UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐

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 001-35312

NUWELLIS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware		No. 68-0533453
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

12988 Valley View Road, Eden Prairie, MN 55344

(Address of Principal Executive Offices) (Zip Code)

(952) 345-4200

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	NUWE	Nasdaq Capital Market

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 ☒

The number of outstanding shares of the registrant’s common stock, $0.0001 par value, as of May 8, 2023 was 1,206,932

TABLE OF CONTENTS

Page Number
PART I—FINANCIAL INFORMATION

Item 1	Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4	Controls and Procedures	18
PART II—OTHER INFORMATION

Item 1	Legal Proceedings	19
Item 1A	Risk Factors	19
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3	Defaults Upon Senior Securities	19
Item 4	Mine Safety Disclosures	19
Item 5	Other Information	19
Item 6	Exhibits	19

	March 31, 2023			December 31, 2022
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	11,515		$	17,737
Marketable securities		575			569
Accounts receivable		1,301			1,406
Inventories, net		2,742			2,661
Other current assets		477			396
Total current assets		16,610			22,769
Property, plant and equipment, net		907			980
Operating lease right-of-use asset		856			903
Other assets		106			21
TOTAL ASSETS	$	18,479		$	24,673

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	2,524		$	2,245
Accrued compensation		1,312			2,161
Current portion of operating lease liability		201			196
Current portion of finance lease liability		21			28
Other current liabilities		49			58
Total current liabilities		4,107			4,688
Common stock warrant liability		—			6,868
Operating lease liability		708			760
Total liabilities		4,815			12,316

Commitments and contingencies		—			—

Stockholders’ equity
Series A junior participating preferred stock as of March 31, 2023 and December 31, 2022, par value $0.0001 per share; authorized 30,000 shares, none outstanding		—			—
Series F convertible preferred stock as of both March 31, 2023 and December 31, 2022, par value $0.0001 per share; authorized 127 shares, issued and outstanding 127 shares		—			—
Series I convertible preferred stock as of March 31, 2023 and December 31, 2022, par value $0.0001; authorized 1,049,280, issued and outstanding none and 1,049,280, respectively		—			—
Preferred stock as of both March 31, 2023 and December 31, 2022, par value $0.0001 per share; authorized 39,969,873 shares, none outstanding		—			—
Common stock as of March 31, 2023 and December 31, 2022, par value $0.0001 per share; authorized 100,000,000 shares, issued and outstanding 1,206,932 and 536,394 shares, respectively		—			—
Additional paid-in capital		287,529			279,736
Accumulated other comprehensive income:
Foreign currency translation adjustment		(25	)		(18	)
Unrealized gain on marketable securities		62			56
Accumulated deficit		(273,902	)		(267,417	)
Total stockholders’ equity		13,664			12,357
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,479		$	24,673

	Three months ended March 31,
	2023			2022
Net sales	$	1,826		$	1,926
Cost of goods sold		759			824
Gross profit		1,067			1,102
Operating expenses:
Selling, general and administrative		5,490			4,412
Research and development		1,428			1,106
Total operating expenses		6,918			5,518
Loss from operations		(5,851	)		(4,416	)
Other income (expense), net		123			(55	)
Change in fair value of warrant liability		(755	)		—
Loss before income taxes		(6,483	)		(4,471	)
Income tax expense		(2	)		(2	)
Net loss	$	(6,485	)	$	(4,473	)

Basic and diluted loss per share	$	(5.76	)	$	(42.45	)

Weighted average shares outstanding – basic and diluted		1,126			105

Other comprehensive loss:
Unrealized gain on marketable securities		6			—
Unrealized foreign currency translation adjustments	$	(7	)	$	(2	)
Total comprehensive loss	$	(6,486	)	$	(4,475	)

	Outstanding Shares of Common Stock		Common Stock		Additional Paid in Capital		Accumulated Other Comprehensive Income			Accumulated Deficit			Stockholders’ Equity
Balance December 31, 2021		105,376	$	—	$	278,874	$	(35	)	$	(252,892	)	$	25,947
Net loss		—		—		—		—			(4,473	)		(4,473	)
Unrealized foreign currency translation adjustment		—		—		—		(2	)		—			(2	)
Stock-based compensation, net		—		—		241		—			—			241
Balance March 31, 2022		105,376	$	—	$	279,115	$	(37	)	$	(257,365	)	$	21,713

