2023-06-30

 2024-03-06

 us-gaap: ProductMember

 us-gaap: ProductMember

 NEPH:RoyaltyAndOtherRevenuesMember

 NEPH:RoyaltyAndOtherRevenuesMember

 srt: ScenarioPreviouslyReportedMember

 us-gaap: SeriesAPreferredStockMember
 NEPH:SRPPurchaseAgreementMember

 us-gaap: SeriesAPreferredStockMember
 NEPH:SRPPurchaseAgreementMember

 NEPH:LoanAgreementMember

 2020-01-01
 2020-12-31

 NEPH:LoanAgreementMember

 srt: MinimumMember

 us-gaap: ShippingAndHandlingMember

 us-gaap: ShippingAndHandlingMember

 NEPH:CustomerAMember

 NEPH:CustomerAMember

 NEPH:CustomerBMember

 NEPH:CustomerBMember

 NEPH:CustomerTotalMember

 NEPH:CustomerTotalMember

 NEPH:CustomerAMember

 NEPH:CustomerAMember

 NEPH:CustomerBMember

 NEPH:CustomerBMember

 NEPH:CustomerCMember

 NEPH:CustomerCMember

 NEPH:CustomerTotalMember

 NEPH:CustomerTotalMember

 NEPH:UnvestedRestrictedStockMember

 NEPH:UnvestedRestrictedStockMember

 NEPH:DefinitiveAssetPurchaseAgreementMember

 2022-10-03
 2022-10-04

 NEPH:DefinitiveAssetPurchaseAgreementMember

 2022-10-04

 2022-10-03
 2022-10-04

 2022-10-04

 NEPH:OtherRevenueMember

 NEPH:OtherRevenueMember

 NEPH:RoyaltyRevenueMember
 NEPH:CamelbakSublicenseAgreementMember

 NEPH:RoyaltyRevenueMember
 NEPH:CamelbakSublicenseAgreementMember

 us-gaap: FairValueInputsLevel1Member

 us-gaap: FairValueInputsLevel2Member

 us-gaap: FairValueInputsLevel3Member

 us-gaap: FairValueInputsLevel1Member

 us-gaap: FairValueInputsLevel2Member

 us-gaap: FairValueInputsLevel3Member

 NEPH:ManufacturingAndResearchEquipmentMember

 NEPH:ManufacturingAndResearchEquipmentMember

 NEPH:ManufacturingAndResearchEquipmentMember
 srt: MinimumMember

 NEPH:ManufacturingAndResearchEquipmentMember

 NEPH:CapitalizedInternalUseSoftwareAndWebsiteDevelopmentMember

 NEPH:CapitalizedInternalUseSoftwareAndWebsiteDevelopmentMember

 us-gaap: ComputerEquipmentMember

 us-gaap: ComputerEquipmentMember

 us-gaap: ComputerEquipmentMember
 srt: MinimumMember

 us-gaap: ComputerEquipmentMember

 us-gaap: FurnitureAndFixturesMember

 us-gaap: FurnitureAndFixturesMember

 us-gaap: LeaseholdImprovementsMember

 us-gaap: LeaseholdImprovementsMember

 NEPH:TradenamesServiceMarksandDomainNamesMember

 NEPH:TradenamesServiceMarksandDomainNamesMember

 us-gaap: CustomerRelationshipsMember

 us-gaap: CustomerRelationshipsMember

 2023-12-10
 2023-12-11

 NEPH:AprilTwentyThreeTwoThousandFourteenThroughDecemberThirtyOneTwoThousandTwentyThreeMember
 NEPH:MedicaMember

 us-gaap: CostOfSalesMember

 us-gaap: CostOfSalesMember

 us-gaap: AccountsPayableAndAccruedLiabilitiesMember

 us-gaap: AccountsPayableAndAccruedLiabilitiesMember

 NEPH:SecuredPromissoryNoteAgreementMember
 NEPH:TechCapitalLLCMember

 2018-03-27

 NEPH:SecuredPromissoryNoteAgreementMember
 NEPH:TechCapitalLLCMember

 NEPH:SecuredPromissoryNoteAgreementMember
 NEPH:TechCapitalLLCMember

 NEPH:SecuredPromissoryNoteAgreementMember
 NEPH:TechCapitalLLCMember

 NEPH:SecuredNoteMember

 NEPH:SecuredNoteMember

 us-gaap: DomesticCountryMember

 us-gaap: StateAndLocalJurisdictionMember

 NEPH:FederalResearchAndDevelopmentTaxCreditCarryforwardMember

 NEPH:TwoThousandEighteenFederalMember

 srt: MinimumMember

 NEPH:TwoThousandAndFourStockIncentivePlanMember

 NEPH:TwoThousandAndFourStockIncentivePlanMember

 2023-11-01

 us-gaap: SellingGeneralAndAdministrativeExpensesMember

 us-gaap: ResearchAndDevelopmentExpenseMember

 us-gaap: SellingGeneralAndAdministrativeExpensesMember

 us-gaap: ResearchAndDevelopmentExpenseMember

 NEPH:EmployeesMember

 NEPH:SRPEquityIncentivePlanMember

 2019-05-07

 NEPH:SRPEquityIncentivePlanMember

 NEPH:SRPEquityIncentivePlanMember

 us-gaap: EmployeeStockMember

 us-gaap: EmployeeStockMember

 NEPH:SeriesAPreferredStockPurchaseAgreementMember

 2018-09-08
 2018-09-09

 NEPH:SeriesAPreferredStockPurchaseAgreementMember

 2018-09-09

 NEPH:SRPPurchaseAgreementClosingAmendmentMember

 NEPH:SRPPurchaseAgreementClosingAmendmentMember

 2022-02-03
 2022-02-04

 NEPH:SRPPurchaseAgreementClosingAmendmentMember

 srt: ChiefExecutiveOfficerMember

 NEPH:LambdaInvestorsLLCMember
 us-gaap: SeriesAPreferredStockMember

 us-gaap: SeriesAPreferredStockMember
 NEPH:LambdaInvestorsLLCMember

 2023-03-01
 2023-03-31

 2023-03-31

 srt: ManagementMember

 srt: ManagementMember

 NEPH:SavingsIncentiveMatchPlanMember

 2016-12-29
 2017-01-02

 NEPH:SavingsIncentiveMatchPlanMember

 NEPH:SavingsIncentiveMatchPlanMember

 NEPH:TwoThousandTwentyFourMember

 NEPH:TwoThousandTwentyFiveMember

 NEPH:TwoThousandTwentySixMember

 NEPH:TwoThousandTwentySevenMember

 NEPH:TwoThousandTwentyEightMember

 NEPH:Integer

 NEPH:Segment

 utr:sqft

 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 WASHINGTON,
DC 20549

 FORM

 ANNUAL
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2023

 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

INC.

 (Exact
name of registrant specified in its charter)

 Delaware

 13-3971809

 (State
 or Other Jurisdiction of

 Incorporation
 or Organization)

 (I.R.S.
 Employer

 Identification
 No.)

Lackawanna Place

 South
Orange, NJ 07079

 (Address
of Principal Executive Offices)

 (201) 343-5202

 (Telephone
Number, Including Area Code)

 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

 Securities
registered pursuant to Section 12(g) of the Exchange Act: None

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes
 No

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

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

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or emerging growth company. See 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.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 The
aggregate market value of the voting stock held by non-affiliates of the registrant, as of June 30, 2023, was $ 10,420,918. Such aggregate
market value was computed by reference to the closing price of the common stock as reported on the Nasdaq Stock Market on June 30, 2023.
For purposes of making this calculation only, the registrant has defined affiliates as including only directors and executive officers
and stockholders holding greater than 10% of the voting stock of the registrant as of June 30, 2023.

 As
of March 6, 2024, there were 10,543,675 shares of the registrant's common stock, $0.001 par value, outstanding.

 DOCUMENTS
INCORPORATED BY REFERENCE

 Certain
portions of the registrant's proxy statement to be filed with the Securities and Exchange Commission in connection with the 2024
Annual Meeting of Stockholders (the "2024 Proxy Statement") are incorporated by reference into Part III of this Annual Report
on Form 10-K. The 2024 Proxy Statement will be filed within 120 days of December 31, 2023.

 TABLE
OF CONTENTS

 Item 1. Business

 Item 1A. Risk Factors

 Item 1B. Unresolved Staff Comments

 Item 2. Properties

 Item 3. Legal Proceedings

 Item 4. Mine Safety Disclosures

 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6. Selected Financial Data

 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A. Quantitative and Qualitative Disclosures About Market Risk

 Item 8. Financial Statements and Supplementary Data

 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item 9A. Controls and Procedures

 Item 9B. Other Information

 Item 10. Directors, Executive Officers and Corporate Governance

 Item 11. Executive Compensation

 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13. Certain Relationships and Related Transactions, and Director Independence

 Item 14. Principal Accounting Fees and Services

 Item 15. Exhibits, Financial Statement Schedules

 Item 16. Form 10K Summary

 SIGNATURES

 FORWARD
LOOKING STATEMENTS

 The
Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain statements
in this Annual Report on Form 10-K constitute "forward-looking statements." Such statements include statements regarding
our ability to increase our revenue, limit our expenses and other expected operating results, including our ability and the timing of
our business generating positive cash flows from operations, the adequacy of our existing capital resources to fund our operations, our
belief that we will maintain good relationships with our suppliers, distributors and customers, and other statements that are not historical
facts, including statements that 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 guarantees
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 operations;

 we
 may not have sufficient capital to successfully implement our business plan;

 we
 may not be able to effectively market and sell 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;

 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 Annual Report on Form 10-K, is set forth in our filings with the U.S. Securities and Exchange Commission (the "SEC"),
including our other periodic 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 because of
new information, future events or otherwise, except as required by law.

 PART
I

 Item
1. Business

 Overview

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

 In
medical markets, we sell water filtration products. 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.

 In
commercial markets, we manufacture and sell water filters that improve the taste and odor of water and reduce biofilm, bacteria, and
scale build-up in downstream equipment. Our products are marketed primarily to the food service, hospitality, convenience store, and
health care markets. These commercial products are also marketed into medical markets, as supplemental filtration to our medical filters.

 We
were founded in 1997 by healthcare professionals affiliated with Columbia University Medical Center/New York-Presbyterian Hospital to
develop and commercialize an alternative method to hemodialysis. We have extended our filtration technologies to meet the demand for
liquid purification in other areas, in particular, water purification.

 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 rapidly expand 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. Department of Health and Human Services 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  We are not including the information on our website as a part of, nor incorporating it by reference into, this Annual Report on Form
10-K.

 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 National Institute
of Health, 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 mach ines, 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" configuration.

 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 provides 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.

 Hemodiafiltration
(HDF) Systems and Specialty Renal Products, Inc.

 The
current standard of care in the United States for patients with chronic renal failure is hemodialysis ("HD"), a process in
which toxins are cleared via diffusion. Patients typically receive HD treatments at least 3 times weekly for 3-4 hours per treatment.
HD is most effective in removing smaller, easily diffusible toxins. For patients with acute renal failure, the current standard of care
in the United States is hemofiltration ("HF"), a process where toxins are cleared via convection. HF offers a much better
removal of larger sized toxins when compared to HD; however, HF treatment is more challenging for patients, as it is performed daily,
and typically takes 12-24 hours per treatment.

 Our
company was originally founded to develop and commercialize a hemodiafiltration ("HDF") medical device. HDF is an alternative
dialysis modality that combines the benefits of HD and HF into a single therapy by clearing toxins using both diffusion and convection.
Though not widely used in the United States, HDF is prevalent in Europe and is performed for a growing number of patients. Clinical experience
and literature demonstrate that HDF's benefits, among other factors, include enhanced clearance of middle and large molecular weight
toxins, improved patient survival, reduced incidence of dialysis-related amyloidosis, improved patient quality of life and reduced hospitalizations
and overall length of stays.

 Our
original HDF device ("HDF1") was cleared by the U.S. Food and Drug Administration ("FDA") for the treatment of
patients with chronic renal failure in 2012, but did not gain market acceptance due to, among other reasons, the feeling that it was
too difficult to use.

 We
previously held a majority stake in Specialty Renal Products, Inc. ("SRP"), a development-stage medical device company that
was focused primarily on the development of the second-generation HDF device ("HDF2"). SRP undertook efforts to redesign
and dramatically simplify our HDF device. We believe those updates made the system significantly easier to use. On May 13, 2022, the
FDA gave 510(k) clearance to SRP's second-generation model of the OLp rH2H 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 us 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.

 Corporate
Information

 We
were incorporated under the laws of the State of Delaware in April 1997. Our principal executive offices are located at 380 Lackawanna
Place, South Orange, New Jersey 07079, and our telephone number is (201) 343-5202. We also have an office in Whippany, New Jersey. For
more information about Nephros, please visit our website at www.nephros.com. We are not including the information
on our website as a part of, nor incorporating it by reference into, this Annual Report on Form 10-K.

 Manufacturing
and Suppliers

 We
do not, and do not intend to in the near future, manufacture any of our medical device filtration products. We do manufacture some of
our commercial filtration products in our facility in South Orange, New Jersey.

 On
April 23, 2012, we entered into a License and Supply Agreement (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 our filtration products, and for an exclusive supply arrangement
for the filtration products. Under the License and Supply Agreement, as amended, Medica granted us 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, we granted to Medica an exclusive license under our intellectual property
to make the filtration products during the term of the License and Supply Agreement. The filtration covered under the License and Supply
Agreement include both certain products based on Medica's proprietary Versatile microfiber technology and certain filtration products
based on Medica's proprietary Medisulfone ultrafiltration technology. The term of the License and Supply Agreement with Medica
expires on December 31, 2028, unless earlier terminated by either party in accordance with the terms of the License and Supply Agreement.
We currently have an understanding with Medica whereby we have agreed 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.

 In
exchange for the rights granted, we agreed to make minimum annual aggregate purchases from Medica throughout the term of the License
and Supply Agreement.

 Sales
and Marketing

 Our
New Jersey headquarters oversees global sales and marketing activity of our ultrafilter products. We work with multiple distributors
for our ultrafilter products in the hospital and dialysis water markets. For the food service and hospitality markets, we have contracted
with Donastar LLC as our master distributor. For other prospective markets for our ultrafilter products, we are pursuing alliance opportunities
for joint product development and/or distribution. Our ultrafilter manufacturer in Europe shares certain intellectual property rights
with us for one of our dual stage ultrafilter designs.

and Development

 Our
research and development efforts continue on several fronts directly related to our current product lines. For the ultrafiltration systems
business, we are continually working with existing and potential distributors of ultrafilter products to develop solutions to meet customer
needs.

 Major
Customers

 For
the years ended December 31, 2023 and 2022, the following customers accounted for the following percentages of our revenues, respectively:

 Customer

 2023

 2022

 A

 %

 %

 B

 %

 %

 Total

 %

 %

 As
of December 31, 2023 and 2022, the following customers accounted for the following percentages of our accounts receivable, respectively:

 Customer

 2023

 2022

 A

 %

 %

 B

 %

 %

 C

 %

 %

 Total

 %

 %

 Competition

 With
respect to the water filtration market, we compete with companies that are well-entrenched in the water filtration domain. These companies
include Pall Corporation (wholly owned by Danaher Corporation), which manufactures point-of-use microfiltration products, as well as
3M and Pentair, who manufacture the Cuno and Everpure brands of water filtration and purification products, respectively. Our
methods of competition in the water filtration domain include:

 developing
 and marketing products that are designed to meet critical and specific customer needs more effectively than competitive devices;

 offering
 unique attributes that illustrate our product reliability, "user-friendliness," and performance capabilities;

 selling
 products to specific customer groups where our unique product attributes are mission-critical; and

 pursuing
 alliance and/or acquisition opportunities for joint product development and distribution.

 Intellectual
Property

 Patents

 We
protect our technology and products through patents and patent applications. In addition to the United States, we also apply for patents
in other jurisdictions, such as the European Patent Office, Canada, and Japan, to the extent we deem appropriate. We have built a portfolio
of patents and applications covering our products, including their hardware design and methods of hemodiafiltration.

 We
believe that our patent strategy will provide a competitive advantage in our target markets, but our patents may not be broad enough
to cover our competitors' products and may be subject to invalidation claims. Our U.S. patent for the "Method and Apparatus
for a Hemodiafiltration Module for use with a Dialysis Machine," has claims that cover the OLp r MDHDF filter series and
the method of hemodiafiltration employed in the operation of the products. Technological developments in ESRD therapy could reduce the
value of our intellectual property. Any such reduction could be rapid and unanticipated. We have issued patents on our water filtration
products and applications in process to cover various applications in residential, commercial, and remote environments.

 As
of December 31, 2023, we had four U.S. patents and one Canadian patent. In addition, we have one pending patent application in the United
States. Our pending US patent application relates to filter technologies, including liquid purification filter systems that are particularly
suited for use in harsh environments.

 Trademarks

 As
of December 31, 2023, in the United States, we secured registrations of the trademarks ENDOPUR, HYDRAGUARD, NANOGUARD, and NEPHROS. In
the US, we filed two trademark applications for BECAUSE WATER MATTERS. In the UK, we secured registrations for the trademarks NANOGUARD,
NEPHROS HYDRAGUARD, and PATHOGUARD.

