Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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: June 30, 2024

☐ 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 August 5, 2024, 10,544,139 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 – June 30, 2024 and December 31, 2023	3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – Three and six months ended June 30, 2024 and 2023	4

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY – Three and six months ended June 30, 2024 and 2023	5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – Six months ended June 30, 2024 and 2023	6

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	17

Item 3. Quantitative and Qualitative Disclosures About Market Risk.	25

Item 4. Controls and Procedures.	25

PART II - OTHER INFORMATION	25

Item 1A. Risk Factors	25

Item 5. Other Information	25

Item 6. Exhibits	26

SIGNATURES	27

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)

	June 30, 2024			December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	3,080		$	4,307
Accounts receivable, net		1,878			1,496
Inventory		2,803			2,470
Prepaid expenses and other current assets		165			132
Total current assets		7,926			8,405
Property and equipment, net		186			152
Lease right-of-use assets		1,551			1,807
Intangible assets, net		365			381
Goodwill		759			759
License and supply agreement, net		243			271
Other assets		70			86
TOTAL ASSETS	$	11,100		$	11,861

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,159		$	873
Accrued expenses		435			794
Current portion of lease liabilities		358			446
Total current liabilities		1,952			2,113
Lease liabilities, net of current portion		1,222			1,390
TOTAL LIABILITIES		3,174			3,503

COMMITMENTS AND CONTINGENCIES (Note 13)		-			-

STOCKHOLDERS’ EQUITY

Preferred stock, $.001 par value; 5,000,000 shares authorized at June 30, 2024 and December 31, 2023; no shares issued and outstanding at June 30, 2024 and December 31, 2023.		-			-
Common stock, $.001 par value; 40,000,000 shares authorized at June 30, 2024 and December 31, 2023; 10,544,139 and 10,543,675 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively.		11			10
Additional paid-in capital		152,779			152,754
Accumulated deficit		(144,864	)		(144,406	)
TOTAL STOCKHOLDERS’ EQUITY		7,926			8,358
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	11,100		$	11,861

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

NEPHROS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

	2024			2023			2024			2023
	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Net revenue:
Product revenues	$	3,208		$	3,537		$	6,714		$	7,199
Royalty and other revenues		44			8			60			43
Total net revenues		3,252			3,545			6,774			7,242
Cost of goods sold		1,340			1,466			2,675			3,052
Gross margin		1,912			2,079			4,099			4,190
Operating expenses:
Selling, general and administrative		1,941			2,239			4,083			4,363
Research and development		254			221			466			460
Depreciation and amortization		34			54			67			108
Total operating expenses		2,229			2,514			4,616			4,931
Operating loss		(317	)		(435	)		(517	)		(741	)
Other (expense) income:
Interest expense		-			-			(1	)		(1	)
Interest income		21			13			46			25
Other income (expense), net		7			(11	)		14			(22	)
Total other expense:		28			2			59			2
Net loss		(289	)		(433	)		(458	)		(739	)

Net loss per common share, basic and diluted	$	(0.03	)	$	(0.04	)	$	(0.04	)	$	(0.07	)
Weighted average common shares outstanding, basic and diluted		10,509,937			10,297,429			10,505,833			10,297,429

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

NEPHROS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)

	Shares		Amount		Capital			Deficit			Subtotal			Interest		Equity
	Three and six months ended June 30, 2024

	Common Stock				Additional Paid-in			Accumulated						Noncontrolling		Total Stockholders’
	Shares		Amount		Capital			Deficit			Subtotal			Interest		Equity
Balance, December 31, 2023		10,501,508	$	10	$	152,754		$	(144,406	)	$	8,358		$	-	$	8,358
Net loss		-		-		-			(169	)		(169	)		-		(169	)
Stock option exercises		464		-		-			-			-			-		-
Stock-based compensation		-		-		(9	)		-			(9	)		-		(9	)
Balance, March 31, 2024		10,501,972	$	10	$	152,745		$	(144,575	)	$	8,180		$	-	$	8,180

Net loss		-	$	-	$	-		$	(289	)	$	(289	)	$	-	$	(289	)
Stock-based compensation		-		-		35			-			35			-		35
Restricted stock vesting		42,167		1		(1	)		-			-			-		-
Balance, June 30, 2024		10,544,139	$	11	$	152,779		$	(144,864	)	$	7,926		$	-	$	7,926

	Three and six months ended June 30, 2023

	Common Stock				Additional Paid-in		Accumulated						Noncontrolling			Total Stockholders’
	Shares		Amount		Capital		Deficit			Subtotal			Interest			Equity
Balance, December 31, 2022		10,297,429	$	10	$	148,413	$	(142,831	)	$	5,592		$	3,289		$	8,881
Net loss		-		-		-		(306	)		(306	)		-			(306	)
Change in non-controlling interest		-		-		3,262		-			3,262			(3,262	)		-
Stock-based compensation		-		-		346		-			346			(27	)		319
Balance, March 31, 2023		10,297,429	$	10	$	152,021	$	(143,137	)	$	8,894		$	-		$	8,894
Balance		10,297,429	$	10	$	152,021	$	(143,137	)	$	8,894		$	-		$	8,894

Net loss		-	$	-	$	-	$	(433	)	$	(433	)	$	-		$	(433	)
Stock-based compensation		-		-		194		-			194			-			194
Balance, June 30, 2023		10,297,429	$	10	$	152,215	$	(143,570	)	$	8,655		$	-		$	8,655
Balance		10,297,429	$	10	$	152,215	$	(143,570	)	$	8,655		$	-		$	8,655

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

NEPHROS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	2024			2023
	Six Months Ended June 30,
	2024			2023
OPERATING ACTIVITIES:
Net loss	$	(458	)	$	(739	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment		22			19
Amortization of intangible assets, license and supply agreement and finance lease right-of-use asset		47			88
Stock-based compensation		26			513
Inventory impairments and writeoffs		180			106
Gain on foreign currency transactions		(5	)		-
Gain on disposal of equipment		(5	)		-
Decrease (increase) in operating assets:
Accounts receivable		(382	)		(290	)
Inventory		(513	)		920
Prepaid expenses and other current assets		(33	)		35
Right-of-use assets		252			160
Other assets		17			2
(Decrease) increase in operating liabilities:
Accounts payable		289			(437	)
Accrued expenses		(358	)		285
Lease liabilities		(252	)		(160	)
Net cash (used in) provided by operating activities		(1,173	)		502
INVESTING ACTIVITIES:
Proceeds from sale of equipment		5			-
Purchase of property and equipment		(55	)		-
Net cash used in investing activities		(50	)		-
FINANCING ACTIVITIES:
Principal payments on finance lease liability		(4	)		(4	)
Principal payments on equipment financing		-			(1	)
Payments on secured note payable		-			(71	)
Net cash (used in) financing activities		(4	)		(76	)
Net (decrease) increase in cash and cash equivalents		(1,227	)		426
Cash and cash equivalents, beginning of period		4,307			3,634
Cash and cash equivalents, end of period	$	3,080		$	4,060
Supplemental disclosure of cash flow information
Cash paid for interest	$	1		$	2

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

NEPHROS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)

Note 1 – Organization and Nature of Operations

Nephros, Inc. (“Nephros” or the “Company”) was incorporated under the laws of the State of Delaware on April 3, 1997. The Company was founded by health professionals, scientists and engineers affiliated with Columbia University to develop advanced end stage renal disease (“ESRD”) therapy technology and products.

Beginning in 2009, Nephros introduced high performance liquid purification filters to meet the demand for water purification in certain medical markets. The Company’s filters, generally classified as ultrafilters, are primarily used in hospitals for the prevention of infection from waterborne pathogens, such as legionella and pseudomonas, and in dialysis centers for the removal of biological contaminants from water and bicarbonate concentrate. The Company also develops and sells water filtration products for commercial applications, focusing on the hospitality and food service markets.

In July 2018, the Company formed a subsidiary, Specialty Renal Products, Inc. (“SRP”), to drive the development of its second-generation hemodiafiltration system and other products focused on improving therapies for patients with renal disease. After SRP’s formation, the Company assigned to SRP all of the Company’s rights to three patents relating to the Company’s hemodiafiltration technology, which were carried at zero book value. On March 9, 2023, the SRP Stockholders approved a plan of dissolution to wind down SRP’s operations, liquidate SRP’s remaining assets and dissolve SRP, and SRP filed a certificate of dissolution with the State of Delaware on April 13, 2023. As a result of the SRP Stockholders’ approval of the plan of dissolution and provisions therein and after satisfying all of SRP’s liabilities, there are no assets available for distribution to the holders of any of SRP’s capital stock, including its Series A Preferred Stock. As such, the value recorded to non-controlling interest was written to zero and the impact reclassified to the Company’s additional paid-in capital as the Company retained control of SRP.

The Company’s primary U.S. facility is located at 380 Lackawanna Place, South Orange, New Jersey 07079. This location along with our Whippany, NJ facility, houses the Company’s corporate headquarters, research, manufacturing, and distribution facilities.

Note 2 – Basis of Presentation and Liquidity

Interim Financial Information

The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 and Article 10 of Regulation S-X. The condensed consolidated balance sheet as of December 31, 2023 was derived from the Company’s audited financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. Results as of and for the six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

The condensed consolidated interim financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Segment Reporting

The Company operates in only one business segment from which the Company’s chief operating decision maker evaluates the financial performance of the Company.

Consolidation

The accompanying condensed consolidated financial statements include the accounts of Nephros, Inc. and its subsidiary, SRP, which was dissolved pursuant to a plan of dissolution adopted by its stockholders on March 9, 2023, and the subsequent filing of a certificate of dissolution with the State of Delaware on April 13, 2023. All intercompany accounts and transactions were eliminated in the preparation of the accompanying condensed consolidated financial statements.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amount of revenues and expenses, during the reporting period. Actual results could differ materially from those estimates. Included in these estimates are assumptions about the collection of accounts receivable, value of inventories, useful life of fixed assets and intangible assets, the assessment of expected cash flows used in evaluating goodwill and other long-lived assets, the assessment of the ability to continue as a going concern and assumptions used in determining stock compensation such as expected volatility and risk-free interest rate.

Liquidity

In connection with SRP’s plan of dissolution and pursuant to an agreement between the Company and SRP entered into on May 24, 2023, SRP assigned substantially all of its remaining assets to the Company in satisfaction of the entire loan balance. See “Note 11 – Stockholders’ Equity – Noncontrolling Interest” Accordingly, as of June 30, 2024, there was no outstanding balance of this loan.

