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<SEC-DOCUMENT>0000922423-05-001325.txt : 20050815
<SEC-HEADER>0000922423-05-001325.hdr.sgml : 20050815
<ACCEPTANCE-DATETIME>20050815114652
ACCESSION NUMBER:		0000922423-05-001325
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20050815
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20050815
DATE AS OF CHANGE:		20050815

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NEPHROS INC
		CENTRAL INDEX KEY:			0001196298
		STANDARD INDUSTRIAL CLASSIFICATION:	SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841]
		IRS NUMBER:				133971809
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-32288
		FILM NUMBER:		051024370

	BUSINESS ADDRESS:	
		STREET 1:		3960 BROADWAY
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10032
		BUSINESS PHONE:		2127815113
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>kl00857_8k.txt
<DESCRIPTION>FORM 8-K CURRENT REPORT
<TEXT>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                           __________________________


                                    FORM 8-K

                                 CURRENT REPORT

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


        Date of report (Date of earliest event reported) August 15, 2005
                                                         ---------------



                                  Nephros, Inc.
                                  -------------
               (Exact Name of Registrant as Specified in Charter)

                        Commission File Number: 001-32288
                                                ---------

           Delaware                                            13-3971809
           --------                                            ----------
 (State or other Jurisdiction of                             (I.R.S. Employer
         Incorporation)                                     Identification No.)


                     3960 Broadway, New York, New York 10032
                     ---------------------------------------
                    (Address of Principal Executive Offices)
                                   (Zip Code)


                                 (212) 781-5113
                                 --------------
              (Registrant's telephone number, including area code)

                                 Not Applicable
                                 --------------
          (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
    230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
    240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
    Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
    Act (17 CFR 240.13e-4(c))

<PAGE>

Item 2.02. Results of Operations and Financial Condition.

      On August 15, 2005, Nephros, Inc. issued a press release announcing its
financial results for the three and six months ended June, 30, 2005. A copy of
this press release is attached hereto as Exhibit 99.1. The information in this
report shall not be deemed to be "filed" for the purposes of Section 18 of the
Securities Exchange Act of 1934 or otherwise subject to the liability of that
Section.

Item 9.01. Financial Statements and Exhibits.

      (c)   Exhibits

      99.1  Press Release issued by Nephros, Inc. dated August 15, 2005.


<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


Date: August 15, 2005



                                        NEPHROS, INC.

                                        By: /s/ Marc L. Panoff
                                           ------------------------------------
                                           Marc L. Panoff
                                           Chief Financial Officer (Principal
                                           Financial and Accounting Officer)



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>kl00857_ex99-1.txt
<DESCRIPTION>EXHIBIT 99.1 PRESS RELEASE
<TEXT>
                                                                    Exhibit 99.1

NEPHROS

Contact:
Marc Panoff, CFO              Garth Russell / Todd Fromer
Nephros, Inc.                 KCSA Worldwide
Tel: 212-781-5113             212-896-1250 / 212-896-1215


              Nephros Reports Second Quarter 2005 Financial Results

NEW YORK, August 15, 2005 - Nephros, Inc. (AMEX: NEP) announced today financial
results for the three months and six months ended June 30, 2005.

For the quarter ended June 30, 2005, Nephros reported net revenue of $226,426,
attributable to sales of its OLpur MD190 product in Europe, compared with no
revenue in the corresponding period of 2004.

The Company's net loss was $2,032,333 for the second quarter of 2005 versus a
net loss of $1,680,033 in the second quarter of 2004. Nephros reported a net
loss attributable to common stockholders in the second quarter of 2005 of
$2,032,333, or $0.17 loss per basic and diluted share, compared to a loss of
$4,360,120, or $2.74 loss per basic and diluted share, in the year-earlier
period.

For the six months ended June 30, 2005, Nephros reported net revenue of
$2,128,091 compared with no revenue in the first six months of 2004. In the
first half of 2005, net revenue recognized from product sales totaled $378,091.
Half-year revenue also included a one-time, upfront fee of $1.75 million
resulting from Nephros's license agreement with Asahi Kasei Medical Co., Ltd.,
the largest filter provider in Japan, entered into on March 2, 2005.