 Governmental
Regulation

 The
research and development, manufacturing, promotion, marketing, and distribution of our ESRD therapy products in the United States, Europe
and other regions of the world are subject to regulation by numerous governmental authorities, including the FDA, the European Union
and analogous agencies.

 United
States

 The
FDA regulates the manufacture and distribution of medical devices in the United States pursuant to the Food, Drug, and Cosmetics (FDC)
Act. All of our ESRD therapy products are regulated in the United States as medical devices by the FDA under the FDC Act. Under the FDC
Act, medical devices are classified into one of three classes, namely Class I, II or III, on the basis of the controls deemed necessary
by the FDA to reasonably ensure their safety and effectiveness.

 Class
 I devices are medical devices for which general controls are deemed sufficient to ensure their safety and effectiveness. General
 controls include provisions related to (1) labeling, (2) producer registration, (3) defect notification, (4) records and reports
 and (5) quality service requirements ("QSR").

 Class
 II devices are medical devices for which the general controls for the Class I devices are deemed not sufficient to ensure their safety
 and effectiveness and require special controls in addition to the general controls. Special controls include provisions related to
 (1) performance and design standards, (2) post-market surveillance, (3) patient registries and (4) the use of FDA guidelines.

 Class
 III devices are the most regulated medical devices and are generally limited to devices that support or sustain human life or are
 of substantial importance in preventing impairment of human health or present a potential, unreasonable risk of illness or injury.
 Pre-market approval by the FDA is the required process of scientific review to ensure the safety and effectiveness of Class III devices.

 Before
a new medical device can be introduced to the market, Section 510(k), and Section 515 of the FDC Act require a manufacturer who intends
to market a medical device to submit a premarket notification (Section 510(k)) or a request for premarket approval (Section 515), to
the FDA.

 A
510(k) clearance will be granted if the submitted information establishes that the proposed device is "substantially equivalent"
to a legally marketed Class I or Class II medical device or to a Class III medical device for which the FDA has not called for premarket
approval under Section 515. The 510(k) clearance process is generally faster and simpler than the premarket approval process.

 Premarket
approval (PMA) is the FDA's process of scientific and regulatory review to evaluate the safety and effectiveness of Class III medical
devices. Class III devices are those that support or sustain human life, are of substantial importance in preventing impairment of human
health, or which present a potential, unreasonable risk of illness or injury, or are new and present unknown safety or effectiveness
issues or risks. PMA is the most stringent type of device marketing application required by the FDA. To gain approval, the manufacturer
must present adequate scientific evidence to assure that the device is safe and effective for its intended use(s).

 For
any devices cleared through the 510(k) clearance process, modifications or enhancements that could significantly affect the safety or
effectiveness of the device or that constitute a major change to the intended use of the device will require a new 510(k) clearance submission.
Accordingly, if we do obtain Section 510(k) clearance for any of our ESRD therapy and/or filtration products, we will need to submit
another Section 510(k) notification if we significantly affect that product's safety or effectiveness through subsequent modifications
or enhancements.

 All
of our products have been cleared by the FDA as Class II devices, such as.

 DSU
 Dual Stage UltraFilter: In June 2009, we received FDA 510(k) clearance of the DSU to be used to filter biological contaminants
 from water and bicarbonate concentrate used in hemodialysis procedures.

 SSU-D/DSU-D
 Dual Stage UltraFilter: In July 2011, we received FDA 510(k) clearance of the SSU/DSU to be used to filter water or bicarbonate
 concentrate used in hemodialysis procedures.

 OLp r
 H2H Module and OLp r MD 220 Hemodiafilter: In April 2012, we received FDA 510(k) clearance of the OLp r H2H Module
 and OLp r MD 220 Hemodiafilter for use with a UF controlled hemodialysis machine that provides ultrapure dialysate in accordance
 with current ANSI/AAMI/ISO standards, for the treatment of patients with chronic renal failure in the United States.

 DSU-H/SSU-H:
 In October 2014, we received FDA 510(k) clearance of the DSU-H and SSU-H ultrafilters to be used to filter EPA quality drinking
 water. The filters retain bacteria, viruses, and endotoxin. By providing ultrapure water for patient washing and drinking, the filters
 aid in infection control.

 S100
 Point of Use Filter: In April 2016, we received FDA 510(k) clearance of the S100 point-of-use filter to be used to filter EPA
 quality drinking water. The filters retain bacteria. By retaining bacteria in water for washing and drinking, the filter may aid
 in infection control.

 HydraGuard:
 In December 2016, we received FDA 510(k) clearance of the HydraGuard 10" ultrafilter intended to be used to filter EPA
 quality drinking water. The filter retains bacteria, viruses and endotoxin. By providing ultrapure water for patient washing and
 drinking, the filter aids in infection control.

 EndoPur:
 In March 2017, we received FDA 510(k) clearance of the EndoPur ultrafilter intended to be used to filter water used in hemodialysis
 devices. It assists in providing hemodialysis quality water. The device is not a complete water treatment system but serves to remove
 biological contaminants. Therefore, it must be used in conjunction with other water treatment equipment (Reverse Osmosis, Deionization,
 etc.).

 The
FDC Act requires that medical devices be manufactured in accordance with the FDA's current QSR regulations which require, among
other things, that:

 the
 design and manufacturing processes be regulated and controlled by the use of written procedures;

 the
 ability to produce medical devices which meet the manufacturer's specifications be validated by extensive and detailed testing
 of every aspect of the process;

 any
 deficiencies in the manufacturing process or in the products produced be investigated;

 detailed
 records be kept, and a corrective and preventative action plan be in place; and

 manufacturing
 facilities be subject to FDA inspection on a periodic basis to monitor compliance with QSR regulations.

 In
addition to the requirements described above, the FDC Act requires that:

 all
 medical device manufacturers and distributors register with the FDA annually and provide the FDA with a list of those medical devices
 which they distribute commercially;

 information
 be provided to the FDA on death or serious injuries alleged to have been associated with the use of the products, as well as product
 malfunctions that would likely cause or contribute to death or serious injury if the malfunction were to recur; and

 certain
 medical devices not cleared with the FDA for marketing in the United States meet specific requirements before they are exported.

 We
and our contract manufacturers are required to manufacture our products in compliance with current Good Manufacturing Practice (GMP)
requirements set forth in the QSR. The QSR requires a quality system for the design, manufacture, packaging, labeling, storage, installation,
and servicing of marketed devices, and it includes extensive requirements with respect to quality management and organization, device
design, buildings, equipment, purchase and handling of components or services, production and process controls, packaging and labeling
controls, device evaluation, distribution, installation, complaint handling, servicing, and record keeping. The FDA evaluates compliance
with the QSR through periodic unannounced inspections that may include the manufacturing facilities of our subcontractors. If the FDA
believes that we or any of our contract manufacturers, or regulated suppliers, are not in compliance with these requirements, there may
be a material adverse effect on our manufacturing operations, effecting our ability to sell.

 European
Union

 The
European Union began to harmonize national regulations comprehensively for the control of medical devices in member nations in 1993,
when it adopted its Medical Devices Directive 93/42/EEC. The European Union directive applies to both the manufacturer's quality
assurance system and the product's technical design and discusses the various ways to obtain approval of a device (dependent on
device classification), how to properly CE mark a device, and how to place a device on the market.

 In
2017, the European Union (EU) adopted the EU Medical Device Regulation (Council Regulations 2017/745) which imposes stricter requirements
for the marketing and sale of medical devices, including new quality system and post-market surveillance requirements.

 As
defined in EU Medical Device Regulation (Council Regulations 2017/745), the regulatory approach necessary to demonstrate to the European
Union that the organization has the ability to provide medical devices and related services that consistently meet customer requirements
and regulatory requirements applicable to medical devices requires the certification of a full quality management system by a notified
body.

 European
Union requirements for products are set forth in harmonized European Union standards and include conformity to safety requirements, physical
and biological properties, construction and environmental properties, and information supplied by the manufacturer. A company demonstrates
conformity to these requirements, with respect to a product, by pre-clinical tests, biocompatibility tests, qualification of products
and packaging, risk analysis and well-conducted clinical investigations approved by ethics committees.

 Once
a manufacturer's full quality management system is determined to be in compliance with ISO 13485/2016 and other statutory requirements,
and the manufacturer's products conform to harmonized European standards, the notified body will recommend and document such conformity.
The manufacturer will receive a CE marking and ISO certifications, and then may place a CE mark on the relevant products. The CE mark,
which stands for Conformit Europ ene, demonstrates compliance with the relevant European Union requirements. Products
subject to these provisions that do not bear the CE mark cannot be imported to, or sold or distributed within, the European Union.

 Medical
Devices sold in Europe/ anticipated to be sold in Europe, shall be examined, and classified as:

 Class
 I: Provided non-sterile or do not have a measuring function; Low Risk

 Class
 I: Provided sterile and/or have a measuring function; Low/medium risk

 Class
 IIa: Medium risk

 Class
 IIb: Medium/high risk

 Class
 III: High risk

 Currently
we are in the process to seek approval for CE certification under EU Medical Device Regulation (Council Regulations 2017/745). Once approved,
the following products will have certification from BSI America for CE marking and adherence to ISO 13485 standards as Class IIa (Rule
3) medical devices:

 SSU-D/DSU-D/SSUmini
 Ultrafilters: Intended to be used to filter water or bicarbonate concentrate used in hemodialysis procedures.

 Regulatory
Authorities in Regions Outside of the United States and the European Union

 In
November 2007 and May 2011, the Therapeutic Products Directorate of Health Canada, the Canadian health regulatory agency, approved our
OLp r MD220 Hemodiafilter and our DSU, respectively, for marketing in Canada. Other than the Canadian approval of our OLp r
MD220 Hemodiafilter and DSU products, we have not obtained any regulatory approvals to sell any of our products outside of the United
States and the European Union and there is no assurance that any such clearance or certification will be issued.

 Requirements
pertaining to medical devices vary widely from country to country, ranging from no health regulations to detailed submissions such as
those required by the FDA. Our manufacturing facilities are subject to audits and have been certified to be ISO 13485:2016, which allows
us to sell our products in the United States and Canada.

 In
November 2020, we received MDSAP certification to continue sales and compliance in the United States and Health Canada. The Medical Device
Single Audit Program (MDSAP) is a program that allows the conduct of a single regulatory audit of a medical device manufacturer's
quality management system that satisfies the requirements of multiple regulatory jurisdictions. Audits are conducted by Auditing Organizations
authorized by the participating Regulatory Authorities to audit under MDSAP requirements. The MDSAP is a way that medical device manufacturers
can be audited once for compliance with the standard and regulatory requirements of up to five different medical device markets: Australia,
Brazil, Canada, Japan, and the United States.

 In
November 2023, we received approval for expansion of our MDSAP certification to include Brazil. This expansion provides Nephros the approval
to sell the following medical devices in Brazil:

 SSSUmini
Ultrafilters: Intended to be used to filter water or bicarbonate concentrate used in hemodialysis procedures.

 EndoPur Filters: The device is not a complete water treatment system but serves to remove biological contaminants.
 Therefore, it must be used in conjunction with other water treatment equipment (Reverse Osmosis, Deionization, etc.).

 Product
Liability and Insurance

 The
production, marketing and sale of our products have an inherent risk of liability in the event of product failure or claim of harm caused
by product operation. We have acquired product liability insurance for our products in the amount of $3 million. A successful claim in
excess of our insurance coverage could materially deplete our assets. Moreover, any claim against us could generate negative publicity,
which could decrease the demand for our products, our ability to generate revenues and our profitability.

 Some
of our existing and potential agreements with manufacturers of our products and components of our products do or may require us (1) to
obtain product liability insurance or (2) to indemnify manufacturers against liabilities resulting from the sale of our products. If
we are not able to maintain adequate product liability insurance, we will be in breach of these agreements, which could materially adversely
affect our ability to produce our products. Even if we are able to obtain and maintain product liability insurance, if a successful claim
in excess of our insurance coverage is made, then we may have to indemnify some or all of our manufacturers for their losses, which could
materially deplete our assets.

 Employees

 As
of December 31, 2023, we employed a total of 31 full-time employees, including 11 employed in sales/marketing/customer support, 15 in
logistics, general, and administrative, and 4 in research and development and 1 in manufacturing. None of our employees are currently
represented by a labor union or covered by a collective bargaining agreement and we believe that our relations with our employees are
good. During 2023, we had limited voluntary turnover. Going forward, we intend to focus on maintaining our current good relations with
our employees and continuing to develop and explore ways to collaborate with our employees and create a well-regarded workplace.

 Available
Information

 We
are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Exchange
Act requires us to file periodic reports, proxy statements and other information with the SEC. The SEC maintains a website that contains
reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. These materials
may be obtained electronically by accessing the SEC's website at

 Item
1A. Risk Factors

 Risks
Related to Our Overall Business and Operations

 We
have a history of operating losses and a significant accumulated deficit, and we may not achieve or maintain profitability in the future.

 As
of December 31, 2023, we had an accumulated deficit of $144.4 million as a result of historical operating losses. While we believe that
revenues will increase following our planned sales team expansion, there can be no guarantee of this. We may continue to incur additional
losses in the future depending on the timing and marketplace acceptance of our products and as a result of operating expenses being higher
than our gross margin from product sales. We began sales of our first product in March 2004, and we may never realize sufficient revenues
from the sale of our products or be profitable. Each of the following factors, among others, may influence the timing and extent of our
profitability, if any:

 the
 market acceptance of our technologies and products in each of our target markets;

 our
 ability to effectively and efficiently manufacture, market and distribute our products;

 our
 ability to sell our products at competitive prices that exceed our per unit costs; and

 our
 ability to continue to develop products and maintain a competitive advantage in our industry.

 If
we are unable to achieve profitability, we will need additional capital to fund our operating activities. Such capital is likely to be
from the sale of shares of our common stock or other equity securities or from loans or other debt securities. However, there is no assurance
that such capital will be available on favorable terms or at all.

 We
may be unable to achieve or sustain revenue growth.

 Our
business and future prospects are substantially dependent upon our ability to significantly grow our product revenue. Although our sales
were approximately 43% higher in 2023 compared to 2022, there is no assurance that we will be able to continue our sales growth in future
periods. Our ability to increase our revenues in future periods will depend on our ability to significantly grow our customer base and
then consistently obtaining product reorders from those customers. If we cannot sustain significant revenue growth for an extended period,
our financial results will be adversely affected, and our stock price may decline.

 We
face significant challenges in obtaining market acceptance of our products, which could adversely affect our potential sales and revenues.

 Our
success depends on our ability to both maintain our existing customers and to continue growing our customer base. If we are unable to
maintain and further grow our customer base, our ability to grow revenue will be limited and we will have difficulty achieving profitability.
Our ability to grow our customer base also depends on our ability to continue increasing achieve market acceptance of our water filter
products, including among healthcare facility customers, or may not be deemed suitable for other commercial, military, industrial or
retail applications. Factors that may affect our ability to achieve acceptance of our water filtration products and technologies in the
marketplace include whether such products will be safe for use, whether they will be effective and whether they will be cost-effective.

 If
we are not able to successfully scale-up production of our products, then our sales and revenues will suffer.

 In
order to successfully commercialize our products, we need to be able to produce them in a cost-effective way on a large scale to meet
commercial demand, while maintaining extremely high standards for quality and reliability. The extent to which we fail to successfully
commercialize our products will limit our ability to be profitable.

 We
rely on, and for the foreseeable future expect to continue to rely on, a limited number of independent manufacturers to produce our products.
Our manufacturers' systems and procedures may not be adequate to support our operations and may not be able to achieve the rapid
execution necessary to exploit the market for our products. If we are successful in continuing to increase our product revenue, we will
need to also increase our supply requirements. However, our contracted manufacturers could experience manufacturing and control problems
in connection with their manufacture of our products, which could disrupt their ability to timely and adequately supply us with product.
If we experience any of these problems with respect to our manufacturers' scale-ups of manufacturing operations, then we may not
be able to have our products manufactured and delivered in a timely manner. Our products are new and evolving, and our manufacturers
may encounter unforeseen difficulties in manufacturing them in commercial quantities or at all.

 If
we cannot develop adequate distribution, customer service and technical support networks, then we may not be able to market and distribute
our products effectively and/or customers may decide not to order our products. In either case, our sales and revenues will suffer.

 Our
strategy requires us to distribute our products and provide a significant amount of customer service and maintenance and other technical
service. To provide these services, we have begun, and will need to continue, to develop a network of distribution and a staff of employees
and independent contractors in each of the areas in which we intend to operate. In particular, our ability to grow sales in our commercial
business depends largely on the efforts of a distribution partner with respect to which we have given exclusive distribution rights to
our products in the food, beverage and hospitality markets. We cannot assure that we will be able to organize and manage this network
on a cost-effective basis. If we cannot effectively organize and manage this network, then it may be difficult for us to distribute our
products and to provide competitive service and support to our customers, in which case customers may be unable, or decide not, to order
our products and our sales and revenues will suffer.

 We
have limited experience selling our products to healthcare facilities, and we might be unsuccessful in increasing our sales.

