10-Q 1 brhc10024523_10q.htm 10-Q

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, 2021

☐

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 7, 2021 was 6,532,018

TABLE OF CONTENTS

		Page Number
PART I—FINANCIAL INFORMATION
Item 1	Financial Statements	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4	Controls and Procedures	20
PART II—OTHER INFORMATION
Item 1	Legal Proceedings	21
Item 1A	Risk Factors	21
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3	Defaults Upon Senior Securities	21
Item 4	Mine Safety Disclosures	21
Item 5	Other Information	21
Item 6	Exhibits	21

	March 31, 2021			December 31, 2020
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	27,893		$	14,437
Accounts receivable		919			905
Inventories		2,957			2,957
Other current assets		369			237
Total current assets		32,138			18,536
Property, plant and equipment, net		1,219			1,200
Operating lease right-of-use asset		206			255
Other assets		—			21
TOTAL ASSETS	$	33,563		$	20,012

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	1,613		$	1,097
Accrued compensation		1,245			2,192
Current portion of operating lease liability		212			206
Current portion of finance lease liability		24			24
Other current liabilities		69			66
Total current liabilities		3,163			3,585
Operating lease liability		—			55
Finance lease liability		48			54
Total liabilities		3,211			3,694

Commitments and contingencies

Stockholders’ equity
Series A junior participating preferred stock as of March 31, 2021 and December 31, 2020, par value $0.0001 per share; authorized 30,000 shares, none outstanding		—			—
Series F convertible preferred stock as of both March 31, 2021 and December 31, 2020, par value $0.0001 per share; authorized 127 shares, issued and outstanding 127 shares		—			—
Preferred stock as of both March 31, 2021 and December 31, 2020, par value $0.0001 per share; authorized 39,969,873 shares, none outstanding		—			—
Common stock as of March 31, 2021 and December 31, 2020, par value $0.0001 per share; authorized 100,000,000 shares, issued and outstanding 6,531,942 and 2,736,060, respectively		—			—
Additional paid‑in capital		268,921			249,663
Accumulated other comprehensive loss:
Foreign currency translation adjustment		(10	)		(7	)
Accumulated deficit		(238,559	)		(233,338	)
Total stockholders’ equity		30,352			16,318
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	33,563		$	20,012

	Three months ended March 31,
	2021			2020
Net sales	$	1,918		$	1,630
Cost of goods sold		952			796
Gross margin		966			834
Operating expenses:
Selling, general and administrative		5,237			4,537
Research and development		947			864
Total operating expenses		6,184			5,401
Loss from operations		(5,218	)		(4,567	)
Other income (expense), net		(1	)		1
Loss before income taxes		(5,219	)		(4,566	)
Income tax expense		(2	)		(2	)
Net loss	$	(5,221	)	$	(4,568	)

Basic and diluted loss per share	$	(1.25	)	$	(11.54	)

Weighted average shares outstanding – basic and diluted		4,212			548

Other comprehensive loss:
Foreign currency translation adjustments	$	(3	)	$	(3	)
Total comprehensive loss	$	(5,224	)	$	(4,571	)

	Outstanding Shares of Common Stock		Common Stock		Additional Paid in Capital		Accumulated Other Comprehensive Income			Accumulated Deficit			Stockholders’ Equity
Balance December 31, 2019		155,802	$	—	$	218,278	$	1,214		$	(217,502	)	$	1,990
Net loss		—		—		—		—			(4,568	)		(4,568	)
Foreign currency translation adjustment		—		—		—		(3	)		—			(3	)
Stock-based compensation and stock awards, net		—		—		380		—			—			380
Issuance of common and preferred stock, net		340,261		—		9,616		—			—			9,616
Exercise of warrants		29,933		—		289		—			—			289
Conversion of preferred stock into common stock		378,751		—		—		—			—			—
Balance March 31, 2020		904,747	$	—	$	228,563	$	1,211		$	(222,070	)	$	7,704

	Outstanding Shares of Common Stock		Common Stock		Additional Paid in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Stockholders’ Equity
Balance December 31, 2020		2,736,060	$	—	$	249,663	$	(7	)	$	(233,338	)	$	16,318
Net loss		—		—		—		—			(5,221	)		(5,221	)
Foreign currency translation adjustment		—		—		—		(3	)		—			(3	)
Stock-based compensation, net		—		—		355		—			—			355
Issuance of common stock, net		3,795,816		—		18,902		—			—			18,902
Exercise of warrants		66		—		1		—			—			1
Balance March 31, 2021		6,531,942	$	—	$	268,921	$	(10	)	$	(238,559	)	$	30,352

( in thousands)	March 31, 2021		December 31, 2020
Finished Goods	$	1,232	$	1,343
Work in Process		315		342
Raw Materials		1,410		1,272
Total	$	2,957	$	2,957

	March 31
	2021		2020
Warrants to purchase common stock		1,631,882		925,869
Series H convertible preferred stock		—		16,264
Series F convertible preferred stock		23,114		48,720
Stock options		140,471		13,995
Total		1,795,467		1,004,848

(in thousands, except per share amounts)	2021			2020
Net loss	$	(5,221	)	$	(4,568	)
Deemed dividend to preferred shareholders (see Note 3)		(33	)		(1,757	)
Net loss after deemed dividend		(5,254	)		(6,325	)
Weighted average shares outstanding		4,212			548
Basic and diluted loss per share	$	(1.25	)	$	(11.54	)

	Three-months ended March 31,
(in thousands)	2021		2020
Selling, general and administrative expense	$	327	$	354
Research and development expense		28		26
Total stock-based compensation expense	$	355	$	380

Three Months Ended March 31, 2021				Three Months Ended March 31, 2020				Increase (Decrease)				% Change
$	1,918			$	1,630			$	288				17.7	%

(in thousands)	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020		Increase (Decrease)		% Change
Cost of goods sold	$	952	$	796	$	156		19.		6	%
Selling, general and administrative	$	5,237	$	4,537	$	700		15.		4	%
Research and development	$	947	$	864	$	83		9.6	%

		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

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

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

3.8	Certificate of Amendment to Fourth Amended and Restated Certificate of Incorporation	8-K	001-35312	April 27, 2021	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	Certificate of Designation of Preferences, Rights and Limitations of Series G Convertible Preferred Stock	8-K	001-35312	March 13, 2019	3.1

3.12	Certificate of Designation of Preferences, Rights and Limitations of Series H Convertible Preferred Stock	8-K	001-35312	January 29, 2020	3.1

3.13	Second Amended and Restated Bylaws	8-K	001-35312	April 27, 2021	3.2

	Nuwellis, Inc.

Date: May 13, 2021	By:	/s/ Nestor Jaramillo, Jr.
		Nestor Jaramillo, Jr.
		President, Chief Executive Officer and Chief Financial Officer
		(principal executive officer and
		principal financial officer)

Date: May 13, 2021	By:	/s/ Paul Wotta
		Paul Wotta
		Principal Accounting Officer
		(principal accounting officer)

SEC Form 10-Q filed by Nuwellis Inc.