Nuwellis, Inc.

Note 1 – Nature of Business and Basis of Presentation

Nature of Business: Nuwellis, Inc. (the “Company”) isa medical technology company committed to delivering solutions for patients with cardio-renal conditions, addressing the critical interplay between the heart and kidneys. The Company is focused on commercializing the Aquadex SmartFlow system for ultrafiltration therapy. The Aquadex SmartFlow system is indicated for temporary (up to eight hours) or extended (longer than 8 hours in patients who require hospitalization) use in adult and pediatric patients weighing 20 kg or more whose fluid overload is unresponsive to medical management, including diuretics. Nuwellis, Inc. is a Delaware corporation headquartered in Minneapolis with a wholly owned subsidiary in Ireland. The Company has been listed on Nasdaq since February 2012.

In August 2016, the Company acquired the business associated with the Aquadex System (the “Aquadex Business”) from a subsidiary of Baxter International, Inc. (“Baxter”), and refocused its strategy to fully devote its resources to the Aquadex Business. On April 27, 2021, the Company announced that it was changing its name from CHF Solutions, Inc. to Nuwellis, Inc. to reflect the expansion of its customer base from treating fluid imbalance resulting from congestive heart failure to also include critical care and pediatric applications.

Principles of Consolidation: The accompanying condensed consolidated balance sheet as of December 31, 2024, which has been derived from the consolidated audited financial statements, and the unaudited 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 with the instructions to Form 10-Q and Article 8 of Regulation S-X. Certain information and note disclosures normally included in the audited annual consolidated financial statements have been condensed or omitted pursuant to those rules and regulations. Accordingly, they do not include all of the information necessary for a fair presentation of results of operations, comprehensive loss, financial condition, and cash flows in conformity with U.S. GAAP. In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of the Company for the periods presented. Operating results for interim periods are not necessarily indicative of results that may be expected for the year. The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the consolidated financial statements and during the reporting period. Actual results could differ materially from these estimates.

These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Going Concern: The Company’s consolidated financial statements have been prepared and presented on a basis assuming it continues as a going concern. During the years ended December 31, 2024, and 2023, the Company incurred losses from operations and net cash outflows from operating activities as disclosed in the consolidated statements of operations and cash flows, respectively. As of September 30, 2025, the Company had an accumulated deficit of $313.9 million, and it expects to incur losses for the immediate future. To date, the Company has been funded by equity financings, and although the Company believes that it will be able to successfully fund its operations, there can be no assurance that it will be able to do so or that it will ever operate profitably. These factors raise substantial doubt about the Company’s ability to continue as a going concern through at least twelve months from the filing date.

The Company became a revenue-generating company after acquiring the Aquadex Business in August 2016. The Company expects to incur additional losses in the near-term as it grows the Aquadex Business, including investments in expanding its sales and marketing capabilities, purchasing inventory and new product development, and complying with the requirements related to being a U.S. public company. To become and remain profitable, the Company must succeed in expanding the adoption and market acceptance of the Aquadex System. This will require the Company to succeed in training personnel at hospitals and effectively distributing the Aquadex System and related components. There can be no assurance that the Company will succeed in these activities, and it may never generate revenues sufficient to achieve profitability.

Understanding the near-term need to raise capital, in 2024, the Company undertook steps to reduce its monthly cash burn rate by approximately 40%, balanced against its strategic growth initiatives, which was intended to provide more flexibility in anticipation of tougher capital market conditions for microcap companies like Nuwellis. These reductions included, but were not limited to, a reduction of the salaries for members of senior management, no merit increases to the base salaries of any named executive officer or employee in 2024 for performance provided during the fiscal year ended December 31, 2023, no cash bonuses to any named executive officer or employee in 2024 for performance provided during the fiscal year ended December 31, 2023, a reduction in Board of Director and committee fees, temporary suspension of the Company’s 401(k) match, travel reductions, and reductions to select professional services. The Board authorized the restoration of the Company 401(k) match effective October 1, 2024, and the restoration of Board and committee fees and executive salaries, effective November 1, 2024.

The Company believes that its existing capital resources will be sufficient to support its operating plan into the first quarter of 2026. However, the Company will seek to raise additional capital to support its growth or other strategic initiatives through debt, equity, or a combination thereof. There can be no assurance we will be successful in raising additional capital.