 Our
business strategy depends in part on our ability to sell our products to hospitals and other healthcare facilities, including dialysis
clinics. We have limited experience with respect to sales and marketing. If we are unsuccessful at manufacturing, marketing, and selling
our products, our operations and potential revenues will be materially adversely affected.

 We
are dependent on third parties to supply us with our products to us, making us vulnerable to supply problems and price fluctuations.

 We
rely on third-party suppliers to provide us with certain components of our products. With respect to our proprietary filter material
used in our DSU-H, SSU-H, S100 and HydraGuard TM and HydraGuard TM – Flush filters, we rely on a single source
supplier. Our agreement with that supplier will expire in 2028 and although our relationship with this supplier is good, there can be
no assurance that our current agreement will guarantee uninterrupted supply or that we will be able to renew the agreement on favorable
terms, or at all. We depend on our suppliers to provide us and our customers with materials in a timely manner that meet our and their
quality, quantity and cost requirements. These suppliers may encounter problems during manufacturing for a variety of reasons, any of
which could delay or impede their ability to meet our demand and our customers' demands.

 Companies
in the United States and around the world have experienced a disruption in the supply of certain components and raw materials, such as
resins and polymers, which may adversely affect us and our ability to obtain these components in a timely manner, in the volumes we require,
or at all. In addition, the prices of these components and other supplies we rely upon in the manufacture of our products may rise. For
example, we and our suppliers have recently experienced, and may continue to experience, rising costs due to inflation, such as costs
of materials, labor and freight. If inflation continues to rise, the prices of our components may rise, resulting in increased expenses
to us that we may not be able to offset by raising the prices of our products.

 Any
supply interruption from our suppliers or failure to obtain additional suppliers for any of the components used in our products, or price
increases of these supplies, could have a material adverse effect on our business, financial condition and results of operations.

 We
operate with a limited senior management team and are highly dependent on our sales and marketing personnel. Our business could be harmed
if we are unable to attract and retain personnel necessary for our success.

 We
operate our business with a two-person senior management team. We have a Chief Executive Officer and a Chief Financial Officer, who together
directly oversee operations, sales and finances. Our dependence on two officers to perform multiple functions exposes us to various risks,
including the risk that two officers may be unable to devote sufficient or timely attention to all aspects of operating our business
and that in the event of a sudden departure of one officer, we may not be able to promptly identify a successor. We do not carry key
person life insurance on any of our employees. If we are unable to recruit and retain qualified personnel to our senior management teams,
we will be unlikely to achieve our objectives of continuing to grow our company and our business may otherwise be harmed.

 In
addition, our need to significantly increase our revenue is also dependent on the personnel in our sales and marketing organization.
Although we have recently added a number of new sales and marketing professionals, our success will depend on their ability to quickly
integrate into our business and our ability to develop and retain them as employees. Our ability to increase our sales revenue may be
materially impaired if we experience attrition in our sales and marketing organization.

 We
rely on information technology systems and network infrastructure to operate and manage our business. If we experience a breach, cyber
attack or other disruption to these systems or data, our business, results of operations and financial condition could be adversely affected.

 We
are increasingly dependent on sophisticated information technology systems to operate our business, including to process, transmit and
store sensitive data. Specifically, we rely on our information technology systems to effectively manage sales and marketing, accounting
and financial functions, inventory management, and our research and development data. Our business therefore depends on the continuous,
effective, reliable, and secure operation of our computer hardware, software, networks, Internet servers, and related infrastructure.

 Although
we believe our computer and communications hardware is protected by reasonable physical, technical, and administrative safeguards, it
is still vulnerable to system malfunction, computer viruses, and cybersecurity breaches – including ransomware, phishing, malware,
brute force, insider threats, and other cyber attacks and security incidents. These events could lead to the unauthorized access to information
systems maintained by us or our service providers or customers and result in the misappropriation or unauthorized disclosure of confidential
information belonging to us, our employees, customers, distributors or our suppliers. The techniques used by criminal elements to attack
computer systems are sophisticated, change frequently and may originate from less regulated and remote areas of the world, including
countries that engage in state-sponsored cyber attacks. As a result, we may not be able to address these techniques proactively or implement
adequate preventative measures. Additionally, the regulatory environment governing information, security and privacy laws is increasingly
demanding and continues to evolve. If our information technology systems are compromised, we could be subject to fines, damages, litigation
and enforcement actions and we could lose trade secrets or other confidential information, the occurrence of which could harm our reputation,
business, results of operations and financial condition.

 Our
information systems, and those of third parties with whom we contract, also require an ongoing commitment of significant resources to
maintain, protect and enhance existing systems and develop new systems to keep pace with continuing changes in information technology.
The failure of our information technology systems to perform as we anticipate or our failure to effectively implement new systems could
disrupt our operations and could result in decreased sales, increased overhead costs, excess inventory and product shortages, all of
which could have a material adverse effect on our reputation, business, results of operations and financial condition.

 Product
liability associated with the production, marketing, and sale of our products, and/or the expense of defending against claims of product
liability, could materially deplete our assets and generate negative publicity which could impair our reputation.

 The
production, marketing and sale of water-filtration products, particularly to healthcare facility customers, have inherent risks of liability
in the event of product failure or claim of harm caused by product operation. Voluntary recalls could subject us to claims or proceedings
by consumers, the FDA or other regulatory authorities which may adversely impact our sales and revenues. Furthermore, even meritless
claims of product liability may be costly to defend against. Although we have acquired product liability insurance for our products,
we may not be able to maintain or obtain this insurance on acceptable terms or at all. Because we may not be able to obtain insurance
that provides us with adequate protection against all potential product liability claims, a successful claim in excess of our insurance
coverage could materially deplete our assets. Moreover, even if we are able to obtain adequate insurance, any claim against us could
generate negative publicity, which could impair our reputation and adversely affect the demand for our products, our ability to generate
sales and our profitability.

 Some
of the agreements that we may enter into with manufacturers of our products and components of our products may require us to obtain product
liability insurance; or to indemnify manufacturers against liabilities resulting from the sale of our products. For example, the agreement
with our contract manufacturer ("CM") requires that we obtain and maintain certain minimum product liability insurance coverage
and that we indemnify our CM against certain liabilities arising out of our products that they manufacture, provided they do not arise
out of our CM's breach of the agreement, negligence or willful misconduct. If we are not able to obtain and maintain adequate product
liability insurance, then we could be in breach of these agreements, which could materially adversely affect our ability to produce our
products and generate revenues. Even if we are able to obtain and maintain product liability insurance, if a successful claim in excess
of our insurance coverage is made, then we may have to indemnify some or all of our manufacturers for their losses, which could materially
deplete our assets.

 We
cannot assure you that our products will be safe or that there will not be product-related deaths, serious injuries or product malfunctions.
Further, we are required under applicable law to report any circumstances relating to our medically approved products that could result
in deaths or serious injuries. These circumstances 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
cannot assure you that our products will prove to be safe or that there will not be product-related deaths or serious injuries or product
malfunctions, which could trigger recalls, class action lawsuits and other events that could cause us to incur significant expenses,
limit our ability to market our products and generate revenues from such products or cause us reputational harm. Under the FDC Act, we
are required to submit medical device reports ("MDRs") to the FDA to report device-related deaths, serious injuries and malfunctions
of medically approved products that could result in death or serious injury if they were to recur. Depending on their significance, MDRs
could trigger events that could cause us to incur expenses and may also limit our ability to generate revenues from such products. Additionally,
any of the following could occur:

 information
 contained in the MDRs could trigger FDA regulatory actions such as inspections, recalls and patient/physician notifications;

 because
 the reports are publicly available, MDRs could become the basis for private lawsuits, including class actions; and

 if
 we fail to submit a required MDR to the FDA, the FDA could take enforcement action against us.

 If
any of these events occur, then we could incur significant expenses and it could become more difficult for us to market and sell our
products and to generate revenues from sales. Other countries may impose analogous reporting requirements that could cause us to incur
expenses and may also limit our ability to generate revenues from sales of our products.

 Risks
Related to Government Regulation

 If
we violate any provisions of the FDC Act or any other statutes or regulations, then we could be subject to enforcement actions by the
FDA or other governmental agencies.

 We
face a significant compliance burden under the FDC Act and other applicable statutes and regulations which govern the testing, labeling,
storage, record keeping, distribution, sale, marketing, advertising and promotion of our medically approved products. If we violate the
FDC Act or other regulatory requirements (either with respect to our ultrafilters or otherwise) at any time during or after the product
development and/or approval process, we could be subject to enforcement actions by the FDA or other agencies, including:

 fines;

 injunctions;

 civil
 penalties;

 recalls
 or seizures of products;

 total
 or partial suspension of the production of our products;

 withdrawal
 of any existing approvals or pre-market clearances of our products;

 refusal
 to approve or clear new applications or notices relating to our products;

 recommendations
 that we not be allowed to enter into government contracts; and

 criminal
 prosecution.

 Any
of the above could have a material adverse effect on our business, financial condition, and results of operations.

 If
we develop new water filter products in the future, we may be required to obtain regulatory approvals and clearances in the countries
in which we intend to sell such products. If we fail to receive, or experience a significant delay in receiving, such approvals and clearances,
then we may not be able to get our new products to market and enhance our revenues.

 Our
current water filter products that we market and sell to healthcare facilities and dialysis centers have 510(k) clearance from the FDA.
However, we will need to continue developing new products in the future to continue to compete in our industry, and such new products
may require obtaining regulatory approvals in the U.S. and other jurisdictions in which we intend to market them.

 We
cannot ensure that any new products developed by us in the future, will be approved for marketing. The clearance and/or approval processes
can be lengthy and uncertain, and each requires substantial commitments of our financial resources and our management's time and
effort. We may not be able to obtain further CE marking or regulatory approval for any of our existing or new products in a timely manner
or at all. Even if we do obtain regulatory approval, approval may be only for limited uses with specific classes of patients, processes,
or other devices. Our failure to obtain, or delays in obtaining, the necessary regulatory clearance and/or approvals would prevent us
from selling our affected products in the applicable regions. If we cannot sell some of our products in such regions, or if we are delayed
in selling while waiting for the necessary clearance and/or approvals, our ability to generate revenues from these products will be limited.

 Over
time, we intend to market our products globally. Requirements pertaining to the sale of our products vary widely from country to country.
It may be very expensive and difficult for us to meet the requirements for the sale of our products in many countries. As a result, we
may not be able to obtain the required approvals in a timely manner, if at all. If we cannot sell our products in a particular region,
then the size of our potential market could be reduced, which would limit our potential sales and revenues.

 Significant
additional governmental regulation could subject us to unanticipated delays that would adversely affect our sales and revenues.

 Our
business strategy depends in part on our ability to get our products into the market as quickly as possible. Additional laws and regulations,
or changes to existing laws and regulations that are applicable to our business may be enacted or promulgated, and the interpretation,
application or enforcement of the existing laws and regulations may change. We cannot predict the nature of any future laws, regulations,
interpretations, applications or enforcements or the specific effects any of these might have on our business. Any future laws, regulations,
interpretations, applications, or enforcements could delay or prevent regulatory approval or clearance of our products and our ability
to market our products. Moreover, changes that result in our failure to comply with the requirements of applicable laws and regulations
could result in enforcement actions by the FDA and/or other agencies, all of which could impair our ability to have manufactured and
to sell the affected products.

 If
we are not able to maintain sufficient quality controls, then the approval or clearance of our products by the European Union, the FDA
or other relevant authorities could be withdrawn, delayed, or denied and our sales and revenues will suffer.

 Approval
or clearance of our products could be withdrawn, delayed, or denied by the European Union, the FDA and the relevant authorities of other
countries if our manufacturing facilities do not comply with their respective manufacturing requirements. The European Union imposes
requirements on quality control systems of manufacturers, which are inspected and certified on a periodic basis and may be subject to
additional unannounced inspections. Failure by our manufacturers to comply with these requirements could prevent us from marketing our
products in the European Community. The FDA also imposes requirements through quality system requirements regulations, which include
requirements for good manufacturing practices. Failure by our manufacturers to comply with these requirements could prevent us from obtaining
FDA pre-clearance or approval of our products and from marketing such products in the United States. Although the manufacturing facilities
and processes that we use to manufacture our OLp r MD HDF filter series have been inspected and certified by a worldwide testing
and certification agency (also referred to as a notified body) that performs conformity assessments to European Union requirements for
medical devices, they have not been inspected by the FDA. A "notified body" is a group accredited and monitored by governmental
agencies that inspects manufacturing facilities and quality control systems at regular intervals and is authorized to carry out unannounced
inspections. We cannot be sure that any of the facilities or processes we use will comply or continue to comply with their respective
requirements on a timely basis or at all, which could delay or prevent our obtaining the approvals we need to market our products in
the European Community and the United States.

 To
market our products in the European Community, the United States, and other countries, where approved, manufacturers of such products
must continue to comply or ensure compliance with the relevant manufacturing requirements. Although we cannot control the manufacturers
of our products, we may need to expend time, resources and effort in product manufacturing and quality control to assist with their continued
compliance with these requirements. If violations of applicable requirements are noted during periodic inspections of the manufacturing
facilities of our manufacturers, then we may not be able to continue to market the products manufactured in such facilities and our revenues
may be materially adversely affected.

 Risks
Related to our Intellectual Property

 Protecting
our intellectual property in our technology through patents may be costly and ineffective. If we are not able to adequately secure or
enforce protection of our intellectual property, then we may not be able to compete effectively and we may not be profitable.

 Our
future success depends in part on our ability to protect the intellectual property for our technology through patents. We will only be
able to protect our products and methods from unauthorized use by third parties to the extent that our products and methods are covered
by valid and enforceable patents or are effectively maintained as trade secrets. Our 4 granted U.S. patents will expire at various times
from 2029 to 2039, assuming they are properly maintained.

 The
protection provided by our patents, and patent applications if issued, may not be broad enough to prevent competitors from introducing
similar products into the market. Our patents, if challenged or if we attempt to enforce them, may not necessarily be upheld by the courts
of any jurisdiction. Numerous publications may have been disclosed by, and numerous patents may have been issued to, our competitors
and others relating to methods and devices for dialysis of which we are not aware and additional patents relating to methods and devices
for dialysis may be issued to our competitors and others in the future. If any of those publications or patents conflict with our patent
rights, or cover our products, then any or all of our patent applications could be rejected and any or all of our granted patents could
be invalidated, either of which could materially adversely affect our competitive position.

 Litigation
and other proceedings relating to patent matters, whether initiated by us or a third party, can be expensive and time-consuming, regardless
of whether the outcome is favorable to us, and may require the diversion of substantial financial, managerial, and other resources. An
adverse outcome could subject us to significant liabilities to third parties or require us to cease any related development, product
sales or commercialization activities. In addition, if patents that contain dominating or conflicting claims have been or are subsequently
issued to others and the claims of these patents are ultimately determined to be valid, then we may be required to obtain licenses under
patents of others in order to develop, manufacture, use, import and/or sell our products. We may not be able to obtain licenses under
any of these patents on terms acceptable to us, if at all. If we do not obtain these licenses, we could encounter delays in, or be prevented
entirely from using, importing, developing, manufacturing, offering, or selling any products or practicing any methods, or delivering
any services requiring such licenses.

 If
we file for or obtain additional patents in foreign countries, we will be subject to laws and procedures that differ from those in the
United States. Such differences could create additional uncertainty about the level and extent of our patent protection. Moreover, patent
protection in foreign countries may be different from patent protection under U.S. laws and may not be as favorable to us. Many non-U.S.
jurisdictions, for example, prohibit patent claims covering methods of medical treatment of humans, although this prohibition may not
include devices used for such treatment.

 If
we are not able to secure and enforce protection of our trade secrets through enforcement of our confidentiality and non-competition
agreements, then our competitors may gain access to our trade secrets, we may not be able to compete effectively, and we may not be profitable.
Such protection may be costly and ineffective.

 We
attempt to protect our trade secrets, including the processes, concepts, ideas, and documentation associated with our technologies, through
the use of confidentiality agreements and non-competition agreements with our current employees and with other parties to whom we have
divulged such trade secrets. If these employees or other parties breach our confidentiality agreements and non-competition agreements,
or if these agreements are not sufficient to protect our technology or are found to be unenforceable, then our competitors could acquire
and use information that we consider to be our trade secrets and we may not be able to compete effectively. Policing unauthorized use
of our trade secrets is difficult and expensive and, in the event we further expand our operations, the laws of other countries may not
adequately protect our trade secrets.

 Risks
Related to Owning Our Common Stock

 The
prices at which shares of the common stock trade have been and will likely continue to be volatile.

 During
the two years ended December 31, 2023, our common stock has traded at prices ranging from a high of $6.19 to a low of $0.91 per share.
Due to the lack of an active trading market for our common stock, we expect the prices at which our common stock might trade to continue
to be highly volatile. The expected volatile price of our stock will make it difficult for investors to predict the value of an investment
in our common stock, to sell shares at a profit at any given time, or to plan purchases and sales in advance. A variety of other factors
might also affect the market price of our common stock. These include, but are not limited to:

 period-to-period
 fluctuations in our results of operations;

 sales
 of our common stock or other financing transactions;

 announcements
 of technological innovations or new commercial products by our competitors or us;

 developments
 concerning proprietary rights, including patents;

 achievement
 or rejection of regulatory approvals by our competitors or us;

 regulatory
 developments in the United States and foreign countries;

 economic
 or other crises and other external factors;

 threatened
 or actual litigation; and

 changes
 in financial estimates by securities analysts.

