these events could cause a significant adverse impact on our business, prospects and share price.
Pursuant to the Loan Agreement, we have pledged substantially all of our assets and the assets of our subsidiary, Rockwell Transportation, Inc., and have agreed that we may not sell or assign rights to our patents and other intellectual property without the prior consent of Innovatus. Additionally, the Loan Agreement contains affirmative, including financial covenants related to liquidity and trailing twelve months sales of Triferic, and negative covenants that, among other things, restrict our ability to:
•incur additional indebtedness;
•grant liens;
•make distributions, including dividends;
•enter into a merger or consolidation;
•alter the business of the Company; or
•sell all or a portion of the Company’s property, business or assets.
These terms of the Loan Agreement could prevent us from taking certain actions without the consent of our lenders, which may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our stockholders, placing us at a competitive disadvantage compared to our competitors who have less leverage and who therefore may be able to take advantage of opportunities that our leverage prevents us from exploiting. These covenants could also limit our ability to make needed capital expenditures or otherwise conduct necessary or desirable business activities.
We cannot assure you that we can maintain compliance with the covenants under our Loan Agreement, which may result in an event of default. Our ability to comply with these covenants may be adversely affected by events beyond our control. For example, the Loan Agreement contains certain financial covenants relating to sales and, as a result of the ongoing COVID-19 pandemic and its effect on our sales activities, among other factors, we may not be able to satisfy such covenants in the future. Because our Triferic sales would not have met the threshold required at the September 30, 2021 measurement date, we entered into an amendment to our Loan Agreement through which we were able to cure the potential default in exchange for our payment of an aggregate principal amount of $7.5 million in ten consecutive equal monthly installments commencing on December 31, 2021.
The Loan Agreement also includes customary events of default, including, among other things, a change of control or a failure to comply with certain of the covenants in the Loan Agreement. Upon the occurrence and continuation of an event of default, all amounts due under the Loan Agreement become (in the case of a bankruptcy event), or may become (in the case of all other events of default and at the option of Innovatus), immediately due and payable.
If an event of default under the Loan Agreement should occur, we could be required to immediately repay the outstanding indebtedness. If we are unable to repay this debt, the lenders would be able to foreclose on the secured collateral, including our cash accounts, and take other remedies permitted under the Loan Agreement. Even if we are able to repay the indebtedness on an event of default, the repayment of these sums may significantly reduce our working capital and impair our ability to operate as planned. The occurrence of any of these events could cause a significant adverse impact on our business and financial condition.

We may fail to qualify for continued listing on Nasdaq, which could make it more difficult for our stockholders to sell their shares.
35

Our common stock, par value $0.0001 per share (the “Common Stock”) is listed on The Nasdaq Global Market and therefore we are required to satisfy the continued listing requirements of Nasdaq for inclusion in the Global Market to maintain such listing, including, among other things, the maintenance of a minimum closing bid price of $1.00 per share and either (i) a market value of listed securities of at least $50 million, (ii) stockholders’ equity of at least $10 million or (iii) total assets and total revenue in the most recent fiscal year (or two of the three most recent fiscal years) of at least $50 million. On June 11, 2021, we received a notice from Nasdaq that we were not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5450(a)(1) for continued listing on The Nasdaq Global Market. Nasdaq Listing Rule 5450(a)(1) requires listed securities maintain a minimum closing bid price of $1.00 per share, and Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum closing bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The notification of noncompliance had no immediate effect on the listing or trading of our Common Stock on the Global Market and we have 180 days, or until December 8, 2021, to achieve compliance with the minimum bid price requirement. To regain compliance, the closing bid price of the Company’s common stock must be at least $1.00 per share for a minimum of 10 consecutive business days at any time prior to December 8, 2021.
In the event that we do not regain compliance with the Nasdaq’s Listing Rules prior to the expiration of the grace period or fail to obtain an extension of time to regain compliance, we expect to receive written notification that our Common Stock is subject to delisting. If we receive such a delisting notification, we may either apply for listing on The Nasdaq Capital Market, provided we meet the continued listing requirements of that market, or appeal the decision to a Nasdaq Hearings Panel. In the event of an appeal, our Common Stock would remain listed on The Nasdaq Global Market pending a decision by the panel following the hearing. There can be no assurance that we will be able to regain compliance with the continued listing requirements. If our Common Stock is delisted by Nasdaq, we could face significant material adverse consequences, including:

•a limited availability of market quotations for our Common Stock;
•reduced liquidity with respect to our Common Stock;
•a determination that our shares are “penny stock,” which will require brokers trading in our shares to adhere to more stringent shares, and which may limit demand for our Common Stock among certain investors;
•a limited amount of news and analyst coverage for our company; and
•a decreased ability to issue additional securities or obtain additional financing in the future.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits

The exhibits filed or furnished as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index, which Exhibit Index is incorporated herein by reference.
36

EXHIBIT INDEX
Exhibit No. Description
10.1
First Amendment to the Loan and Security Agreement, dated September 24, 2021, by and among the Company, Innovatus Life Sciences Lending Fund I, LP and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 30, 2021).
10.2 +
31.1*
31.2*
32.1**
101.INS* XBRL Instance Document
101.SCH* XBRL Taxonomy Extension Schema
101.CAL* XBRL Taxonomy Extension Calculation Linkbase
101.DEF* XBRL Taxonomy Extension Definition Database
101.LAB* XBRL Taxonomy Extension Label Linkbase
101.PRE* XBRL Taxonomy Extension Presentation Linkbase
104* The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL (included as Exhibit 101)
* Filed herewith
** Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act
+
Certain confidential portions of this exhibit were omitted by means of marking such portions with asterisks because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.

37

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 thereunto duly authorized.
ROCKWELL MEDICAL, INC.
(Registrant)
Date: November 15, 2021 /s/ Russell Ellison
Russell Ellison
Chief Executive Officer (Principal Executive Officer)
Date: November 15, 2021 /s/ Russell Skibsted
Russell Skibsted
Chief Financial Officer (Principal Financial Officer)
38
Rockwell Medical (NASDAQ:RMTI)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more Rockwell Medical Charts.
Rockwell Medical (NASDAQ:RMTI)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more Rockwell Medical Charts.