UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On November 15, 2022, Nephros, Inc. ("the Company") consummated the transactions contemplated by the Agreement for Purchase and Sale of Assets, dated October 4, 2022 (the "Purchase Agreement"), between the Company and BWSI, LLC (the "Purchaser"), pursuant to which the Company agreed to sell substantially all of the assets and transfer certain liabilities relating to the Company's pathogen detection systems business (the "PDS Business"). Following the Company's entry into the Purchase Agreement on October 4, 2022, the PDS Business was classified as discontinued operations in the Company's condensed consolidated financial statements and excluded from continuing operations and the related assets and liabilities were classified as held for sale beginning in the third quarter of 2022.
The following unaudited pro forma financial statements give effect to the sale of the PDS Business and have been prepared in accordance with the Article 11 and Rule 8-05 of Regulation S-X. The unaudited pro forma balance sheet as of September 30, 2022, has been prepared assuming the sale of the PDS Business was consummated as of such date. The unaudited pro forma statements of operations for nine months ended September 30, 2022, and the year ended December 31, 2021, have been prepared assuming that the sale of the PDS Business occurred as of the first day of each such period. The data presented in the columns labeled "Historical" is derived from the Company's historical unaudited consolidated condensed balance sheets as of September 30, 2022, and the consolidated statements of operations for the nine months ended September 30, 2022, the year ended December 31, 2021.
The unaudited pro forma financial data is presented for informational purposes only and is not necessarily indicative of the results of future operations or future financial position of the Company or the actual results of operations or financial position that would have occurred had the sale of the PDS Business been consummated as of the dates indicated above. The unaudited pro forma financial information should be read in conjunction with the Company's audited consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2021, and the Company's unaudited condensed consolidated financial statements and accompanying notes included in the Company's Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2022.
NEPHROS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30, 2022
(In thousands, except share amounts)
Historical Nephros | Adjustment for PDS | Pro forma Nephros Combined | ||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 3,940 | $ | - | $ | 3,940 | ||||||||
Accounts receivable, net | 1,374 | (45 | ) | A | 1,329 | |||||||||
Inventory | 3,488 | - | 3,488 | |||||||||||
Prepaid expenses and other current assets | 186 | - | 186 | |||||||||||
Current assets held for sale | 130 | (130 | ) | B | - | |||||||||
Total current assets | 9,118 | (175 | ) | 8,943 | ||||||||||
Property and equipment, net | 128 | - | 128 | |||||||||||
Operating right-use-of assets | 404 | - | 404 | |||||||||||
Intangible assets, net | 433 | - | 433 | |||||||||||
Goodwill | 759 | - | 759 | |||||||||||
License and supply agreement, net | 435 | - | 435 | |||||||||||
Other assets | 58 | - | 58 | |||||||||||
Total assets | $ | 11,335 | $ | (175 | ) | $ | 11,160 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Secured note, current portion | $ | 141 | $ | - | $ | 141 | ||||||||
Accounts payable | 779 | (14 | ) | A | 765 | |||||||||
Accrued expenses | 272 | (24 | ) | A | 248 | |||||||||
Current portion lease liabilities | 229 | - | 229 | |||||||||||
Current liabilities held for sale | 130 | (130 | ) | B | - | |||||||||
Total current liabilities | 1,551 | (168 | ) | 1,383 | ||||||||||
Financing obligation, net of current portion | 2 | - | 2 | |||||||||||
Lease liabilities | 201 | - | 201 | |||||||||||
Total liabilities | 1,754 | (168 | ) | 1,586 | ||||||||||
Commitments and Contingencies | ||||||||||||||
Stockholders' equity: | ||||||||||||||
Preferred stock, $.001 par value; 5,000,000 shares authorized at September 30, 2022; no shares issued and outstanding September 30, 2022. | - | - | - | |||||||||||
Common stock, $.001 par value; 40,000,000 shares authorized at September 30, 2022; 10,303,818 shares issued and outstanding at September 30, 2022 | 10 | - | 10 | |||||||||||
Additional paid-in capital | 148,275 | - | 148,275 | |||||||||||
Accumulated deficit | (141,983 | ) | (7 | ) | C | (141,990 | ) | |||||||
Subtotal | 6,302 | (7 | ) | 6,295 | ||||||||||
Noncontrolling interest | 3,279 | - | 3,279 | |||||||||||