 We
are not able to control many of these factors, and we believe that period-to-period comparisons of our financial results will not necessarily
be indicative of our future performance.

 Our
common stock could be further diluted as a result of the issuance of additional shares of common stock, warrants or options.

 In
the past we have issued common stock and warrants in order to raise capital to help fund our business. We have also issued stock options
and restricted stock as compensation for services and incentive compensation for our employees, directors, and consultants. We have shares
of common stock reserved for issuance upon the exercise of certain of these securities and may increase the shares reserved for these
purposes in the future. Our issuance of additional common stock, options and warrants could affect the rights of our stockholders, could
reduce the market price of our common stock, or could obligate us to issue additional shares of common stock.

 Market
sales of large amounts of our common stock, or the potential for those sales even if they do not actually occur, may have the effect
of depressing the market price of our common stock, the supply of common stock available for resale could be increased, which could stimulate
trading activity and cause the market price of our common stock to drop, even if our business is doing well. Furthermore, the issuance
of any additional shares of our common stock or securities convertible into our common stock could be substantially dilutive to holders
of our common stock if they do not invest in future offerings.

 We
have never paid dividends and do not intend to pay cash dividends.

 We
have never paid dividends on our common stock and currently do not anticipate paying cash dividends on our common stock for the foreseeable
future. Consequently, any returns on an investment in our common stock in the foreseeable future will have to come from an increase in
the value of the stock itself. As noted above, the lack of an active trading market for our common stock will make it difficult to value
and sell our common stock. While our dividend policy will be based on the operating results and capital needs of our business, we anticipate
that all earnings, if any, will be retained to finance our future operations.

 Several
provisions of the Delaware General Corporation Law, our fourth amended and restated certificate of incorporation, as amended, and our
second amended and restated bylaws could discourage, delay or prevent a merger or acquisition, which could adversely affect the market
price of our common stock.

 Several
provisions of the Delaware General Corporation Law, our fourth amended and restated certificate of incorporation, as amended, and our
second amended and restated bylaws could discourage, delay or prevent a merger or acquisition that stockholders may consider favorable,
and the market price of our common stock could be reduced as a result. These provisions include:

 authorizing
 our board of directors to issue "blank check" preferred stock without stockholder approval;

 providing
 for a classified board of directors with staggered, three-year terms;

 prohibiting
 us from engaging in a "business combination" with an "interested stockholder" for a period of three years
 after the date of the transaction in which the person became an interested stockholder unless certain provisions are met;

 prohibiting
 cumulative voting in the election of directors;

 limiting
 the persons who may call special meetings of stockholders; and

 establishing
 advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on
 by stockholders at stockholder meetings.

 As
a smaller reporting company with little or no name recognition and with several risks and uncertainties that could impair our business
operations, we are not likely to generate widespread interest in our common stock. Without widespread interest in our common stock, our
common stock price may be highly volatile and an investment in our common stock could decline in value.

 Unlike
many companies with publicly traded securities, we have little or no name recognition in the investment community. We are a relatively
new company and very few investors are familiar with either our company or our products. We do not have an active trading market in our
common stock, and one might never develop, or if it does develop, might not continue.

 Additionally,
the market price of our common stock may fluctuate significantly in response to many factors, many of which are beyond our control. Risks
and uncertainties, including those described elsewhere in this "Risk Factors" section could impair our business operations
or otherwise cause our operating results or prospects to be below expectations of investors and market analysts, which could adversely
affect the market price of our common stock. As a result, investors in our common stock may not be able to resell their shares at or
above their purchase price and could lose all of their investment.

 Securities
class action litigation is often brought against public companies following periods of volatility in the market price of such company's
securities. We may become subject to this type of litigation in the future. Litigation of this type could be extremely expensive and
divert management's attention and resources from running our company.

 Our
directors, executive officers, and Wexford Capital LP ("Wexford") control a significant portion of our stock and, if they
choose to vote together, could have sufficient voting power to control the vote on substantially all corporate matters.

 As
of March 1, 2024, Wexford, our largest stockholder, beneficially owned approximately 35% of our outstanding common stock. Collectively,
Wexford, our directors and our executive officers beneficially owned approximately 37.5% of our outstanding common stock. As a result
of this ownership, Wexford has the ability to exert significant influence over our policies and affairs, including the election of directors.
Wexford, whether acting alone or acting with other stockholders, could have the power to elect all of our directors and to control the
vote on substantially all other corporate matters without the approval of other stockholders. Furthermore, such concentration of voting
power could enable Wexford, whether acting alone or acting with other stockholders, to delay or prevent another party from taking control
of our company even where such change of control transaction might be desirable to other stockholders. The interests of Wexford in any
matter put before the stockholders may differ from those of any other stockholder.

 Future
sales of our common stock could cause the market price of our common stock to decline.

 The
market price of our common stock could decline due to sales of a large number of shares in the market, including sales of shares by Wexford
or any other large stockholder, or the perception that such sales could occur. These sales could also make it more difficult or impossible
for us to sell equity securities in the future at a time and price that we deem appropriate to raise funds through future offerings of
common stock. Future sales of our common stock by stockholders could depress the market price of our common stock.

 Item
1B. Unresolved Staff Comments

 Not
required.

 Item
1C. Cybersecurity

 Risk
Management and Strategy

 We
have implemented cybersecurity processes, technologies, and controls to aid in our efforts to assess, identify, and manage cybersecurity
risks. Our enterprise risk management framework considers cybersecurity risk alongside other company risks as part of our overall risk
assessment process.

 Our
cybersecurity risk management program is integrated into our overall enterprise risk management program and shares common methodologies,
reporting channels, and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic,
operational, and financial risk areas.

 Our
cybersecurity risk management program includes:

 risk
 assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and
 our broader enterprise information technology ("IT") environment;

 an
 outsourced security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls,
 and (3) our response to cybersecurity incidents;

 the
 use of external service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security controls;

 cybersecurity
 awareness training for our employees, incident response personnel, and senior management. This includes mandatory computer-based
 training, internal communications, and regular phishing awareness campaigns that are designed to emulate real-world contemporary
 threats and provide immediate feedback (and, if necessary, additional training or remedial action) to employees.

 In
addition to the processes, technologies, and controls that we have in place to reduce the likelihood of a material cybersecurity incident
(or series of related cybersecurity incidents), our outsourced security team has a written incident response plan outlining how to address
cybersecurity events that occur. We have assigned a team comprised of finance and technology personnel to review the plan annually to
serve as a framework for the execution of responsibilities across businesses and operational roles. The incident response plan is designed
to help us coordinate actions to prepare for, detect, respond to and recover from cybersecurity incidents, and includes processes to
triage, assess severity, escalate, contain, investigate, and remediate the incident, as well as to assess the need for disclosure, comply
with applicable legal obligations and mitigate the impact to our brand and reputation and on impacted parties.

 In
addition to the cybersecurity incident response plan, our outsourced team conducts tabletop exercises to enhance our incident response
preparedness. They also have processes to oversee and identify material risks from cybersecurity threats associated with our use of third-party
service providers. Such processes include conducting due diligence and risk assessment of our current and potential vendors that examine
such vendor's cybersecurity protocols and adherence to applicable regulations.

 We
also maintain business continuity and disaster recovery plans to prepare for and respond to the potential for any disruption in the technology
we rely on. Additionally, we maintain insurance coverage that, subject to its terms and conditions, is intended to help us cover certain
costs associated with cybersecurity incidents and information system failures.

 We
(or the third parties we rely on) may not be able to fully, continuously, or effectively implement security controls as intended. As
described above, we utilize a risk-based approach and judgment to determine whether and how to implement certain security controls and
it is possible that we may not implement the necessary controls if we are unable to recognize or underestimate a particular risk. In
addition, security controls, no matter how well designed or implemented, may only mitigate and not fully eliminate cybersecurity risks.
Cybersecurity events, when detected by security tools or third parties, may not always be identified immediately or addressed in the
manner intended by our cybersecurity incident response plan.

 Governance

 Based
on the information available as of the date of this Annual Report, we have no reason to believe any risks from cybersecurity threats,
including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect
us, including our business strategy, results of operations or financial condition. For additional information, see "Risks Related
to Cybersecurity, Data Privacy and IT Systems," in Item 1A, "Risk Factors" in this Annual Report on Form 10-K.

 Given
that cybersecurity risks can impact various areas of responsibility of the Committees of the Board, as well as the overall size of the
Board, the Board believes it is useful and effective for the entire Board to maintain direct oversight over cybersecurity matters. We
have implemented processes that will include regular updates to the Board from our Chief Executive Officer and Chief Financial Officer
for its review and feedback regarding cybersecurity governance processes, the status of projects to strengthen internal cybersecurity,
results from third-party assessments, and also discusses any significant cyber incidents, including recent incidents at other companies
and the emerging threat landscape.

 Our
cybersecurity risk management strategy processes, discussed in greater detailed above, are led by our Chief Financial Officer, in conjunction
with our outsourced security team, under the supervision of our Chief Executive Officer. Our Chief Financial Officer has over 5 years
of prior work experience in various roles involving supervising the implementation of various information technology systems. These individuals
are informed about and monitor the prevention, mitigation, detection and remediation of cybersecurity incidents through their management
of, and participation in, the cybersecurity risk management and strategy processes described above, including their roles in our overall
enterprise risk management. As discussed above, our Chief Executive Officer and Chief Financial Officer regularly report to the Board
about cybersecurity threat risks, among other cybersecurity related matters.

 Item
2. Properties

 Our
U.S. facilities are located at 380 Lackawanna Place, South Orange, New Jersey 07079 and 30 Leslie Court, Whippany, NJ 07981. We use these
facilities to house our corporate headquarters, research, manufacturing, and distribution facilities.

 We
believe our current facilities are adequate to meet our needs, although we may consolidate facilities in the future. We do not own any
real property for use in our operation or otherwise.

 Item
3. Legal Proceedings

 There
are currently no material pending legal proceedings and, as far as we are aware, no governmental authority is contemplating any material
proceeding to which we are a party or to which any of our properties is subject.

 Item
4. Mine Safety Disclosures

 Not
applicable.

 PART
II

 Item
5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Common
Stock Information

 Our
common stock is quoted on the Nasdaq Capital Market under the symbol "NEPH". Our common stock commenced trading on August
14, 2019.

 As
of December 31, 2023, there were approximately 44 holders of record and approximately 1,300 beneficial holders of our common stock.

 Recent
Sales of Unregistered Securities

 Except
as previously reported in our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K, we have not sold any equity securities
during the year ended December 31, 2023, that were not registered under the Securities Act of 1933, as amended.

 Issuer
Repurchases of Equity Securities

 There
were no repurchases of our common stock during the fourth quarter of 2023.

 Equity
Compensation Plan Information

 See
Part III, Item 12, under the heading "Equity Compensation Plan Information," which is incorporated by reference herein.

 Item
6. Reserved

 Item
7. Management's Discussion and Analysis of Financial Condition and Results of Operations

 The
following 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.
A list of the known material factors that may cause our results to vary, or may cause management to deviate from its current plans and
expectations, is included in Item 1A, "Risk Factors," of this Annual Report on Form 10-K. The following discussion should
also be read in conjunction with the consolidated financial statements and notes included in Item 8, "Financial Statements and
Supplemental Data," of this Annual Report on Form 10-K.

 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 are
also sold into 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. On May 13, 2022, the FDA gave 510(k) clearance
to SRP's second-generation model of the OLp rH2H 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.

 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 – Summary of Significant Accounting Policies," to our consolidated financial statements
included in Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.

 Critical
Accounting Policies and Estimates

 Our
discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The preparation
of financial statements in accordance with GAAP requires application of management's subjective judgments, often requiring estimates
about the effect of matters that are inherently uncertain and may change in subsequent periods. Our actual results may differ substantially
from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail
in "Note 2 – Summary of Significant Accounting Policies," to our consolidated financial statements included in Item
8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K, we believe that the following accounting
policies require the application of significant judgments and estimates.

 Inventories

 Our
inventory reserve requirements are based on various factors including product expiration date and estimates for the future sales of the
product. Reserve assessments include inventory obsolescence based upon expiration date, damaged, or rejected product, slow-moving products,
and other considerations. We continue to monitor our inventory reserves amounts and policies, and to update both as required by relevant
circumstances.

 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 for the foreseeable future by several factors,
including market acceptance of our products, expense management, and progress in continuing 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.

 Fiscal
Year Ended December 31, 2023, Compared to the Fiscal Year Ended December 31, 2022

 The
following table sets forth our summarized, consolidated results of operations for the years ended December 31, 2023 and 2022 (in thousands
except percentages):

 Years Ended December 31,

 $
 Increase

 %
 Increase

 2023

 2022

 (Decrease)

 (Decrease)

 Total net revenues

 $
 14,238

 $
 9,975

 $
 4,263

 %

 Cost of goods sold

 5,833

 5,244

 %

 Gross margin

 8,405

 4,731

 3,674

 %

 Gross margin %

 %

 %

 -

 Research and development expenses

 1,255

 (382
)

 (30
)%

 Depreciation and amortization expenses

 (4
)

 (2
)%

 Selling, general and administrative expenses

 8,911

 7,593

 1,318

 %

 Operating loss from continuing operations

 (1,593
)

 (4,335
)

 2,742

 (63
)%

 Interest expense

 (2
)

 (20
)

 (90
)%

 Interest income

 %

 Other (expense) income, net

 (44
)

 (108
)

 (169
)%

 Net loss from continuing operations

 (1,575
)

 (4,277
)

 2,702

 (63
)%

 Net loss from discontinued operations

 -

 (2,829
)

 2,829

 %

 Net Loss

 (1,575
)

 (7,106
)

 5,531

 (78
)%

 Less: undeclared deemed dividend attributable to continuing noncontrolling interest

 -

 (276
)

 (100
)%

 Net loss attributable to Nephros, Inc. shareholders

 $
 (1,575
)

 $
 (7,382
)

 5,807

 (79
)%

 Net
Revenues.

 Total
net revenues increased 43% in the year ended December 31, 2023, driven by investments in our executive and sales organizations, as well
as partnering with a master distributor for much of our commercial business.

 Gross
Profit Margin

 Gross
profit margin was approximately 59% for the year ended December 31, 2023, compared to approximately 47% for the year ended December 31,
2022. The increase of approximately 12 percentage points reflects a return to target gross margins of 55%-60%. Lower gross margins in
2022 were primarily driven by large inventory write-downs due to expired product, and higher shipping expense from supply chain disruptions.

and Development Expenses

and development expenses decreased 30% primarily due to the wind down of SRP in 2023 and consequently a reduction in SRP-related
research and development expense of $0 in 2023 versus $376,000 in 2022, and slightly decreased investment in 2023 in water filter
research and development.

 Depreciation
and Amortization Expense

 Depreciation
and amortization expenses were $0.2 million for each of the years ended December 31, 2023 and 2022.

 Selling,
General and Administrative Expenses

 Selling,
general and administrative expenses increased $1.3 million or 17%, primarily due to increased bonus and sales commission expense associated
with higher sales, the hiring of a new CEO and CFO to replace one person acting in both positions, and increased hires to support the
sales organization.

Expense

expense was approximately $2,000 for the year ended December 31, 2023 compared to $20,000 for the year ended December 31, 2022. This
reduction is primarily related to a lower principal balance of the company's secured note payable.

Income

income was approximately $64,000 for the year ended December 31, 2023 compared to approximately $14,000 for the ended December 31, 2022.
The increase in interest income is due to higher interest rates earned on invested cash balances.

 Other
Income (Expense), net

 Other
expense was approximately $44,000 for the year ended December 31, 2023, compared to other income of $64,000 for the year ended December
31, 2022. This decrease is primarily a result of losses on foreign currency transactions
in 2023. For the year ended December 31, 2022, other income related to the release of the cumulative
translation adjustment from accumulated other comprehensive income (loss) on the liquidation of a foreign entity, related to the
closure in the second quarter of 2022 of Nephros International, our wholly-owned subsidiary.

 Loss
from discontinued operations

 Loss
from discontinued operations was approximately $2.8 million for the year ended December 31, 2022. The discontinued operations are related
to the company's former PDS operating segment.

 Liquidity
and Capital Resources

 The
following table summarizes our liquidity and capital resources as of December 31, 2023 and 2022 and is intended to supplement the more
detailed discussion that follows. The amounts stated are expressed in thousands.

 As of December 31,

 Liquidity and Capital Resources

 2023

 2022

 Cash and cash equivalents

 $
 4,307

 $
 3,634

 Other current assets

 4,098

 4,627

 Working capital

 6,292

 6,849

 Stockholders' equity

 8,358

 8,881

 We
operate under an Investment, Risk Management and Accounting Policy adopted by our Board of Directors. Such policy limits the types of
instruments or securities in which we may invest our excess funds: U.S. Treasury Securities; Certificates of Deposit issued by money
center banks; Money Funds by money center banks; Repurchase Agreements; and Eurodollar Certificates of Deposit issued by money center
banks. This policy provides that our primary objectives for investments are the preservation of principal and achieving sufficient liquidity
to meet our forecasted cash requirements. In addition, provided that such primary objectives are met, we may seek to achieve the maximum
yield available under such constraints.

