Reports Full-Year Net Revenue of $10.4 Million, a 22% Year-Over-Year Increase and Fourth Quarter Net Revenue of $2.8 Million, an 18% Year-Over-Year Increase;Reaffirms Fiscal Year 2022 Guidance of $13.0 Million to $13.5 Million in Annual Revenue SOUTH ORANGE, NJ, Feb. 23, 2022 (GLOBE NEWSWIRE) — via NewMediaWire –Nephros, Inc.(Nasdaq: NEPH), a leading water technology company providing filtration and pathogen detection solutions to the medical and commercial markets, today announced financial results for the fourth quarter and fiscal year ended December 31, 2021. Financial HighlightsFourth Quarter Ended December 31, 2021– Water FiltrationBusiness Segment Net revenue was $2.7 million, compared with $2.3 million in 2020, up 16%Operating loss was ($0.7 million), compared to ($0.3 million) in 2020Adjusted Operating Loss was ($64,000), compared with ($10,000) in 2020 Fourth Quarter Ended December 31, 2021 – Consolidated Net revenue was $2.8 million, compared with $2.3 million in 2020, up 18%Net loss was ($1.0 million), compared with ($0.8 million) in 2020, up 37%Adjusted EBITDA was ($0.4 million), compared with ($0.5 million) in 2020 Year-End 2021 – Water Filtration Business Segment Net revenue was $10.2 million, compared with $8.5 million in 2020, up 20%Operating loss was ($2.9 million), compared with a net loss of ($2.0 million) in 2020Adjusted Operating Loss was ($1.3 million) in 2021 and 2020 Year-end 2021 – Consolidated Net revenue was $10.4 million, compared with $8.6 million in 2020, up 22%Net loss was ($3.9 million), compared with ($4.5 million) in 2020, down 15%Adjusted EBITDA was ($2.6 million), compared with ($3.6 million) in 2020 “We are pleased to report that Nephros delivered four consecutive quarters of year-over-year growth averaging 19%, ending the year at a new revenue record for the company,” said Andy Astor, President and Chief Executive Officer of Nephros. “Looking forward to 2022, we believe our recent investments into a scalable sales and marketing infrastructure, along with the expected retreat of COVID-19 to endemic state, will bring our growth rates even higher, as evidenced by our recent revenue guidance of $13.0-13.5 million, or 25-30% growth.” Financial Performance for the Fourth Quarter and Year Ended December 31, 2021Net revenue for the year ended December 31, 2021 was $10.4 million, compared with $8.6 million in 2020, an increase of 22%. Net revenues for the fourth quarter of 2021 were $2.8 million, compared with $2.3 million in the fourth quarter of 2020, an increase of 18%. Cost of goods sold for the year ended December 31, 2021 was $4.7 million, compared with $3.6 million in 2020, an increase of 28%. Cost of goods sold for the fourth quarter of 2021 was $1.3 million, compared with $1 million in the fourth quarter of 2020, an increase of 26%. Gross margins for the year ended December 31, 2021 were 55%, compared with 57% in 2020. Gross margins for the fourth quarter of 2021 were 53%, compared with 56% in the fourth quarter of 2020. Selling, general and administrative expenses for the year ended December 31, 2021 were $7.7 million, compared with $6.5 million in 2020, an increase of 19%. Selling, general and administrative expenses for the fourth quarter of 2021 were approximately $2 million compared with approximately $1.4 million in the fourth quarter of 2020, an increase of 44%. Research and development expenses for the year ended December 31, 2021 were $2.2 million, compared with $2.8 million in 2020, a decrease of 21%. Research and development expenses for the fourth quarter of 2021 were $0.5 million, compared with $0.6 million in the fourth quarter of 2020, a decrease of 19%. Depreciation and amortization expenses for the year ended December 31, 2021 were approximately $202,000, compared with approximately $192,000 in 2020, an increase of 5%. Depreciation and amortization expenses for the fourth quarter of 2021 were approximately $51,000, compared with approximately $50,000 in the fourth quarter of 2020, an increase of 2%. Net loss for the year ended December 31, 2021 was ($3.9 million), compared with a net loss of ($4.5 million) in 2020, a 15% decrease in loss. Net loss for the fourth quarter of 2021 was approximately ($1 million), compared with a net loss of approximately ($0.8 million) in the fourth quarter of 2020, a 37% increase. Adjusted EBITDA for the year ended December 31, 2021 was ($2.6 million), compared with ($3.6 million) in 2020, a 29% decrease. Adjusted EBITDA for the fourth quarter 2021 was approximately ($0.4 million), compared with approximately ($0.5 million) in the fourth quarter of 2020, a 11% decrease. As of December 31, 2021, Nephros had cash and cash equivalents of approximately $7.0 million. Water Filtration Adjusted Operating Loss Definition and Reconciliation to GAAP Financial MeasuresWater Filtration Adjusted Operating Loss is calculated