Total stockholders' equity | 9,581 | (7 | ) | 9,574 | ||||||||||
Total liabilities and equity | $ | 11,335 | $ | (175 | ) | $ | 11,160 |
NEPHROS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Nine Months ended September 30, 2022
(In thousands, except share amounts)
Historical Nephros | Adjustment for PDS | Pro forma Nephros Combined | ||||||||||
Net revenues: | ||||||||||||
Product revenues | $ | 7,387 | $ | - | $ | 7,387 | ||||||
Royalty and other revenues | 30 | - | 30 | |||||||||
Total net revenues | 7,417 | - | 7,417 | |||||||||
Cost of goods sold | 4,195 | - | 4,195 | |||||||||
Gross margin | 3,222 | - | 3,222 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 896 | - | 896 | |||||||||
Depreciation and amortization | 162 | - | 162 | |||||||||
Selling, general and administrative | 5,806 | - | 5,806 | |||||||||
Total operating expenses | 6,864 | - | 6,864 | |||||||||
Loss from continuing operations | (3,642 | ) | - | (3,642 | ) | |||||||
Interest expense | 17 | - | 17 | |||||||||
Interest income | (7 | ) | - | (7 | ) | |||||||
Other (income) expense, net | (94 | ) | - | (94 | ) | |||||||
Loss before income taxes from continuing operations | (3,558 | ) | - | (3,558 | ) | |||||||
Income tax benefit | - | - | - | |||||||||
Loss from continuing operations | (3,558 | ) | - | (3,558 | ) | |||||||
Net loss from discontinued operations | (2,700 | ) | 2,700 | - | ||||||||
Net loss | (6,258 | ) | 2,700 | (3,558 | ) | |||||||
Less: Deemed dividend attributable to noncontrolling interest | (206 | ) | - | (206 | ) | |||||||
Net loss attributable to continuing non-controlling interest | (206 | ) | - | (206 | ) | |||||||
Net loss attributable to Nephros Inc shareholders | (6,464 | ) | 2,700 | (3,764 | ) | |||||||
Loss per common share from continuing operations | $ | (0.35 | ) | $ | (0.35 | ) | ||||||
Loss per common share from discontinued operations | $ | (0.26 | ) | $ | - | |||||||
Net loss per common share, basic and diluted | $ | (0.61 | ) | $ | (0.35 | ) | ||||||
Net loss per common share attributable to continuing non-controlling interest | $ | (0.02 | ) | $ | (0.02 | ) | ||||||
Net loss per common share attributable to Nephros Inc. shareholders | $ | (0.63 | ) | $ | (0.37 | ) | ||||||
Weighted average common shares outstanding, basic and diluted | 10,278,258 | 10,278,258 |
NEPHROS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year ended December 31, 2021
(In thousands, except share amounts)
Historical Nephros | Adjustment for PDS | Pro forma Nephros Combined | ||||||||||
Net revenues: | ||||||||||||
Product revenues | $ | 10,204 | $ | (139 | ) | $ | 10,065 | |||||
Royalty and other revenues | 200 | (48 | ) | 152 | ||||||||
Total net revenues | 10,404 | (187 | ) | 10,217 | ||||||||
Cost of goods sold | 4,661 | (77 | ) | 4,584 | ||||||||
Gross margin | 5,743 | (110 | ) | 5,633 | ||||||||
Operating expenses: | ||||||||||||
Research and development | 7,710 | (668 | ) | 7,042 | ||||||||
Depreciation and amortization | 202 | (10 | ) | 192 | ||||||||
Selling, general and administrative | 2,166 | (515 | ) | 1,651 | ||||||||
Total operating expenses | 10,078 | (1,193 | ) | 8,885 | ||||||||
Loss from operations | (4,335 | ) | 1,083 | (3,252 | ) | |||||||
Interest expense | 41 | - | 41 | |||||||||
Interest income | (10 | ) | - | (10 | ) | |||||||
Other (income) expense, net | (17 | ) | - | (17 | ) | |||||||
Extinguishment of PPP loan | (482 | ) | - | (482 | ) | |||||||
Loss before income taxes | (3,867 | ) | 1,083 | (2,784 | ) | |||||||
Income tax benefit | - | - | - | |||||||||
Net income (loss) | (3,867 | ) | 1,083 | (2,784 | ) | |||||||
Less: Deemed dividend attributable to noncontrolling interest | 240 | - | 240 | |||||||||
Net loss attributable to Nephros Inc shareholders | (4,107 | ) | 1,083 | (3,024 | ) | |||||||
Net loss per common share attributable to Nephros Inc. shareholders | $ | (0.41 | ) | $ | (0.30 | ) | ||||||
Weighted average common shares outstanding, basic and diluted | 10,017,830 | 10,017,830 |
Nephros, Inc.
Unaudited Pro Forma Financial Information
Notes to the Unaudited Pro Forma Financial Statements
A. Reflects balances of net assets or liabilities as of December 31, 2021, identified and assigned to the PDS Business.
B. Reflects balances of assets and liabilities as of December 31, 2021, assigned to the PDS Disposal Group.
C. Reflects net amount of the assets and liabilities identified and assigned to the PDS Business and Disposal Group.
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Nephros Inc. published this content on 21 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 November 2022 21:10:42 UTC.