 At
December 31, 2023, we had an accumulated deficit of $144.4 million and we expect to 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, as well as the fact that we generated $0.7 million
in cash flow in 2023, we believe that our existing cash resources together with our anticipated revenue, will be sufficient to fund our
current operating plan through at least the next 12 months from the date of issuance of the consolidated financial statements in this
Annual Report on Form 10-K. 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 provided by operating activities was $0.8 million for the year ended December 31, 2023 compared to net cash used in operating activities
of approximately $3.2 million for the year ended December 31, 2022, an increase of $4.1 million. This increase of $4.1 million is due
primarily to a decrease in the net loss incurred of $5.5 million, in addition there was approximately $1.4 million in non-cash charges
for impairment of assets held for sale in 2022.

 Net
cash used in investing activities was $0.1 million for the years ended December 31, 2023 and 2022

 Net
cash used in financing activities was approximately $79,000 for the year ended December 31, 2023. This was primarily from payments of
$71,000 on our secured note, principal payments of approximately $7,000 on our finance lease obligation
 and principal payments of approximately $1,000 on our equipment financing debt.

 Net
cash provided by financing activities was $34,000 for the year ended December 31, 2022. This was primarily from proceeds from the exercise
of warrants of $0.2 million and from the sale to Nephros of SRP preferred shares of $0.2 million, offset partially by payments of $0.3
million on our secured note, payments of employee taxes on restricted stock of approximately $31,000, principal payments of approximately
$12,000 on our finance lease obligation and principal payments of approximately $3,000 on our equipment financing debt.

 Purchase
Commitments

 In
exchange for the rights granted under the License and Supply Agreement with Medica (see Note 9 – 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, 2023, the Company had agreed to make minimum annual aggregate purchases from Medica of 3.8 million
(approximately $4.1 million). For the year ended December 31, 2023, aggregate purchase commitments totaled 4.9 million (approximately
$5.3 million). All purchase agreements were met.

 Future
purchase commitments under the License and Supply Agreement with Medica are as follows:

 2024:
 4,208,000

 2025:
 4,629,000

 2026:
 4,976,000

 Item
7A. Quantitative and Qualitative Disclosures About Market Risk

 Not
required for smaller reporting companies.

 Item
8. Financial Statements and Supplementary Data

 Report
of Independent Registered Public Accounting Firm

 To
the Board of Directors and Stockholders of

 Nephros,
Inc.

 Opinion
on the Financial Statements

 We
have audited the accompanying balance sheets of Nephros, Inc. (the "Company") as of December 31, 2023 and 2022, and the related
statements of operations and comprehensive loss, changes in stockholders' equity, and cash flows for each of the two years in the
period ended December 31, 2023, and the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023,
in conformity with accounting principles generally accepted in the United States of America.

 Basis
for Opinion

 These
consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.

 Critical
Audit Matter

 The
critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that
was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material
to the financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical
audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating
the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which
it relates.

Valuation

 Critical
Audit Matter Description

 As
described in Note 2 to the financial statements, inventory consists of finished goods and raw materials and is valued at the lower of
cost or net realizable value using the first-in, first-out method. The Company's inventory reserve requirements are based on various
factors including product expiration date and estimates for the future sales of the product. Reserve assessments include inventory obsolescence
based upon expiration date, damaged or rejected product, slow-moving products, and other considerations.

 We
identified the assessment of the excess and obsolete inventory reserve as a critical audit matter. The principal consideration for our
determination that this is a critical audit matter is the significant judgment by management to estimate the excess and obsolete inventory
reserve, which led to a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate management's
significant assumptions.

 How
We Addressed the Matter in Our Audit

 Addressing
the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial
statements. The primary procedures we performed to address this critical audit matter included:

 testing
 management's process for estimating the excess and obsolete inventory reserve, including evaluating the appropriateness of
 the approach utilized and underlying assumptions

 testing
 the mathematical accuracy of the excess and obsolete inventory reserve calculation

 testing
 the completeness and accuracy of underlying data used in the analysis, including historical usage and inventory age

 /s/
 Baker Tilly US, LLP

 We
 have served as the Company's auditor since 2015.

 Tewksbury,
 Massachusetts

 March

 CONSOLIDATED
BALANCE SHEETS

 (In
thousands, except share and per share amounts)

2023

2022

 ASSETS

 Current assets:

 Cash and cash equivalents

 $
 4,307

 $
 3,634

 Accounts receivable, net

 1,496

 1,286

 2,470

 3,153

 Prepaid expenses and other current assets

 Total current assets

 8,405

 8,261

 Property and equipment, net

 Lease right-of-use assets

 1,807

 Intangible assets, net

 License and supply agreement, net

 Other assets

 TOTAL ASSETS

 $
 11,861

 $
 10,999

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:

 Current portion of secured note payable

 $
 -

 $

 Accounts payable

 Accrued expenses

 Current portion of lease liabilities

 Total current liabilities

 2,113

 1,412

 Equipment financing, net of current portion

 -

 Lease liabilities, net of current portion

 1,390

 TOTAL LIABILITIES

 3,503

 2,118

 COMMITMENTS AND CONTINGENCIES (Note 17)

 -

 -

 STOCKHOLDERS' EQUITY:

 Preferred stock, $.001 par value; 5,000,000 shares authorized at

 December 31, 2023 and 2022; no shares issued and outstanding at

 December 31, 2023 and 2022

 -

 -

 Common stock, $.001 par value; 40,000,000 shares authorized at

 December 31, 2023 and 2022; 10,543,675 and 10,297,429 shares issued

 and outstanding at December 31, 2023 and 2022, respectively

 Additional paid-in capital

 152,754

 148,413

 Accumulated deficit

 ( 144,406
)

 ( 142,831
)

 Subtotal

 8,358

 5,592

 Noncontrolling interest

 -

 3,289

 TOTAL STOCKHOLDERS' EQUITY

 8,358

 8,881

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 $
 11,861

 $
 10,999

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

 CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 (In
thousands, except share and per share amounts)

 2023

 2022

 Years Ended December 31,

 2023

 2022

 Net revenue:

 Product revenues

 $
 14,110

 $
 9,929

 Royalty and other revenues

 Total net revenues

 14,238

 9,975

 Cost of goods sold

 5,833

 5,244

 Gross Margin

 8,405

 4,731

 Operating expenses:

 Research and development

 1,255

 Depreciation and amortization

 Selling, general and administrative

 8,911

 7,593

 Total operating expenses

 9,998

 9,066

 Operating loss from continuing operations

 ( 1,593
)

 ( 4,335
)

 Other (expense) income:

 Interest expense

 ( 2
)

 ( 20
)

 Interest income

 Other (expense) income, net

 ( 44
)

 Total other income:

 Loss from continuing operations

)

 ( 4,277
)

 Net loss from discontinued operations

 -

 ( 2,829
)

)

)

 Less: undeclared deemed dividend attributable to noncontrolling interest

 -

 ( 276
)

 Net loss attributable to Nephros, Inc. shareholders

)

 ( 7,382
)

 Net loss per common share, basic and diluted from continuing operations

 $
 ( 0.15
)

 $
 ( 0.42
)

 Net loss per common share, basic and diluted from discontinued operations

 -

 ( 0.28
)

 Net loss per common share, basic and diluted

 $
 ( 0.15
)

 $
 ( 0.70
)

 Net loss per common share, basic and diluted, attributable to continuing noncontrolling interest

 -

 ( 0.03
)

 Net loss per common share, basic and diluted, attributable to Nephros, Inc, shareholders

 $
 ( 0.15
)

 $
 ( 0.73
)

 Weighted average common shares outstanding, basic and diluted

 10,386,018

 10,297,134

 Comprehensive loss:

 $
)

 $
)

 Other comprehensive loss, foreign currency translation adjustments, net of tax

 -

 ( 14
)

 Comprehensive loss

)

 ( 7,120
)

 Comprehensive loss attributable to continuing noncontrolling interest

 -

 ( 276
)

 Comprehensive loss attributable to Nephros, Inc. shareholders

 $
)

 $
 ( 7,396
)

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

 CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

 (In
thousands, except share amounts)

 Amount

 Capital

 Income

 Deficit

 Subtotal

 Equity

 Common Stock

 Additional Paid-in

 Accumulated Other Comprehensive

 Accumulated

 Noncontrolling

 Total Stockholders'

 Amount

 Capital

 Income

 Deficit

 Subtotal

 Equity

 Balance, December 31, 2021

 10,198,712

 $

 $
 147,346

 $

 $
 ( 135,725
)

 $
 11,695

 $
 3,054

 $
 14,749

 -

 -

 -

 -

)

)

)

 Change in non-controlling interest

 Restricted stock vesting

 44,732

 -

 -

 -

 -

 -

 -

 Elimination of cumulative translation adjustment, upon closing of wholly owned foreign subsidiary

 -

 -

 ( 64
)

 -

 ( 64
)

 -

 ( 64
)

 Exercise of warrants

 60,374

 -

 -

 -

 -

 Restricted shares withheld for employee taxes

 ( 6,389
)

 -

 ( 31
)

 -

 -

 ( 31
)

 -

 ( 31
)

 Stock-based compensation

 -

 -

 -

 -

 Balance, December 31, 2022

 10,297,429

 $

 $
 148,413

 $
 -

 $
 ( 142,831
)

 $
 5,592

 $
 3,289

 $
 8,881

 -

 -

 -

 -

)

)

 -

)

 Change in non-controlling interest

 -

 -

 3,262

 -

 -

 3,262

 ( 3,262
)

 -

 Cashless exercise of stock options

 16,576

 -

 -

 -

 Restricted stock vesting

 187,503

 -

 -

 -

 -

 -

 -

 -

 Stock-based compensation

 -

 -

 1,079

 -

 -

 1,079

 ( 27
)

 1,052

 Balance, December 31, 2023

 10,501,508

 $

 $
 152,754

 $
 -

 $
 ( 144,406
)

 $
 8,358

 $
 -

 $
 8,358

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

 CONSOLIDATED
STATEMENTS OF CASH FLOWS

 (In
thousands)

 2023

 2022

 Years Ended December 31,

 2023

 2022

 OPERATING ACTIVITIES:

 $
)

 $
)

 Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 Depreciation of property and equipment

 Amortization of intangible assets, license and supply agreement and finance lease right-of-use asset

 Stock-based compensation

 1,052

 Inventory impairments and writeoffs

 Increase (Decrease) in provision for bad debt

 ( 1
)

 Impairment of assets held for sale

 -

 1,395

 Gain (Loss) on foreign currency transactions

 -

 ( 60
)

 Decrease (Increase) in operating assets:

 Accounts receivable

 ( 221
)

 Prepaid expenses and other current assets

 Change in right-of-use asset

 ( 342
)

 Other assets

 ( 31
)

 (Decrease) Increase in operating liabilities:

 Accounts payable

 ( 593
)

 Accrued expenses

 ( 150
)

 Lease liabilities

 ( 355
)

 Net cash provided by (used in) operating activities

 ( 3,234
)

 INVESTING ACTIVITIES:

 Purchase of property and equipment

 ( 75
)

 ( 137
)

 Net cash used in investing activities

 ( 75
)

 ( 137
)

 FINANCING ACTIVITIES:

 Proceeds from sale of subsidiary preferred shares to noncontrolling interest

 -

 Payments on secured note payable

 ( 71
)

 ( 271
)

 Principal payments on finance lease liability

 ( 7
)

 ( 12
)

 Principal payments on equipment financing

 ( 1
)

 ( 3
)

 Payments to employee taxes on restricted stock

 -

 ( 31
)

 Proceeds from exercise of warrants

 -

 Net cash provided by (used in) financing activities

 ( 79
)

 Effect of exchange rates on

 -

 ( 2
)

 Net increase (decrease) in cash and cash equivalents

 ( 3,339
)

 Cash and cash equivalents, beginning of year

 3,634

 6,973

 Cash and cash equivalents, end of year

 $
 4,307

 $
 3,634

 Supplemental disclosure of cash flow information

 Cash paid for interest expense

 $

 $

 Cash paid for income taxes

 $
 -

 $
 -

 Supplemental disclosure of noncash investing and financing activities

 Right-of-use asset obtained in exchange for operating lease liability

 $
 1,164

 $

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

 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 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. The water filtration business is a reportable segment, referred to as the Water Filtration
segment.

 On
October 4, 2022, the Company entered into a definitive asset purchase agreement with a third party for the sale of substantially all
of the Company's Pathogen Detection Systems ("PDS") business, which had been previously reported as a separate reportable
operating segment. As a result of the sale of the PDS business, we completely exited the PDS business. As a result, we determined that
our PDS business had met the criteria for discontinued operations as of September 30, 2022. We no longer separately report the PDS business
as a separate reportable segment in our financial statements including in this Annual Report for any of the periods presented.

 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. Pursuant to such plan, 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 - Summary of Significant Accounting Policies

 Principles
of Consolidation and Basis of Presentation

 The
accompanying consolidated financial statements include the accounts of Nephros, Inc. and its subsidiaries, including the Company's
wholly owned subsidiary Nephros International, which was dissolved during the quarter ended June 30, 2022, and 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
consolidated financial statements.

 Discontinued
Operations

 See
Note 3, Discontinued Operations, for a discussion of the Company's significant accounting policy surrounding the sale of substantially
all of the Company's PDS business.

 Use
of Estimates

 The
preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of
America ("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.

 Reclassifications

 Certain reclassifications were made to the prior year's amounts
to conform to the 2023 presentation. On the Consolidated Statements of Cash Flows, Inventory impairments and writeoffs reported as $ 623,000
for the year ended December 31, 2022, was increased to $ 773,000, and Inventory reported as $ 915,000 for the year ended December 31, 2022 was decreased
to $ 765,000, to accurately reflect the non-cash portion of the change in inventories for the year ended December 31, 2022.

 Liquidity

 In
February 2022, pursuant to a First Amendment to Series A Preferred Stock Purchase Agreement (the "Amendment") among SRP and
the holders of SRP's outstanding shares of Series A Preferred Stock, SRP issued and sold an additional 100,003 shares of its Series
A Preferred Stock at a price of $ 5.00 per share, resulting in total gross proceeds of $ 500,015. See "Note 15 – Stockholders'
Equity – Noncontrolling Interest," below. In addition to the funds provided by the sale of these additional shares of Series
A Preferred Stock, the Company and SRP also maintained a loan agreement under which the Company loaned $ 1.3 million to SRP, of which
$ 1.0 million had been loaned during the year ended December 31, 2020. These loaned funds were used to fund SRP's operating activities
through the FDA 510(k) clearance process of SRP's second-generation hemodiafiltration system, which was initially submitted to
the FDA on February 24, 2021, and which received 510(k) clearance on May 13, 2022. 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. Accordingly, as of December 31, 2023, there was no outstanding balance
of this loan.

 The
Company has sustained operating losses every quarter through December 31, 2023, generating an accumulated deficit of $ 144.4
 million as of December 31, 2023. Throughout 2023,
however, the Company's operating cash flows have been positive due to increased sales, improved gross margins, careful expense
management, and the dispositions of the PDS and SRP businesses. These actions resulted in the Company generating cash from operations
of approximately $ 0.8 million through the twelve months ended December 31, 2023.
Based on these positive cash flows, the Company believes that its 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 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.

 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 years ended December 31, 2023 and 2022, the following customers accounted for the following percentages of our revenues, respectively:

 Schedule of Revenues and Accounts Receivable Percentage of Major Customers

 Customer

 2023

 2022

 A

 %

 %

 B

 %

 %

 Total

 %

 %

 As
of December 31, 2023 and 2022, the following customers accounted for the following percentages of our accounts receivable, respectively:

 Customer

 2023

 2022

 A

 %

 %

 B

 %

 %

 C

 %

 %

 Total

 %

 %

 Cash
and Cash Equivalents

 The
Company considers all highly liquid money market instruments with an original maturity of three months or less when purchased to be cash
equivalents. The company also classifies, as cash equivalents, certificates of deposit with an original maturity of greater than three
months for which there is no cost to withdrawal funds prior to maturity date. At December 31, 2023 and 2022, cash and cash equivalents
were deposited in financial institutions and consisted entirely of immediately available fund balances. The Company maintains its cash
deposits and cash equivalents with financial institutions it believes to be well-known and stable.

 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 credit losses 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 doubtful accounts was approximately $ 11,000 and $ 0 as of December 31, 2023 and 2022, respectively.

 For
all medical device products and some commercial products, the Company engages third parties to manufacture and package its finished goods,
which are shipped to the Company for warehousing, until sold to distributors or end customers. Some commercial products are manufactured
at Company facilities. Inventory consists of finished goods and raw materials and is valued at the lower of cost or net realizable value
using the first-in, first-out method.

 Our
inventory reserve requirements are based on various factors including product expiration date and estimates for the future sales of the
product. Reserve assessments include inventory obsolescence based upon expiration date, damaged, or rejected product, slow-moving products,
and other considerations.