by taking operating loss calculated in accordance with generally accepted accounting principles (“GAAP”) and excluding all non-recurring expenses and income, and non-cash items, including depreciation and amortization and non-cash compensation. The following table presents a reconciliation of Water Filtration Adjusted Operating Loss to operating loss, the most directly comparable GAAP financial measure for segment reporting, for the 2021 and 2020 fiscal years: Water Filtration(unaudited) 2021Three Month Period EndedAnnual 3/31/216/30/219/30/2112/31/21Totals Operating loss $(634) $(875) $(755) $(670) $(2,934) Adjustments: Depreciation of property and equipment 7 7 7 16 37 Amortization of other assets 46 48 46 74 214 Non-cash stock-based compensation 265 269 257 422 1,213 Other non-cash items 5 24 90 94 213 Adjusted EBITDA $(311) $(527) $(355) $(64) $(1,257) 2020 Three Month Period Ended Annual 3/31/206/30/209/30/2012/31/20 Totals Operating loss $(548) $(852) $(311) $(285) $(1,996) Adjustments: Depreciation of property and equipment 5 6 7 7 25 Amortization of other assets 45 45 46 47 183 Change in FV of contingent consideration (42) – (187) – (229)Non-cash stock-based compensation 190 166 160 200 716 Other non-cash items 11 12 2 21 46 Adjusted EBITDA $(339) $(623) $(283) $(10) $(1,255) Consolidated Adjusted EBITDA Definition and Reconciliation to GAAP Financial MeasuresConsolidated Adjusted EBITDA is calculated by taking net loss calculated in accordance with generally accepted accounting principles (“GAAP”) and excluding all interest-related expenses and income, non-recurring expenses and income, and non-cash items, including depreciation and amortization and non-cash compensation. The following table presents a reconciliation of Consolidated Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, for the 2021 and 2020 fiscal years: Consolidated(unaudited) 2021Three Month Period EndedAnnualConsolidated3/31/20216/30/20219/30/202112/31/2021Totals Net loss $ (537) $ (1,126) $ (1,163) $ (1,041)$ (3,867) Adjustments: Depreciation of property and equipment 7 8 7 16 38 Amortization of other assets 46 48 46 74 214 Interest expense 13 11 10 7 41 Interest income (3) (3) (2) (2) (10)Non-cash stock-based compensation 276 281 268 434 1,259 Other non-cash items 5 24 90 97 216 PPP Loan Forgiveness (482) – – – (482) Adjusted EBITDA $ (675) $ (757) $ (744) $ (415) $ (2,591) 2020Three Month Period EndedAnnualConsolidated3/31/20206/30/20209/30/202012/31/2020Totals Net loss $ (1,098) $ (1,657) $ (1,012) $ (759)$ (4,526) Adjustments: Depreciation of property and equipment 5 6 7 7 25 Amortization of other assets 45 45 46 47 183 Interest expense 43 30 22 15 110 Interest income (1) (4) (3) (3) (11)Change in FV of contingent consideration (42) – (187) – (229)Non-cash stock-based compensation 222 179 172 206 779 Other non-cash items11 12 2 21 46 Adjusted EBITDA $ (815) $ (1,389) $ (953) $ (466) $ (3,623) Nephros believes that Adjusted EBITDA provides useful information to management and investors regarding certain financial and business trends relating to Nephros’s financial condition and results of operations. Management does not consider Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of Adjusted EBITDA is that it excludes significant expenses and income that are required by GAAP to be recognized in Nephros’s consolidated financial statements. In addition, Adjusted EBITDA is subject to inherent limitations as it reflects the exercise of judgments by management about which expenses and income are excluded or included in determining Adjusted EBITDA. In order to compensate for these limitations, management presents Adjusted EBITDA in connection with net loss, the most directly comparable GAAP financialmeasure. Nephros urges investors to review the reconciliation of Adjusted EBITDA to net loss and not to rely on any single financial measure to evaluate the business. Conference Call Today at 4:30pm Eastern TimeNephros will host a conference call today at 4:30pm ET, during which management will discuss Nephros’s financial results and provide a general business overview. Participants may dial into the following number to access the call: 1 (844) 808-7106. International callers may use 1 (412) 317-5285. Please ask to be joined into the Nephros conference call. A replay of the call can be accessed until March 2, 2022 at 1 (877) 344-7529 or 1 (412) 317-0088 for international callers and entering replay access code: 8949087. An audio archive of the call will be available shortly after the call on the Nephros investor relations page at https://investors.nephros.com/events/. About NephrosNephros, Inc. is a company committed to improving the human relationship with water through leading, accessible technology. We provide innovative filtration and pathogen detection as part of an integrated approach to water safety that combines