8-K

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

FORM8-K

CURRENTREPORT

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

Dateof Report (Date of earliest event reported): February 27, 2020

NEPHROS,INC**.**

(Exact name of Registrant as Specified in its Charter)

Delaware	001-32288	13-3971809
(State<br> or other jurisdiction<br><br> <br>of<br> incorporation)	(Commission<br><br> <br>File<br> Number)	(IRS<br> Employer<br><br> <br>Identification<br> No.)
380 Lackawanna Place, South Orange, New Jersey 07079<br><br> <br>(Address<br> of principal executive offices, including ZIP code)
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(201) 343-5202<br><br> <br>(Registrant’s<br> telephone number, including area code)
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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<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]	Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]	Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]	Pre-commencement<br> 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<br> of each class	Trading<br> Symbol(s)	Name<br> of each exchange on which registered
Common<br> stock, $0.001 par value	NEPH	The<br> 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.

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On February 27, 2020, Nephros, Inc. (the “Company”) issued a press release in which it disclosed its fourth quarter and fiscal year 2019 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.

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Item 9.01.	Financial Statements and Exhibits.

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(d)	Exhibits

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Exhibit No.	Description
99.1	Nephros, Inc. Press Release, dated February 27, 2020.

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SIGNATURES

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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:<br> February 27, 2020	By:	/s/ Andrew Astor
		Andrew<br> Astor
		Chief<br> Financial Officer

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Exhibit99.1

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NephrosReports 2019 Fourth Quarter and Full Year Financial Results

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FourthQuarter Net Revenue up 96%; Annual Net Revenue up 82%

Establishes2020 Revenue Guidance at $14.5 to $15.5 Million

SOUTH ORANGE, NJ, February 27, 2020 – Nephros, Inc. (Nasdaq:NEPH), a commercial stage company that develops and sells high performance water purification products and pathogen detection systems to the medical and commercial markets, today announced financial results for the fourth quarter and full year ended December 31, 2019.

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FinancialHighlights

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FourthQuarter Ended December 31, 2019 – Water Filtration Business Segment

●	Net<br> revenue was $3.2 million, compared with $1.6 million in 2018, up 96%
●	Net<br> income was $135,000, compared with a net (loss) of ($147,000) in 2018
●	Adjusted<br> EBITDA was $648,000, compared with $136,000 in 2018, up 376%

FourthQuarter Ended December 31, 2019 – Consolidated

●	Net<br> revenue was $3.2 million, compared with $1.6 million in 2018, up 96%
●	Net<br> (loss) was ($144,000), compared with ($664,000) in 2018, improved 78%
●	Adjusted<br> EBITDA was $376,000, compared with ($256,000) in 2018

Year-End2019 – Water Filtration Business Segment

●	Net<br> revenue was $10.3 million, compared with $5.7 million in 2018, up 82%
●	Net<br> (loss) was ($1.6 million), compared with ($2.4 million), improved 32%
●	Adjusted<br> EBITDA was $281,000, compared with ($861,000) in 2018

Year-end2019 – Consolidated

●	Net<br> revenue was $10.3 million, compared with $5.7 million in 2018, up 82%
●	Net<br> (loss) was ($3.2 million), compared with ($3.3 million) in 2018, improved 4%
●	Adjusted<br> EBITDA was ($1.2 million), compared with ($1.8 million) in 2018, improved 30%

“We are pleased the 2019’s results continued the Company’s consistent multi-year growth trajectory and steady improvement of the bottom line,” said Daron Evans, President and Chief Executive Officer of Nephros. “As we look forward into 2020, we are well capitalized and believe we are well positioned to maintain the momentum we have generated,” “We expect to grow revenues between 40% and 50%, with additional revenue growth possible depending on the timing and growth trajectory of our pathogen detection system products. We look forward to building on our foundation of engineering and customer service excellence into an exciting 2020.”

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FinancialPerformance for the Fourth Quarter and Year Ended December 31, 2019

Net revenue for the year ended December 31, 2019 was $10.3 million, compared with $5.7 million in 2018, an increase of 82%. Net revenues for the fourth quarter of 2019 were $3.2 million, compared with $1.6 million in the fourth quarter of 2018, an increase of 96%.