The Company has sustained operating losses every quarter through June 30, 2024, generating an accumulated deficit of $144.9 million as of June 30, 2024. However, in 2023, the Company’s operating cash flow was positive due to increased sales, improved gross margins, careful expense management, a reduction in inventory, and the dispositions of the Pathogen Detection Systems and SRP businesses. These actions resulted in the Company generating cash from operations of approximately $0.8 million for the twelve months ended December 31, 2023. Conversely, net cash from operations was negative for the six months ended June 30, 2024 due to an operating loss, payment of prior year annual bonuses, and an increase in inventory and accounts receivable. The Company continues to focus on growth in sales and managing tight expenses with the goal of turning cash flow positive from operations. The investment in inventory in the first quarter of 2024 was preparing for higher volumes of key products in the future. The Company believes that the tight focus on operations and its current cash balances are sufficient to fund its current operating plan through at least the next 12 months from the date of issuance of the accompanying condensed consolidated financial statements. However, in the event that the Company’s operating results do not meet its expectations, the Company may need to further reduce discretionary expenditures such as headcount, R&D projects, and other variable costs.

Recent Accounting Pronouncements, Not Yet Effective

In March 2024, the FASB issued ASU 2024-01, “ASC 718-Scope Application of Profits Interest and Similar Awards,” which provides guidance to assist entities in determining whether profits interest and similar awards should be accounted for in accordance with Topic 718, Compensation—Stock Compensation. The guidance is effective for the Company’s fiscal year 2025, including interim periods. Early adoption is permitted. The Company is assessing the impact of adopting this guidance on its condensed consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures. The guidance is effective for the Company’s annual reporting period ending December 31, 2025. Early adoption is permitted. The Company is assessing the impact of adopting this guidance on its condensed consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, “Improvements to Reportable Segment Disclosures,” which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for the Company beginning in the annual reporting period ending December 31, 2024 and interim periods beginning in fiscal year 2025. Early adoption is permitted. The Company is assessing the impact of adopting this guidance on its consolidated financial statements.

Concentration of Credit Risk

The Company deposits its cash in financial institutions. At times, such deposits may be in excess of insured limits. To date, the Company has not experienced any impairment losses on its cash. The Company also limits its credit risk with respect to accounts receivable by performing credit evaluations when deemed necessary.

Major Customers

For the three months ended June 30, 2024, and 2023, the following customers accounted for the following percentages of the Company’s revenues, respectively:

Customer	2024			2023
A		22	%		18	%
B		8	%		11	%
D		3	%		11	%
Total		33	%		40	%

For the six months ended June 30, 2024, and 2023, the following customers accounted for the following percentages of the Company’s revenues, respectively:

Customer	2024			2023
A		27	%		19	%
B		7	%		10	%
C		2	%		13	%
Total		36	%		42	%

As of June 30, 2024, and December 31, 2023, the following customers accounted for the following percentages of the Company’s accounts receivable, respectively:

Customer	2024			2023
A		16	%		12	%
E		12	%		-
Total		28	%		12	%

Accounts Receivable

The Company recognizes an allowance that reflects a current estimate of credit losses expected to be incurred over the life of a financial asset, including trade receivables. The Company continuously monitors collections and payments from its customers and maintains a provision for estimated credit losses. The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of time balances are past due, the Company’s previous loss history, the customer’s current ability to pay its obligations to the Company and the expected condition of the general economy and the industry as a whole. The Company writes off accounts receivable when they are determined to be uncollectible. The allowance for credit losses was approximately $11,000 as of each of the periods ended June 30, 2024, and December 31, 2023.

Note 3 – Revenue Recognition

The Company recognizes revenue related to product sales when product is shipped via external logistics providers and the other criteria of ASC 606 are met. Product revenue is recorded net of returns and allowances. There was no allowance for sales returns for the three and six months ended June 30, 2024, or 2023. In addition to product revenue, the Company recognizes revenue related to services to customers, royalties, and other agreements in accordance with the five-step model in ASC 606. Other revenues recognized for the three and six months ended June 30, 2024, were approximately $44,000 and $60,000, respectively. Other revenues recognized for the three and six months ended June 30, 2023 were approximately $8,000 and $43,000, respectively.

Note 4 – Fair Value Measurements

The Company measures certain financial instruments and other items at fair value.

To determine the fair value, the Company uses the fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use to value an asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs are inputs based on assumptions about the factors market participants would use to value an asset or liability.

To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Value is determined using pricing models, discounted cash flow methodologies, or similar techniques and also includes instruments for which the determination of fair value requires significant judgment or estimation.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level of classification for each reporting period.

At June 30, 2024 the Company’s cash equivalents consisted of money market funds. At December 31,2023 the Company’s cash equivalents consisted of money market funds and a certificate of deposit. The Company values its cash equivalents using observable inputs that reflect quoted prices for securities with identical characteristics and classify the valuation techniques that use these inputs as Level 1.

At June 30, 2024 and December 31, 2023, the fair value measurements of the Company’s assets and liabilities measured on a recurring basis were as follows:

(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

June 30, 2024
Cash	$	1,403	$	-	$	-
Money market funds		1,677		-		-
		-
Cash and cash equivalents	$	3,080	$	-	$	-

December 31, 2023
Cash	$	274	$	-	$	-
Money market funds		2,515		-		-
Certificate of deposit		1,518		-		-
Cash and cash equivalents	$	4,307	$	-	$	-

Assets and Liabilities Not Measured at Fair Value on a Recurring Basis

The carrying amounts of accounts receivable, accounts payable and accrued expenses approximate fair value due to their short-term nature.

The carrying amounts of the lease liabilities and equipment financing approximate fair value as of June 30, 2024 and December 31, 2023 because those financial instruments bear interest at rates that approximate current market rates for similar agreements with similar maturities and quality.

Note 5 – Inventory

Inventory is stated at the lower of cost or net realizable value using the first-in, first-out method and consists of raw materials and finished goods. The Company’s inventory components as of June 30, 2024 and December 31, 2023, were as follows:

Schedule of Inventory, Net

	June 30, 2024		December 31, 2023
	(in thousands)
Finished goods	$	2,413	$	2,144
Raw materials		390		326
Total inventory	$	2,803	$	2,470

Note 6 – Intangible Assets and Goodwill

Intangible Assets

Intangible assets as of June 30, 2024 and December 31, 2023 are set forth in the table below. Gross carrying values and accumulated amortization of the Company’s intangible assets by type are as follows:

Schedule of Intangible Assets

	June 30, 2024							December 31, 2023
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
	(in thousands)
Customer relationships	$	540		(175	)	$	365	$	540		(159	)		381
Total intangible assets	$	540	$	(175	)	$	365	$	540	$	(159	)	$	381

The Company recognized amortization expense of approximately $8,000 and $11,000 for the three months ended June 30, 2024 and June 30, 2023, respectively. All were recognized in selling, general and administrative expenses on the accompanying condensed consolidated statement of operations.

As of June 30, 2024, future amortization expense for each of the next five years is (in thousands):

Fiscal Years
2024 (excluding the six months ended June 30, 2024)	$	16
2025		32
2026		32
2027		32
2028		32
2029		32

Goodwill

Goodwill has a carrying value on the Company’s condensed consolidated balance sheets of approximately $0.8 million at June 30, 2024 and December 31, 2023.

Note 7 – License and Supply Agreement, net

On April 23, 2012, the Company entered into a License and Supply Agreement (as thereafter amended, the “License and Supply Agreement”) with Medica S.p.A. (“Medica”), an Italy-based medical product manufacturing company, for the marketing and sale of certain filtration products based upon Medica’s proprietary Medisulfone ultrafiltration technology in conjunction with the Company’s filtration products, and for an exclusive supply arrangement for the filtration products. Under the License and Supply Agreement, Medica granted to the Company an exclusive license, with right of sublicense, to market, promote, distribute, offer for sale and sell the filtration products worldwide, with certain limitations on territory, during the term of the License and Supply Agreement. In addition, the Company granted to Medica an exclusive license under the Company’s intellectual property to make the filtration products during the term of the License and Supply Agreement. The filtration products covered under the License and Supply Agreement includes both certain products based on Medica’s proprietary Versatile microfiber technology and certain filtration products based on Medica’s proprietary Medisulfone ultrafiltration technology. In December 2023, the Company signed a new agreement with Medica which extends the term until December 31, 2028, unless earlier terminated by either party in accordance with the terms of the License and Supply Agreement.

In exchange for the license, the gross value of the intangible asset capitalized was $2.3 million. License and Supply Agreement, net, on the condensed consolidated balance sheet is $0.2 million and $0.3 million as of June 30, 2024 and December 31, 2023, respectively. Accumulated amortization is $2.0 and $1.9 million as of June 30, 2024 and December 31, 2023, respectively. The intangible asset is being amortized as an expense over the life of the License and Supply Agreement. Amortization expense of approximately $14,000 and $33,000 was recognized in each of the three months ended June 30, 2024 and 2023, respectively on the condensed consolidated statement of operations.

As of December 11, 2023, the Company has agreed with Medica to pay interest per month at the EURIBOR 360-day rate plus 500 basis points calculated on the principal amount of any outstanding invoices that are overdue by more than 15 days beyond the original payment terms. There was no interest recognized for the six months ended June 30, 2024 or June 30, 2023.

In addition, for the period beginning April 23, 2014 through December 31, 2023, the Company paid Medica a royalty rate of 3% of net sales of the filtration products sold, subject to reduction as a result of a supply interruption pursuant to the terms of the License and Supply Agreement. Approximately $95,000 for the three months ended June 30, 2023 was recognized as royalty expense and is included in cost of goods sold on the condensed consolidated statement of operations. Approximately $191,000 for the six months ended June 30, 2023 was recognized as royalty expense and is included in cost of goods sold on the condensed consolidated statement of operations. Approximately $95,000 of this royalty expense was included in accounts payable as of June 30, 2023. Starting in 2024, the Company is no longer required to pay Medica royalties.

Note 8 – Secured Note Payable

On March 27, 2018, the Company entered into a Secured Promissory Note Agreement (the “Secured Note”) with Tech Capital for a principal amount of $1.2 million. As of June 30, 2023, the principal balance of the Secured Note was paid off.

The Secured Note had a maturity date of April 1, 2023. The unpaid principal balance accrued interest at a rate of 8% per annum. Principal and interest payments were due on the first day of each month commencing on May 1, 2018. The Secured Note was subject to terms and conditions of and was secured by security interests granted by the Company in favor of Tech Capital under the Loan and Security Agreement entered into on August 17, 2017 and subsequently amended on December 20, 2019 (the “Loan Agreement”). An event of default under such Loan Agreement was an event of default under the Secured Note and vice versa.

During the three months ended June 30, 2023, no payments were made under the Secured Note, as the Note was repaid in full at March 31, 2023.

During the six months ended June 30, 2023, the Company made payments under the Secured Note of approximately $71,000. Included in the total payments made, approximately $1,000 was recognized as interest expense on the condensed consolidated statements of operations for the six months ended June 30, 2023.

Note 9 – Leases

The Company has operating leases for corporate offices and office equipment. The leases have remaining lease terms of 1 year to 5 years.

Lease cost, as presented below, includes costs associated with leases for which right-of-use (“ROU”) assets have been recognized as well as short-term leases.