Nephros's net loss was $2,425,220 for the first half of 2005 versus a net loss
of $3,697,766 in the comparable period last year. Nephros reported a net loss
attributable to common stockholders for the first half of 2005 of $2,425,220, or
$0.20 loss per basic and diluted share, compared to a loss of $8,449,353, or
$5.30 loss per basic and diluted share, in the year-earlier period.

It should be noted that, although Nephros began selling products in the first
quarter of 2004, Nephros does not recognize revenue from product sales until a
customer's right of return has expired. Accordingly, Nephros reported no revenue
during the first half of 2004. It should also be noted that the differences
between net loss and net loss attributable to common stockholders for the 2004
periods are the result of the accrual of preferred dividends and the accretion
of a beneficial conversion feature associated with Nephros's issuance of series
D convertible preferred stock.

As of June 30, 2005, Nephros had cash, cash equivalents and short-term
investments of $8,813,624.

"I am pleased with our achievements in the second quarter of 2005. In June, we
received approval from the FDA to market our OLpur(TM) HD190 high flux filter in
the U.S., a significant milestone for our company. While the Olpur(TM) HD190 is
not expected to offer a substantial sales opportunity in the foreseeable future,
we believe that the FDA approval of the Olpur(TM) HD190 is an important step in
the regulatory process to gain approval for our more advanced End-Stage Renal
Disease therapies in the U.S.

<PAGE>

In addition, we recently received U.S. patent confirmation for our Olpur(TM)
H2H(TM) online hemodiafiltration module, giving us the exclusive right, subject
to FDA approval, to use our Olpur(TM) H2H(TM) product to open the U.S. market to
hemodiafiltration, which has been shown to be a superior therapy to
hemodialysis," stated Norman Barta, chief executive officer of Nephros.

"In addition to progress in the U.S., we continue to make marked strides in the
European market. During the second quarter, we built upon the initial sales of
our OLpur(TM) MD190 and initiated supplemental clinical trials in five European
countries which are designed to demonstrate the OLpur(TM) MD190's effectiveness
in removing a range of blood toxins and other factors contributing to overall
therapy cost savings and patient well-being. We're pursuing our strategy of
attaining targeted, measurable sales growth throughout Europe, and in turn
expanding into other key geographic areas including the U.S. We have made
measurable progress in the execution of our business plan during the first half
of 2005, and remain focused on increasing sales and driving market penetration
of our advanced mid-dilution hemodiafiltration technologies," Barta concluded.

About Nephros Inc.
Nephros, Inc., headquartered in New York, is a medical device company developing
and marketing products designed to improve the quality of life for the End-Stage
Renal Disease (ESRD) patient, while addressing the critical financial and
clinical needs of the care provider. ESRD is a disease state characterized by
the irreversible loss of kidney function. Nephros believes that its products are
designed to remove a range of harmful substances more effectively, and more
cost-effectively, than existing treatment methods; particularly with respect to
substances known collectively as "middle molecules," due to their molecular
weight, that have been found to contribute to such conditions as dialysis
related amyloidosis, carpal tunnel syndrome, degenerative bone disease and
ultimately, to mortality in the ESRD patient.

Forward Looking Statements
This news release contains certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, as amended.
Such statements may include statements regarding the efficacy and intended use
of Nephros's technologies under development, the timelines for bringing such
products to market and the availability of funding sources for continued
development of such products and other statements that are not historical facts,
including statements which may be preceded by the words "intends," "may,"
"will," "plans," "expects," "anticipates," "projects," "predicts," "estimates,"
"aims," "believes," "hopes," "potential" or similar words. For such statements,
Nephros claims the protection of the Private Securities Litigation Reform Act of
1995.