Cost of goods sold for the year ended December 31, 2019 was $4.3 million, compared with $2.5 million in 2018, an increase of 71%. Cost of goods sold for the fourth quarter of 2019 was $1.3 million, compared with $0.7 million in the fourth quarter of 2018, an increase of 92%.

Gross margins for the year ended December 31, 2019 were 59%, compared with 56% in 2018. Gross margins for the fourth quarter of 2019 were 60%, compared with 59% in the fourth quarter of 2018.

Research and development expenses for the year ended December 31, 2019 were $3.1 million, compared with $1.5 million in 2018, an increase of 101%. Research and development expenses for the fourth quarter of 2019 were $0.8 million, compared with $0.5 million in the fourth quarter of 2018, an increase of 40%.

Depreciation and amortization expenses for the year ended December 31, 2019 were approximately $186,000, compared with approximately $163,000 in 2018, an increase of 14%. Depreciation and amortization expenses for the fourth quarter of 2019 were approximately $44,000, compared with approximately $40,000 in the fourth quarter of 2018, an increase of 10%.

Selling, general and administrative expenses for the year ended December 31, 2019 were $6.1 million, compared with $4.5 million in 2018, an increase of 35%. Selling, general and administrative expenses for the fourth quarter of 2019 were $1.4 million, compared with $1.1 million in 2018, an increase of 30%.

Net (loss) for the year ended December 31, 2019 was ($3.2 million), compared with a net (loss) of ($3.3 million) in 2018, a 4% reduction in loss. Net (loss) for the fourth quarter of 2019 was approximately ($143,000), compared with a net (loss) of approximately ($664,000) in the fourth quarter of 2018, a 78% reduction.

Adjusted EBITDA for the year ended December 31, 2019 was ($1.2 million), compared with ($1.8 million) in 2018, a 30% reduction. Adjusted EBITDA for the fourth quarter 2019 was approximately $377,000, compared with approximately ($256,000) in the fourth quarter of 2018.

As of December 31, 2019, Nephros had cash and cash equivalents of approximately $4.2 million. In January 2020, Nephros completed a Common Stock offering which generated approximately $6.7 million of net cash proceeds.

AdjustedEBITDA Definition and Reconciliation to GAAP Financial Measures

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Adjusted EBITDA is calculated by taking net (loss) income 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 and amortization and non-cash compensation. The following table presents a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, for the 2019 and 2018 fiscal years for both Nephros on a consolidated basis and the Water Filtration Business Segment:

2019	Three Month Period Ended												Annual
Water Filtration Business Segment	03/31/19			06/30/19			09/30/19			12/31/19			Totals
Net (loss) income		(904	)		(532	)		(346	)		135			(1,647	)
Adjustments:
Depreciation of property and equipment		8			8			4			4			24
Amortization of other assets		44			44			44			44			176
Interest expense		46			46			48			55			195
Interest income		-			-			-			-			-
Change in FV of contingent consideration		(10	)		(9	)		(94	)		(43	)		(156	)
Non-cash stock-based compensation		158			147			348			665			1,318
Income tax benefit		-			-			-			(225	)		(225	)
Other non-cash items		35			31			29			13			108
Non-Recurring Adjustments
Aether acquisition		78			-			-			-			78
Pathogen detection development		110			150			150			-			410
Adjusted EBITDA		(435	)		(115	)		183			648			281
2018	Three Month Period Ended												Annual
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Water Filtration Business Segment	03/31/18			06/30/18			09/30/18			12/31/18			Totals
Net loss		(1,319	)		(578	)		(246	)		(272	)		(2,415	)
Adjustments:
Depreciation of property and equipment		7			7			7			7			29
Amortization of other assets		34			33			35			33			134
Loss on extinguishment of debt		199			-			-			-			199
Interest expense		51			28			32			27			138
Noncash interest expense		34			-			-			-			34
Interest income		(1	)		(1	)		(1	)		(1	)		(4	)
Income tax benefit		-			-			-			(93	)		(93	)
Noncash compensation		242			226			120			397			985
Other noncash items		67			(7	)		35			38			133
Adjusted EBITDA		(686	)		(292	)		(18	)		136			(861	)