Segment Information: Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker in deciding how to allocate resources and assess performance. The Company and the Company’s chief operating decision-maker (the “CODM”), the chief executive officer, view the Company’s operations and manages its business as a single operating segment. On September 30, 2025 and December 31, 2024, long-lived assets were located primarily in the United States. (see Note 9 — Segment Reporting).

Revenue Recognition: The Company recognizes revenue in accordance with Accounting Standards Codification, Topic 606, Revenue from Contracts with Customers, which the Company adopted effective January 1, 2018. Accordingly, the Company recognizes revenue when its customers obtain control of its products or services, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods and services. See Note 2 – Revenue Recognition below for additional disclosures. For the three months ended September 30, 2025, two customer each represented 11% of net sales. For the nine months ended September 30, 2025, one customer represented 14% of net sales. For the three months ended September 30, 2024, two customers represented 12% and 10% of net sales. For the nine months ended September 30, 2024, one customer represented 16% of net sales.

Accounts Receivable: Accounts receivable are unsecured, are recorded at net realizable value, and do not bear interest. The Company makes judgments as to its ability to collect outstanding receivables based upon significant patterns of collectability, historical experience, and management’s evaluation of specific accounts and will provide an allowance for credit losses when collection becomes doubtful. Payment is generally due 30 days from the invoice date and accounts past 30 days are individually analyzed for collectability. When all collection efforts have been exhausted, the account is written off against the related allowance. To date, the Company has not experienced any write-offs or significant deterioration of the aging of its accounts receivable, and therefore, no allowance for credit losses was considered necessary as of September 30, 2025, or December 31, 2024. As of September 30, 2025, two customers represented 19% and 11% of the accounts receivable balance. As of December 31, 2024, two customers represented 23% and 11% of the total accounts receivable balance.

Inventories: Inventories are recorded at the lower of cost or net realizable value using the first-in, first-out method. Overhead is allocated to manufactured finished goods inventory based on the normal capacity of the Company’s production facilities. On a regular basis, the Company reviews its inventory and identifies that which is excess, slow moving, and obsolete by considering factors such as inventory levels and expected product life. A reserve is established for any identified excess, slow moving, and obsolete inventory through a charge to cost of goods sold. Inventories consisted of the following:

Income (loss) per Share: Basic income (loss) per share is computed based on the net income (loss) for each period divided by the weighted average number of common shares outstanding. See Note 3 – Stockholders’ Equity below for additional disclosures.

Diluted earnings per share is computed based on the net income (loss) allocable to Common Stockholders for each period divided by the weighted average number of common shares outstanding, increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued, and reduced by the number of shares the Company could have repurchased from the proceeds from issuance of the potentially dilutive shares. Potentially dilutive shares of Common Stock include shares underlying outstanding convertible preferred stock, warrants, stock options and other stock-based awards granted under stock-based compensation plans.

The following table sets forth the potential shares of Common Stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented:

The following table reconciles reported net loss with reported net loss per share for each of the three and nine months ended September 30:

Recently Issued Accounting Pronouncements: In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The new guidance is expected to improve income tax disclosures primarily related to the rate reconciliation and income taxes paid information by requiring 1) consistent categories and greater disaggregation of information in the rate reconciliation and 2) income taxes paid disaggregated by jurisdiction. The guidance is effective on a prospective basis, although retrospective application and early adoption is permitted. The Company is evaluating its disclosure approach for ASU 2023-09 and anticipates adopting the standard for the annual period ending December 31, 2025.

Reclassification of Prior Year amounts: Certain reclassifications have been made to the prior years' consolidated financial statements to conform to the current year presentation. The reclassifications had no effect on previously reported results of operations, cash flows or stockholders’ deficit.

Subsequent Events: The Company evaluates events through the date the condensed consolidated financial statements are filed for events requiring adjustment to or disclosure in the condensed consolidated financial statements.