The components of total lease costs were as follows:

Schedule of Components of Lease Cost

	Three months ended June 30, 2024		Three months ended June 30, 2023
	(in thousands)
Operating lease cost	$	127	$	90
Finance lease cost:
Amortization of right-of-use assets		2		2
Interest on lease liabilities		1		1
Total finance lease cost		3		3
Variable lease cost		14		3
Total lease cost	$	144	$	96

	Six months ended June 30, 2024		Six months ended June 30, 2023
	(in thousands)
Operating lease cost	$	252	$	182
Finance lease cost:
Amortization of right-of-use assets		4		4
Interest on lease liabilities		2		2
Total finance lease cost		6		6
Variable lease cost		25		7
Total lease cost	$	283	$	195

Supplemental cash flow information related to leases was as follows:

	Six months ended June 30, 2024		Six months ended June 30, 2023
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	316	$	160
Financing cash flows from finance leases	$	4	$	4

Supplemental balance sheet information related to leases was as follows:

	June 30, 2024			December 31, 2023
	(in thousands)
Operating lease right-of-use assets	$	1,550		$	1,803
Finance lease right-of-use assets	$	1		$	4

Current portion of operating lease liabilities	$	357		$	442
Operating lease liabilities, net of current portion		1,222			1,390
Total operating lease liabilities	$	1,579		$	1,832

Current portion of finance lease liabilities	$	1		$	4
Finance lease liabilities, net of current portion		-			-
Total finance lease liabilities	$	1		$	4

Weighted average remaining lease term
Operating leases		4.0 years			4.3 years
Finance leases		0.1 years			0.6 years

Weighted average discount rate
Operating leases		8.0	%		8.0	%
Finance leases		8.0	%		8.0	%

As of June 30, 2024, maturities of lease liabilities were as follows:

	Operating Leases			Finance Leases
	(in thousands)
2024 (excluding the six months ended June 30, 2024)	$	246		$	1
2025		435			-
2026		450			-
2027		450			-
2028		251			-
Total future minimum lease payments		1,832			1
Less imputed interest		(253	)		-
Total	$	1,579		$	1

Note 10 – Stock Plans and Share-Based Payments

The fair value of stock options and restricted stock is recognized as stock-based compensation expense in the Company’s condensed consolidated statement of operations. The Company calculates stock-based compensation expense in accordance with ASC 718. The fair value of stock-based awards is amortized over the vesting period of the award.

Stock Options

The Company granted stock options to purchase 85,198 shares of common stock to employees during the three and six months ended June 30, 2024. These stock options are being expensed over the respective vesting period, which is based on a service condition. The fair value of the stock options granted during the three and six months ended June 30, 2024, was approximately $0.1 million.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The below assumptions for the risk-free interest rates, expected dividend yield, expected lives and expected stock price volatility were utilized for the stock options granted during the six months ended June 30, 2024.

Schedule of Fair Value Assumptions

Assumptions for Option Grants
Stock Price Volatility	70.34	%
Risk-Free Interest Rate	4.45	%
Expected Life (in years)	6.08
Expected Dividend Yield	-	%

Stock-based compensation expense related to stock options was approximately $28,000 and $169,000 for the three months ended June 30, 2024 and 2023, respectively. For the three months ended June 30, 2024, approximately $27,000 and $2,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed consolidated statement of operations. Stock-based compensation expense for the three months ended June 30, 2024 consisted of $62,000 expense for shares vested during the quarter, partially offset by a credit of $33,000 due to the reversal of expense related to an immaterial error associated with the forfeiture of unvested options for employee terminations that occurred in prior fiscal periods. For the three months ended June 30, 2023, approximately $156,000 and $13,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed consolidated statement of operations.

Stock-based compensation expense related to stock options was $11,000 and $349,000 for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024, approximately $8,000 and $3,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed consolidated statement of operations. Stock-based compensation expense for the six months ended June 30, 2024 consisted of $120,000 expense for shares vested during the quarter, partially offset by a credit of $109,000 due to the reversal of expense related to an immaterial error associated with the forfeiture of unvested options for employee terminations that occurred in prior fiscal periods. For the six months ended June 30, 2023, approximately $315,000 and $34,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed consolidated statement of operations.

There was no tax benefit related to expense recognized in the three or six months ended June 30, 2024 and 2023, as the Company is in a net operating loss position. As of June 30, 2024, there was approximately $625,000 of total unrecognized compensation expense related to unvested stock-based awards granted under the equity compensation plans, which will be amortized over the weighted average remaining requisite service period of 2.7 years.

Restricted Stock

Total stock-based compensation expense for restricted stock on the Company’s condensed consolidated statement of operations was approximately $7,000 and $25,000 for the three months ended June 30, 2024 and 2023, respectively. Stock-based compensation expense for restricted stock is included in selling, general and administrative expenses on the accompanying condensed consolidated statement of operations.

Total stock-based compensation expense for restricted stock was approximately $15,000 and $38,000 for the six months ended June 30, 2024, and 2023, respectively. During the six months ended June 30, 2023, 23,781 shares of restricted stock were issued to employees, 133,722 shares of restricted stock were issued to board members all related to services rendered during the year ended December 31, 2022. In addition, 30,000 shares of restricted stock were issued to contractors during the six months ended June 30, 2023. All restricted shares issued during the six months ended June 30, 2023, have a vesting period of six months.

As of June 30, 2024, there was no unrecognized compensation expense related to unvested stock-based awards granted under the equity compensation plans.

SRP Equity Incentive Plan

SRP’s 2019 Equity Incentive Plan was approved on May 7, 2019 under which 150,000 shares of SRP’s common stock are reserved for the issuance of options and other awards. This plan is no longer operational, due to the wind down of SRP’s operations and its April 2023 dissolution.

Due to the Company’s acquisition of the non-controlling interest in SRP during the six months ended June 30, 2023, all remaining equity-based awards have been forfeited and no further expense will be incurred related to these awards. There were no SRP stock options or other equity awards granted during the six months ended June 30, 2023. For the six months ended June 30, 2023, a credit of approximately ($27,000) was recognized for expense related to the SRP equity-based awards. Stock-based compensation expense related to the SRP equity-based awards is included in selling, general and administrative expenses on the accompanying condensed consolidated statement of operations.

Note 11 – Stockholders’ Equity

Noncontrolling Interest

In separate transactions in September 2018 and February 2022, SRP issued and sold an aggregate of 700,003 shares of its Series A Preferred Stock for aggregate gross proceeds of approximately $3.5 million. Of such shares, the Company purchased 62,500 shares in the February 2022 transaction, maintaining a 62.5% ownership stake in SRP. Approximately $188,000 of the proceeds from the February 2022 sales were recorded as an increase to the equity of the non-controlling interests. In addition to the Company’s purchase of Series A Preferred Stock from SRP, the Company also loaned to SRP the principal amount of $1.3 million, $1.0 million of which was advanced during the year ended December 31, 2020.

In March 2023, the board of directors of SRP adopted, and the stockholders of SRP approved, a plan to wind down SRP’s operations and dissolve, and in April 2023, SRP filed a certificate of dissolution with the State of Delaware. In accordance with its plan of dissolution, after SRP satisfied its other outstanding liabilities, SRP assigned to the Company all of its remaining assets, including its intellectual property rights, in satisfaction of outstanding indebtedness owed to the Company in the approximate amount of $1.5 million. No other assets are available for distribution to any of SRP’s stockholders, including the Company, in respect of their shares of SRP capital stock, including the Series A Preferred. As a result of the dissolution described above, it was determined approximately $24,000 of inventory likely had no value, and was written off in the period ended March 31, 2023.

Note 12 – Net Loss per Common Share

Basic loss per common share is calculated by dividing net loss available to common shareholders by the number of weighted average common shares issued and outstanding. Diluted loss per common share is calculated by dividing net loss available to common shareholders by the weighted average number of common shares issued and outstanding for the period, plus amounts representing the dilutive effect from the exercise of stock options and warrants and unvested restricted stock, as applicable. The Company calculates dilutive potential common shares using the treasury stock method, which assumes the Company will use the proceeds from the exercise of stock options and warrants to repurchase shares of common stock to hold in its treasury stock reserves.

The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as they would be antidilutive:

	June 30,
	2024		2023
Shares underlying options outstanding		1,249,354		1,765,853
Unvested restricted stock		-		187,503

Note 13 – Commitments and Contingencies

Purchase Commitments

In exchange for the rights granted under the License and Supply Agreement with Medica (see Note 7 – License and Supply Agreement, net), the Company agreed to make certain minimum annual aggregate purchases from Medica over the term of the License and Supply Agreement. For the year ended December 31, 2024, the Company has agreed to make minimum annual aggregate purchases from Medica of €4.2 million (approximately $4.5 million). As of June 30, 2024, the Company’s aggregate purchase commitments totaled €3.6 million (approximately $3.9 million).

Contractual Obligations

See Note 9 – Leases for a discussion of the Company’s contractual obligations.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto included in Item 1 of Part I of this Quarterly Report on Form 10-Q. This discussion includes forward-looking statements about our business, financial condition and results of operations including discussions about management’s expectations for our business. These statements represent projections, beliefs and expectations based on current circumstances and conditions and in light of recent events and trends, and these statements should not be construed either as assurances of performances or as promises of a given course of action. Instead, various known and unknown factors are likely to cause our actual performance and management’s actions to vary, and the results of these variances may be both material and adverse.

Business Overview

We are a commercial-stage company that develops and sells high performance water solutions to the medical and commercial markets.

Our medical water filters, mostly classified as ultrafilters, are used primarily by hospitals for the prevention of infection from waterborne pathogens, such as legionella and pseudomonas, and in dialysis centers for the removal of biological contaminants from water and bicarbonate concentrate. Because our ultrafilters capture contaminants as small as 0.005 microns in size, they minimize exposure to a wide variety of bacteria, viruses, fungi, parasites, and endotoxins.

Our commercial water filters improve the taste and odor of water and reduce biofilm, cysts, particulates, and scale build-up in downstream equipment. Our products are marketed primarily to the food service, hospitality, convenience store, and health care markets, and also sold to medical institutions to supplement our medical filters.

We previously held a majority stake in Specialty Renal Products, Inc. (“SRP”), a development-stage medical device company that was focused primarily on developing hemodiafiltration (“HDF”) technology. In May 2022, SRP received 510(k) clearance from the FDA for SRP’s second-generation model of the OLpūrH2H Hemodiafiltration System, which enables nephrologists to provide HDF treatment to patients with end stage renal disease. In January 2023, SRP management began exploring strategic partnerships to support a commercial launch of the HDF product but was unsuccessful in identifying a partner. By late February 2023, SRP had nearly exhausted its capital resources and, due to its limited capital and lack of prospects for securing a strategic partnership or additional financing, the board of directors of SRP adopted a plan on March 6, 2023 to wind down SRP operations, liquidate its remaining assets and dissolve the company. That plan was approved by SRP’s stockholders on March 9, 2023, and on April 13, 2023, SRP filed a certificate of dissolution with the State of Delaware. SRP’s cash resources were sufficient to satisfy all of its outstanding liabilities other than its obligations to us under a loan with an outstanding balance of approximately $1.5 million. Accordingly, SRP assigned to Nephros all of its remaining assets, including its intellectual property rights in the HDF2 device, in satisfaction of its outstanding loan balance. Although we have no current plans to do so, we may re-evaluate opportunities for HDF in the future.