2019	Three Month Period Ended												Annual
Consolidated	03/31/19			06/30/19			09/30/19			12/31/19			Totals
Net (loss) income		(1,349	)		(942	)		(744	)		(144	)		(3,179	)
Adjustments:
Depreciation of property and equipment		8			8			4			4			24
Amortization of other assets		44			44			44			44			176
Interest expense		46			46			48			55			195
Interest income		-			-			-			-			-
Change in FV of contingent consideration		(10	)		(9	)		(94	)		(43	)		(156	)
Non-cash stock-based compensation		158			150			354			670			1,332
Income tax benefit		-			-			-			(225	)		(225	)
Other non-cash items		35			31			29			15			110
Non-Recurring Adjustments
Aether acquisition		78			-			-			-			78
Pathogen detection development		110			150			150			-			410
Adjusted EBITDA		(880	)		(522	)		(209	)		376			(1,235	)
2018	Three Month Period Ended												Annual
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Consolidated	03/31/18			06/30/18			09/30/18			12/31/18			Totals
Net loss		(1,429	)		(682	)		(550	)		(664	)		(3,325	)
Adjustments:
Depreciation of property and equipment		7			7			7			7			29
Amortization of other assets		34			33			34			33			134
Loss on extinguishment of debt		199			-			-			-			199
Interest expense		51			28			32			27			138
Noncash interest expense		34			-			-			-			34
Interest income		(1	)		(1	)		(1	)		(1	)		(4	)
Income tax benefit		-			-			-			(93	)		(93	)
Noncash compensation		242			226			120			397			985
Other noncash items		67			(7	)		35			38			133
Adjusted EBITDA		(796	)		(396	)		(323	)		(256	)		(1,771	)

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

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ConferenceCall Today at 4:30pm Eastern Time

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

Participants may dial into the following number to access the call: 1-866-652-5200. International callers may use +1-412-317-6060. Please ask to be joined into the Nephros conference call. A replay of the call can be accessed until March 5, 2020 at 1-877-344-7529 or +1-412-317-0088 for international callers and entering replay access code: 10139589. An audio archive of the call will be available shortly after the call on the Nephros investor relations page at https://www.nephros.com/investor-relations/.

AboutNephros

Nephros is a commercial stage company that develops and sells high performance water purification products and pathogen detection systems to the medical and commercial markets. Nephros ultrafilters and pathogen detection systems are used in hospitals and medical clinics to assess and reduce the infection risks from waterborne pathogens (e.g., Legionella, Pseudomonas) in showers, sinks, and ice machines. Additionally, Nephros ultrafilters are used by dialysis centers for assisting in the added removal of endotoxins and other biological contaminants from the water and bicarbonate concentrate supplied to hemodialysis machines and patients.

Nephros filters, including AETHER™ brand filters, improve the taste and odor of water and reduce biofilm, bacteria, and scale build-up in downstream equipment. Nephros and AETHER™ products are used in the health care, food service, hospitality, and convenience store markets.

For more information about Nephros, please visit its website at www.nephros.com.

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Forward-LookingStatements

This release contains forward-looking statements that are subject to various risks and uncertainties. Such statements include statements regarding expected revenue and financial performance in 2020, the potential for further growth and the expected growth in medical, commercial and industrial filter sales, the expected future revenue growth of a new waterborne pathogen detection system, Nephros’s sales and marketing plans and strategies, management’s expectations regarding future gross margins, Nephros’s ability to respond to outbreaks in water borne pathogens, anticipated investment in the development of a second-generation HDF system and other statements that are not historical facts, including statements which 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 uncertainty in clinical outcomes, potential delays in the regulatory approval process, changes in business, economic and competitive conditions, the availability of capital when needed, dependence on third-party manufacturers and researchers, regulatory reforms, uncertainties in litigation or investigative proceedings, and the availability of financing. These and other risks and uncertainties are detailed in our reports filed with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2018. Nephros does not undertake any responsibility to update the forward-looking statements in this release.