 License
and Supply Rights

 The
Company's rights under the License and Supply Agreement with Medica are capitalized and stated at cost, less accumulated amortization,
and are amortized using the straight-line method over the term of the License and Supply Agreement, which is from April 23, 2012 through
December 31, 2028. The Company determines amortization periods for licenses based on its assessment of various factors impacting estimated
useful lives and cash flows of the acquired rights. Such factors include the expected launch date of the product, the strength of the
intellectual property protection of the product and various other competitive, developmental, and regulatory issues, and contractual
terms. See Note 9 – License and Supply Agreement, net for further discussion.

 Leases

 The
Company determines if an arrangement contains a lease at inception. Leases are included in lease right-of-use ("ROU") assets
and lease liabilities on the consolidated balance sheet.

 Lease
ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at
commencement date. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing
rate based on the information available at commencement date in determining the present value of future payments. The operating lease
ROU asset includes any lease payments made and initial direct costs incurred and excludes lease incentives. The Company's lease
terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

 The
Company has elected as an accounting policy not to apply the recognition requirements in ASC 842 to short-term leases. Short-term leases
are leases that have a term of 12 months or less and do not include an option to purchase the underlying asset that the Company is reasonably
certain to exercise. The Company recognizes the lease payments for short-term leases on a straight-line basis over the lease term.

 The
Company has also elected, as a practical expedient, by underlying class of asset, not to separate lease components from non-lease components
and, instead, account for them as a single component.

 Property
and Equipment, net

 Property
and equipment, net is stated at cost less accumulated depreciation. These assets are depreciated over their estimated useful lives of
 three to seven years using the straight-line method.

 The
Company adheres to ASC 360 and periodically evaluates whether current facts or circumstances indicate that the carrying value of its
depreciable assets to be held and used may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted
future cash flows produced by the long-lived assets, or the appropriate grouping of assets, is compared to the carrying value to determine
whether impairment exists. If an asset is determined to be impaired, the loss is measured based on the difference between the asset's
fair value and its carrying value. For long-lived assets, the estimate of fair value is based on various valuation techniques, including
a discounted value of estimated future cash flows. The Company reports an asset to be disposed of at the lower of its carrying value
or its fair value less costs to sell. For the year ended December 31, 2022, See Note 3 Discontinued Operations, for a discussion of the
Company's significant accounting policy surrounding the sale of substantially all of the Company's PDS business and related
impairment charge. There were no impairment losses for long-lived assets recorded for the year ended December 31, 2023.

 Intangible

 The
Company's intangible assets include finite lived assets. Finite lived intangible assets, consisting of customer relationships,
tradenames, service marks and domain names are amortized on a straight-line basis over the estimated useful lives of the assets.

 Finite
lived intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying value of the asset
may not be recoverable. Impairment testing requires management to estimate the future undiscounted cash flows of an intangible asset
using assumptions believed to be reasonable, but which are unpredictable and inherently uncertain. Actual future cash flows may differ
from the estimates used in the impairment testing.

represents the excess of purchase price over the fair value of net assets acquired. In accordance with ASC 350, "Goodwill and Other
Intangibles," rather than recording periodic amortization, goodwill is subject to an annual assessment for impairment by applying
a fair value-based test. If the fair value of the reporting unit exceeds the reporting unit's carrying value, including goodwill,
then goodwill is considered not impaired, making further analysis not required. The Company reviews goodwill for possible impairment
annually during the fourth quarter, or whenever events or circumstances indicate that the carrying amount may not be recoverable.

 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.

 Revenue
Recognition

 The
Company recognizes revenue under ASC 606, "Revenue from Contracts with Customers." ASC 606 prescribes a five-step model for
recognizing revenue, which includes (i) identifying contracts with customers; (ii) identifying performance obligations; (iii) determining
the transaction price; (iv) allocating the transaction price; and (v) recognizing revenue. See Note 4 – Revenue Recognition for
further discussion.

 Shipping
and Handling Costs

 Shipping
and handling costs charged to customers are recorded as revenue and as cost of goods sold and were approximately $ 107,000 and $ 98,000
for the years ended December 31, 2023 and 2022, respectively.

and Development Costs

and development costs represent a significant part of our business. Costs included in research and development are expensed as incurred
and relate to the processes of discovering, testing and developing new products, improving existing products and regulatory compliance
prior to FDA approval. Research and development costs include, but are not limited to, personnel expenses, consulting costs and equipment
depreciation.

 Stock-Based
Compensation

 The
fair value of stock options is recognized as stock-based compensation expense in the Company's consolidated statement of operations
and comprehensive loss. The Company calculates stock-based compensation expense in accordance with ASC 718. The fair value of the Company's
stock option awards is estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions
and elections including expected stock price volatility and the estimated life of each award. The fair value of stock-based awards is
amortized over the vesting period of the award. For stock awards that vest based on performance conditions (e.g., achievement of certain
milestones), expense is recognized when it is probable that the condition will be met.

 Warrants

 The
Company accounts for stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant
agreement.

 Other
Income and Expense, net

 Other
expense of approximately $ 44,000 for the year ended December 31, 2023, is primarily a result of
losses on foreign currency transactions. Other income of approximately $ 64,000 for the year ended December 31, 2022, is primarily
related to the release of the cumulative translation adjustment from accumulated other comprehensive income (loss) on the liquidation
of a foreign entity and of gains on foreign currency transactions related to the closure in the second quarter of 2022 of Nephros
International, a wholly owned subsidiary of Nephros, Inc.

 Income
Taxes

 The
Company accounts for income taxes in accordance with ASC 740, which requires accounting for deferred income taxes under the asset and
liability method. Deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory
tax rates applicable in future years to differences between the financial statement carrying amounts and the tax basis of existing assets
and liabilities.

 For
financial reporting purposes, the Company has incurred a loss in each period since its inception. Based on available objective evidence,
including the Company's history of losses, management believes it is more likely than not that the net deferred tax assets will
not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December
31, 2023 and 2022.

 ASC
740 prescribes, among other things, a recognition threshold and measurement attributes for the financial statement recognition and measurement
of uncertain tax positions taken or expected to be taken in a company's income tax return. ASC 740 utilizes a two-step approach
for evaluating uncertain tax positions. Step one, or recognition, requires a company to determine if the weight of available evidence
indicates a tax position is more likely than not to be sustained upon audit, including resolution of related appeals or litigation processes,
if any. Step two, or measurement, is based on the largest amount of benefit that is more likely than not to be realized on settlement
with the taxing authority. The Company is subject to income tax examinations by major taxing authorities for all tax years subsequent
to 2016. During the years ended December 31, 2023 and 2022, the Company recognized no adjustments for uncertain tax positions. However,
management's conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including,
but not limited to, on-going analyses of and changes to tax laws, regulation and interpretations, thereof.

 See
Note 13 – Income Taxes for further discussion.

 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:

of Antidilutive Securities Excluded from Computation of Earnings Per Share

 2023

 2022

 Shares underlying options outstanding

 1,789,206

 1,365,365

 Unvested restricted stock

 42,167

 -

 Foreign
Currency Translation

 Foreign
currency translation is recognized in accordance with ASC 830. The functional currency of Nephros International Limited, the Company's
Irish subsidiary is the Euro, and its translation gains and losses are included in accumulated other comprehensive income. The balance
sheet is translated at the year-end rate. The consolidated statements of operations and comprehensive loss are translated at the weighted
average rate for the year.

 Transactions
denominated in a currency other than an entity's functional currency may give rise to transaction gains and losses. The
Company recognizes transaction gains and losses within other (expense) income, net, within the consolidated
statements of operations and comprehensive loss.

 Comprehensive
Loss

 Comprehensive
loss, as defined in ASC 220, is the total of net loss and all other non-owner changes in equity (or other comprehensive loss). The Company's
other comprehensive loss consists only of foreign currency translation adjustments.

 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.

 Recent
Accounting Pronouncements, Not Yet Effective

 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 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.

 Note
3 – Discontinued Operations

 In
accordance with ASC 205-20, Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entity or
a group of components of an entity (disposal group) is required to be reported as discontinued operations if the disposal represents
a strategic shift that has (or will have) a major effect on an entity's operations and financial results when the disposal group
meets the criteria to be classified as held-for-sale. The consolidated statements of operations reported for current and prior periods
report the results of operations of the discontinued operations, including the impairment loss recognized as a component of net income
(loss) separate from the net income (loss) from continuing operations.

 All
discontinued operations relate to the Company's previously reported PDS segment, for the year ended December 31, 2022.

of Assets and Liabilities of Discontinued Operations

 (In thousands)

 Year Ended December 31,

 2022

 Total net revenues

 $

 Gross margin

 ( 259
)

 Research and development expenses

 Depreciation and amortization expense

 -

 Selling, general and administrative expenses

 Total operating expenses

 1,175

 Operating loss from discontinued operations

 ( 1,434
)

 Impairment of assets held for sale

 ( 1,395
)

 Loss from discontinued operations

 $
 ( 2,829
)

 On
October 4, 2022, the Company entered into a definitive asset purchase agreement with a third party pursuant to which the Company agreed
to sell substantially all of the assets used in the Company's PDS business. In consideration for the sale of these assets, the
Company received $ 1,000 in cash at the closing, and will receive potential royalties payable to Nephros for a seven -year period commencing
on January 1, 2023 subject to a minimum gross margin threshold. As such, the potential royalties payable to the Company are a gain contingency
as they pertain to an uncertain event that will be resolved in future reporting periods. As a result, the Company will recognize the
gain contingency when it is probable the contingency will be resolved, which is ultimately when settled. The Company determined all of
the required criteria for held-for-sale and discontinued operations classification were met as of September 30, 2022. Additionally, the
Company evaluated the disposal group including the relevant intangible assets and recorded an impairment loss of $ 1,395,000. Based upon
the selling price less the costs of sale, the Company determined the net carrying value of the assets held for sale were impaired, and
the value of the asset group to be sold was $ 0.

 The
following items related to discontinued operations were included in the consolidated statement of cash flows:

 (in thousands)

 For the Year ended December 31,
 2022

 Depreciation

 $

 Amortization

 Stock compensation

 Impairment of assets held-for-sale

 1,395

 Operating lease right-of-use assets

 Purchases of property and equipment

 ( 34
)

 During
year ended December 31, 2022, $ 49,000 of right-of-use assets related to discontinuing operations were obtained in exchange for operating
lease liabilities.

 Note
4 – 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 at December 31,
2023 or 2022. In addition to product revenue, the Company recognizes revenue related to royalty and other agreements in accordance with
the five-step model in ASC 606. Royalty and other revenues recognized for the years ended December 31, 2023 and 2022 (in thousands) is
comprised of:

of Royalty and Other Revenues

 2023

 2022

 Years Ended

 2023

 2022

 Other revenue

 $

 $

 Royalty revenue under the Sublicense Agreement with CamelBak (1)

 -

 Total royalty and other revenues

 $

 $

 (1)

 In
 May 2015, the Company entered into a Sublicense Agreement (the "Sublicense Agreement") with CamelBak Products, LLC ("CamelBak").
 Under this Sublicense Agreement, the Company granted CamelBak an exclusive, non-transferable, worldwide (with the exception of Italy)
 sublicense and license, in each case solely to market, sell, distribute, import and export the IWTD. In exchange for the rights granted
 to CamelBak, CamelBak agreed, through December 31, 2022, to pay the Company a percentage of the gross profit on any sales made to
 a branch of the U.S. military, subject to certain exceptions, and to pay a fixed per-unit fee for any other sales made. CamelBak
 was also required to meet or exceed certain minimum annual fees payable to the Company, and, if such fees are not met or exceeded,
 the Company was able to convert the exclusive sublicense to a non-exclusive sublicense with respect to non-U.S. military sales. In
 the first quarter of 2019, the Sublicense Agreement was amended to eliminate the minimum fee obligations starting May 6, 2018 and,
 as such, CamelBak has no further minimum fee obligations. The Sublicense Agreement expired on December 31, 2022, though we and
CamelBak thereafter orally agreed to continue operating under the terms of the Sublicense agreement. In March 2024, we entered into a
further written amendment to the Sublicense Agreement, which was made effective December 31, 2022, that extended the term of the Sublicense
Agreement through December 31, 2025.

 Other
Revenue – Other revenues are derived from sales of services to customers, which primarily include installation, training and testing
on product and equipment sold to certain customers.

 Note
5 – Fair Value Measurements

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
December 31, 2023 and December 31, 2022, the Company's cash equivalents consisted of money market funds. 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
December 31, 2023 and December 31, 2022, the fair value measurements of the Company's assets and liabilities measured on a recurring
basis were as follows:

of Assets and Liabilities Measured at Fair Value on Recurring Basis

 Fair Value Measurements at Reporting Date Using

 Quoted
 Prices in
 Active
 Markets for
 Identical
 (Level 1)

 Significant
 Other
 Observable
 Inputs
 (Level 2)

 Significant
 Unobservable
 Inputs
 (Level 3)

 (in thousands)

 Cash

 $

 $
 -

 $
 -

 Money market funds

 2,515

 -

 -

 Certificate of deposit

 1,518

 Cash and cash equivalents

 $
 4,307

 $
 -

 $
 -

 Cash

 $
 1,598

 -

 -

 Money market funds

 2,036

 -

 -

 Cash and cash equivalents

 $
 3,634

 $
 -

 $
 -

and Liabilities Not Measured at Fair Value on a Recurring Basis

 The
carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value as of
December 31, 2023 and 2022 due to the short-term maturity of these instruments.

 The
carrying amounts of the secured long-term note payable, lease liabilities and equipment financing approximate fair value as of December
31, 2023 and 2022 because those financial instruments bear interest at rates that approximate current market rates for similar agreements
with similar maturities and credit.

 Note
6 - 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 December 31, 2023 and December 31, 2022, were as follows:

of Inventory, Net

 2023

 2022

 (In thousands)

 2023

 2022

 Finished goods

 $
 2,144

 $
 2,709

 Raw material

 Work in process

 -

 Total inventory

 $
 2,470

 $
 3,153

 Note
7 - Property and Equipment, Net

 Property
and equipment as of December 31, 2023 and 2022 was as follows (in thousands):

 Schedule of Property and Equipment, Net

 Life

 2023

 2022

 Estimated

 Useful

 Life

 2023

 2022

 Manufacturing and research equipment

 3 - 7 years

 $

 $

 Capitalized internal use software and website development

 5 years

 Computer equipment

 3 - 4 years

 Furniture and fixtures

 7 years

 Leasehold improvements

 Life of lease

 Property and equipment, gross

 1,114

 1,039

 Less: accumulated depreciation

 ( 962
)

 ( 923
)

 Property and equipment, net

 $

 $

 Depreciation
related to equipment utilized in the manufacturing process is recognized in cost of goods sold on the consolidated statements of operations
and comprehensive loss. Depreciation expense for the years ended December 31, 2023 and 2022 was approximately $ 39,000 and $ 93,000, respectively.
Approximately $ 3,000 of depreciation expense has been recognized in cost of goods sold for the year ended December 31, 2023. Approximately
$ 22,000 of depreciation expense has been recognized in cost of goods sold for the year ended December 31, 2022.

 Note
8 – Intangible Assets and Goodwill

 Intangible

 Intangible
assets at December 31, 2023 and December 31, 2022 are set forth in the table below. Gross carrying values and accumulated amortization
of the Company's intangible assets by type are as follows:

of Intangible Assets

 Cost

 Accumulated Amortization

 Net

 Cost

 Accumulated Amortization

 Net

 (in thousands)

 Tradenames, service marks and domain names

 $

 $
 ( 50
)

 $
 -

 $

 $
 ( 40
)

 $

 Customer relationships

 ( 159
)

 ( 127
)

 Total intangible assets

 $

 $
 ( 209
)

 $

 $

 $
 ( 167
)

 $

 The
Company recognized amortization expense of approximately $ 42,000 for the years ended December 31, 2023 and December 31, 2022 in selling,
general and administrative expenses on the accompanying consolidated statement of operations and comprehensive loss.

 As
of December 31, 2023, future amortization expense for each of the next five years is (in thousands):

of Future Amortization Expense

 Fiscal Years

 2024

 $

 2025

 2026

 2027

 2028

 The
Company recognized approximately $ 1.0 million in intangible asset impairment charges during the year ended December 31, 2022, related
to the fair value of assets held for sale. (See Note 3–Discontinued Operations).

had a carrying value on the Company's consolidated balance sheets of $ 0.8 million at December 31, 2023 and 2022, respectively.
The Company concluded the carrying value of goodwill was not impaired as of December 31, 2023, or 2022 as the Company determined that
it was not more likely than not that the fair value of goodwill was less than its carrying value.

 Note
9 – 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 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 include 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 consolidated balance sheet is $ 0.3 million and $ 0.4 million as of December 31, 2023 and 2022, respectively. Accumulated amortization
is $ 2.0 million and $ 1.9 million as of December 31, 2023 and 2022, respectively. The intangible asset is being amortized as an expense
over the life of the License and Supply Agreement. Amortization expense of $ 0.1 million was recognized in each of the years ended December
31, 2023 and 2022 on the consolidated statement of operations and comprehensive loss.