Note 2 – Revenue Recognition

Net Sales: The Company sells its products in the United States primarily through a direct salesforce. Customers who purchase the Company’s products include hospitals and clinics throughout the United States. In countries outside the United States, the Company has historically sold its products through a limited number of specialty healthcare distributors in Austria, Belarus, Brazil, Colombia, Czech Republic, Germany, Greece, Hong Kong, India, Indonesia, Israel, Italy, Panama, Romania, Singapore, Slovak Republic, Spain, Switzerland, Thailand, United Arab Emirates and the United Kingdom. These distributors resell the Company’s products to hospitals and clinics in their respective geographies. International revenue represents 0% and 3% of net sales for the three months ended September 30, 2025, and 2024, respectively, and 2% and 4% of net sales for the nine months ended September 30, 2025 and 2024, respectively.

On August 7, 2025, the Company announced its decision to exit international operations in order to focus exclusively on the U.S. market—where the Company is seeing the strongest growth and clinical demand. This strategic realignment supports Nuwellis’ core business strategy: investing in the markets driving revenue growth. With expanding traction in U.S. cardiac surgery and pediatric programs, and a rising opportunity in the hospital-based outpatient space, the Company is streamlining to prioritize investment in markets where it can have the most immediate and long-term impact. As of September 30, 2025, the Company has accrued approximately $254,000 in contractual exit fees and product repurchase obligations with certain of its former international distributors. These accrued contractual exit fees and product repurchases will be substantially paid out by the end of the first quarter of fiscal 2026.

Revenue from product sales is recognized when the customer or distributor obtains control of the product, which occurs at a point in time, most frequently upon shipment of the product or receipt of the product, depending on shipment terms. The Company’s standard shipping terms are FOB shipping point unless the customer requests that control and title to the inventory transfer upon delivery.

Revenue is measured as the amount of consideration we expect to receive, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price, which is based on the invoiced price, in exchange for transferring products. All revenue is recognized when the Company satisfies its performance obligations under the contract. The majority of the Company’s contracts have a single performance obligation and are short-term in nature. The Company has entered into extended service plans with customers whose related revenue is recognized over time. This revenue represents less than 1% of net sales for the three and nine months ended September 30, 2025, and 2024. The unfulfilled performance obligations related to these extended service plans are included in deferred revenue, which is included in other current liabilities on the condensed consolidated balance sheets. The majority of the deferred revenue is expected to be recognized withinone year.

Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Revenue includes shipment and handling fees charged to customers. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold.

Product Returns: The Company offers customers a limited right of return for its products in case of non-conformity or performance issues. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company currently estimates product return liabilities using available industry data and its own historical sales and returns information. The Company has received minimal returns to date and believes that future returns of its products will be minimal. Therefore, revenue recognized is not currently impacted by variable consideration related to product returns.

Note 3 – Stockholders’ Equity

Series F Convertible Preferred Stock: On November 27, 2017, the Company closed on an underwritten public offering of Series F convertible preferred stock and warrants to purchase shares of Common Stock. The Series F convertible preferred stock has full ratchet price-based anti-dilution protection, subject to customary carve-outs, in the event of a down-round financing at a price per share below the conversion price of the Series F convertible preferred stock (which protection will expire if, during any 20 of 30 consecutive trading days, the volume weighted average price of the Company’s Common Stock exceeds 300% of the then-effective conversion price of the Series F convertible preferred stock and the daily dollar trading volume for each trading day during such period exceeds $7,000,000). Effective for every stock offering or reverse stock split, when applicable, the conversion price of the Series F convertible preferred stock has been recalculated based on the offering price.

As of July 7, 2025 (the effective date of the most recent reverse stock split), the conversion price of the Series F convertible preferred stock was recalculated to $397.00. As of September 30, 2025 and December 31, 2024,27 shares and 127 shares of the Series F convertible preferred stock remained outstanding, respectively.

Series F-1 Convertible Preferred Stock: On June 6, 2025, the Company filed the Certificate of Designation of Preferences, Rights and Limitations of Series F-1 Convertible Preferred Stock with the State of Delaware. At that time,100 shares of Series F Preferred Stock were outstanding and owned by the Company’s Chief Executive Officer, John L. Erb. Such 100 shares of Series F Preferred Stock were exchanged for Series F-1 Preferred Shares pursuant to a Securities Exchange Agreement between John L. Erb and the Company, dated June 9, 2025.