Our Products

Water Filtration Products

We develop and sell water filtration products used in both medical and commercial applications. Our water filtration products employ multiple filtration technologies, as described below.

In medical markets, our primary filtration mechanism is to pass liquids through the pores of polysulfone hollow fiber. Our filters’ pores are significantly smaller than those of competing products, resulting in highly effective elimination of waterborne pathogens, including legionella bacteria (the cause of Legionnaires disease) and viruses, which are not eliminated by most other microbiological filters on the market. Additionally, the fiber structure and pore density in our hollow fiber enables significantly higher flow rates than in other polysulfone hollow fiber.

Our primary sales strategy in medical markets is to sell through value-added resellers (“VARs”). Leveraging VARs has enabled us to expand rapidly our access to target customers with limited sales staff expansion. In addition, while we are currently focused on medical markets, the VARs that support these customers also support a wide variety of commercial and industrial customers. We believe that our VAR relationships have and will continue to facilitate growth in filter sales outside of the medical industry.

In commercial markets, we develop and sell our filters, for which carbon-based absorption is the primary filtration mechanism. These products allow us to improve water’s odor and taste, to reduce scale and heavy metals, and to reduce other water contaminants for customers who are primarily in the food service, convenience store, and hospitality industries. These commercial products are also sold into medical markets, as supplemental filtration to our medical filters.

In commercial markets, our model combines both direct and indirect sales. Through our employee sales staff, we have sold products directly to a number of convenience stores, hotels, casinos, and restaurants. We have also signed an agreement with a partner to be the exclusive distributor to resell select water filters and related products to customers in the commercial food and beverage markets subject to meeting certain minimum thresholds.

Target Markets

Our ultrafiltration products currently target the following markets:

	●	Hospitals and Other Healthcare Facilities: Filtration of water for washing and drinking as an aid in infection control. The filters produce water that is suitable for wound cleansing, cleaning of equipment used in medical procedures, and washing of surgeons’ hands.
	●	Dialysis Centers and Home/Portable Dialysis Machines: Filtration of water or bicarbonate concentrate used in hemodialysis.
	●	Commercial Facilities: Filtration and purification of water for consumption, including for use in ice machines and soft drink dispensers.
	●	Military and Outdoor Recreation: Individual water purification devices used by soldiers and backpackers to produce drinking water in the field, as well as filters customized to remote water processing systems.

Hospitals and Other Healthcare Facilities. Nephros filters are a leading tool used to provide proactive protection to patients in high-risk areas (e.g., ice machines, surgical rooms, NICUs) and reactive protection to patients in broader areas during periods of water pathogen outbreaks. Our products are used in hundreds of medical facilities to aid in infection control, both proactively and reactively.

As of 2023, according to the American Hospital Association, there are approximately 6,129 hospitals in the U.S., with approximately 920,000 beds. Over 34 million patients were admitted to these hospitals. The U.S. Centers for Disease Control and Prevention (“CDC”) estimates that healthcare associated infections (“HAI”) occur in approximately 1 out of every 31 hospital patients, which calculates to over one million patients in 2023. HAIs affect patients in hospitals or other healthcare facilities and are not present or incubating at the time of admission. They also include infections acquired by patients in the hospital or facility, but appearing after discharge, and occupational infections among staff. Many HAIs are caused by waterborne bacteria and viruses that can thrive in aging or complex plumbing systems often found in healthcare facilities.

In January 2022, the Center for Clinical Standards and Quality at the Centers for Medicare and Medicaid Services (“CMS”) expanded its requirements – originally implemented in 2017 – for facilities to develop policies and procedures that inhibit the growth and spread of legionella and other opportunistic pathogens in building water systems. In this 2022 update, CMS requires teams to be assigned to the development of formal water management plans (“WMPs”), as well as detailed documentation regarding the development of the WMPs and their execution. CMS surveyors regularly review policies, procedures, and reports documenting water management implementation results to verify that facilities are compliant with these requirements. We believe that these CMS regulations may have a positive impact on the sale of our HAI-inhibiting ultrafilters.

We currently have FDA 510(k) clearance on the following portfolio of medical device products for use in the hospital setting to aid in infection control:

●	The DSU-H and SSU-H are in-line, 0.005-micron ultrafilters that provide dual- and single-stage protection, respectively, from waterborne pathogens. They are primarily used to filter potable water feeding ice machines, sinks, and medical equipment, such as endoscope washers and surgical room humidifiers. The DSU-H has an up to 6-month product life in a typical hospital setting, while the SSU-H has an up to 3-month product life.

●	The S100 is a point-of-use, 0.01-micron microfilter that provides protection from waterborne pathogens. The S100 is primarily used to filter potable water feeding sinks and showers. The S100 has an up to 3-month product life when used in a hospital setting.

●	The HydraGuard^TM and HydraGuard^TM - Flush are 0.005-micron cartridge ultrafilters that provide single-stage protection from waterborne pathogens. The HydraGuard ultrafilters are primarily used to filter potable water feeding ice machines and medical equipment, such as endoscope washers and surgical room humidifiers. The HydraGuard has an up to 6-month product life and the HydraGuard - Flush has an up to 12-month product life when used in a hospital setting.

Our complete hospital infection control product line, including in-line, and point-of-use can be viewed on our website at https://www.nephros.com/infection-control/. We are not including the information on our website as a part of, nor incorporating it by reference into, this Quarterly Report on Form 10-Q.

Dialysis Centers - Water/Bicarbonate. In the dialysis water market, Nephros ultrafiltration products are among the highest performing products on the market. The DSU-D, SSU-D and the SSUmini have become the standard endotoxin filter in many portable reverse osmosis systems. The EndoPur^®, our large-format ultrafilter targeted at dialysis clinic water systems, provides the smallest pore size available.

To perform hemodialysis, all dialysis clinics have dedicated water purification systems to produce water and bicarbonate concentrate, two essential ingredients for making dialysate, the liquid that removes waste material from the blood. According to the American Journal of Kidney Diseases, there are approximately 7,100 dialysis clinics in the United States servicing approximately 500,000 patients annually. We estimate that there are over 100,000 hemodialysis machines in operation in the United States.

We currently have FDA 510(k) clearance on the following portfolio of medical device products for use in the dialysis setting to aid in bacteria, virus, and endotoxin retention:

	●	The DSU-D, SSU-D and SSUmini are in-line, 0.005-micron ultrafilters that provide protection from bacteria, viruses, and endotoxins. All of these products have an up to 12-month product life in the dialysis setting and are used to filter water following treatment with a reverse osmosis (“RO”) system, and to filter bicarbonate concentrate. These ultrafilters are primarily used in the water lines and bicarbonate concentrate lines leading into dialysis machines, and as a polish filter for portable RO machines.

	●	The EndoPur is a 0.005-micron cartridge ultrafilter that provides single-stage protection from bacteria, viruses, and endotoxins. The EndoPur has an up to 12-month product life in the dialysis setting and is used to filter water following treatment with an RO system. More specifically, the EndoPur is used primarily to filter water in large RO systems designed to provide ultrapure water to an entire dialysis clinic. The EndoPur is a cartridge-based, “plug and play” market entry that requires no plumbing at installation or replacement. The EndoPur is available in 10”, 20”, and 30” configurations.

Commercial and Industrial Facilities. Our commercial NanoGuard^® product line accomplishes ultrafiltration via small pore size (0.005 micron) technology, filtering bacteria and viruses from water. In addition, our commercial filtration offerings include technologies that are primarily focused on improving odor and taste and on reducing scale and heavy metals from filtered water.

Our commercial market focus is on the hotel, restaurant, and convenience store markets. In March 2022, we entered into an agreement to provide water filtration systems to an organization that services approximately 3,000 Quick Service Restaurants (“QSR”). Effective January 1, 2023, we entered into a new supply agreement with this commercial partner, which superseded the March 2022 agreement. Under the January 2023 agreement, we engaged this commercial partner to be our exclusive distributor to the food, beverage and hospitality industries. We continue to pursue other national accounts, which, over time, may result in step-change increases in commercial market revenue.

Over time, we believe that the same water safety management programs currently underway at medical facilities may migrate to commercial markets. As the epidemiology of waterborne pathogens expands, links to contamination sources will become more efficient and the data more readily available. In cases where those sources are linked to restaurants, hotels, office buildings and residential complexes, the corporate owners of those facilities will likely face increasing liability exposure. We expect that building owners will come to understand ASHRAE-188, which outlines risk factors for buildings and their occupants, and provides water safety management guidelines. We believe, in time, most commercial buildings will need to follow the basic requirements of ASHRAE-188: create a water management plan, perform routine testing, and establish a plan to treat the building in the event of a positive test.

As demand for water testing and microbiological filtration grows, we will be ready to deploy our expertise and solutions based on years of experience servicing the medical market. We believe that we have an opportunity to offer unique expertise and products to the commercial market, and that our future revenue from the commercial market could even surpass our infection control revenue.

We currently market the following portfolio of proprietary products for use in the commercial, industrial, and food service settings:

	●	The NanoGuard set of products are in-line, 0.005-micron ultrafilter that provides dual-stage retention of any organic or inorganic particle larger than 15,000 Daltons. NanoGuard products are designed to fit a variety of existing plumbing configurations, including 10” and 20” standard housings, and Nephros and Everpure® manifolds. Included in the NanoGuard product line are both conventional and flushable filters.

	●	The Nephros line of commercial filters provide a variety of technology solutions that improve water quality in food service, convenience store, hospitality, and industrial applications. Nephros filters improve water taste and odor, and reduce sediment, dirt, rust particles and other solids, chlorine and heavy minerals, lime scale build-up, and both particulate lead and soluble lead.

Nephros commercial products combine effectively with NanoGuard ultrafiltration technologies to offer full-featured solutions to the commercial water market, including to existing users of Everpure filter manifolds.

Critical Accounting Policies

For the six-month period ended June 30, 2024, there were no significant changes to our critical accounting policies as identified in our Annual Report on Form 10-K for the year ended December 31, 2023.

Recent Accounting Pronouncements

We are subject to recently issued accounting standards, accounting guidance and disclosure requirements. For a description of these new accounting standards, see Note 2, “Basis of Presentation and Liquidity,” of the Notes to our Unaudited Condensed Consolidated Interim Financial Statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Results of Operations

Fluctuations in Operating Results

Our results of operations have fluctuated significantly from period to period in the past, including recently, and are likely to continue to do so in the future. We anticipate that our annual results of operations will be impacted in the foreseeable future by several factors, including market acceptance of our products, expense management, and progress to achieve positive operating cash flow. Due to these fluctuations, we believe that the period-to-period comparisons of our operating results are not a good indication of our future performance.

Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023

The following table sets forth our summarized, consolidated results of operations for the three months ended June 30, 2024 and 2023 (in thousands, except percentages):

							$			%
							Increase			Increase
	2024			2023			(Decrease)			(Decrease)
Total net revenues	$	3,252		$	3,545		$	(293	)		(8	)%
Cost of goods sold		1,340			1,466			(126	)		(9	)%
Gross margin		1,912			2,079			(167	)		(8	)%
Gross margin %		59	%		59	%		-			-	%
Selling, general and administrative expense		1,941			2,239			(298	)		(13	)%
Research and development expense		254			221			33			15	%
Depreciation and amortization expense		34			54			(20	)		(37	)%
Operating loss		(317	)		(435	)		118			(27	)%
Interest expense		-			-			-			-	%
Interest income		21			13			8			62	%
Other income (expense), net		7			(11	)		18			164	%
Net loss	$	(289	)	$	(433	)	$	144			(33	)%

Revenue

Overall, net revenues decreased by $0.3 million, or 8%, for the three months ended June 30, 2024, compared to the same period in 2023. This decrease was primarily driven by decreased revenue from emergency response orders, which were unusually large in the second quarter of 2023 but not repeated to the same degree in the comparable 2024 period. We believe that one contributor to this decline is the reduced stringency of waterborne risk response in territories previously committed to both proactive filtration measures and robust corrective actions. Consequently, we experienced the effects of a relaxation of requirements for emergency relief and remediation. However, the decrease in emergency response orders was partially offset by increased revenue from programmatic or recurring sales, which were 8% more than the same period in 2023. This increase in programmatic sales was due to the development of our newer sales personnel hired in 2023.

Gross Profit Margin

Consolidated gross margin was approximately 59% for each of the three month periods ended June 30, 2024, and June 30, 2023.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses decreased $298,000, or 13%, primarily due to a decrease in bonus accrual, sales commission expense, stock compensation expense, and professional fees.

Research and Development Expenses

Consolidated research and development expenses increased approximately $33,000 due to an increase in headcount.

Depreciation and Amortization Expense

Depreciation and amortization expenses were approximately $34,000 and $54,000, respectively, for the three months ended June 30, 2024, and 2023.

Interest Income

Interest income was approximately $21,000 for the three months ended June 30, 2024 compared to approximately $13,000 for the three months ended June 30, 2023.

Other Income (Expense), net

Other income of approximately $7,000 for the three months ended June 30, 2024, is primarily a result of a sale of a fully depreciated asset. Other expense of approximately $11,000 for the three months ended June 30, 2023 is primarily a result of losses on foreign currency transactions.

Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

The following table sets forth our summarized, consolidated results of operations for the six months ended June 30, 2024 and 2023 (in thousands, except percentages):

							$			%
							Increase			Increase
	2024			2023			(Decrease)			(Decrease)
Total net revenues	$	6,774		$	7,242		$	(468	)		(6	)%
Cost of goods sold		2,675			3,052			(377	)		(12	)%
Gross margin		4,099			4,190			(91	)		(2	)%
Gross margin %		61	%		58	%		-			3	%
Selling, general and administrative expense		4,083			4,363			(280	)		(6	)%
Research and development expense		466			460			6			1	%
Depreciation and amortization expense		67			108			(41	)		(38	)%
Operating loss		(517	)		(741	)		224			(30	)%
Interest expense		(1	)		(1	)		-			-	%
Interest income		46			25			21			84	%
Other (expense) income, net		14			(22	)		36			164	%
Net loss	$	(458	)	$	(739	)	$	281			(38	)%

Revenue

Overall, net revenues decreased by $0.5 million, or 6% for the six months ended June 30, 2024, compared to the same period in 2023. This decrease was primarily driven by decreased revenue from emergency response orders, which were unusually large in the first half of 2023 but not repeated to the same degree in the comparable 2024 period. We believe that one contributor to this decline is the reduced stringency of waterborne risk response in territories previously committed to both proactive filtration measures and robust corrective actions. Consequently, we experienced the effects of a relaxation of requirements for emergency relief and remediation. However, the decrease in emergency response orders was partially offset by increased revenue from programmatic or recurring sales, which were 10% more than the same period in 2023. This increase in programmatic sales was due to the development of our newer sales personnel hired in 2023.

Gross Profit Margin

Consolidated gross margin was approximately 61% for the six months ended June 30, 2024, compared to approximately 58% for the six months ended June 30, 2023. The increase of approximately 3 percentage points, was driven by more favorable pricing terms with our largest supplier and reduced shipping expenses in the first quarter of 2024.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses decreased $280,000 or 6% primarily due to a decrease in bonus accrual, sales commission expense, stock compensation expense, and professional fees offset in part by an increase in salary expense.

Research and Development Expenses

Consolidated research and development expenses increased $6,000 primarily due to an increase in headcount offset by the wind down of our SRP division.

Depreciation and Amortization Expense

Depreciation and amortization expenses were approximately $67,000 and $108,000, respectively, for the six months ended June 30, 2024, and 2023.

Interest Expense

Interest expense was approximately $1,000 for the six months ended June 30, 2024 and June 30, 2023.

Interest Income

Interest income was approximately $46,000 for the six months ended June 30, 2024 compared to approximately $25,000 for the six months ended June 31, 2023.

Other Income (Expense), net

Other income was approximately $14,000 for the six months ended June 30, 2024, and is primarily a result of losses on foreign currency transactions and a sale of a fully depreciated asset. Other expense was approximately $22,000 for the six months ended June 30, 2023 and is primarily a result of losses on foreign currency transactions.

Liquidity and Capital Resources

The following table summarizes our liquidity and capital resources as of June 30, 2024 and December 31, 2023 and is intended to supplement the more detailed discussion that follows. The amounts stated are expressed in thousands.

	June 30,		December 31,
Liquidity and Capital Resources	2024		2023
Cash and cash equivalents	$	3,080	$	4,307
Other current assets		4,846		4,098
Working capital		5,974		6,292
Stockholders’ equity		7,926		8,358

At June 30, 2024, we had an accumulated deficit of $144.9 million and we may incur additional operating losses from operations until such time, if ever, that we are able to increase product sales and/or licensing revenue to achieve profitability.

Based on cash that is available for our operations and projections of our future operations, we believe that our cash balances will be sufficient to fund our current operating plan through at least the next 12 months from the date of issuance of the condensed consolidated financial statements in this Quarterly Report on Form 10-Q. Additionally, our operating plans are designed to help control operating costs, to increase revenue, and to raise additional capital until such time as we generate sufficient cash flows to fund operations. If there were a decrease in the demand for our products due to either economic or competitive conditions, or if we are otherwise unable to achieve our plan or achieve our anticipated operating results, there could be a significant reduction in liquidity due to our possible inability to cut costs sufficiently. In such event, the Company may need to take further actions to reduce its discretionary expenditures, including further reducing headcount, reducing spending on R&D projects, and reducing other variable costs.

Our future liquidity sources and requirements will depend on many other factors, including:

	●	the market acceptance of our products, and our ability to effectively and efficiently produce, market and sell our products;
	●	the costs involved in filing and enforcing patent claims and the status of competitive products; and
	●	the cost of litigation, including potential patent litigation and any other actual or threatened litigation.

We expect to put our current capital resources toward the development, marketing, and sales of our water filtration products and working capital purposes.

Net cash used in operating activities was $1.2 million for the six months ended June 30, 2024, compared to net cash provided by operating activities of approximately $0.5 million for the six months ended June 30, 2023. Net cash used in operating activities in 2024 was primarily due to the net loss of approximately $0.5 million, an increase in inventory of approximately $0.5 million, an increase in accounts receivable of approximately $0.4 million and a decrease in accrued expenses of approximately $0.4 million, offset by an increase in accounts payable of approximately $0.3 million, and an increase in inventory impairments and write offs of approximately $0.2 million. Net cash provided by operating activities in 2023 was primarily due to a decline in inventory of approximately $0.9 million, an increase in accrued expenses of approximately $0.3 million offset by a decrease in accounts payable of approximately $0.4 million and an increase in accounts receivable of approximately $0.3 million.

Net cash used in investing activities was approximately $55,000 in the six months ended June 30, 2024, due to purchases of property and equipment. We had no investing activities for the six months ended June 30, 2023.

Net cash used in financing activities was approximately $4,000 for the six months ended June 30, 2024, primarily due to payments on finance lease. Net cash used in financing activities was approximately $0.1 million for the six months ended June 30, 2023, primarily due to principal payments on debt.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of June 30, 2024.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain statements in this Quarterly Report on Form 10-Q constitute “forward-looking statements”. Such statements include statements regarding the efficacy and intended use of our technologies under development, the timelines and strategy for bringing such products to market, the timeline for regulatory review and approval of our products, the availability of funding sources for continued development of such products, and other statements that are not historical facts, including statements which may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words. Forward-looking statements are not guaranties of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond our control. Actual results may differ materially from the expectations contained in the forward-looking statements. Factors that may cause such differences include, but are not limited to, the risks that:

	●	we face significant challenges in obtaining market acceptance of our products, which, if not obtained, could adversely affect our potential sales and revenues;
	●	product-related deaths or serious injuries or product malfunctions could trigger recalls, class action lawsuits and other events that could cause us to incur expenses and may also limit our ability to generate revenues from such products;
	●	we face potential liability associated with the production, marketing and sale of our products, and the expense of defending against claims of product liability could materially deplete our assets and generate negative publicity, which could impair our reputation;
	●	to the extent our products or marketing materials are found to violate any provisions of the U.S. Food, Drug and Cosmetic Act (the “FDC Act”) or any other statutes or regulations, we could be subject to enforcement actions by the U.S. Food and Drug Administration (the “FDA”) or other governmental agencies;
	●	we may not be able to obtain funding when needed or on terms favorable to us in order to continue operation;
	●	we may not have sufficient capital to successfully implement our business plan;
	●	we may not be able to effectively market our products;
	●	we may not be able to sell our water filtration products at competitive prices or profitably;
	●	we may encounter problems with our suppliers, manufacturers, and distributors;
	●	we may encounter unanticipated internal control deficiencies or weaknesses or ineffective disclosure controls and procedures;
	●	we may not be able to obtain appropriate or necessary regulatory approvals to achieve our business plan;
	●	we may not be able to secure or enforce adequate legal protection, including patent protection, for our products; and
	●	we may not be able to achieve sales growth in key geographic markets.

More detailed information about us and the risk factors that may affect the realization of forward-looking statements, including the forward-looking statements in this Quarterly Report on Form 10-Q, is set forth in our filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and our other reports filed with the SEC. We urge investors and security holders to read those documents free of charge at the SEC’s web site at www.sec.gov. We do not undertake to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise, except as required by law.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting companies.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures, as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which is designed to provide reasonable assurance that information required to be disclosed in our reports filed pursuant to the Exchange Act is accumulated and communicated to management in a timely manner. Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud have been or will be detected.