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 the control of Nephros. Actual results
may differ materially from the expectations contained in the forward-looking
statements. Factors that may cause such differences include the risks that: (i)
products that appeared promising in research or clinical trials to Nephros may
not demonstrate anticipated efficacy, safety or cost savings in subsequent
pre-clinical or clinical trials; (ii) Nephros may not obtain appropriate or
necessary governmental approvals to achieve its business plan; (iii) product
orders may be cancelled, patients currently using Nephros's products may cease
to do so and patients expected to begin using Nephros's products may not; (iv)
hemodiafiltration therapy may not be accepted in the United States and/or
Nephros's technology and products may not be accepted in current or future
target markets, which could lead to the failure to achieve market penetration of
Nephros's products; (v) Nephros may not be able to sell its products at
competitive prices or profitably; (vi) Nephros may not be able to secure or
enforce adequate legal protection, including patent protection, for its
products; (vii) FDA approval relating to Nephros's Olpur(TM) HD190 filter may
not facilitate or have any effect on the regulatory approval process for
Nephros's other products; and (viii) Nephros may not be able to achieve sales
growth in Europe or expand into other key geographic markets. More detailed
information about Nephros and the risk factors that may affect the realization
of forward-looking statements is set forth in Nephros's filings with the
Securities and Exchange Commission, including Nephros's Annual Report on Form
10-KSB filed with the SEC for the fiscal year ended December 31, 2004 and its
Quarterly Report on Form 10-QSB filed with the SEC for the fiscal quarter ended
June 30, 2005. Investors and security

<PAGE>

holders are urged to read those documents free of charge on the SEC's web site
at www.sec.gov. Nephros does not undertake to publicly update or revise its
forward-looking statements as a result of new information, future events or
otherwise.

                                 (Tables follow)


<PAGE>

<TABLE>
<CAPTION>

                          NEPHROS, INC. AND SUBSIDIARY
                      Condensed Consolidated Balance Sheets

                                                                                   June 30,        December 31,
                                                                                     2005              2004
                                                                                ------------       ------------
                                                                                 (unaudited)
ASSETS
Current assets:
<S>                                                                             <C>                <C>
       Cash and cash equivalents                                                $  2,817,064       $  3,719,181
       Short-term investments                                                      5,996,560          5,995,940
       Accounts receivable                                                           219,720            174,797
       Inventory                                                                     528,125            653,351
       Prepaid expenses and other current assets                                     370,408            468,355
                                                                                ------------       ------------
              Total current assets                                                 9,931,877         11,011,624
Property and equipment, at cost less accumulated depreciation
  of $739,719 and $584,130 at June 30, 2005 and December 31, 2004,
  respectively                                                                     1,148,751          1,191,856
Other assets                                                                           3,822              3,822
                                                                                ------------       ------------
              Total assets                                                      $ 11,084,450       $ 12,207,302
                                                                                ============       ============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
       Accounts payable                                                         $    709,769       $    629,814
       Accrued expenses                                                              517,517            362,789
       Deferred revenue                                                               21,031             64,058
       Accrued liabilities                                                         1,500,000          1,500,000
                                                                                ------------       ------------
              Total current liabilities                                            2,748,317          2,556,661
                                                                                ------------       ------------
Stockholders' equity:
       Preferred stock, $.001 par value, 5,000,000 and 31,000,000
         shares authorized at June 30, 2005 and December 31, 2004,
         respectively; no shares issued and outstanding at June
         30, 2005 and December 31, 2004                                                 --                 --
       Common stock, $.001 par value; 25,000,000 and 49,000,000
         shares authorized at June 30, 2005 and December 31, 2004,
         respectively; 12,304,498 and 12,120,248 shares issued
         and outstanding at June 30, 2005 and December 31, 2004,
         respectively                                                                 12,304             12,120
Additional paid-in capital                                                        54,739,869         53,740,171
Deferred compensation                                                             (2,188,424)        (2,479,317)
Accumulated other comprehensive income - foreign currency
  translation                                                                        (24,250)           156,433
Accumulated other comprehensive loss - unrealized losses on
  available-for-sale securities                                                       (3,440)            (4,060)
Accumulated deficit                                                              (44,199,926)       (41,774,706)
                                                                                ------------       ------------
              Total stockholders' equity                                           8,336,133          9,650,641
                                                                                ------------       ------------
              Total liabilities and stockholders' equity                        $ 11,084,450       $ 12,207,302
                                                                                ============       ============
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                          NEPHROS, INC. AND SUBSIDIARY
                 Condensed Consolidated Statements of Operations
                                   (unaudited)


                                                          Three Months Ended June 30,             Six Months Ended June 30,
                                                       ---------------------------------       --------------------------------
                                                           2005                2004                2005               2004
                                                       ------------        -------------       ------------        ------------

