UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2022

☐ 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: 001-32288

NEPHROS, INC.

(Exact name of registrant as specified in its charter)

delaware		13-3971809
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

380 Lackawanna Place South Orange, NJ		07079
(Address of principal executive offices)		(Zip Code)

(201) 343-5202

Registrant’s telephone number, including area code

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol		Name of exchange on which registered
Common stock, par value $0.001 per share		NEPH		The Nasdaq Stock Market LLC

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

As of November 8, 2022, 10,316,597 shares of the registrant’s common stock, $0.001 par value per share, were outstanding.

NEPHROS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	3
Item 1. Financial Statements (unaudited).	3
CONDENSED CONSOLIDATED BALANCE SHEETS – September 30, 2022 and December 31, 2021	3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS – Three and nine months ended September 30, 2022 and 2021	4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY – Three and nine months ended September 30, 2022 and 2021	5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – Nine months ended September 30, 2022 and 2021	7
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	24
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	35
Item 4. Controls and Procedures.	35
PART II - OTHER INFORMATION	36
Item 1A. Risk Factors	36
Item 5. Other Information	36
Item 6. Exhibits	36
SIGNATURES	37

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

NEPHROS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

	September 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	3,940		$	6,973
Accounts receivable, net		1,374			1,641
Inventory		3,488			4,462
Prepaid expenses and other current assets		186			207
Current assets held-for-sale		130			351
Total current assets		9,118			13,634
Property and equipment, net		128			72
Lease right-of-use assets		404			614
Intangible assets, net		433			465
Goodwill		759			759
License and supply agreement, net		435			536
Other assets		58			84
Non-current assets held-for-sale		-			1,486
TOTAL ASSETS	$	11,335		$	17,650

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of secured note payable	$	141		$	248
Accounts payable		779			1,334
Accrued expenses		272			444
Current portion of lease liabilities		229			313
Current liabilities associated with assets held-for-sale		130			51
Total current liabilities		1,551			2,390
Secured note payable, net of current portion		-			95
Equipment financing, net of current portion		2			4
Lease liabilities, net of current portion		201			340
Non-current liabilities associated with assets held-for-sale		-			72
TOTAL LIABILITIES		1,754			2,901

COMMITMENTS AND CONTINGENCIES (Note 15)		-			-

STOCKHOLDERS’ EQUITY

Preferred stock, $.001 par value; 5,000,000 shares authorized at September 30, 2022 and December 31, 2021; no shares issued and outstanding at September 30, 2022 and December 31, 2021.		-			-
Common stock, $.001 par value; 40,000,000 shares authorized at September 30, 2022 and December 31, 2021; 10,303,818 and 10,258,444 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively.		10			10
Additional paid-in capital		148,275			147,346
Accumulated other comprehensive income		-			64
Accumulated deficit		(141,983	)		(135,725	)
Subtotal		6,302			11,695
Noncontrolling interest		3,279			3,054
TOTAL STOCKHOLDERS’ EQUITY		9,581			14,749
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	11,335		$	17,650

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

NEPHROS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

(Unaudited)

	2022	2021	2022	2021
	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Net revenue:

SEC Form 10-Q filed by Nephros Inc.