At the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1A. Risk Factors

As a smaller reporting company, we are not required to provide disclosure pursuant to this item. However, in addition to other information set forth in this Quarterly Report on Form 10-Q, including the important information in the section entitled “Forward Looking Statements,” you should carefully consider the “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this Quarterly Report on Form 10-Q. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial might materially adversely affect our actual business, financial condition and/or operating results.

Item 5. Other Information.

During the three months ended June 30, 2024, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

Item 6. Exhibits

EXHIBIT INDEX

Exhibit No.		Description of Exhibit

10.1		Nephros, Inc. 2024 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to Nephros, Inc.’s Current Report on Form 8-K, filed with the SEC on May 24, 2024).

31.1		Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

31.2		Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

32.1		Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **

32.2		Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **

101		Interactive Data File. *

101.INS		Inline XBRL Instance Document*

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

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

*		Filed herewith
**		Furnished herewith

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 thereunto duly authorized.

	NEPHROS, INC.

Date: August 8, 2024	By:	/s/ Robert Banks
	Name:	Robert Banks
	Title:	President, Chief Executive Officer (Principal Executive Officer)

Date: August 8, 2024	By:	/s/ Judy Krandel
	Name:	Judy Krandel
	Title:	Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Robert Banks, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Nephros, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2024	By:	/s/ Robert Banks
	Name:	Robert Banks
	Title:	President, Chief Executive Officer (Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Judy Krandel, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Nephros, Inc.

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2024	By:	/s/ Judy Krandel
	Name:	Judy Krandel
	Title:	Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Nephros, Inc. (the “Company”) for the period ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Robert Banks, President, Chief Executive Officer of the Company, certifies that:

1.	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Robert Banks
Name:	Robert Banks
Title:	President, Chief Executive Officer (Principal Executive Officer)

Dated: August 8, 2024

Exhibit 32.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Nephros, Inc. (the “Company”) for the period ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Judy Krandel, Chief Financial Officer of the Company, certifies that:

1.	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Judy Krandel
Name:	Judy Krandel
Title:	Chief Financial Officer (Principal Financial and Accounting Officer)

Date:	August 8, 2024

Cover - $ / shares	6 Months Ended
Cover - $ / shares	Jun. 30, 2024	Aug. 05, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
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
Title of 12(b) Security	Common stock, par value $0.001 per share
Trading Symbol	NEPH
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		10,544,139
Entity Listing, Par Value Per Share	$ 0.001

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 3,080	$ 4,307
Accounts receivable, net	1,878	1,496
Inventory	2,803	2,470
Prepaid expenses and other current assets	165	132
Total current assets	7,926	8,405
Property and equipment, net	186	152
Lease right-of-use assets	1,551	1,807
Intangible assets, net	365	381
Goodwill	759	759
License and supply agreement, net	243	271
Other assets	70	86
TOTAL ASSETS	11,100	11,861
Current liabilities:
Accounts payable	1,159	873
Accrued expenses	435	794
Current portion of lease liabilities	358	446
Total current liabilities	1,952	2,113
Lease liabilities, net of current portion	1,222	1,390
TOTAL LIABILITIES	3,174	3,503
COMMITMENTS AND CONTINGENCIES (Note 13)
STOCKHOLDERS’ EQUITY
Preferred stock, $.001 par value; 5,000,000 shares authorized at June 30, 2024 and December 31, 2023; no shares issued and outstanding at June 30, 2024 and December 31, 2023.
Common stock, $.001 par value; 40,000,000 shares authorized at June 30, 2024 and December 31, 2023; 10,544,139 and 10,543,675 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively.	11	10
Additional paid-in capital	152,779	152,754
Accumulated deficit	(144,864)	(144,406)
TOTAL STOCKHOLDERS’ EQUITY	7,926	8,358
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 11,100	$ 11,861

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	10,544,139	10,543,675
Common stock, shares outstanding	10,544,139	10,543,675

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Net revenue:
Total net revenues	$ 3,252	$ 3,545	$ 6,774	$ 7,242
Cost of goods sold	1,340	1,466	2,675	3,052
Gross margin	1,912	2,079	4,099	4,190
Operating expenses:
Selling, general and administrative	1,941	2,239	4,083	4,363
Research and development	254	221	466	460
Depreciation and amortization	34	54	67	108
Total operating expenses	2,229	2,514	4,616	4,931
Operating loss	(317)	(435)	(517)	(741)
Other (expense) income:
Interest expense			(1)	(1)
Interest income	21	13	46	25
Other income (expense), net	7	(11)	14	(22)
Total other expense:	28	2	59	2
Net loss	$ (289)	$ (433)	$ (458)	$ (739)
Net loss per common share, basic	$ (0.03)	$ (0.04)	$ (0.04)	$ (0.07)
Net loss per common share, diluted	$ (0.03)	$ (0.04)	$ (0.04)	$ (0.07)
Weighted average common shares outstanding, basic	10,509,937	10,297,429	10,505,833	10,297,429
Weighted average common shares outstanding, diluted	10,509,937	10,297,429	10,505,833	10,297,429
Product [Member]
Net revenue:
Total net revenues	$ 3,208	$ 3,537	$ 6,714	$ 7,199
Royalty and Other Revenues [Member]
Net revenue:
Total net revenues	$ 44	$ 8	$ 60	$ 43

Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
Balance at Dec. 31, 2022	$ 10	$ 148,413	$ (142,831)	$ 5,592	$ 3,289	$ 8,881
Balance, shares at Dec. 31, 2022	10,297,429
Net loss			(306)	(306)		(306)
Stock-based compensation		346		346	(27)	319
Change in non-controlling interest		3,262		3,262	(3,262)
Balance at Mar. 31, 2023	$ 10	152,021	(143,137)	8,894		8,894
Balance, shares at Mar. 31, 2023	10,297,429
Balance at Dec. 31, 2022	$ 10	148,413	(142,831)	5,592	3,289	8,881
Balance, shares at Dec. 31, 2022	10,297,429
Net loss						(739)
Balance at Jun. 30, 2023	$ 10	152,215	(143,570)	8,655		8,655
Balance, shares at Jun. 30, 2023	10,297,429
Balance at Mar. 31, 2023	$ 10	152,021	(143,137)	8,894		8,894
Balance, shares at Mar. 31, 2023	10,297,429
Net loss			(433)	(433)		(433)
Stock-based compensation		194		194		194
Balance at Jun. 30, 2023	$ 10	152,215	(143,570)	8,655		8,655
Balance, shares at Jun. 30, 2023	10,297,429
Balance at Dec. 31, 2023	$ 10	152,754	(144,406)	8,358		8,358
Balance, shares at Dec. 31, 2023	10,501,508
Net loss			(169)	(169)		(169)
Stock option exercises
Balance, shares	464
Stock-based compensation		(9)		(9)		(9)
Balance at Mar. 31, 2024	$ 10	152,745	(144,575)	8,180		8,180
Balance, shares at Mar. 31, 2024	10,501,972
Balance at Dec. 31, 2023	$ 10	152,754	(144,406)	8,358		8,358
Balance, shares at Dec. 31, 2023	10,501,508
Net loss						(458)
Balance at Jun. 30, 2024	$ 11	152,779	(144,864)	7,926		7,926
Balance, shares at Jun. 30, 2024	10,544,139
Balance at Mar. 31, 2024	$ 10	152,745	(144,575)	8,180		8,180
Balance, shares at Mar. 31, 2024	10,501,972
Net loss			(289)	(289)		(289)
Stock-based compensation		35		35		35
Restricted stock vesting	$ 1	(1)
Balance, shares	42,167
Balance at Jun. 30, 2024	$ 11	$ 152,779	$ (144,864)	$ 7,926		$ 7,926
Balance, shares at Jun. 30, 2024	10,544,139

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
OPERATING ACTIVITIES:
Net loss	$ (289)	$ (169)	$ (433)	$ (306)	$ (458)	$ (739)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment					22	19
Amortization of intangible assets, license and supply agreement and finance lease right-of-use asset					47	88
Stock-based compensation					26	513
Inventory impairments and writeoffs					180	106
Gain on foreign currency transactions					(5)
Gain on disposal of equipment					(5)
Decrease (increase) in operating assets:
Accounts receivable					(382)	(290)
Inventory					(513)	920
Prepaid expenses and other current assets					(33)	35
Right-of-use assets					252	160
Other assets					17	2
(Decrease) increase in operating liabilities:
Accounts payable					289	(437)
Accrued expenses					(358)	285
Lease liabilities					(252)	(160)
Net cash (used in) provided by operating activities					(1,173)	502	$ 800
INVESTING ACTIVITIES:
Proceeds from sale of equipment					5
Purchase of property and equipment					(55)
Net cash used in investing activities					(50)
FINANCING ACTIVITIES:
Principal payments on finance lease liability					(4)	(4)
Principal payments on equipment financing						(1)
Payments on secured note payable						(71)
Net cash (used in) financing activities					(4)	(76)
Net (decrease) increase in cash and cash equivalents					(1,227)	426
Cash and cash equivalents, beginning of period		$ 4,307		$ 3,634	4,307	3,634	3,634
Cash and cash equivalents, end of period	$ 3,080		$ 4,060		3,080	4,060	$ 4,307
Supplemental disclosure of cash flow information
Cash paid for interest					$ 1	$ 2

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure [Table]
Net Income (Loss)	$ (289)	$ (169)	$ (433)	$ (306)	$ (458)	$ (739)

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2024
Insider Trading Arrangements [Line Items]
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Organization and Nature of Operations

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Nature of Operations

Note 1 – Organization and Nature of Operations

Basis of Presentation and Liquidity

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Basis of Presentation and Liquidity

Note 2 – Basis of Presentation and Liquidity

Interim Financial Information

Segment Reporting

The Company operates in only one business segment from which the Company’s chief operating decision maker evaluates the financial performance of the Company.

Consolidation

Use of Estimates

Liquidity

Recent Accounting Pronouncements, Not Yet Effective

Concentration of Credit Risk

Major Customers

For the three months ended June 30, 2024, and 2023, the following customers accounted for the following percentages of the Company’s revenues, respectively:

Customer	2024			2023
A		22	%		18	%
B		8	%		11	%
D		3	%		11	%
Total		33	%		40	%

For the six months ended June 30, 2024, and 2023, the following customers accounted for the following percentages of the Company’s revenues, respectively:

Customer	2024			2023
A		27	%		19	%
B		7	%		10	%
C		2	%		13	%
Total		36	%		42	%

As of June 30, 2024, and December 31, 2023, the following customers accounted for the following percentages of the Company’s accounts receivable, respectively:

Customer	2024			2023
A		16	%		12	%
E		12	%		-
Total		28	%		12	%

Accounts Receivable

Revenue Recognition

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Note 3 – Revenue Recognition

Fair Value Measurements

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 4 – Fair Value Measurements

The Company measures certain financial instruments and other items at fair value.

