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 September 30, 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 November 7, 2023 was 3,263,657.

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	16
Item 3	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4	Controls and Procedures	22
PART II—OTHER INFORMATION
Item 1	Legal Proceedings	23
Item 1A	Risk Factors	23
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds, Use of Proceeds, and Issuer Purchases of Equity Securities	23
Item 3	Defaults Upon Senior Securities	23
Item 4	Mine Safety Disclosures	23
Item 5	Other Information	23
Item 6	Exhibits	23

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)

	September 30, 2023			December 31, 2022
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	4,930		$	17,737
Marketable securities		—			569
Accounts receivable		1,425			1,406
Inventories, net		2,336			2,661
Other current assets		947			396
Total current assets		9,638			22,769
Property, plant and equipment, net		912			980
Operating lease right-of-use asset		762			903
Other assets		120			21
TOTAL ASSETS	$	11,432		$	24,673

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	1,707		$	2,245
Accrued compensation		1,021			2,161
Current portion of operating lease liability		211			196
Current portion of finance lease liability		8			28
Other current liabilities		45			58
Total current liabilities		2,992			4,688
Common stock warrant liability		—			6,868
Operating lease liability		601			760
Total liabilities		3,593			12,316

Commitments and contingencies

Stockholders’ equity
Series A junior participating preferred stock as of September 30, 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 September 30, 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 September 30, 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 September 30, 2023 and December 31, 2022, par value $0.0001 per share; authorized 39,969,873 shares, none outstanding		—			—
Common stock as of September 30, 2023 and December 31, 2022, par value $0.0001 per share; authorized 100,000,000 shares, issued and outstanding 1,864,265 and 536,394 shares, respectively		—			—
Additional paid-in capital		289,980			279,736
Accumulated other comprehensive income:
Foreign currency translation adjustment		(24	)		(18	)
Unrealized gain on marketable securities		—			56
Accumulated deficit		(282,117	)		(267,417	)
Total stockholders’ equity		7,839			12,357
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	11,432		$	24,673

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)

	Three months ended September 30						Nine months ended September 30
	2023			2022			2023			2022
Net sales	$	2,412		$	2,065		$	6,313		$	6,204
Cost of goods sold		1,031			806			2,718			2,780
Gross profit		1,381			1,259			3,595			3,424
Operating expenses:
Selling, general and administrative		3,428			4,251			13,582			12,920
Research and development		1,117			928			4,050			3,141
Total operating expenses		4,545			5,179			17,632			16,061
Loss from operations		(3,164	)		(3,920	)		(14,037	)		(12,637	)
Other income (expense), net		(204	)		52			98			14
Change in fair value of warrant liability		—			—			(755	)		—
Loss before income taxes		(3,368	)		(3,868	)		(14,694	)		(12,623	)
Income tax expense		(2	)		(2	)		(6	)		(6	)
Net loss	$	(3,370	)	$	(3,870	)	$	(14,700	)	$	(12,629	)

Basic and diluted loss per share	$	(1.81	)	$	(36.72	)	$	(10.21	)	$	(119.85	)

Weighted average shares outstanding – basic and diluted		1,864			105			1,439			105

Other comprehensive loss:
Foreign currency translation adjustments	$	—		$	2		$	(6	)	$	1
Total comprehensive loss	$	(3,370	)	$	(3,868	)	$	(14,706	)	$	(12,628	)

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, 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
Net loss		—		—		—		—			(4,286	)		(4,286	)
Foreign currency translation adjustment		—		—		—		1			—			1
Stock-based compensation, net		—		—		236		—			—			236
Balance June 30, 2022		105,376	$	—	$	279,351	$	(36	)	$	(261,651	)	$	17,664
Net loss		—		—		—		—			(3,870	)		(3,870	)
Foreign currency translation adjustment		—		—		—		2			—			2
Stock-based compensation, net		—		—		220		—			—			220
Balance September 30, 2022		105,376	$	—	$	279,571	$	(34	)	$	(265,521	)	$	14,016

	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
Net loss		—		—		—			—			(4,845	)		(4,845	)
Unrealized foreign currency translation adjustment		—		—		—			—			—			—
Unrealized gain on marketable securities		—		—		—

SEC Form 10-Q filed by Nuwellis Inc.