science, solutions, and support services. Nephros products serve the needs of customers within the healthcare and commercial markets, offering both proactive and emergency responses for water management. For more information about Nephros, please visit www.nephros.com. Forward-Looking StatementsThis release contains forward-looking statements that are subject to various risks and uncertainties. Such statements include statements regarding Nephros’s expected revenue for the quarter and year ended December 31, 2021, expected future revenue growth and the timing of such growth, and other statements that are not historical facts, including statements that may be accompanied by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words. Actual results could differ materially from those described in these forward-looking statements due to certain factors, including the impact of the ongoing COVID-19 pandemic, uncertainty in clinical outcomes, potential delays in the regulatory approval process, changes in business, economic and competitive conditions, the availability of capital when needed, dependence on third-party manufacturers and researchers, regulatory reforms, uncertainties in litigation or investigative proceedings, and the availability of financing. These and other risks and uncertainties are detailed in Nephros’s reports filed with the U.S. Securities and Exchange Commission. Nephros does not undertake any responsibility to update the forward-looking statements in this release. Investor Relations Contacts:Kirin Smith, PresidentPCG Advisory, Inc.(646) 823-8656ksmith@pcgadvisory.com Andy Astor, CEONephros, Inc.(201) 345-0824andy.astor@nephros.com NEPHROS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands, except share amounts) December 31, 2021 December 31, 2020 (unaudited) ASSETS Current assets: Cash and cash equivalents $6,973 $8,249 Accounts receivable, net 1,641 1,364 Inventory 4,795 5,304 Prepaid expenses and other current assets 225 237 Total current assets 13,634 15,154 Property and equipment, net 366 295 Operating right-use-of assets 730 1,037 Intangible assets, net 1,536 506 Goodwill 759 759 License and supply agreement, net 536 670 Other assets 89 89 Total assets $17,650 $18,509 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Secured revolving credit facility – $- Secured note, current portion 248 229 PPP loan, current portion – – Accounts payable 1,334 423 Accrued expenses 444 341 Current portion of contingent consideration – – Current portion lease liabilities 364 332 Total current liabilities 2,390 1,325 Secured note payable, long term portion 95 364 PPP loan, net of current portion – 482 Financing obligation, net of current portion 4 7 Contingent consideration, net of current portion – – Lease liabilities 412 759 Total liabilities 2,901 2,937 Commitments and Contingencies Stockholders’ equity: Preferred stock, $.001 par value; 5,000,000 shares authorized at December 31, 2021 and 2020; no shares issued and outstanding December 31, 2021 and 2020 – – Common stock, $.001 par value; 40,000,000 shares authorized at December 31, 2021 and 2020; 10,258,444 and 9,873,006 shares issued and outstanding and December 31, 2021 and 2020, respectively 10 10 Additional paid-in capital 147,346 144,296 Accumulated other comprehensive income 64 74 Accumulated deficit (135,725) (131,858)Subtotal 11,695 12,522 Noncontrolling interest 3,054 3,051 Total stockholders’ equity 14,749 15,573 Total liabilities and equity $17,650 $18,510 NEPHROS, INC. AND SUBSIDIARIESCONSOLIDATED OF OPERATIONS AND COMPREHENSIVE LOSS(In thousands, except share amounts) Year Ended December 31, 2021 2020 (unaudited) Net revenues: Product revenues $10,204 $8,453 Royalty and other revenues 200 108 Total net revenues 10,404 8,561 Cost of goods sold 4,661 3,648 Gross margin 5,743 4,913 Gross margin % 55% 57%Operating expenses: Research and development 2,166 2,759 Depreciation and amortization 202 192 Selling, general and administrative 7,710 6,466 Change in fair value of contingent consideration – (229)Total operating expenses 10,078 9,188 Loss from operations (4,335) (4,275)Interest expense (41) (110)Interest income 10 11 Other income (expense), net 499 (152)Loss before income taxes (3,867) (4,526)Income tax benefit – – Net profit (loss) (3,867) (4,526)Less: Deemed dividend attributable to noncontrolling interest (240) (240)Net loss attributable to Nephros Inc (4,107) (4,766) Net loss per common share, basic and diluted $(0.41) $(0.52)Weighted average common shares outstanding, basic and diluted 10,017,830 9,078,549 Comprehensive loss: Net Loss (3,867) (4,526)Other comprehensive income(loss), foreign currency translation adjustments (10) 9 Comprehensive loss (3,877) (4,517)Comprehensive loss attirbutable to noncontrolling interest (240) (240)Total comprehensive loss attributable to Nephros Inc shareholders $(4,117) $(4,757)