To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level of classification for each reporting period.

At June 30, 2024 and December 31, 2023, the fair value measurements of the Company’s assets and liabilities measured on a recurring basis were as follows:

(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

June 30, 2024
Cash	$	1,403	$	-	$	-
Money market funds		1,677		-		-
		-
Cash and cash equivalents	$	3,080	$	-	$	-

December 31, 2023
Cash	$	274	$	-	$	-
Money market funds		2,515		-		-
Certificate of deposit		1,518		-		-
Cash and cash equivalents	$	4,307	$	-	$	-

Assets and Liabilities Not Measured at Fair Value on a Recurring Basis

The carrying amounts of accounts receivable, accounts payable and accrued expenses approximate fair value due to their short-term nature.

Inventory

6 Months Ended

Jun. 30, 2024

Inventory Disclosure [Abstract]

Inventory

Note 5 – Inventory

Schedule of Inventory, Net

	June 30, 2024		December 31, 2023
	(in thousands)
Finished goods	$	2,413	$	2,144
Raw materials		390		326
Total inventory	$	2,803	$	2,470

Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

Note 6 – Intangible Assets and Goodwill

Intangible Assets

Schedule of Intangible Assets

	June 30, 2024							December 31, 2023
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
	(in thousands)
Customer relationships	$	540		(175	)	$	365	$	540		(159	)		381
Total intangible assets	$	540	$	(175	)	$	365	$	540	$	(159	)	$	381

As of June 30, 2024, future amortization expense for each of the next five years is (in thousands):

Fiscal Years
2024 (excluding the six months ended June 30, 2024)	$	16
2025		32
2026		32
2027		32
2028		32
2029		32

Goodwill

Goodwill has a carrying value on the Company’s condensed consolidated balance sheets of approximately $0.8 million at June 30, 2024 and December 31, 2023.

License and Supply Agreement, net

6 Months Ended

Jun. 30, 2024

License And Supply Agreement Net

License and Supply Agreement, net

Note 7 – License and Supply Agreement, net

Secured Note Payable

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Secured Note Payable

Note 8 – Secured Note Payable

During the three months ended June 30, 2023, no payments were made under the Secured Note, as the Note was repaid in full at March 31, 2023.

Leases

6 Months Ended

Jun. 30, 2024

Leases

Leases

Note 9 – Leases

The Company has operating leases for corporate offices and office equipment. The leases have remaining lease terms of 1 year to 5 years.

Lease cost, as presented below, includes costs associated with leases for which right-of-use (“ROU”) assets have been recognized as well as short-term leases.

The components of total lease costs were as follows:

Schedule of Components of Lease Cost

	Three months ended June 30, 2024		Three months ended June 30, 2023
	(in thousands)
Operating lease cost	$	127	$	90
Finance lease cost:
Amortization of right-of-use assets		2		2
Interest on lease liabilities		1		1
Total finance lease cost		3		3
Variable lease cost		14		3
Total lease cost	$	144	$	96

	Six months ended June 30, 2024		Six months ended June 30, 2023
	(in thousands)
Operating lease cost	$	252	$	182
Finance lease cost:
Amortization of right-of-use assets		4		4
Interest on lease liabilities		2		2
Total finance lease cost		6		6
Variable lease cost		25		7
Total lease cost	$	283	$	195

Supplemental cash flow information related to leases was as follows:

	Six months ended June 30, 2024		Six months ended June 30, 2023
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	316	$	160
Financing cash flows from finance leases	$	4	$	4

Supplemental balance sheet information related to leases was as follows:

	June 30, 2024			December 31, 2023
	(in thousands)
Operating lease right-of-use assets	$	1,550		$	1,803
Finance lease right-of-use assets	$	1		$	4

Current portion of operating lease liabilities	$	357		$	442
Operating lease liabilities, net of current portion		1,222			1,390
Total operating lease liabilities	$	1,579		$	1,832

Current portion of finance lease liabilities	$	1		$	4
Finance lease liabilities, net of current portion		-			-
Total finance lease liabilities	$	1		$	4

Weighted average remaining lease term
Operating leases		4.0 years			4.3 years
Finance leases		0.1 years			0.6 years

Weighted average discount rate
Operating leases		8.0	%		8.0	%
Finance leases		8.0	%		8.0	%

As of June 30, 2024, maturities of lease liabilities were as follows:

	Operating Leases			Finance Leases
	(in thousands)
2024 (excluding the six months ended June 30, 2024)	$	246		$	1
2025		435			-
2026		450			-
2027		450			-
2028		251			-
Total future minimum lease payments		1,832			1
Less imputed interest		(253	)		-
Total	$	1,579		$	1

Stock Plans and Share-Based Payments

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock Plans and Share-Based Payments

Note 10 – Stock Plans and Share-Based Payments

Stock Options

Schedule of Fair Value Assumptions

Assumptions for Option Grants
Stock Price Volatility	70.34	%
Risk-Free Interest Rate	4.45	%
Expected Life (in years)	6.08
Expected Dividend Yield	-	%

Restricted Stock

As of June 30, 2024, there was no unrecognized compensation expense related to unvested stock-based awards granted under the equity compensation plans.

SRP Equity Incentive Plan

Stockholders’ Equity

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Stockholders’ Equity

Note 11 – Stockholders’ Equity

Noncontrolling Interest

Net Loss per Common Share

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Net Loss per Common Share

Note 12 – Net Loss per Common Share

The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as they would be antidilutive:

	June 30,
	2024		2023
Shares underlying options outstanding		1,249,354		1,765,853
Unvested restricted stock		-		187,503

Commitments and Contingencies

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 13 – Commitments and Contingencies

Purchase Commitments

Contractual Obligations

See Note 9 – Leases for a discussion of the Company’s contractual obligations.

Basis of Presentation and Liquidity (Policies)

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Interim Financial Information

Interim Financial Information

Segment Reporting

Segment Reporting

The Company operates in only one business segment from which the Company’s chief operating decision maker evaluates the financial performance of the Company.

Consolidation

Consolidation

Use of Estimates

Use of Estimates

Liquidity

Liquidity

Recent Accounting Pronouncements, Not Yet Effective

Recent Accounting Pronouncements, Not Yet Effective

Concentration of Credit Risk

Concentration of Credit Risk

Major Customers

Major Customers

For the three months ended June 30, 2024, and 2023, the following customers accounted for the following percentages of the Company’s revenues, respectively:

Customer	2024			2023
A		22	%		18	%
B		8	%		11	%
D		3	%		11	%
Total		33	%		40	%

For the six months ended June 30, 2024, and 2023, the following customers accounted for the following percentages of the Company’s revenues, respectively:

Customer	2024			2023
A		27	%		19	%
B		7	%		10	%
C		2	%		13	%
Total		36	%		42	%

As of June 30, 2024, and December 31, 2023, the following customers accounted for the following percentages of the Company’s accounts receivable, respectively:

Customer	2024			2023
A		16	%		12	%
E		12	%		-
Total		28	%		12	%

Accounts Receivable

Accounts Receivable

Basis of Presentation and Liquidity (Tables)

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Schedule of Revenues and Accounts Receivable Percentage of Major Customers

For the three months ended June 30, 2024, and 2023, the following customers accounted for the following percentages of the Company’s revenues, respectively:

Customer	2024			2023
A		22	%		18	%
B		8	%		11	%
D		3	%		11	%
Total		33	%		40	%

For the six months ended June 30, 2024, and 2023, the following customers accounted for the following percentages of the Company’s revenues, respectively:

Customer	2024			2023
A		27	%		19	%
B		7	%		10	%
C		2	%		13	%
Total		36	%		42	%

As of June 30, 2024, and December 31, 2023, the following customers accounted for the following percentages of the Company’s accounts receivable, respectively:

Customer	2024			2023
A		16	%		12	%
E		12	%		-
Total		28	%		12	%

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis

At June 30, 2024 and December 31, 2023, the fair value measurements of the Company’s assets and liabilities measured on a recurring basis were as follows:

(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

June 30, 2024
Cash	$	1,403	$	-	$	-
Money market funds		1,677		-		-
		-
Cash and cash equivalents	$	3,080	$	-	$	-

December 31, 2023
Cash	$	274	$	-	$	-
Money market funds		2,515		-		-
Certificate of deposit		1,518		-		-
Cash and cash equivalents	$	4,307	$	-	$	-

Inventory (Tables)

6 Months Ended

Jun. 30, 2024

Inventory Disclosure [Abstract]

Schedule of Inventory, Net

	June 30, 2024		December 31, 2023
	(in thousands)
Finished goods	$	2,413	$	2,144
Raw materials		390		326
Total inventory	$	2,803	$	2,470

Intangible Assets and Goodwill (Tables)

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

	June 30, 2024							December 31, 2023
	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
	(in thousands)
Customer relationships	$	540		(175	)	$	365	$	540		(159	)		381
Total intangible assets	$	540	$	(175	)	$	365	$	540	$	(159	)	$	381

Schedule of Future Amortization Expense

As of June 30, 2024, future amortization expense for each of the next five years is (in thousands):

Fiscal Years
2024 (excluding the six months ended June 30, 2024)	$	16
2025		32
2026		32
2027		32
2028		32
2029		32

Leases (Tables)

6 Months Ended

Jun. 30, 2024

Leases

Schedule of Components of Lease Cost

The components of total lease costs were as follows:

Schedule of Components of Lease Cost

	Three months ended June 30, 2024		Three months ended June 30, 2023
	(in thousands)
Operating lease cost	$	127	$	90
Finance lease cost:
Amortization of right-of-use assets		2		2
Interest on lease liabilities		1		1
Total finance lease cost		3		3
Variable lease cost		14		3
Total lease cost	$	144	$	96

	Six months ended June 30, 2024		Six months ended June 30, 2023
	(in thousands)
Operating lease cost	$	252	$	182
Finance lease cost:
Amortization of right-of-use assets		4		4
Interest on lease liabilities		2		2
Total finance lease cost		6		6
Variable lease cost		25		7
Total lease cost	$	283	$	195

Schedule of Supplemental Cash Flow Information Related to Leases

Supplemental cash flow information related to leases was as follows:

	Six months ended June 30, 2024		Six months ended June 30, 2023
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	316	$	160
Financing cash flows from finance leases	$	4	$	4

Schedule of Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to leases was as follows:

	June 30, 2024			December 31, 2023
	(in thousands)
Operating lease right-of-use assets	$	1,550		$	1,803
Finance lease right-of-use assets	$	1		$	4

Current portion of operating lease liabilities	$	357		$	442
Operating lease liabilities, net of current portion		1,222			1,390
Total operating lease liabilities	$	1,579		$	1,832

