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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): March 7, 2024

 

NEPHROS, INC.

(Exact name of Registrant as Specified in its Charter)

 

Delaware

 

001-32288

 

13-3971809

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

380 Lackawanna Place, South Orange, New Jersey 07079

(Address of principal executive offices, including ZIP code)

 

(201) 343-5202

(Registrant’s telephone number, including area code)

 

n/a

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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, $0.001 par value   NEPH   The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

 

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. ☐

 

 

 

 

 

Item 2.02. Results of Operations and Financial Condition.

 

On March 7, 2024, Nephros, Inc. (the “Company”) issued a press release in which it disclosed its fourth quarter and fiscal year 2023 financial results. A copy of this press release is furnished herewith as Exhibit 99.1.

 

Pursuant to the rules and regulations of the Securities and Exchange Commission, such exhibit and the information set forth therein and in this Item 2.02 have been furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing regardless of any general incorporation language.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.   Description
99.1   Nephros, Inc. Press Release, dated March 7, 2024.

104

  Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Nephros, Inc.
     
Dated: March 7, 2024 By: /s/ Judy Krandel
    Judy Krandel
    Chief Financial Officer

 

 

EX-99.1 2 ex99-1.htm

 

Exhibit 99.1

 

Nephros, Inc.

380 Lackawanna Place

South Orange NJ 07079

Call:201 343 5202

 

nephros.com

 

Nephros Announces Fourth Quarter and Fiscal Year 2023 Financial Results

Full-Year Net Revenue of $14.2 Million and Fourth-Quarter Net Revenue of $3.3 Million

 

SOUTH ORANGE, NJ, March 7, 2024 – Nephros, Inc. (Nasdaq: NEPH), a leading water technology company providing filtration solutions to the medical and commercial markets, today announced financial results for the fourth quarter and fiscal year ended December 31, 2023.

 

Financial Highlights

 

Fourth Quarter Ended December 31, 2023.

 

  Net revenue from continuing operations was $3.3 million, compared to $2.6 million in the fourth quarter of 2022, up 27%
  Net loss from continuing operations was ($0.7 million), approximately equal to the same period in 2022
  Adjusted EBITDA from continuing operations was ($0.1 million), compared to ($0.5 million) in the fourth quarter of 2022, an improvement of 89%

 

Year-End 2023

 

  Net revenue from continuing operations was $14.2 million, compared with $10.0 million in 2022, up 43%
  Net loss from continuing operations was ($1.6 million), compared with ($4.3 million) in 2022
  Adjusted EBITDA from continuing operations was ($0.1 million), compared with ($2.4 million) in 2022, an improvement of 97%

 

“2023 was an exciting year for Nephros. With freshly streamlined operations and a refocus on filtration, we grew sales 43% for the full year,” said Robert Banks, President and Chief Executive Officer. “Additionally, new water management guidance, such as ASHRAE 514, has enabled our expanded salesforce to propel Nephros solutions to the front of the line within healthcare facilities. We believe our infection control water filters are well-positioned to fulfill the latest directive recommendations and serve broadened customer needs.”

 

“In my view, our ability to leverage the current regulatory landscape has been a significant driver of growth, as well as our active engagement of new partners and strengthening of existing relationships,” remarked Mr. Banks. “Further, we have enacted a series of deliberate and transformative operational improvements to our supply chain management and consolidated expansion of our corporate footprint. Among these improvements was the opening of our new warehouse space in the fourth quarter, which has enabled us to increase delivery efficiency while supporting growing sales and solving the challenge of significant inventory expansion. Another enhancement was the extension of our supplier production agreement, which helps ensure an uninterrupted source of product.”

 

Mr. Banks continued, “I am very excited about the momentum we have built and am buoyed by the tailwinds created as a result of more stringent water safety standards along with heightened awareness of microbiological proliferation. I look forward to sharing future products, tools and key partnerships as they develop.”

 

Financial Performance for the Fourth Quarter and Year Ended December 31, 2023

 

Net revenue from continuing operations for the year ended December 31, 2023 was $14 million, compared with $10 million in 2022, an increase of 43%. Net revenue for the fourth quarter of 2023 was $3.3 million, compared with $2.6 million in the fourth quarter of 2022, an increase of 27%.