On June 9, 2025,66 shares of the Series F-1 Preferred shares were converted into 26,191 shares of the Company’s Common Stock. The conversion rate for the 66 Series F-1 Preferred Shares was $397.00 per share.

As of September 30, 2025,66 of the series F-1 Preferred shares had been converted to Common Stock and 34 remained outstanding.

June 2025 Stock Offering: On June 10, 2025, the Company announced the closing of its public offering of 61,444 shares of its common stock (“Common Stock”), pre-funded warrants to purchase 335,381 shares of Common Stock (all pre-funded warrants were exercised on this date), in each case with accompanying Series A Warrants to purchase up to 1,190,480 shares of Common Stock, Series B Warrants to purchase up to 396,829 shares of Common Stock and Placement Warrants to purchase up to 11,903 shares of Common Stock with gross proceeds of approximately $5.0 million, which included the full exercise of the underwriter’s over-allotment option to purchase additional shares and warrants. The public offering price per share of Common Stock and accompanying warrants was $12.60 per share and accompanying warrants, and the public offering price per pre-funded warrant and accompanying warrants was $12.5958 per pre-funded warrant and accompanying warrants. Each pre-funded warrant has an exercise price of $0.0042 per pre-funded warrant and was immediately exercisable. The Series B Warrants had an exercise price of $12.60 and will be exercisable for a period offive years following the receipt of stockholder approval which was obtained on August 4, 2025, as required by the applicable rules and regulations of Nasdaq. The Series A Warrants contain a one-time reset of the exercise price in the event that the Company implemented the 2025 Reverse Stock Split (as defined below) equal to the greater of: (i)20% of the combined public offering price per share of Common Stock and accompanying warrants in the offering and (ii) the lowest daily volume weighted average price for thefive trading days immediately following the date of the implementation of the 2025 Reverse Stock Split. After the reverse stock split effectuated on July 3, 2025, the reset exercise price of the Series A warrants was set at $7.00 per share and there were no further contractual exercise price adjustments following the reverse split. The Series B Warrants include azero cash exercise option allowing holders of a Series B Warrant the right to receive, without payment of any additional cash to the Company, an aggregate number of shares equal to the number of shares of Common Stock that would be issuable upon a cash exercise of such Series B Warrants.

The Series A and B warrants offered in this financing were determined to be classified as a liability on the condensed consolidated balance sheet. An independent valuation of the warrants was performed and reviewed with management. The Series A warrants were valued using the Monte Carlo Simulation Model utilizing US Treasury Rates, Volatility rates, Common Stock price and assumptions around date and likelihood of a reverse split exercise price adjustment. The Series B warrants were valued using the Common Stock price given the zero-exercise price. The valuation at issuance was $10.6 million for the Series A warrants and $3.9 million for the Series B warrants, and on June 30, 2025, was $10.0 million for the Series A warrants and $3.7 million for the Series B warrants, representing a warrant liability decrease of $0.8 million from issuance. The $0.8 million warrant liability decrease from issuance has been reported on the condensed consolidated statement of operations as a “Change in fair value of warrant liability.” The total warrant valuation of $14.5 million exceeded the gross proceeds of $5.0 million. Accordingly, if the warrant valuation exceeds the gross proceeds, the difference will be recorded as “Day 1 interest.” You will find this difference, along with other issuance costs (discounts, legal, printing) reported on the condensed consolidated statement of operations as “Financing expense.”

As a result of the above, the Company’s stockholders’ equity as of June 30, 2025, was below the Nasdaq Stockholders’ Equity Requirement. However, subsequently the liability associated with the Series A Warrants of $8.4 million was reclassified on July 14, 2025, as equity due to the exercise price being reset to the floor at $7.00 per share. The majority of the liability associated with the Series B Warrants has been removed as these were exercised into Common Stock. As of September 30, 2025, there were 6,268 Series B warrants still unexercised and the fair value of these warrants was $21,004.

