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, 2022

☐

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 6, 2022 was 10,537,606

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	12
Item 3	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4	Controls and Procedures	17
PART II—OTHER INFORMATION
Item 1	Legal Proceedings	17
Item 1A	Risk Factors	17
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3	Defaults Upon Senior Securities	18
Item 4	Mine Safety Disclosures	18
Item 5	Other Information	18
Item 6	Exhibits	18

	March 31, 2022			December 31, 2021
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	19,300		$	24,205
Accounts receivable		951			750
Inventories		3,294			2,843
Other current assets		350			328
Total current assets		23,895			28,126
Property, plant and equipment, net		1,153			1,188
Operating lease right-of-use asset		1,038			1,082
Other assets		21			21
TOTAL ASSETS	$	26,107		$	30,417

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	1,797		$	1,414
Accrued compensation		1,335			1,664
Current portion of operating lease liability		181			167
Current portion of finance lease liability		24			26
Other current liabilities		55			36
Total current liabilities		3,392			3,307
Operating lease liability		909			956
Finance lease liability		22			28
Other long-term liability		71			179
Total liabilities		4,394			4,470

Commitments and contingencies

Stockholders’ equity
Series A junior participating preferred stock as of March 31, 2022 and December 31, 2021, par value $0.0001 per share; authorized 30,000 shares, none outstanding		—			—
Series F convertible preferred stock as of both March 31, 2022 and December 31, 2021, par value $0.0001 per share; authorized 127 shares, issued and outstanding 127 shares		—			—
Preferred stock as of both March 31, 2022 and December 31, 2021, par value $0.0001 per share; authorized 39,969,873 shares, none outstanding		—			—
Common stock as of March 31, 2022 and December 31, 2021, par value $0.0001 per share; authorized 100,000,000 shares, issued and outstanding 10,537,606 shares		1			1
Additional paid-in capital		279,114			278,873
Accumulated other comprehensive income:
Foreign currency translation adjustment		(13	)		(11	)
Accumulated deficit		(257,389	)		(252,916	)
Total stockholders’ equity		21,713			25,947
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	26,107		$	30,417

	Three months ended March 31,
	2022			2021
Net sales	$	1,926		$	1,918
Cost of goods sold		824			952
Gross profit		1,102			966
Operating expenses:
Selling, general and administrative		4,412			5,237
Research and development		1,106			947
Total operating expenses		5,518			6,184
Loss from operations		(4,416	)		(5,218	)
Other income (expense), net		(55	)		(1	)
Loss before income taxes		(4,471	)		(5,219	)
Income tax expense		(2	)		(2	)
Net loss	$	(4,473	)	$	(5,221	)

Basic and diluted loss per share	$	(0.42	)	$	(1.62	)

Weighted average shares outstanding – basic and diluted		10,538			3,242

Other comprehensive loss:
Unrealized foreign currency translation adjustments	$	(2	)	$	(3	)
Total comprehensive loss	$	(4,475	)	$	(5,224	)

	Outstanding Shares of Common Stock		Common Stock		Additional Paid in Capital		Accumulated Other Comprehensive Income			Accumulated Deficit			Stockholders’ Equity
Balance December 31, 2020		2,736,060	$	—	$	249,663	$	(7	)	$	(233,338	)	$	16,318
Net loss		—		—		—		—			(5,221	)		(5,221	)
Unrealized foreign currency translation adjustment		—		—		—		(3	)		—			(3	)
Stock-based compensation, net		—		—		355		—			—			355
Issuance of common, 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, 2022		December 31, 2021
Finished Goods	$	1,331	$	1,409
Work in Process		313		276
Raw Materials		1,650		1,158
Total	$	3,294	$	2,843

	March 31
	2022		2021
Stock options		1,174,748		140,471
Warrants to purchase common stock		1,631,698		1,631,882
Series F convertible preferred stock		50,800		23,114
Total		2,857,246		1,795,467

(in thousands, except per share amounts)	2022			2021
Net loss	$	(4,473	)	$	(5,221	)
Deemed dividend to preferred shareholders (see Note 3)		—			(33	)
Net loss after deemed dividend		(4,473	)		(5,254	)
Weighted average shares outstanding		10,538			3,242
Basic and diluted loss per share	$	(0.42	)	$	(1.62	)

	Three-months ended March 31,
(in thousands)	2022		2021
Selling, general and administrative expense	$	214	$	327
Research and development expense		27		28
Total stock-based compensation expense	$	241	$	355

Three Months Ended March 31, 2022				Three Months Ended March 31, 2021				Increase (Decrease)				% Change
$	1,926			$	1,918			$	8				0.4	%

(in thousands)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		Increase (Decrease)			% Change
Cost of goods sold	$	824	$	952	$	(128	)		(13.4	)%
Selling, general and administrative	$	4,412	$	5,237	$	(825	)		(15.8	)%
Research and development	$	1,106	$	947	$	159			16.8	%

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

10.1	First Amendment to the 2021 Inducement Plan	8-K	001-35312	April 21, 2022	10.1

	Nuwellis, Inc.

Date: May 12, 2022	By:	/s/ Nestor Jaramillo, Jr.
		Nestor Jaramillo, Jr.
		Chief Executive Officer

Date: May 12, 2022	By:	/s/ George Montague
		George Montague
		Chief Financial Officer

SEC Form 10-Q filed by Nuwellis Inc.