 

1

 

Nephros, Inc.

380 Lackawanna Place

South Orange NJ 07079

Call:201 343 5202

 

nephros.com

 

Cost of goods sold for the year ended December 31, 2023 was $5.8 million, compared with $5.2 million in 2022, an increase of 11%. Cost of goods sold for the fourth quarter of 2023 was $1.2 million, compared with $1 million in the fourth quarter of 2022, an increase of 18%.

 

Gross margin for the year ended December 31, 2023 was 59%, compared with 47% in 2022. Gross margin for the fourth quarter of 2023 was 62%, compared with 59% in the fourth quarter of 2022.

 

Selling, general and administrative expenses for the year ended December 31, 2023 were $8.9 million, compared with $7.6 million in 2022, an increase of 17%. Selling, general and administrative expenses for the fourth quarter of 2023 were approximately $2.4 million, compared with $1.8 million in 2022, an increase of 35%.

 

Research and development expenses for the year ended December 31, 2023 were $0.9 million, compared with $1.3 million in 2022 a decrease of 30%. Research and development expenses for the fourth quarter of 2023 were $0.2 million, compared with $0.4 million in the fourth quarter of 2022, a decrease of 42%.

 

Depreciation and amortization expenses for the year ended December 31, 2023 were approximately $214,000, compared with approximately $218,000 in 2022, a decrease of 2%. Depreciation and amortization expenses for the fourth quarter of 2023 were approximately $51,000, compared with approximately $56,000 in the fourth quarter of 2022, a decrease of 9%.

 

Net loss from continuing operations for the year ended December 31, 2023 was ($1.6 million), compared with a net loss of ($4.3 million) in 2022, a 63% decrease in loss. Net loss from continuing operations for the fourth quarter of 2023 and 2022 was approximately ($0.7 million) respectively.

 

Adjusted EBITDA loss from continuing operations for the year ended December 31, 2023 was ($0.1 million), compared with ($2.4 million) in 2022. Adjusted EBITDA loss from continuing operations for the fourth quarter 2023 was approximately ($0.1 million), compared with approximately ($0.5 million) in the fourth quarter of 2022.

 

As of December 31, 2023, Nephros had cash and cash equivalents of approximately $4.3 million, compared to $3.6 million as of December 31, 2022, and remains debt free.

 

Adjusted EBITDA Definition and Reconciliation to GAAP Financial Measures

 

Adjusted EBITDA loss from continuing operations is calculated by taking net loss from continuing operations calculated in accordance with generally accepted accounting principles (“GAAP”) and excluding all interest-related expenses and income, tax-related expenses and income, non-recurring expenses and income, and non-cash items, including depreciation, amortization, non-cash inventory impairments, and write-offs, and non-cash compensation. The following table presents a reconciliation of Adjusted EBITDA loss from continuing operations to net loss from continuing operations, the most directly comparable GAAP financial measure, for the fourth quarter of the 2023 and 2022 fiscal years:

 

2

 

Nephros, Inc.

380 Lackawanna Place

South Orange NJ 07079

Call:201 343 5202

 

nephros.com

 

 

(unaudited)
                               
2023   Three Month Period Ended     Annual  
    3/31/2023     6/30/2023     9/30/2023     12/31/2023     Totals  
                               
Net loss from continuing operations     (306 )     (433 )     (182 )     (654 )     (1,575 )
                                         
Adjustments:                                        
Depreciation of property and equipment     10       10       9       10       39  
Amortization of other assets     44       44       46       41       175  
Interest expense     1       -       -       1       2  
Interest income     (12 )     (13 )     (11 )     (28 )     (64 )
Non-cash stock-based compensation     319       194       149       390       1,052  
Non-cash inventory impairments     91       15       -       189       295  
                                         
Adjusted EBITDA loss from continuing operations     147       (183 )     11       (51 )     (76 )

 

(unaudited)
                               