 As
of December 11, 2023, the Company contractually has agreed 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 years ended December 31, 2023 or 2022.

 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. Royalty expense of $ 0.4 million and $ 0.3 million for the years ended December 31, 2023 and 2022, respectively, was recognized
and is included in cost of goods sold on the consolidated statement of operations and comprehensive loss. Approximately $ 90,000 and $ 71,000
of this royalty expense was included in accounts payable as of December 31, 2023 and 2022, respectively.

 Note
10 – 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. During the year ended December 31, 2023, the principal balance of the Secured Note was paid off. As
of December 31, 2022, the principal balance of the Secured Note was $ 0.1 million.

 The
Secured Note has a maturity date of April 1, 2023. The unpaid principal balance accrues interest at a rate of 8 % per annum. Principal
and interest payments are due on the first day of each month commencing on May 1, 2018. The Secured Note is subject to terms and conditions
of and is 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 is an event of default under the Secured Note and vice versa.

 During
each of the years ended December 31, 2023 and 2022, the Company made payments under the Secured Note of approximately $ 71,000 and $ 289,000
respectively. Included in the total payments made, approximately $ 1,000 and $ 18,000 was recognized as interest expense on the consolidated
statement of operations and comprehensive loss for the year ended December 31, 2023 and 2022, respectively.

 Note
11 – Leases

 The
Company has operating leases for corporate offices, warehouse space, an automobile 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 (in thousands):

 Schedule of Components of Lease Cost

 Year ended

 Year ended

 Operating lease cost

 $

 $

 Finance lease cost:

 Amortization of right-of-use assets

 Interest on lease liabilities

 Total finance lease cost

 Variable lease cost

 Total lease cost

 $

 $

 Supplemental
cash flow information related to leases was as follows (in thousands):

 Schedule of Supplemental Cash Flow Information Related to Leases

 Year ended

 Year ended

 Cash paid for amounts included in the measurement of lease liabilities:

 Operating cash flows from operating leases

 $

 $

 Financing cash flows from finance leases

 $

 $

 Supplemental
balance sheet information related to leases was as follows (in thousands except years):

 Schedule of Supplemental Balance Sheet Information Related to Leases

 Operating lease right-of-use assets

 $
 1,803

 $

 Finance lease right-of-use assets

 $

 $

 Current portion of operating lease liabilities

 $

 $

 Operating lease liabilities, net of current portion

 1,390

 Total operating lease liabilities

 $
 1,832

 $
 1,009

 Current portion of finance lease liabilities

 $

 $

 Finance lease liabilities, net of current portion

 -

 Total finance lease liabilities

 $

 $

 Weighted average remaining lease term

 Operating leases

 4.3 years

 3.9 years

 Finance leases

 0.6 years

 1.5 years

 Weighted average discount rate

 Operating leases

 8.0
 %

 8.0
 %

 Finance leases

 8.0
 %

 8.0
 %

 As
of December 31, 2023, maturities of lease liabilities were as follows (in thousands):

 Schedule of Maturities of Lease Liabilities

 Operating
 Leases

 Finance
 Leases

 2024

 $

 $

 2025

 -

 2026

 -

 2027

 -

 2028

 -

 Total
 future minimum lease payments

 2,148

 Less
 imputed interest

 ( 316
)

 -

 Total

 $
 1,832

 $

 Note
12 - Accrued Expenses

 Accrued
expenses as of December 31, 2023 and 2022 were as follows (in thousands):

 Schedule of Accrued Expenses

 2023

 2022

 2023

 2022

 Accrued bonus

 $

 $

 Accrued directors' fees

 -

 Accrued legal

 Accrued sales commission

 Accrued sales tax payable

 Accrued franchise tax

 Accrued other

 Accrued expenses

 $

 $

 Note
13 - Income Taxes

 There
was no income tax current or deferred tax benefit or expense recognized during the years ended December 31, 2023 and 2022.

 A
reconciliation of the income tax benefit computed at the statutory tax rate to the Company's effective tax rate for the years ended
December 31, 2023, and 2022 is as follows:

 Schedule of Effective Income Tax Rate Reconciliation

 2023

 2022

 Years Ended December 31,

 2023

 2022

 U.S. federal statutory rate

 21.00
 %

 21.00
 %

 State taxes

 12.22
 %

 4.79
 %

 Expired NOLs and credits

 ( 115.56
)%

 ( 12.78
)%

 Stock-based compensation

 ( 4.54
)%

 ( 2.43
)%

 Federal research and development credits

 -
 %

 0.62
 %

 Foreign Rate Differential

 -
 %

 9.15
 %

 Other

 0.12
 %

 3.44
 %

 Non-taxable Cancelation of Indebtedness

 19.14
 %

 -
 %

 Valuation allowance

 67.62
 %

 ( 23.78
)%

 Effective tax rate

 -
 %

 -
 %

 Significant
components of the Company's deferred tax assets (liabilities) as of December 31, 2023 and 2022 are as follows (in thousands):

 Schedule of Deferred Tax Assets

 2023

 2022

 2023

 2022

 Deferred tax assets:

 Net operating loss carry forwards

 $
 16,700

 $
 17,672

 Research and development credits

 1,087

 1,401

 Nonqualified stock option compensation expense

 Lease liabilities

 Capital loss carryforwards

 2,072

 1,946

 Fixed and intangible basis difference

 -

 Other temporary book - tax differences

 Total deferred tax assets

 21,634

 22,376

 Deferred tax liabilities:

 Lease right-of-use assets

 ( 442
)

 ( 234
)

 Fixed and intangible asset basis difference

 ( 116
)

 -

 Total deferred tax liabilities

 ( 558
)

 ( 234
)

 Deferred tax assets, net

 21,076

 22,142

 Valuation allowance for deferred tax assets

 ( 21,076
)

 ( 22,142
)

 Net deferred tax assets after valuation allowance

 $
 -

 $
 -

 A
valuation allowance has been recognized to offset the Company's net deferred tax asset as it is more likely than not that such
net asset will not be realized. The Company primarily considered its historical loss and potential Internal Revenue Code Section 382
limitations to arrive at its conclusion that a valuation allowance was required. The Company's valuation allowance decreased approximately
$ 1.1 million from December 31, 2022 to December 31, 2023.

 At
December 31, 2023, the Company had Federal income tax net operating loss carryforwards of $ 77.3 million and State income tax net operating
loss carryforwards of $ 6.8 million. The Company had Federal research and development tax credit carryforwards of $ 1.1 million at December
31, 2023. The Company's net operating losses and research and development tax credits may ultimately be limited by Section 382
of the Internal Revenue Code and, as a result, the Company may be unable to offset future taxable income (if any) with losses, or its
tax liability with credits, before such losses and credits expire. Included in the Federal net operating loss carryforwards are $ 14 million
of losses generated from 2018 onward that have an indefinite carryover period. The remaining Federal and New Jersey net operating loss
carryforwards and Federal and New Jersey tax credit carryforwards will expire at various times between 2024 and 2041 unless utilized.

 The
Company has analyzed the tax positions taken or expected to be taken in its tax returns and concluded it has no liability related to
uncertain tax positions. The Company is subject to income tax examinations by major taxing authorities for all tax years subsequent to
2018 and does not anticipate a change in its uncertain tax positions within the next twelve months. The Company's policy is to
report interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

 Note
14 - 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 consolidated
statement of operations and comprehensive loss. 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
Plans

 In
2015, the Board of Directors adopted the Nephros, Inc. 2015 Equity Incentive Plan ("2015 Plan"). As of December 31, 2023,
including amendments approved by the Board of Directors, 2,547,400 shares of common stock were approved for issuance pursuant to stock
options, restricted stock and other equity incentive awards to the Company's employees, directors and consultants. The maximum
contractual term for stock options granted under the 2015 Plan is 10 years.

 As
of December 31, 2023, options to purchase 1,774,819 shares of common stock had been issued to employees under the 2015 Plan and were
outstanding. The options issued to employees expire on various dates between April 15, 2025 and December 27, 2033. Taking into account
all options and restricted stock granted under the 2015 Plan, there are 65,580 shares available for future grant under the 2015 Plan.
Generally, grants vest based on a service condition only and vest between two to four years.

 The
Company's previously adopted and approved plan, the 2004 Stock Incentive Plan ("2004 Plan"), expired in the year ended
December 31, 2014. As of December 31, 2023, options to purchase 14,387 shares of common stock had been issued to employees under the
2004 Plan and were outstanding. The options expire on various dates between February 5, 2024 and March 26, 2024. No shares are available
for future grants under the 2004 Plan. Options currently outstanding are fully vested.

 On
November 1, 2023, the Company issued 122,524 stock options outside of the 2015 Plan to the Company's new Chief Financial Officer.
The terms for these options are identical to those issued to employees under the 2015 Plan.

 Stock
Options

 The
Company has elected to recognize forfeitures as they occur. Stock-based compensation expense recognized for the years ended December
31, 2023 and 2022 was $ 1.0 million and $ 0.9 million, respectively.

 For
the year ended December 31, 2023, $ 1.0 million and approximately $ 39,000 are included in selling, general and administrative expenses
and research and development expenses, respectively, on the accompanying consolidated statement of operations and comprehensive loss.
For the year ended December 31, 2022, $ 0.8 million and approximately $ 63,000 are included in selling, general and administrative expenses
and research and development expenses, respectively, on the accompanying consolidated statement of operations and comprehensive loss.

 The
following table issued summarizes the option activity for the years ended December 31, 2023 and 2022:

 Summary of Option Activity

 Weighted
 Average

 Exercise
 Price

 Outstanding at December 31, 2021

 1,426,510

 $
 6.29

 Options granted

 279,115

 1.91

 Options forfeited or expired

 ( 340,260
)

 6.88

 Options exercised

 -

 -

 Outstanding at December 31, 2022

 1,365,365

 $
 5.25

 Options granted

 583,089

 1.47

 Options forfeited or expired

 ( 102,722
)

 5.87

 Options exercised (1)

 ( 56,526
)

 2.47

 Outstanding at December 31, 2023

 1,789,206

 $
 4.07

 (1)

 56,526
options were exercised via cashless exercise which resulted in 16,576
shares issued.

 The
following table summarizes the options exercisable and vested and expected to vest as of December 31, 2023 and 2022.

 Summary of Options Exercisable Vested and Expected to Vest

 Weighted
 Average

 Exercise
 Price

 Exercisable at December 31, 2022

 968,441

 $
 5.55

 Vested and expected to vest at December 31, 2022

 1,342,342

 $
 5.26

 Exercisable at December 31, 2023

 1,171,824

 $
 5.25

 Vested and expected to vest at December 31, 2023

 1,753,398

 $
 4.12

 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 year ended December 31, 2023.

 Schedule of Fair Value Assumptions

 Assumption for Option Grants

 2023

 2022

 Stock Price Volatility

 72.40
 %

 75.44
 %

 Risk-Free Interest Rates

 3.71
 %

 2.74
 %

 Expected Life (in years)

 6.22

 5.64

 Expected Dividend Yield

 %

 %

 Expected
volatility is based on historical volatility of the Company's common stock at the time of grant. The risk-free interest rate is
based on the U.S. Treasury yields in effect at the time of grant for periods corresponding with the expected life of the options. For
the expected life, the Company is using the simplified method as described in the SEC Staff Accounting Bulletin 107. This method assumes
that stock option grants will be exercised based on the average of the vesting periods and the option's life.

 The
weighted-average fair value of options granted in 2023 and 2022 is $ 0.99 and $ 1.25, respectively. The aggregate intrinsic values of stock
options outstanding and stock options vested or expected to vest as of December 31, 2023 was approximately $ 1.4 million and $ 0 respectively.
A stock option has intrinsic value, at any given time, if and to the extent that the exercise price of such stock option is less than
the market price of the underlying common stock at such time. The weighted-average remaining contractual life of options vested or expected
to vest as of December 31, 2023 was approximately 6.4 years.

 The
intrinsic values of stock options exercised was approximately $ 58,000 for the year ended December 31, 2023. No stock options were exercised
for the year ended December 31, 2022.

 As
of December 31, 2023, there was $ 0.6 million of total unrecognized compensation cost related to unvested share-based compensation awards
granted under the equity compensation plans which will be amortized over the weighted average remaining requisite service period of 2.97
years.

 There
was no tax benefit related to expense recognized in the twelve months ended December 31, 2023 and 2022, as the Company is in a net operating
loss position.

 Restricted
Stock

 The
Company has issued restricted stock as compensation for the services of certain employees and non-employee directors. The grant date
fair value of restricted stock is based on the fair value of the common stock on the date of grant, and compensation expense is recognized
based on the period in which the restrictions lapse.

 The
following table summarizes restricted stock activity for the years ended December 31, 2023 and 2022:

 Summary of Restricted Stock Activity

 Weighted

 Average
 Grant Date
 Fair Value

 Nonvested
 at December 31, 2021

 59,732

 $
 8.07

 Granted

 -

 -

 Vested

 ( 44,732
)

 7.87

 Forfeited

 ( 15,000
)

 8.66

 Nonvested
 at December 31, 2022

 -

 -

 Granted

 299,670

 1.47

 Vested

 ( 187,503
)

 1.08

 Nonvested
 at December 31, 2023

 42,167

 $
 3.18

 The
total fair value of restricted stock that vested during the years ended December 31, 2023 and 2022 was approximately $ 0.2 million and
$ 0.4 million, respectively.

 Total
stock-based compensation expense for restricted stock was approximately $ 322,000 and $ 42,000 for the year ended December 31, 2023 and
2022, respectively and is recognized in selling, general and administrative expenses on the accompanying consolidated statement of operations
and comprehensive loss.

 Approximately
$ 154,000 of stock compensation expense was recognized in the year ended December 31, 2022 related to restricted stock granted to board
members and employees for the year ended December 31, 2023 to settle liabilities for services incurred in the respective prior fiscal
year.

 As
of December 31, 2023, there was approximately $ 15,000 of unrecognized compensation expense related to restricted stock-based awards granted
under the equity compensation plans, which will be amortized over the weighted average remaining requisite service period of 0.4 years.
As of December 31, 2022, there was no unrecognized compensation expense related to the restricted stock awards.

 The
aggregate shares of common stock legally issued and outstanding as of December 31, 2023 is greater than the aggregate shares of common
stock outstanding for accounting purposes by the amount of unvested restricted shares.

 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 deemed acquisition of the non-controlling interest in SRP during the year ended December 31, 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 year ended December 31, 2023. For the year ended December 31, 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 stock
grants was approximately $ 47,000 during the year ended December 31, 2022. Stock-based compensation expense related to the SRP equity-based
awards is included in selling, general and administrative expenses on the accompanying consolidated statement of operations and comprehensive
loss. Stock-based compensation expense related to the SRP stock options is presented by the Company as noncontrolling interest on the
consolidated balance sheet as of December 31, 2022.

 Note
15 - Stockholders' Equity

 Noncontrolling

 Pursuant
to the terms and conditions of a Series A Preferred Stock Purchase Agreement, dated September 9, 2018, among SRP and the purchasers identified
therein (the "SRP Purchase Agreement"), SRP sold to such purchasers an aggregate of 600,000 shares of its Series A Preferred
Stock (the "Series A Preferred") at a price of $ 5.00 per share resulting in total gross proceeds of $ 3.0 million. On February
1, 2022, SRP and such purchasers amended the SRP Purchase Agreement to allow for the sale of an additional 100,003 shares of Series A
Preferred, all of which were sold on February 4, 2022, for aggregate gross proceeds of $ 500,015 and otherwise on the same terms and conditions
as set forth in the SRP Purchase Agreement. Approximately $ 188,000 of the proceeds from the February 2022 sales were recorded as an increase
to the equity of the non-controlling interests. The Company purchased 62,500 shares of SRP's Series A Preferred at such closing
and, as a result, maintained its 62.5 % stock ownership position in SRP. The other purchasers at the February 2022 closing included the
Company's Chief Executive Officer, who purchased 313 shares, and Lambda Investors LLC ("Lambda"), an affiliate of Wexford
Capital, which together with its affiliates owns approximately 36 % of the Company's common stock, which purchased 25,938 shares
of the Series A Preferred in February 2022. Such purchases were made on the same terms as all other purchasers. In addition to the funds
provided by the SRP Purchase Agreement, the Company loaned to SRP to the principal amount of $ 1.3 million, $ 1.0 million of which was
advanced during the year ended December 31, 2020.

 As
of December 31, 2022, the non-controlling interest in SRP held by holders of the Series A Preferred was classified as equity on the accompanying
consolidated balance sheet, as the non-controlling interest is redeemable only upon the occurrence of events that are within the control
of the Company. As a result of the adoption of the plan of liquidation and dissolution by SRP's stockholders and the subsequent
filing of a certificate of dissolution of SRP with the State of Delaware, the redemption feature related to the Series A Preferred Stock
effectively terminated. As such, the value of the Series A Preferred Stock previously presented in non-controlling interest was reclassified
to additional paid in capital as the Company retained control of SRP.

 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.

 Warrants

 The
Company accounts for stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant
agreement. The company had no outstanding warrants at December 31, 2023 and December 31, 2022.

