8-K

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): October 4, 2022

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 1.01 Entry into a Material Definitive Agreement.

On October 4, 2022, Nephros, Inc. (the “Company”) entered into an Agreement for Purchase and Sale of Assets (the “Purchase Agreement”) with BWSI, LLC (“BWSI”), pursuant to which the Company agreed to sell, and BWSI agreed to purchase, substantially all of the assets relating to the Company’s Pathogen Detection Systems line of business (the “PDS Business”). The Purchase Agreement provides that the closing of the transactions contemplated thereby (the “Closing”) shall occur on November 18, 2022, or at such other time as the parties may mutually agree in writing.

Under the terms of the Purchase Agreement, BWSI will make a nominal cash payment at the Closing and will assume certain liabilities of the PDS Business from and after the date of Closing. Additionally, for a period of seven years commencing January 1, 2023 and ending December 31, 2029, BWSI will pay the Company an annual royalty equal to a specified percentage of gross margin received by BWSI from each of the sale and licensing of products developed by the PDS Business.

The Purchase Agreement contains customary representations and warranties and includes covenants by the Company not to compete with BWSI with respect to the PDS Business or solicit any customer, employee, independent contractor or agent of BWSI for a period of seven years following the Closing.

The foregoing summary of the Purchase Agreement is qualified in its entirety by reference to the Purchase Agreement, a copy of which will be filed with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Item 2.02 Results of Operations and Financial Condition.

On October 11, 2022, the Company issued a press release in which it disclosed preliminary third quarter 2022 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 October 11, 2022.
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: October 11, 2022	By:	/s/ Andrew Astor
		Andrew Astor
		Chief Executive Officer

EX-99.1

Exhibit 99.1

Nephros, Inc.
380 Lackawanna Place
South Orange NJ 07079
Call: 201 343 5202

nephros.com

Nephros Announces Agreement to Sell Pathogen Detection Systems Business and

Preliminary Results for Quarter Ended September 30, 2022

Sale Reduces Cash Burn, Includes Seven-Year Earn-Out Provision;

Third Quarter Revenue Expected to be Approximately $2.5 Million;

Active Customer Sites Increase 18% YoY

SOUTH ORANGE, NJ, October 11, 2022 – Nephros, Inc. (Nasdaq: NEPH), a leading water technology company providing filtration and pathogen detection solutions to the medical and commercial markets, today announced that it has entered into a definitive agreement to sell its Pathogen Detection Systems (“PDS”) business. The Company also announced preliminary revenue results for the third quarter ended September 30, 2022.

Sale of PDS Business

The company has entered into an asset purchase agreement pursuant to which it will sell substantially all of its assets used in its PDS business to BWSI, a privately held firm that invests in technology for the advancement of public health by better management of water. The parties expect the transaction to close in mid-November of this year, subject to customary closing conditions. Pursuant to the purchase agreement, BWSI will assume all liabilities of the PDS business arising after the closing. In addition, for a period of seven years commencing in 2023, Nephros will be entitled to share a portion of gross profits from the commercialization of the company’s PDS products and technologies.

“We are very pleased with the progress achieved in the PDS business over the past couple of years with our highly competitive, qPCR-based, waterborne pathogen testing products,” said Andy Astor, President and Chief Executive Officer. “However, after significant consideration, we made the strategic decision to leverage the value we created to support the long-term goals of our primary business in water filtration,” Mr. Astor continued. “We are deeply focused on our commitment to achieve positive net cash flow by mid-2023, and we expect this sale to reduce our expenses by approximately $350,000 per quarter. We also believe the potential for earn-out payments will provide an opportunity to realize future revenue in the coming years.”

Professor Howard Shuman, a microbiologist renowned for his groundbreaking work on Legionella and a science advisor to BWSI, commented, “We are excited by the great possibilities we see for the impressive body of important work developed by [Nephros’s] Dr. Smith and his extraordinary team. We are grateful to Nephros for choosing BWSI to take this opportunity to the next level.”

Preliminary Third Quarter Results

Nephros expects net revenue for the quarter ended September 30, 2022 to be approximately $2.5 million. Nephros Active Customer Sites (“ACS”), the number of customer sites that have purchased from Nephros during the trailing 12 months, increased to 1,391, compared to 1,182 one year ago, an increase of 209 sites, or 18%.

“We believe our continuing ACS growth remains a strong leading indicator and confirms the strength of our core water filtration business,” said Mr. Astor. “We are confident that the expense management measures implemented in the second and third quarters, combined with the agreement to sell our PDS business, position Nephros to achieve positive net cash flow in mid-2023.”

Nephros ended the third quarter with approximately $3.9 million in cash on a consolidated basis, compared with $4.2 million at the end of the second quarter.

The company will announce its third-quarter results on Wednesday, November 2, 2022 after market close, and host a conference call that same day at 4:30 PM ET.

1

Nephros, Inc.
380 Lackawanna Place
South Orange NJ 07079
Call: 201 343 5202

nephros.com

About Nephros

Nephros, Inc. is a company committed to improving the human relationship with water through leading, accessible technology. We provide innovative filtration and pathogen detection as part of an integrated approach to water safety that combines science, solutions, and support services. Nephros products serve the needs of customers within the healthcare and commercial markets, offering both proactive and emergency responses for water management.

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

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are provided under the protection of the safe harbor for forward-looking statements provided by such law. These forward-looking statements are subject to various risks and uncertainties. Such statements include statements regarding the following: the timing of completion of the sale of the PDS business; the expected cost savings and future revenue to the Company from the sale of the PDS business; the potential future benefits to the Company; Nephros’s expected revenue for the quarter ended September 30, 2022, as well as its expected future revenue, net cash flow and other financial performance for 2022 and beyond; expected growth in revenue and customer demand attributable to Nephros’s investments in its sales and marketing infrastructure; the effect of recent cost reduction measures on Nephros’s future net cash flow; statements regarding Nephros’s water filtration business achieving positive net cash flow and the timing thereof; 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 the impact of the ongoing COVID-19 pandemic, changes in business, economic and competitive conditions, Nephros’s ability to obtain market acceptance of its products, the availability of capital when needed, dependence on third-party manufacturers and researchers, regulatory reforms. These and other risks and uncertainties are detailed in Nephros’s most recent Annual Report on Form 10-K and such other reports filed with the U.S. Securities and Exchange Commission. Nephros does not undertake any responsibility to update the forward-looking statements in this release to reflect subsequent events or circumstances.

Investor Relations Contacts:

Kirin Smith, President

PCG Advisory, Inc.

(646) 823-8656

ksmith@pcgadvisory.com

Andy Astor, CEO

Nephros, Inc.

(201) 345-0824

andy.astor@nephros.com

2

XML

Cover	Oct. 04, 2022
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 04, 2022
Entity File Number	001-32288
Entity Registrant Name	NEPHROS, INC.
Entity Central Index Key	0001196298
Entity Tax Identification Number	13-3971809
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	380 Lackawanna Place
Entity Address, City or Town	South Orange
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	07079
City Area Code	(201)
Local Phone Number	343-5202
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, $0.001 par value
Trading Symbol	NEPH
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false