Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2024

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U. S. Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements.

The condensed consolidated balance sheet at June 30, 2024, and the condensed consolidated statements of operations, comprehensive income (loss), and changes in stockholders' equity, and cash flows for the three and six months ended June 30, 2024 and 2023 are unaudited, but include all adjustments, consisting of normal recurring adjustments the Company considers necessary for a fair presentation of the financial position, operating results, and cash flows for the periods presented. The results for the three and six months ended June 30, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024 or for any future interim period. The condensed consolidated balance sheet at December 31, 2023 has been derived from audited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2023 and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 as filed with the SEC on March 21, 2024. The Company’s consolidated subsidiaries consist of its wholly-owned subsidiaries, Rockwell Transportation, Inc. and Rockwell Medical India Private Limited.

The accompanying condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Income (Loss) Per Share

Basic and diluted net income (loss) per share for the three and six months ended June 30, 2024 and 2023 was calculated as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands, except share and per share amounts)	2024		2023		2024		2023
Numerator:
Net Income (Loss)	$	343	$	(3,305)	$	(1,388)	$	(5,055)
Less: Undistributed Earnings to Participating Securities	(58)		—		—		—
Net Income (Loss) Attributable to Common Stockholders	$	285	$	(3,305)	$	(1,388)	$	(5,055)

Denominator:
Weighted Average Number of Shares of Common Stock Outstanding - Basic	30,451,622		18,496,640		29,889,413		18,480,248
Incremental Shares Attributable to the Assumed Exercise of Outstanding Options to Purchase Common Stock	35,185		—		—		—
Incremental Shares Attributable to the Assumed Vesting of Unvested Restricted Stock Units	183,333		—		—		—
Incremental Shares Attributable to the Assumed Conversion of Preferred Stock	1,363,636		—		—		—
Weighted Average Number of Shares of Common Stock Outstanding - Diluted	32,033,776		18,496,640		29,889,413		18,480,248
Net Loss per Share Attributable to Common Stockholders - Basic	$	0.01	$	(0.18)	$	(0.05)	$	(0.27)
Net Loss per Share Attributable to Common Stockholders - Diluted	$	0.01	$	(0.18)	$	(0.05)	$	(0.27)

Income (loss) per share (“EPS”) is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, using the more dilutive of the two- class method and the if-converted method in the period of earnings. The two class method is an earnings allocation method that determines income (loss) per share (when there are earnings) for common stock and participating securities. The if-converted method assumes all convertible securities are converted into common stock. Diluted EPS excludes all dilutive potential shares of common stock if their effect is anti-dilutive.

Included within the weighted average shares of common stock outstanding for the three and six months ended June 30, 2023 are 1,793,000 shares of common stock issuable upon the exercise of certain pre-funded warrants, as the warrants were exercisable at any time for nominal consideration and, as such, the shares were considered outstanding for the purpose of calculating basic and diluted net loss per share attributable to common stockholders. There were no unexercised pre-funded warrants during each of the three and six months ended June 30, 2024.

The Company’s potentially dilutive securities include stock options, restricted stock awards and units, convertible preferred stock and warrants. The following table includes the potential shares of common stock, presented based on amounts outstanding at each period end, that were excluded from the computation of diluted net income (loss) per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Warrants to Purchase Common Stock	3,984,484	10,196,268	3,984,484	10,196,268
Options to Purchase Common Stock	342,331	1,570,599	1,895,031	1,570,599
Convertible Preferred Stock	—	1,363,636	1,363,636	1,363,636
Unvested Restricted Stock Units	—	313,065	534,309	313,065
Unvested Restricted Stock Awards	891	891	891	891
Total	4,327,706	13,444,459	7,778,351	13,444,459

Adoption of Recent Accounting Pronouncements

The Company continually assesses new accounting pronouncements to determine their applicability. When it is determined a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a review to determine the consequences of the change to its consolidated financial statements and assures there are sufficient controls in place to ascertain the Company’s consolidated financial statements properly reflect the change.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is in the process of determining the effect this ASU will have on the disclosures contained in the notes to the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which updates income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This ASU also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is in the process of determining the effect this ASU will have on the disclosures contained in the notes to the consolidated financial statements.