Current portion of finance lease liabilities	$	1		$	4
Finance lease liabilities, net of current portion		-			-
Total finance lease liabilities	$	1		$	4

Weighted average remaining lease term
Operating leases		4.0 years			4.3 years
Finance leases		0.1 years			0.6 years

Weighted average discount rate
Operating leases		8.0	%		8.0	%
Finance leases		8.0	%		8.0	%

Schedule of Maturities of Lease Liabilities

As of June 30, 2024, maturities of lease liabilities were as follows:

	Operating Leases			Finance Leases
	(in thousands)
2024 (excluding the six months ended June 30, 2024)	$	246		$	1
2025		435			-
2026		450			-
2027		450			-
2028		251			-
Total future minimum lease payments		1,832			1
Less imputed interest		(253	)		-
Total	$	1,579		$	1

Stock Plans and Share-Based Payments (Tables)

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Fair Value Assumptions

Assumptions for Option Grants
Stock Price Volatility	70.34	%
Risk-Free Interest Rate	4.45	%
Expected Life (in years)	6.08
Expected Dividend Yield	-	%

Net Loss per Common Share (Tables)

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as they would be antidilutive:

	June 30,
	2024		2023
Shares underlying options outstanding		1,249,354		1,765,853
Unvested restricted stock		-		187,503

Schedule of Revenues and Accounts Receivable Percentage of Major Customers (Details) - Customer Concentration Risk [Member]	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Customer A [Member] \| Revenue Benchmark [Member]
Product Information [Line Items]
Total	22.00%	18.00%	27.00%	19.00%
Customer A [Member] \| Accounts Receivable [Member]
Product Information [Line Items]
Total			16.00%		12.00%
Customer B [Member] \| Revenue Benchmark [Member]
Product Information [Line Items]
Total	8.00%	11.00%	7.00%	10.00%
Customer D [Member] \| Revenue Benchmark [Member]
Product Information [Line Items]
Total	3.00%	11.00%
Customer Total [Member] \| Revenue Benchmark [Member]
Product Information [Line Items]
Total	33.00%	40.00%	36.00%	42.00%
Customer Total [Member] \| Accounts Receivable [Member]
Product Information [Line Items]
Total			28.00%		12.00%
Customer C [Member] \| Revenue Benchmark [Member]
Product Information [Line Items]
Total			2.00%	13.00%
Customer E [Member] \| Accounts Receivable [Member]
Product Information [Line Items]
Total			12.00%

Basis of Presentation and Liquidity (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Accounting Policies [Abstract]
Accumulated deficit	$ 144,864,000		$ 144,406,000
Net cash (used in) provided by operating activities	(1,173,000)	$ 502,000	800,000
Allowance for doubtful accounts receivable	$ 11,000		$ 11,000

Revenue Recognition (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Disaggregation of Revenue [Line Items]
Total net revenues	$ 3,252	$ 3,545	$ 6,774	$ 7,242
Royalty and Other Revenues [Member]
Disaggregation of Revenue [Line Items]
Total net revenues	$ 44	$ 8	$ 60	$ 43

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash	$ 1,403	$ 274
Money market funds	1,677	2,515
Certificate of deposit		1,518
Cash and cash equivalents	3,080	4,307
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents

Schedule of Inventory, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Inventory Disclosure [Abstract]
Finished goods	$ 2,413	$ 2,144
Raw materials	390	326
Total inventory	$ 2,803	$ 2,470

Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Total intangible assets, Cost	$ 540	$ 540
Accumulated Amortization	(175)	(159)
Total intangible assets, Net	365	381
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangible assets, Cost	540	540
Accumulated Amortization	(175)	(159)
Total intangible assets, Net	$ 365	$ 381

Schedule of Future Amortization Expense (Details) $ in Thousands	Jun. 30, 2024 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2024 (excluding the six months ended June 30, 2024)	$ 16
2025	32
2026	32
2027	32
2028	32
2029	$ 32

Intangible Assets and Goodwill (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 8	$ 11
Goodwill	$ 759		$ 759

License and Supply Agreement, net (Details Narrative) - USD ($)		3 Months Ended		6 Months Ended
	Dec. 11, 2023	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Capitalized intangible assets, gross		$ 2,300,000		$ 2,300,000
Capitalized intangible assets, net		243,000		243,000		$ 271,000
Accumulated amortization		(175,000)		(175,000)		(159,000)
Amortization expense		8,000	$ 11,000
Interest rate, description	EURIBOR 360-day rate plus 500 basis points calculated on the principal amount of any outstanding invoices that are overdue by more than 15 days beyond the original payment terms
Accounts Payable and Accrued Liabilities [Member]
Royalty expense					$ 95,000
Cost of Sales [Member]
Royalty expense			95,000		$ 191,000
License and Supply Agreement [Member]
Capitalized intangible assets, net		200,000		200,000		300,000
Accumulated amortization		2,000,000.0		$ 2,000,000.0		$ 1,900,000
Amortization expense		$ 14,000	$ 33,000
License and Supply Agreement [Member] \| April 23, 2014 through December 31, 2023 [Member] \| Medica [Member]
Royalty rate				3.00%

Secured Note Payable (Details Narrative) - USD ($)	6 Months Ended
Secured Note Payable (Details Narrative) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Mar. 27, 2018
Secured Note [Member]
Short-Term Debt [Line Items]
Repayments of notes payable		$ 71,000
Interest expense		$ 1,000
Secured Promissory Note Agreement [Member] \| Tech Capital, LLC [Member]
Short-Term Debt [Line Items]
Principal amount of secured note payable			$ 1,200,000
Debt maturity date	Apr. 01, 2023
Debt interest rate	8.00%
Maturity date, description	Principal and interest payments were due on the first day of each month commencing on May 1, 2018

Schedule of Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Leases
Operating lease cost	$ 127	$ 90	$ 252	$ 182
Finance lease cost:
Amortization of right-of-use assets	2	2	4	4
Interest on lease liabilities	1	1	2	2
Total finance lease cost	3	3	6	6
Variable lease cost	14	3	25	7
Total lease cost	$ 144	$ 96	$ 283	$ 195

Schedule of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 316	$ 160
Financing cash flows from finance leases	$ 4	$ 4

Schedule of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Leases
Operating lease right-of-use assets	$ 1,550	$ 1,803
Finance lease right-of-use assets	1	4
Current portion of operating lease liabilities	357	442
Operating lease liabilities, net of current portion	1,222	1,390
Total operating lease liabilities	1,579	1,832
Current portion of finance lease liabilities	1	4
Finance lease liabilities, net of current portion
Total finance lease liabilities	$ 1	$ 4
Weighted average remaining lease term, Operating leases	4 years	4 years 3 months 18 days
Weighted average remaining lease term, Finance leases	1 month 6 days	7 months 6 days
Operating leases	8.00%	8.00%
Finance leases	8.00%	8.00%

Schedule of Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Lessee, Operating Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract]
Operating Leases, 2024	$ 246
Operating Leases, 2025	435
Operating Leases, 2026	450
Operating Leases, 2027	450
Operating Leases, 2028	251
Operating Leases, Total future minimum lease payments	1,832
Operating Leases, Less imputed interest	(253)
Operating Leases, Total	1,579	$ 1,832
Finance Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract]
Finance Leases, 2024	1
Finance Leases, 2025
Finance Leases, 2026
Finance Leases, 2027
Finance Leases, 2028
Finance Leases, Total future minimum lease payments	1
Finance Leases, Less imputed interest
Finance Leases, Total	$ 1	$ 4

Leases (Details Narrative)	Jun. 30, 2024
Minimum [Member]
Remaining lease term	1 year
Maximum [Member]
Remaining lease term	5 years

Schedule of Fair Value Assumptions (Details) - Employee Stock [Member]	6 Months Ended
	Jun. 30, 2024
Subsidiary, Sale of Stock [Line Items]
Stock Price Volatility	70.34%
Risk-Free Interest Rates	4.45%
Expected Life (in years)	6 years 29 days
Expected Dividend Yield

Stock Plans and Share-Based Payments (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	May 07, 2019
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation expense			$ 26,000	$ 513,000
Income tax benefit	$ 0	$ 0	0	0
Unrecognized compensation expense	625,000		$ 625,000
Unrecognized compensation expense, period for recognition			2 years 8 months 12 days
SRP Equity Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Allocated share based compensation expense				27,000
Number of shares reserved and authorized for awards					150,000
Share-Based Payment Arrangement, Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Allocated share based compensation expense	28,000	169,000	$ 11,000	349,000
Share based compensation expense	62,000		120,000
Unvested stock options employee termination expense	33,000		109,000
Share-Based Payment Arrangement, Option [Member] \| Selling, General and Administrative Expenses [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Allocated share based compensation expense	27,000	156,000	8,000	315,000
Share-Based Payment Arrangement, Option [Member] \| Research and Development Expense [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Allocated share based compensation expense	2,000	13,000	3,000	34,000
Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Allocated share based compensation expense	7,000	$ 25,000	15,000	$ 38,000
Unvested Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unrecognized compensation expense	$ 0		$ 0
Employees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock options, granted	85,198		85,198
Fair value of stock options, granted	$ 100,000		$ 100,000
Employees [Member] \| Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares issued				23,781
Board [Member] \| Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares issued				133,722
Contractors [Member] \| Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares issued				30,000

Stockholders’ Equity (Details Narrative) - USD ($)	1 Months Ended			3 Months Ended	6 Months Ended		12 Months Ended
Stockholders’ Equity (Details Narrative) - USD ($)	Mar. 31, 2023	Feb. 28, 2022	Sep. 30, 2018	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2020
Class of Stock [Line Items]
Inventory write down					$ 180,000	$ 106,000
Specialty Renal Products, Inc. [Member]
Class of Stock [Line Items]
Outstanding indebtness	$ 1,500,000
Inventory write down				$ 24,000,000
SRP Purchase Agreement Closing [Member]
Class of Stock [Line Items]
Sale of stock		$ 188,000
Loan Agreement [Member] \| Specialty Renal Products, Inc. [Member]
Class of Stock [Line Items]
Principal amount							$ 1,300,000
Proceeds from Loans							$ 1,000,000.0
Specialty Renal Products, Inc. [Member]
Class of Stock [Line Items]
Number of shares purchase		62,500
Ownership percentage		62.50%
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Issuance of shares		700,003	700,003
Proceeds from sale of preferred stock		$ 3,500,000	$ 3,500,000

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Share-Based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	1,249,354	1,765,853
Unvested Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share		187,503

Commitments and Contingencies (Details Narrative) - License and Supply Agreement [Member] - Medica Spa [Member] € in Millions, $ in Millions	6 Months Ended		12 Months Ended
	Jun. 30, 2024 USD ($)	Jun. 30, 2024 EUR (€)	Dec. 31, 2024 USD ($)	Dec. 31, 2024 EUR (€)
Long-term purchase commitment, amount	$ 3.9	€ 3.6
Forecast [Member]
Long-term purchase commitment, amount			$ 4.5	€ 4.2