Reverse Stock Split: On June 19, 2025, the Board approved aone-for-forty-two reverse stock split of the Company’s issued and outstanding shares of Common Stock (the “2025 Reverse Stock Split”). On July 2, 2025, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) to effect the 2025 Reverse Stock Split. The 2025 Reverse Stock Split became effective as of 5:00 p.m. Eastern Time on July 3, 2025, and the Company’s Common Stock began trading on a split-adjusted basis when the market opened on July 7, 2025. When the 2025 Reverse Stock Split became effective, every forty-two shares of the Company’s issued and outstanding Common Stock (and such shares held in treasury) automatically was converted into one share of Common Stock, without any change in the par value per share.

In addition, a proportionate adjustment was made to the per share exercise price and the number of shares issuable upon the conversion of the Company’s outstanding shares of preferred stock and exercise of all outstanding stock options, restricted stock units and warrants to purchase shares of Common Stock and the number of shares reserved for issuance pursuant to the Company’s equity incentive compensation plans. Any fraction of a share of Common Stock that was created as a result of the 2025 Reverse Stock Split was rounded down to the next whole share and the stockholder received cash equal to the market value of the fractional share, determined by multiplying such fraction by the closing sales price of the Company’s Common Stock as reported on Nasdaq on the last trading day before the 2025 Reverse Stock Split became effective. All share and per-share amounts have been retroactively adjusted to reflect the reverse stock splits for all periods presented.

At The Market Offering: On September 3, 2025, the Company entered into an At The Market Offering Agreement (“Sales Agreement”) with Ladenburg Thalmann & Co. Inc. pursuant to which the Company may sell shares of the Company’s Common Stock from time to time, at its option, through or to Ladenburg, as sales agent or principal. Sales of the Company’s Common Stock made pursuant to the Sales Agreement, were made under the Company’s Registration Statement on Form S-3 (File No. 333-280647) and the prospectus supplement filed on September 3, 2025 with the Securities and Exchange Commission, in sales deemed to be “at the market offerings” as defined in Rule 415 promulgated under the Securities Act, initially having an aggregate offering price of up to $4,650,000. Ladenburg will use its commercially reasonable efforts to sell the Common Stock from time to time, based upon the Company’s instructions (including any price, time, or size limits or other customary parameters or conditions the Company may impose). As of September 30, 2025, the Company had sold 447,288 of Common Shares for net proceeds of approximately $1.9 million.

The Company is not obligated to make any sales of Common Stock under the Sales Agreement, and the Company cannot provide any assurances that it will issue any shares pursuant to the Sales Agreement. The offering of Common Stock pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement as permitted therein. The Company is obligated to pay Ladenburg an aggregate sales agent commission of up to 3.0% of the gross proceeds of the sale price for Common Stock sold under the Sales Agreement. The Company has also provided Ladenburg with customary indemnification rights and expense reimbursements for up to $50,000 of expenses in addition to ongoing diligence expenses. The representations, warranties and covenants contained in the Sales Agreement were made only for purposes of the Sales Agreement as of specific dates indicated therein, were solely for the benefit of Ladenburg and to allocate risk between the Company and Ladenburg, and as a result should not be relied on and may be subject to limitations agreed upon by the parties.

Note 4 - Stock-Based Compensation

Under the fair value recognition provisions of U.S. GAAP for accounting for stock-based compensation, the Company measures stock-based compensation expense at the grant date based on the fair value of the award and recognizes the compensation expense over the requisite service period, which is generally the vesting period.

The following table presents the classification of stock-based compensation expense recognized for the periods below:

During the three months ended September 30, 2025 and 2024, under the 2017 Equity Incentive Plan, and the 2021 Inducement Plan, the Company granted 0 stock options for both periods to its directors, officers and employees. During the nine months ended September 30, 2025 and 2024, the Company granted 4,409 and 28 stock options, respectively, to its directors. Vesting generally occurs either immediately or up to a 48-month period based on a time-of-service condition. As the Company didnot issue any stock options during the three months ended September 30, 2025, there isno weighted-average grant date fair value of the stock options issued during the three months ended September 30, 2025. The weighted-average grant date fair value of the stock options issued during the nine months ended September 30, 2025, and 2024 was $19.23 and $920.22 per share, respectively.

The total number of stock options outstanding as of September 30, 2025, and September 30, 2024 was 4,460 and 79, respectively.