 Warrants
Exercised During 2022

 During
the year ended December 31, 2022, warrants to purchase 60,374 shares of the Company's common stock were exercised, resulting in
proceeds of $ 0.2 million and the issuance of 60,374 shares of the Company's common stock. Of the warrants exercised during the
year ended December 31, 2022, warrants to purchase 14,815 shares of the Company's common stock were exercised by members of management,
resulting in proceeds of approximately $ 40,000. Warrants to purchase 63,102 shares of the Company's common stock expired unexercised
during the year ended December 31, 2022.

 Note
16 – Savings Incentive Match Plan

 On
January 1, 2017, the Company established a Savings Incentive Match Plan for Employees Individual Retirement Account (SIMPLE IRA), which
covers all employees. The SIMPLE IRA Plan provides for voluntary employee contributions up to statutory IRA limitations. The Company
matches 100 % of employee contributions to the SIMPLE IRA Plan, up to 3 % of each employee's salary. The Company contributed and
expensed approximately $ 91,000 and $ 104,000 to the SIMPLE IRA in 2023 and 2022, respectively.

 Note
17 - Commitments and Contingencies

 Purchase
Commitments

 In
exchange for the rights granted under the License and Supply Agreement with Medica (see Note 9 – 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, 2023, the Company agreed to make minimum annual aggregate purchases from Medica of
 3.8
million (approximately $ 4.1
million). For the year ended December 31, 2023, aggregate purchase commitments totaled 4.9
million (approximately $ 5.3
million). All minimum purchase requirements were met.

 Future
purchase commitments under the License and Supply Agreement with Medica are as follows:

 2024:
 4,208,000

 2025:
 4,629,000

 2026:
 4,976,000

 2027:
 5,349,000

 2028:
 5,750,000

 Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 None.

 Item
9A. Controls and Procedures

 Disclosure
Controls and Procedures

 Disclosure
controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the
reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in
the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated
to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 As
required by Rules 13a-15 and 15d-15 under the Exchange Act, the Chief Executive Officer and Chief Financial Officer carried out an evaluation
of the effectiveness of the design and operation of the disclosure controls and procedures as of December 31, 2023. Based upon this evaluation,
the Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as
of December 31, 2023. Accordingly, management believes that the financial statements included in this Annual Report on Form 10-K present
fairly in all material respects the financial position, results of operations and cash flows for the period presented.

 Management's
Report on Internal Control Over Financial Reporting

 Management
is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange
Act Rules 13a-15(f) and 15d-15(f). Under the supervision of the Chief Executive Officer and Chief Financial Officer, management conducted
an evaluation of the effectiveness of the internal control over financial reporting as of December 31, 2023 based on the framework set
forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in "Internal Control-Integrated Framework".
Based on the assessment, management concluded that the internal control over financial reporting was effective as of December 31, 2023.

 Changes
in Internal Control Over Financial Reporting

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

 Item
9B. Other Information

 We
are reporting the following information in lieu of reporting on a Current Report on Form 8-K:

 Item
1.01 Entry into a Material Definitive Agreement.

 On
December 11, 2023, Nephros, Inc. (the "Company") entered into a license and supply agreement (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 (collectively, the "Products"), and to engage in an exclusive supply arrangement
for the Products. The License and Supply Agreement supersedes and replaces that certain License and Supply Agreement, dated April 23,
2012, as amended (the "Prior Agreement") between the Company and Medica, which Prior Agreement was terminated by the parties
upon entry into the License and Supply Agreement.

 Under
the License and Supply Agreement, Medica granted the Company an exclusive license, with right of sublicense, to market, promote, distribute,
offer for sale and sell the Products in the Territory (as defined in the License and Supply Agreement). In addition, the Company granted
to Medica an exclusive license under the Company's intellectual property to make the Products during the term of the License and
Supply Agreement. In exchange for the rights granted, the Company has agreed to make minimum annual aggregate purchases from Medica of
 3,825,000, 4,208,000, 4,629,000, 4,976,000, 5,349,000 and 5,750,000 for the years 2023, 2024, 2025,
2026, 2027 and 2028, respectively. The License and Supply Agreement contains standard representations and warranties and indemnification
obligations of the parties.

 The
term of the License and Supply Agreement commenced on December 11, 2023 and continues in effect through December 31, 2028, unless earlier
terminated by either party in accordance with the terms of the License and Supply Agreement.

 The
foregoing description of the License and Supply Agreement does not purport to be complete and is subject to and qualified in its entirety
by reference to the License and Supply Agreement, a copy of which is filed as Exhibit 10.36 to this Annual Report on Form 10-K and is
incorporated herein by reference.

 Item
1.02 Termination of a Material Definitive Agreement.

 The
information related to the termination of the Prior Agreement contained in Item 1.01 of this Item 9B of this Annual Report on Form 10-K
is incorporated herein by reference.

 PART
III

 Item
10. Directors, Executive Officers and Corporate Governance

 The
information set forth under the captions "Proposal No. 1 – Election of Directors," "Corporate Governance"
and "Delinquent Section 16(a) Reports" in the 2024 Proxy Statement is incorporated herein by reference.

 Item
11. Executive Compensation

 The
information set forth under the caption "Compensation Matters" in the 2024 Proxy Statement is incorporated herein by reference.

 Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 The
information set forth under the captions "Stock Ownership of Management and Principal Stockholders" and "Compensation
Matters" in the 2024 Proxy Statement is incorporated herein by reference.

 Item
13. Certain Relationships and Related Transactions, and Director Independence

 The
information set forth under the captions "Corporate Governance" and "Certain Relationships and Related Transactions"
in the 2024 Proxy Statement is incorporated herein by reference.

 Item
14. Principal Accounting Fees and Services

 The
information set forth under the caption "Proposal No. 2 – Ratification of Selection of Independent Registered Public Accounting
Firm" in the 2024 Proxy Statement is incorporated herein by reference.

 PART
IV

 Item
15. Exhibits, Financial Statement Schedules

 (a)
Documents filed as part of this report:

 (1)
Consolidated Financial Statements of Nephros, Inc.

 Report of independent registered public accounting firm, Baker Tilly US, LLP. 1 Highwood Drive, Tewksbury, MA 01876, Firm ID - 23

 Consolidated balance sheets as of December 31, 2023 and 2022.

 Consolidated statements of operations and comprehensive loss for the years ended December 31, 2023 and 2022.

 Consolidated statements of changes in stockholders' equity for the years ended December 31, 2023 and 2022.

 Consolidated statements of cash flows for the years ended December 31, 2023 and 2022.

 Notes to consolidated financial statements.

 (2)
Exhibits:

 Exhibit

 No.

 Description

 2.1

 Agreement for Purchase and Sale of Assets, dated October 4, 2022, by and between Nephros, Inc. and BWSI, LLC, incorporated by reference to Exhibit 2.1 to Nephros Inc.'s Current Report on Form 8-K, filed with the SEC on November 21, 2022 (pursuant to Item 601(b)(2)(ii) of Regulation S-K, certain information contained in this Exhibit 2.1 has been redacted as indicated therein).

 3.1

 Conformed Copy of the Fourth Amended and Restated Certificate of Incorporation, incorporating those Certificates of Amendment dated June 4, 2007; June 29, 2007; November 13, 2007; October 23, 2009; March 10, 2011; March 11, 2011 and July 8, 2019, incorporated by reference to Exhibit 3.1 to Nephros, Inc.'s Quarterly Report on Form 10-K for the quarter ended June 30, 2019, filed with the SEC on August 7, 2019.

 3.2

 Second Amended and Restated By-Laws of the Registrant, incorporated by reference to Exhibit 3.1 to Nephros, Inc.'s Current Report on Form 8-K, filed with the SEC on December 3, 2007.

 4.1

 Specimen of Common Stock Certificate of the Registrant, incorporated by reference to Exhibit 4.1 to Nephros, Inc.'s Amendment No. 1 to Registration Statement on Form S-1/A (Reg. No. 333-116162), filed with the SEC on July 20, 2004.

 4.2

 Description of Capital Stock, incorporated by reference to Exhibit 4.5 to Nephros, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 27, 2020.

 10.1

 Nephros, Inc. 2004 Stock Incentive Plan, incorporated by reference to Exhibit 10.2 to Nephros, Inc.'s Amendment No. 1 to Registration Statement on Form S-1/A (Reg. No. 333-116162), filed with the SEC on July 20, 2004.

 10.2

 Amendment No. 1 to Nephros, Inc. 2004 Stock Incentive Plan, incorporated by reference to Exhibit 4.3 to Nephros, Inc.'s Registration Statement on Form S-8 (Reg. No. 333-127264), filed with the SEC on August 5, 2005.

 10.3

 Amendment No. 2 to Nephros, Inc. 2004 Stock Incentive Plan, incorporated by reference to Exhibit 10.7 to Nephros, Inc.'s Quarterly Report on Form 10-QSB for the quarter ended September 30, 2007, filed with the SEC on November 13, 2007.

 10.4

 Amendment No. 3 to Nephros, Inc. 2004 Stock Incentive Plan, incorporated by reference to Exhibit 10.51 to Nephros, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 31, 2009

 10.5

 Amendment No. 4 to Nephros, Inc. 2004 Stock Incentive Plan, incorporated by reference to Exhibit A to Nephros, Inc.'s Definitive Proxy Statement, filed with the SEC on December 2, 2010.

 10.6

 Amendment No. 5 to Nephros, Inc. 2004 Stock Incentive Plan, incorporated by reference to Appendix A to Nephros, Inc.'s Definitive Proxy Statement, filed with the SEC on April 11, 2013.

 10.7

 Amendment No. 6 to Nephros, Inc. 2004 Stock Incentive Plan, dated June 14, 2013, incorporated by reference to Exhibit 10.2 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, filed with the SEC on August 13, 2013.

 10.8

 Nephros, Inc. 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.2 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed with the SEC on May 15, 2015.

 10.9

 Form of Incentive Stock Option Agreement under the 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.3 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed with the SEC on May 15, 2015.

 10.10

 Form of Non-Qualified Stock Option Agreement under the 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.4 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed with the SEC on May 15, 2015.

 10.11

 Form of Restricted Stock Agreement under the 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.5 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed with the SEC on May 15, 2015.

 10.12

 Form of Restricted Stock Unit Agreement under the 2015 Equity Incentive Plan, incorporated by reference to Exhibit 10.6 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed with the SEC on May 15, 2015.

 10.13

 Nephros, Inc. Director Compensation Policy, incorporated by reference to Exhibit 10.15 to Nephros, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 26, 2018.

 10.14

 License and Supply Agreement, dated April 23, 2012, between the Registrant and Medica S.p. A., incorporated by reference to Exhibit 10.1 to Nephros, Inc.'s Current Report on Form 8-K, filed with the SEC on April 26, 2012.

 10.15

 Second Amendment to License and Supply Agreement, dated May 4, 2015, between the Registrant and Medica S.p. A., incorporated by reference to Exhibit 10.4 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed with the SEC on August 10, 2015.

 10.16

 Third Amendment to License and Supply Agreement, dated May 5, 2017, between the Registrant and Medica S.p. A., incorporated by reference to Exhibit 10.4 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.

 10.17

 Fourth Amendment to License and Supply Agreement, dated September 26, 2017, between the Registrant and Medica S.p. A., incorporated by reference to Exhibit 10.1 to Nephros, Inc.'s Current Report on Form 8-K, filed with the SEC on September 27, 2017.

 10.18

 Registration Rights Agreement, dated September 19, 2007, among the Registrant and the Holders, incorporated by reference to Exhibit 10.3 to Nephros, Inc.'s Current Report on Form 8-K, filed with the SEC on September 25, 2007.

 10.19

 Form of Registration Rights Agreement, between the Registrant and Wexford Capital LP, incorporated by reference to Exhibit 10.57 to Nephros, Inc.'s Registration Statement on Form S-1 (Reg. No. 333-169728), filed with the SEC on October 1, 2010.

 10.20

 Registration Rights Agreement, dated February 4, 2013, between the Registrant and Wexford Capital LP, incorporated by reference to Exhibit 10.68 to Nephros, Inc.'s Registration Statement on Form S-1 (Reg. No. 333-187036), filed with the SEC on March 4, 2013.

 10.21

 First Amendment to Registration Rights Agreement, dated May 23, 2013, between the Registrant and Wexford Capital LP, incorporated by reference to Exhibit 10.1 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, filed with the SEC on August 13, 2013.

 10.22

 Registration Rights Agreement, dated November 12, 2013, between the Registrant and Wexford Capital LP, incorporated by reference to Exhibit 10.2 to Nephros, Inc.'s Current Report on Form 8-K, filed with the SEC on November 14, 2013.

 10.23

 First Amendment to Registration Rights Agreement, dated April 14, 2014, between the Registrant and Wexford Capital LP, incorporated by reference to Exhibit 10.2 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, filed with the Securities and Exchange Commission on May 14, 2014.

 10.24

 Registration Rights Agreement, dated August 29, 2014, between the Registrant and Wexford Capital LP, incorporated by reference to Exhibit 10.2 to Nephros, Inc.'s Current Report on Form 8-K, filed with the SEC on September 3, 2014.

 10.25

 First Amendment to Registration Rights Agreement, dated September 23, 2014, between the Registrant and Wexford Capital LP, incorporated by reference to Exhibit 10.5 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the SEC on November 13, 2014.

 10.26

 Registration Rights Agreement dated March 17, 2017, among the Registrant and the Purchasers identified therein, incorporated by reference to Exhibit 10.2 to Nephros, Inc.'s Current Report on Form 8-K, filed with the SEC on March 23, 2017.

 10.27

 Amended and Restated Loan and Security Agreement, dated May 26, 2020, by and between Tech Capital, LLC and the Registrant, incorporated by reference to Exhibit 10.2 to Nephros Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, filed with the SEC on August 5, 2020.

 10.28

 Amended and Restated Secured Promissory Note (Single Advance – Non-Revolving), dated May 26, 2020, issued by the Registrant, incorporated by reference to Exhibit 10.3 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, filed with the SEC on August 5, 2020.

 10.29

 Employment Agreement between the Registrant and Andrew Astor, dated August 23, 2020, incorporated by reference to Exhibit 10.1 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed with the SEC on November 5, 2020.

 10.30

 Employment Agreement dated May 5, 2023, between Nephros, Inc. and Robert Banks (incorporated by reference to Exhibit 10.1 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023).

 10.31

 Letter Agreement, dated July 28, 2023, between the Nephros, Inc. and Judy Krandel. *

 10.32

 Inducement Stock Option Agreement, dated November 1, 2023, between Nephros, Inc. and Judy Krandel. *

 10.33

 Amendment to Employment Agreement, dated August 9, 2023, between Nephros, Inc. and Andrew Astor (incorporated by reference to Exhibit 10.1 to Nephros, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023).

 10.34

 License
 and Supply Agreement, dated December 11, 2023, between the Registrant and Medica S.p. A. (pursuant to Item 601(b)(2)(ii) of Regulation S-K, certain information contained in this Exhibit 10.34 has been redacted as indicated
therein).*

 21.1

 List of Subsidiaries of Nephros, Inc. *

 23.1

 Consent of Baker Tilly US, LLP Independent Registered Public Accounting Firm. *

 24.1

 Power of Attorney (included on the signature page). *

 31.1

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

 32.1

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

 97.1

 Nephros, Inc. Policy for Recoupment of Erroneously Awarded Compensation. *

 Interactive
 Data File. *

 *

 Filed
 herewith.

 Management
 contract or compensatory plan arrangement.

 +

 Confidential
 treatment has been granted for certain portions omitted from this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act
 of 1934, as amended.

 Item
16. Form 10-K Summary

 Not
applicable.

 SIGNATURES

 Pursuant
to the requirements of Section 13 or 15(d) 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.

 INC.

 Date:
 March 15, 2024

 By:

 /s/
 Robert Banks

 Name:

 Robert
 Banks

 Title:

 President,
 Chief Executive Officer (Principal Executive Officer)

 Date:
 March 15, 2024

 By:

 /s/
 Judy Krandel

 Name:

 Judy
 Krandel

 Title:

 Chief
 Financial Officer (Principal Financial and Accounting Officer)

 POWER
OF ATTORNEY

 We,
the undersigned directors and officers of Nephros, Inc., hereby severally constitute and lawfully appoint Robert Banks, our true and
lawful attorney-in-fact with full power to him to sign for us, in our names in the capacities indicated below, the Annual Report on Form
10-K for the fiscal year ended December 31, 2023 of Nephros, Inc. and any and all amendments thereto, and to file the same with all exhibits
thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent,
or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

 Signature

 Title

 Date

 /s/
 Robert Banks

 President,
 Chief Executive Officer

 March

 Robert
 Banks

 (Principal
 Executive Officer)

 /s/
 Judy Krandel

 Chief
 Financial Officer

 March

 Judy
 Krandel

 (Principal Financial and Accounting Officer)

 /s/
 Arthur H. Amron

 Director

 March

 Arthur
 H. Amron

 /s/
 Oliver Spandow

 Director

 March

 Oliver
 Spandow

 /s/
 Alisa Lask

 Director

 March

 Alisa
 Lask

 /s/Joe
 Harris

 Director

 March

 Joe
 Harris