2022   Three Month Period Ended     Annual  
    3/31/2022     6/30/2022     9/30/2022     12/31/2022     Totals  
                               
Net loss from continuing operations     (1,561 )     (747 )     (1,250 )     (719 )     (4,277 )
                                         
Adjustments:                                        
Depreciation of property and equipment     8       20       12       12       52  
Amortization of other assets     47       41       44       44       176  
Interest expense     7       6       4       3       20  
Interest income     (2 )     (1 )     (4 )     (7 )     (14 )
Non-cash stock-based compensation     254       258       225       207       944  
Non-cash inventory impairments     49       59       665               773  
Other non-cash items     -       (38 )     -       -       (38 )
                                         
Adjusted EBITDA loss from continuing operations     (1,198 )     (402 )     (304 )     (460 )     (2,364 )

 

Nephros believes that Adjusted EBITDA loss from continuing operations provides useful information to management and investors regarding certain financial and business trends relating to Nephros’ financial condition and results of operations. Management does not consider Adjusted EBITDA loss from continuing operations in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of Adjusted EBITDA loss from continuing operations is that it excludes significant expenses and income that are required by GAAP to be recognized in Nephros’ financial statements. In addition, Adjusted EBITDA loss from continuing operations is subject to inherent limitations as it reflects the exercise of judgments by management about which expenses and income are excluded or included in determining Adjusted EBITDA loss from continuing operations. To compensate for these limitations, management presents Adjusted EBITDA loss from continuing operations in connection with net loss from continuing operations, the most directly comparable GAAP financial measure. Nephros urges investors to review the reconciliation of Adjusted EBITDA loss from continuing operations to net loss from continuing operations and not to rely on any single financial measure to evaluate the business.

 

3

 

Nephros, Inc.

380 Lackawanna Place

South Orange NJ 07079

Call:201 343 5202

 

nephros.com

 

Conference Call Today at 4:30pm Eastern Time

 

Nephros will host a conference call today at 4:30pm ET, during which management will discuss Nephros’ financial results and provide a general business overview.

 

Participants may dial into the call as follows:

Domestic access: 1 (844) 808-7106

International access: 1 (412) 317-5285

 

Upon joining, please ask to be joined into the Nephros conference call.

 

An audio archive of the call will be available shortly after the call on the Nephros Investor Relations page.

 

Alternatively, a replay of the call may be accessed until March 14th, 2024 at 1 (877) 344-7529 or

1 (412) 317-0088 for international callers and entering replay access code: 3916556.

 

About Nephros

 

Nephros is committed to improving the human relationship with water through leading, accessible technology. We provide innovative water filtration products and services, along with water-quality education, as part of an integrated approach to water safety. Nephros goods serve the needs of customers within healthcare and commercial markets, offering both proactive and emergency solutions for water management.

 

For more information about Nephros, please visit nephros.com.

 

Forward-Looking Statements

 

This release contains forward-looking statements that are subject to various risks and uncertainties. Such statements include statements regarding Nephros’ expected revenue and cash flows for the quarter and year ended December 31, 2023, expected future revenue growth and the timing of such growth, the effect of new regulations on future revenue growth, Nephros’ ability to appropriately manage product inventory , and other statements that are not historical facts, including statements that may be accompanied by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words. Actual results could differ materially from those described in these forward-looking statements due to certain factors, including Nephros’ ability to further develop its sales organization and realize increased revenues, inflationary factors and other economic and competitive conditions, the availability of capital when needed, dependence on third-party manufacturers and researchers, and regulatory reforms. These and other risks and uncertainties are detailed in Nephros’ reports filed with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2023, which is expected to be filed on or before March 31, 2024. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of this release, and Nephros does not undertake any responsibility to update any forward-looking statements that it makes, except as may be required by law.

 

Investor Relations Contacts:

 

Kirin Smith, President

PCG Advisory, Inc.

(646) 823-8656

ksmith@pcgadvisory.com

 

Robert Banks, CEO

Nephros, Inc.

(201) 343-5202 x110

robert.banks@nephros.com

 

4

 

Nephros, Inc.