The weighted-average assumptions used in the Black-Scholes option-pricing model are as follows for the stock options granted during the three and nine months ended September 30, 2025, and 2024:

During the three months ended September 30, 2025, and 2024,1,238 and 10 stock options vested, respectively, and 18 and 0 stock options expired or were forfeited during these periods, respectively. During the nine months ended September 30, 2025, and 2024,1,378 and 41 stock options vested, respectively, and 29 and 4 stock options expired or were forfeited during these periods, respectively. During the three and nine months ended September 30, 2025, and 2024, no options were exercised.

Note 5—Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents and warrants.

Pursuant to the requirements of Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurement,” the Company’s financial assets and liabilities measured at fair value on a recurring basis are classified and disclosed in one of the following three categories:

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Level 1 - Financial instruments with unadjusted quoted prices listed on active market exchanges.

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Level 2 - Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over-the-counter traded financial instruments. The prices for the financial instruments are determined using prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

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Level 3 - Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques.

The fair value of the Company’s common and preferred stock warrant liabilities related to the warrants issued in the October 2022, October 2023, April 2024 and June 2025 public offerings were calculated using a Monte Carlo valuation model and were classified as Level 3 in the fair value hierarchy.

The following is a roll-forward of the fair value of the Level 3 warrants:

Note 6 – Income Taxes

The Company provides for a valuation allowance when it is more likely than not that it will not realize a portion of its deferred tax assets. The Company has established a full valuation allowance for its U.S. and foreign deferred tax assets due to the uncertainty that enough taxable income will be generated in those taxing jurisdictions to utilize the assets. Therefore, the Company has not reflected any benefit of such deferred tax assets in the accompanying condensed consolidated financial statements.

As of September 30, 2025, there were no material changes to what the Company disclosed regarding tax uncertainties or penalties in its Annual Report on Form 10-K for the year ended December 31, 2024.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted and the Company continues to evaluate the impact on its financial position. The OBBBA is not currently expected to materially impact the Company’s effective tax rate or cash flows in the current fiscal year.

Note 7—Operating Leases

The Company leases a 23,000 square foot facility located in Eden Prairie, Minnesota for office and manufacturing space under a non-cancelable operating lease that expires in March 2027. In November 2021, the Company entered into a fourth amendment to the lease, extending the term of the lease from March 31, 2022 to March 31, 2027. This facility serves as our corporate headquarters and houses substantially all our functional departments. Monthly rent and common area maintenance charges, including estimated property tax for our headquarters, total approximately $36,000. The lease contains provisions for annual inflationary adjustments. Rent expense is being recorded on a straight-line basis over the term of the lease. Beginning on April 1, 2022, the annual base rent was $10.50 per square foot, subject to future annual increases of $0.32 to $0.34 per square foot.

Note 8—Commitments and Contingencies

Employee Retirement Plan: The Company has a 401(k) retirement plan that provides retirement benefits to all eligible U.S. employees. Eligible employees may contribute a percentage of their annual compensation, subject to Internal Revenue Service limitations, with the Company matching a portion of the employees’ contributions at the discretion of the Company.

Note 9—Segment Reporting

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources in assessing performance. Nuwellis hasone reportable segment: fluid overload. The Company is a medical technology company focused on developing and commercializing the Aquadex System. The Company recognizes this medical device system asone reporting segment. The CODM is the chief executive officer.

The accounting policies of the fluid overload segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the fluid overload segment based on net loss, which is reported on the statement of operations as consolidated net loss. The measure of segment assets is reported on the balance sheet as total consolidated assets. The Company does not have any intra-entity sales or transfers.

The CODM uses cash forecast models in deciding how to invest into the fluid overload segment. Such cash forecast models are reviewed to assess the entity-wide operating results and performance. Net income (loss) is used to monitor budget versus actual results. Monitoring budgeted versus actual results is used in assessing performance of the segment and in establishing management’s compensation.

The table below summarizes the significant expense categories regularly reviewed by the CODM for the three months and nine months ended September 30, 2025 and 2024:

Note 10—Subsequent Events

At The Market Offering: As a result of entering into the Sales Agreement initiated on September 3, 2025, the Company has received gross proceeds of approximately $1.1 million on sales of 293,829 Common Shares subsequent to September 30, 2025 and as of the date of filing this Quarterly Report on Form 10-Q.

Item 2.