Nuwellis (NUWE) risk factors, FY2024 10-K

Other

1. 01MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
2. 02MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
3. 03CRITICAL ACCOUNTING POLICIES AND ESTIMATES
4. 04Impairment of Long-Lived Assets
5. 05Internal Controls and Procedures
6. 06RECENT ACCOUNTING PRONOUNCEMENTS
7. 07Each October 2023 Warrant has an exercise price of $262.50 per one-half of one (0.5) share of Series J Convertible Preferred Stock, was immediately exercisable and will expire three (3) years from the date of issuance
8. 08The Series J Preferred Stock is classified as mezzanine equity and accreted to reflect its redemption value as of each reporting date. The accretion will be reflected as a deemed dividend adjustment to arrive at net loss attributed to common stockholders for earnings per share calculations
9. 09The gross proceeds to the Company from the April 2024 Offering, before deducting the placement agent fees and other offering expenses were approximately $2.7 million
10. 10Roth Capital Partners, LLC acted as the placement agent in the July 2024 Offering
11. 11Cash Flows from Operating Activities
12. 12Cash Flows from Investing Activities
13. 13Cash Flows from Financing Activities
14. 14Contractual Obligations and Commitments
15. 15Off-Balance Sheet Arrangements
16. 16Report of Independent Registered Public Accounting Firm
17. 17Opinion on the Financial Statements
18. 18Critical Audit Matter Description
19. 19How We Addressed the Matter in Our Audit
20. 20Dividend on Series J Convertible Preferred Stock
21. 21Unrealized (loss) gain on marketable securities
22. 22Unrealized gain on marketable securities
23. 23Reclassification of warrants to equity
24. 24Series J Convertible Preferred Stock PIK dividend
25. 25Reclassification of April 2024 warrants to equity
26. 26Net realized and unrealized gains on marketable securities
27. 27Net cash (used in) provided by investing activities
28. 28Cash and Cash Equivalents
29. 29Property, Plant and Equipment
30. 30Depreciation and amortization expense was $310,000 and $362,000 for the years ended December 31, 2024, and 2023, respectively
31. 31Foreign Currency Translation
32. 32The Company computes the estimated fair values of stock options using the Black-Scholes option pricing model. Market price at the date of grant is used to calculate the fair value of common stock awards
33. 33Note 3—Property, Plant and Equipment
34. 34Note 4—Stockholders’ Equity
35. 35As of August 23, 2024 (the most recent stock offering), the conversion price of the Series F convertible preferred stock was recalculated to $542.01. As of September 30, 2024, and December 31, 2023, 127 shares of the Series F convertible preferred stock remained outstanding
36. 36Stock Options and Restricted Stock Awards
37. 37The Company’s financial instruments consist of cash and cash equivalents, marketable securities, and warrants
38. 38Level 1 - Financial instruments with unadjusted quoted prices listed on active market exchanges
39. 39The fair value of the Company’s common and preferred stock warrants issued in the April 2024 and October 2022 public offerings, were calculated using a Monte Carlo valuation model and were classified as Level 3 in the fair value hierarchy
40. 40The Company recognizes interest and penalties on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense. At December 31, 2024 and 2023, the Company recorded no accrued interest or penalties related to uncertain tax positions
41. 41Variable lease costs consist primarily of taxes, insurance, and common area or other maintenance costs for our leased office and manufacturing space
42. 42Present value of lease liability
43. 43Note 11—Segment Reporting
44. 44Evaluation of Disclosure Controls and Procedures
45. 45Management Report on Internal Control Over Financial Reporting
46. 46A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis
47. 47Material Weakness in Internal Control Over Financial Reporting
48. 48Changes in Internal Control over Financial Reporting
49. 49Directors and Executive Officers
50. 50Background and Qualifications
51. 51Except as described in the preceding sentence, no other event has occurred during the past 10 years related to Mr. Ayotte or any other executive officer requiring disclosure pursuant to Item 401(f) of Regulation S-K
52. 52Dr. Costanzo’s qualifications to serve on our Board include her years of clinical medical experience in cardiac care, in particular heart failure, including her experiences leading multi-center clinical trials and serving as a board member and fellow on international medical societies
53. 53Dr. Georgiou’s qualifications to serve on our Board include her years of clinical medical experience in internal medicine and her understanding of complex medical information
54. 54Mr McCormick’s qualifications to serve on our Board include his 25-plus years of experience in leading medical device companies and experience with publicly held companies
55. 55Mr. McDonald’s qualifications to serve on our Board include his experience in healthcare investment banking, advising clients on hundreds of merger and acquisition and financing transactions
56. 56The table below sets forth the compensation of each non-employee director from January 1, 2024 through December 31, 2024
57. 57Dr. Costanzo elected not to receive any equity compensation for her role as a director
58. 58Reflects a stock option granted under the Company’s New Hire Equity Incentive Plan or 2021 Inducement Plan, as applicable
59. 59Narrative Discussion of Summary Compensation Table for 2024
60. 60Employment Agreement – Mr. Jaramillo
61. 61In connection with the equity grant contemplated by the agreement, Mr. Jaramillo received an option to purchase 3 shares of our common stock at an exercise price of $32,550 per share effective January 22, 2021
62. 62Offer Letter – Mr. Ayotte
63. 63Outstanding Equity Awards at Fiscal Year-End 2024
64. 64Equity Compensation Plans
65. 65for cause, the option will terminate upon the date of termination, and the participant will be prohibited from exercising his or her option from and after such time
66. 66Change in Control Agreements
67. 67Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
68. 68Based on 4,373,968 shares outstanding as of March 7, 2025
69. 69Consists of 134 shares issuable upon the exercise of outstanding stock options
70. 70Equity Compensation Plan Information
71. 71Certain Relationships and Related Person Transactions
72. 72Pre-Approval Policies and Procedures
73. 73Independent Registered Public Accounting Firm Fees
74. 74Exhibits, and Financial Statement Schedules
75. 75Financial Statement Schedules: The schedules are either not applicable or the required information is presented in the consolidated financial statements or notes thereto
76. 76Indicates management compensatory plan, contract or arrangement