380 Lackawanna Place

South Orange NJ 07079

Call:201 343 5202

 

nephros.com

 

NEPHROS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

    December 31, 2023     December 31, 2022  
ASSETS                
Current assets:                
Cash and cash equivalents   $ 4,307     $ 3,634  
Accounts receivable, net     1,496       1,286  
Inventory     2,470       3,153  
Prepaid expenses and other current assets     132       188  
Total current assets     8,405       8,261  
Property and equipment, net     152       116  
Lease right-use-of assets     1,807       984  
Intangible assets, net     381       423  
Goodwill     759       759  
License and supply agreement, net     271       402  
Other assets     86       54  
TOTAL ASSETS   $ 11,861     $ 10,999  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
Current portion of secured note payable   $ -     $ 71  
Accounts payable     873       740  
Accrued expenses     794       285  
Current portion of lease liabilities     446       316  
Total current liabilities     2,113       1,412  
Equipment financing, net of current portion     -       1  
Lease liabilities, net of current portion     1,390       705  
TOTAL LIABILITIES     3,503       2,118  
                 
COMMITMENTS AND CONTINGENCIES                
                 
STOCKHOLDERS’ EQUITY:                
Preferred stock, $.001 par value; 5,000,000 shares authorized at December 31, 2023 and 2022; no shares issued and outstanding at December 31, 2023 and 2022     -       -  
Common stock, $.001 par value; 40,000,000 shares authorized at December 31, 2023 and 2022; 10,543,675 and 10,297,429 shares issued and outstanding at December 31, 2023 and 2022, respectively     10       10  
Additional paid-in capital     152,754       148,413  
Accumulated deficit     (144,406 )     (142,831 )
Subtotal     8,358       5,592  
Noncontrolling interest     -       3,289  
TOTAL STOCKHOLDERS’ EQUITY     8,358       8,881  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 11,861     $ 10,999  

 

5

 

Nephros, Inc.

380 Lackawanna Place

South Orange NJ 07079

Call:201 343 5202

 

nephros.com

 

NEPHROS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

(Unaudited)

 

    Twelve Months Ended December 31,  
    2023     2022  
Net revenue:                
Product revenues   $ 14,110     $ 9,929  
Royalty and other revenues     128       46  
Total net revenues     14,238       9,975  
Cost of goods sold     5,833       5,244  
Gross margin     8,405       4,731  
Operating expenses:                
Selling, general and administrative     8,911       7,593  
Research and development     873       1,255  
Depreciation and amortization     214       218  
Total operating expenses     9,998       9,066  
Operating loss from continuing operations     (1,593 )     (4,335 )
Other (expense) income:                
Interest expense     (2 )     (20 )
Interest income     64       14  
Other (expense) net     (44 )     64  
Total other expense:     18       58  
Loss from continuing operations     (1,575 )     (4,277 )
Net loss from discontinued operations     -       (2,829 )
Net loss     (1,575 )     (7,106 )
Less: Undeclared deemed dividend attributable to noncontrolling interest     -       (276 )
Net loss attributable to Nephros Inc. shareholders   $ (1,575 )   $ (7,382 )
                 
Net loss per common share, basic and diluted from continuing operations   $ (0.15 )   $ (0.42 )
Net loss per common share, basic and diluted from discontinued operations     -       (0.28 )
Net loss per common share, basic and diluted   $ (0.15 )   $ (0.70 )
Net loss per common share, basic and diluted, attributable to continuing noncontrolling interest     -       (0.03 )
                 
Net loss per common share, basic and diluted, attributable to Nephros, Inc, shareholders   $ (0.15 )   $ (0.73 )
Weighted average common shares outstanding, basic and diluted     10,386,018       10,297,134  
                 
Comprehensive loss:                
Net loss   $ (1,575 )   $ (7,106 )
Other comprehensive loss, foreign currency translation adjustments, net of tax     -       (14 )
Comprehensive loss     (1,575 )     (7,120 )
Comprehensive loss attributable to continuing noncontrolling interest     -       (276 )
Comprehensive loss attributable to Nephros, Inc. shareholders   $ (1,575 )   $ (7,396 )

 

6