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 June 30, 2024

☐

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 August 13, 2024 was 1,383,539.

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 (Deficit)	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	15
Item 3	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4	Controls and Procedures	23
PART II—OTHER INFORMATION
Item 1	Legal Proceedings	23
Item 1A	Risk Factors	24
Item 2	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	26
Item 3	Defaults Upon Senior Securities	26
Item 4	Mine Safety Disclosures	26
Item 5	Other Information	26
Item 6	Exhibits	26

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NUWELLIS, INC. AND SUBSIDIARY

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

	June 30, 2024			December 31, 2023
ASSETS	(Unaudited)
Current assets
Cash and cash equivalents	$	1,023		$	3,800
Accounts receivable		1,292			1,951
Inventories, net		1,967			1,997
Other current assets		544			461
Total current assets		4,826			8,209
Property, plant and equipment, net		630			728
Operating lease right-of-use asset		613			713
Other assets		120			120
TOTAL ASSETS	$	6,189		$	9,770

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities	$	3,028		$	2,380
Accrued compensation		706			525
Current portion of operating lease liability		226			216
Other current liabilities		56			51
Total current liabilities		4,016			3,172
Common stock warrant liability		8,579			2,843
Operating lease liability		428			544
Total liabilities		13,023			6,559
Commitments and contingencies

Mezzanine Equity Series J Convertible Preferred Stock as of June 30, 2024 and December 31, 2023, par value $0.0001 per share; authorized 600,000 shares, issued and outstanding 88 and 11,950, respectively		2			221

Stockholders’ equity (deficit)
Series A junior participating preferred stock as of June 30, 2024 and December 31, 2023, par value $0.0001 per share; authorized 30,000 shares, none outstanding		—			—
Series F convertible preferred stock as of June 30, 2024 and December 31, 2023, par value $0.0001 per share; authorized 18,000 shares, issued and outstanding 127 shares		—			—
Preferred stock as of June 30, 2024 and December 31, 2023, par value $0.0001 per share; authorized 39,352,000 shares, none outstanding		—			—
Common stock as of June 30, 2024 and December 31, 2023, par value $0.0001 per share; authorized 100,000,000 shares, issued and outstanding 515,744 and 162,356, respectively		—			—
Additional paid‑in capital		292,887			290,647
Accumulated other comprehensive income:
Foreign currency translation adjustment		(42	)		(31	)
Accumulated deficit		(299,681	)		(287,626	)
Total stockholders’ equity (deficit)		(6,836	)		2,990
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	6,189		$	9,770

See notes to the condensed consolidated financial statements.

Table of Contents

NUWELLIS, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except per share amounts and weighted average shares outstanding)

	Three months ended June 30						Six months ended June 30
	2024			2023			2024			2023
Net sales	$	2,194		$	2,075		$	4,051		$	3,901
Cost of goods sold		720			928			1,386			1,687
Gross profit		1,474			1,147			2,665			2,214
Operating expenses:
Selling, general and administrative		3,236			4,664			7,842			10,154
Research and development		558			1,505			1,892			2,933
Total operating expenses		3,794			6,169			9,734			13,087
Loss from operations		(2,320	)		(5,022	)		(7,069	)		(10,873	)
Other income (expense), net		6			179			(95	)		302
Financing Expense		(5,607	)		—			(5,607	)		—
Change in fair value of warrant liability		198			—			720			(755	)
Loss before income taxes		(7,723	)		(4,843	)		(12,051	)		(11,326	)
Income tax expense		(2	)		(2	)		(4	)		(4	)
Net loss	$	(7,725	)	$	(4,845	)	$	(12,055	)	$	(11,330	)
Deemed dividend attributable to Series J Convertible Preferred Stock		—			—			541			—
Net loss attributable to common shareholders	$	(7,725	)	$	(4,845	)	$	(11,514	)	$	(11,330	)

Basic and diluted loss per share	$	(18.85	)	$	(127.65	)	$	(40.91	)	$	(323.15	)

Weighted average shares outstanding – basic and diluted		409,690			37,949			294,649			35,060

Other comprehensive loss:
Foreign currency translation adjustments	$	(2	)	$	1		$	(11	)	$	(6	)
Total comprehensive loss	$	(7,727	)	$	(4,844	)	$	(12,066	)	$	(11,336	)

See notes to the condensed consolidated financial statements.

Table of Contents

NUWELLIS, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)

	Outstanding Shares of Common Stock		Common Stock		Additional Paid in Capital			Accumulated Other Comprehensive Income			Accumulated Deficit			Stockholders’ Equity
Balance December 31, 2022		15,326	$	—	$	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		—		—		181			—			—			181
Issuance costs related to 2022 common stock offering		—		—		(11	)		—			—			(11	)
Issuance of common stock from Preferred Series I stock conversions		300		—		—			—			—			—
Reclassification of warrants to equity		—		—		7,623			—			—			7,623
Issuance of common stock from exercise of warrants		18,858		—		—			—			—			—
Balance March 31, 2023		34,484	$	—	$	287,529		$	37		$	(273,902	)	$	13,664
Net loss		—		—		—			—			(4,845	)		(4,845	)
Unrealized foreign currency translation adjustment		—		—		—			—			—			(7	)
Unrealized gain on marketable securities		—		—		—			(61	)		—			(61	)
Stock-based compensation		—		—		197			—			—			197
Issuance costs related to ATM offering		—		—		(98	)		—			—			(98	)
Issuance of common stock from ATM offering		18,781		—		2,217			—			—			2,217
Balance June 30, 2023		53,265	$	—	$	289,845		$	(24	)	$	(278,747	)	$	11,074

	Outstanding Shares of Common Stock		Common Stock		Additional Paid in Capital			Accumulated Other Comprehensive Income			Accumulated Deficit			Stockholders’ Equity
Balance December 31, 2023		162,356	$	—	$	290,647		$	(31	)	$	(287,626	)	$	2,990
Net loss		—		—		—			—			(4,330	)		(4,330	)
Unrealized foreign currency translation adjustment		—		—		—			(9	)		—			(9	)
Stock-based compensation		—		—		158			—			—			158
Issuance of common stock from conversion of Series J Convertible Preferred Stock		31,971		—		1,535			—			—			1,535
Series J Convertible Preferred Stock deemed dividend		—		—		541			—			—			541
Balance March 31, 2024		194,327	$	—	$	292,881		$	(40	)	$	(291,956	)	$	885
Net loss		—		—		—			—			(7,725	)		(7,725	)
Unrealized foreign currency translation adjustment		—		—		—			(2	)		—			(2	)
Stock-based compensation		—		—		115			—			—			115
Issuance of common stock, net		321,417		—		(109	)		—			—			(109	)
Balance June 30, 2024		515,744	$	—	$	292,887		$	(42	)	$	(299,681	)	$	(6,836

SEC Form 10-Q filed by Nuwellis Inc.