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InvestorRelations Contacts:

Kirin Smith, President

PCG Advisory, Inc.

(646) 863-6519

[email protected]

www.pcgadvisory.com

Andy Astor, COO & CFO

Nephros, Inc.

(201) 345-0824

[email protected]

www.nephros.com

NEPHROS,INC. AND SUBSIDIARIES

CONSOLIDATEDBALANCE SHEETS

(Inthousands, except share and per share amounts)

			December 31, 2018
ASSETS
Current assets:
Cash	4,166		$	4,581
Accounts receivable, net	1,045			1,359
Inventory, net	2,562			1,864
Prepaid expenses and other current assets	526			369
Total current assets	8,299			8,173
Property and equipment, net	81			91
Operating lease right-of-use assets	1,106			-
Intangible assets, net	548			590
Goodwill	759			748
License and supply agreement, net	804			938
Other assets	32			18
TOTAL ASSETS	11,629		$	10,558
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Secured revolving credit facility	560		$	991
Current portion of secured note payable	211			195
Accounts payable	959			836
Accrued expenses	136			396
Current portion of contingent consideration	300			236
Current portion of operating lease liabilities	262			-
Total current liabilities	2,428			2,654
Secured note payable, net of current portion	613			843
Equipment financing, net of current portion	10			-
Contingent consideration, net of current portion	-			263
Operating lease liabilities, net of current portion	889			-
TOTAL LIABILITIES	3,940			3,760
COMMITMENTS AND CONTINGENCIES (Note 20)
STOCKHOLDERS’ EQUITY:
Preferred stock, .001 par value; 5,000,000 shares authorized at December 31, 2019 and 2018; no shares issued and outstanding at December 31, 2019 and 2018.	-			-
Common stock, .001 par value; 40,000,000 and 10,000,000 shares authorized at December 31, 2019 and 2018, respectively; 8,058,850 and 7,134,719 shares issued and outstanding at December 31, 2019 and 2018, respectively.	8			7
Additional paid-in capital	131,934			127,873
Accumulated other comprehensive income	65			71
Accumulated deficit	(127,332	)		(124,153	)
Subtotal	4,675			3,798
Noncontrolling interest	3,014			3,000
TOTAL STOCKHOLDERS’ EQUITY	7,689			6,798
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	11,629		$	10,558

All values are in US Dollars.

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NEPHROS,INC. AND SUBSIDIARIES

CONSOLIDATEDSTATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Inthousands, except share and per share amounts)

	Years Ended December 31,
	2019			2018
Net revenue:
Product revenues	$	10,182		$	5,457
Royalty and other revenues		152			230
Total net revenues		10,334			5,687
Cost of goods sold		4,250			2,484
Gross margin		6,084			3,203
Operating expenses:
Research and development		3,090			1,539
Depreciation and amortization		186			163
Selling, general and administrative		6,119			4,517
Change in fair value of contingent consideration		(156	)		-
Total operating expenses		9,239			6,219
Loss from operations		(3,155	)		(3,016	)
Other income (expense):
Loss on extinguishment of debt		-			(199	)
Interest expense		(195	)		(172	)
Interest income		-			4
Other expense, net		(54	)		(35	)
Loss before income taxes		(3,404	)		(3,418	)
Income tax benefit		225			93
Net loss		(3,179	)		(3,325	)
Less: Undeclared deemed dividend attributable to noncontrolling interest		(241	)		(77	)
Net loss attributable to Nephros, Inc. shareholders	$	(3,420	)	$	(3,402	)
Net loss per common share, basic and diluted	$	(0.45	)	$	(0.50	)
Weighted average common shares outstanding, basic and diluted		7,542,299			6,846,669
Comprehensive loss:
Net loss	$	(3,179	)	$	(3,325	)
Other comprehensive loss, foreign currency translation adjustments, net of tax		(6	)		(6	)
Comprehensive loss		(3,185	)		(3,331	)
Comprehensive loss attributable to noncontrolling interest		(241	)		(77	)
Comprehensive loss attributable to Nephros, Inc. shareholders	$	(3,426	)	$	(3,408	)