<S>                                                    <C>                 <C>                 <C>                 <C>
Net contract revenues                                  $       --          $       --          $  1,750,000        $       --
Net product revenues                                        226,426                --               378,091                --
                                                       ------------        ------------        ------------        ------------
      Net revenues                                          226,426                --             2,128,091                --
                                                       ------------        ------------        ------------        ------------
Operating costs and expenses:
      Cost of product revenue                               113,681              54,304             249,049              66,922
      Research and development                              551,009             601,992           1,013,710           1,292,016
      Selling, general and administrative                 1,656,533           1,024,307           3,409,021           2,340,743
                                                       ------------        ------------        ------------        ------------
           Total operating expenses                       2,321,223           1,680,603           4,671,780           3,699,681
                                                       ------------        ------------        ------------        ------------
Loss from operations                                     (2,094,797)         (1,680,603)         (2,543,689)         (3,699,681)
                                                       ------------        ------------        ------------        ------------
Other income:
      Interest income                                        62,464                 570             118,469               1,915
                                                       ------------        ------------        ------------        ------------
           Total other income                                62,464                 570             118,469               1,915
                                                       ------------        ------------        ------------        ------------
Net loss                                                 (2,032,333)         (1,680,033)         (2,425,220)         (3,697,766)

Dividends and accretion to redemption
   value of redeemable convertible
   preferred stock                                             --            (2,680,087)               --            (4,751,587)
                                                       ------------        ------------        ------------        ------------
Net loss attributable to common stockholders           $ (2,032,333)       $ (4,360,120)       $ (2,425,220)       $ (8,449,353)
                                                       ============        ============        ============        ============

Basic and diluted net loss attributable
  to common stockholders per common share              $      (0.17)       $      (2.74)       $      (0.20)       $      (5.30)
                                                       ============        ============        ============        ============

Shares used in computing basic and
  diluted net loss attributable to common
  stockholders per common share                          12,304,498           1,593,659          12,228,151           1,593,659
                                                       ============        ============        ============        ============
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                          NEPHROS, INC. AND SUBSIDIARY
                 Condensed Consolidated Statements of Cash Flows
                                   (unaudited)

                                                                                     Six months ended June 30,
                                                                                  -------------------------------
                                                                                      2005               2004
                                                                                  -----------        ------------

<S>                                                                               <C>                <C>
Operating activities
       Net loss                                                                   $(2,425,220)       $(3,697,766)
       Adjustments to reconcile net loss to net cash used in operating
           activities:
           Depreciation and amortization                                              155,589             71,554
           Noncash stock-based compensation                                           290,893            417,608
           (Increase) decrease in operating assets
              Accounts receivable                                                     (44,923)           (24,113)
              Prepaid expenses and other current assets                                97,947           (542,764)
              Inventory                                                               125,226             98,799
           Increase (decrease) in operating liabilities
              Accounts payable and accrued expenses                                   234,683           (165,507)
              Deferred revenue                                                        (43,027)            38,830
                                                                                  -----------        -----------
                     Net cash used in operating activities                         (1,608,832)        (3,803,359)
                                                                                  -----------        -----------
Investing activities
       Purchase of property and equipment                                            (112,484)          (481,042)
                                                                                  -----------        -----------
                     Net cash used in investing activities                           (112,484)          (481,042)
                                                                                  -----------        -----------
Financing activities
       Proceeds from issuance of preferred stock, net                                    --            3,811,538
       Proceeds from exercise of warrants                                                --               87,500
       Proceeds from issuance of common stock subsequent to the initial
         public offering                                                              955,521               --
       Adjustment to proceeds from initial public offering of common stock             44,361               --
                                                                                  -----------        -----------
                     Net cash provided by financing activities                        999,882          3,899,038
                                                                                  -----------        -----------
Effect of exchange rates on cash                                                     (180,683)           (38,397)
                                                                                  -----------        -----------
                     Net increase (decrease) in cash and cash equivalents            (902,117)          (423,760)
       Cash and cash equivalents, beginning of period                               3,719,181          4,121,263
                                                                                  -----------        -----------
       Cash and cash equivalents, end of period                                   $ 2,817,064        $ 3,697,503
                                                                                  ===========        ===========
Supplemental disclosure of cash flow information
       Cash paid for income taxes                                                 $    11,630        $       723
</TABLE>

                                      # # #




</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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