	Outstanding Shares of Common Stock		Common Stock		Additional Paid in Capital			Accumulated Other Comprehensive Income			Accumulated Deficit			Stockholders’ Equity
Balance December 31, 2022		536,394	$	—	$	279,736		$	38		$	(267,417	)	$	12,357
Net loss		—		—		—			—			(6,485	)		(6,485	)
Unrealized foreign currency translation adjustment		—		—		—			(7	)		—			(7	)
Unrealized gain on marketable securities		—		—		—			6			—			6
Stock-based compensation, net		—		—		181			—			—			181
Issuance costs related to 2022 common stock offering		—		—		(11	)		—			—			(11	)
Conversion of preferred stock into common stock		10,493		—		—			—			—			—
Reclassification of warrants to equity		—		—		7,623			—			—			7,623
Conversion of warrants into common stock		660,045		—		—			—			—			—
Balance March 31, 2023		1,206,932	$	—	$	287,529		$	37		$	(273,902	)	$	13,664

(in thousands)	March 31, 2023			December 31, 2022
Finished Goods	$	1,185		$	993
Work in Process		172			204
Raw Materials		1,523			1,609
Inventory Reserves		(138	)		(145	)
Total	$	2,742		$	2,661

	March 31
	2023		2022

Stock options		105,296		11,747
Warrants to purchase common stock		19,190		16,317
Series F convertible preferred stock		5,080		508
Total		129,566		28,572

(in thousands, except per share amounts)	2023			2022
Net loss	$	(6,485	)	$	(4,473	)
Weighted average shares outstanding		1,126			105
Basic and diluted loss per share	$	(5.76	)	$	(42.45	)

	Three-months ended March 31,
(in thousands)	2023		2022
Selling, general and administrative expense	$	172	$	214
Research and development expense		9		27
Total stock-based compensation expense	$	181	$	241

	March 31, 2023				December 31, 2022
(in thousands)	Fair Value		Level 1		Fair Value		Level 1

Marketable securities	$	575	$	575	$	569	$	569

(in thousands)
Balance at December 31, 2022	$	6,868
Change in fair value		755
Balance at January 4, 2023 (revaluation date)		7,623
Warrants reclassified to equity		(7,623	)
Balance at March 31, 2023	$	—

		Incorporated By Reference
Exhibit Number	Exhibit Description	Form	File Number	Date of First Filing	Exhibit Number	Filed Herewith	Furnished Herewith
3.1	Fourth Amended and Restated Certificate of Incorporation	10	001-35312	February 1, 2012	3.1

3.2	Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation	8-K	001-35312	January 13, 2017	3.1

3.3	Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation	8-K	001-35312	May 23, 2017	3.1

3.4	Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation	8-K	001-35312	October 12, 2017	3.1

3.5	Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation	8-K/A	001-35312	October 16, 2020	3.1

3.6	Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation	8-K	001-35312	January 2, 2019	3.1

3.7	Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation	8-K	001-35312	April 27, 2021	3.1

3.8	Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation	8-K	001-35312	December 9, 2022	3.1

3.9	Form of Certificate of Designation of Series A Junior Participating Preferred Stock	8-K	001-35312	June 14, 2013	3.1

3.10	Form of Certificate of Designation of Preferences, Rights and Limitations of Series F Convertible Preferred Stock	S-1/A	333-221010	November 17, 2017	3.7

3.11	Form of Certificate of Designation of Preferences, Rights and Limitations of Series I Convertible Preferred Stock	8-K	001-35312	October 18, 2022	3.1

3.12	Third Amended and Restated Bylaws	8-K	001-35312	April 27, 2021	3.2

	Nuwellis, Inc.

Date: May 9, 2023	By:	/s/ Nestor Jaramillo, Jr.
		Nestor Jaramillo, Jr.
		President and Chief Executive Officer

		Lynn Blake
		Chief Financial Officer

Three Months Ended March 31, 2023				Three Months Ended March 31, 2022				Increase (Decrease)				% Change
$	1,826			$	1,926			$	(100	)			(5.2	)%

SEC Form 10-Q filed by Nuwellis Inc.