SOURCE: Nephros, Inc.

May 03, 2007 17:42 ET

Nephros Provides Information Regarding Auditor's Going Concern Report and Fiscal 2006 Results

NEW YORK, NY -- (MARKET WIRE) -- May 3, 2007 -- Nephros, Inc. (AMEX: NEP) announced today that its consolidated financial statements for the year ended December 31, 2006, which were included in its Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on April 10, 2007, contained a going concern qualification from its independent auditors, Deloitte & Touche LLP. This announcement is being made to comply with AMEX Company Guide Section 610(b) requiring a public announcement of the receipt of an audit report that contains a going concern qualification. Further information regarding the going concern qualification is contained in Nephros' Annual Report on Form 10-KSB for the year ended December 31, 2006, which is available free of charge on the Securities and Exchange Commission's web site at www.sec.gov.

Nephros used $7,299,597 of cash in operating activities for the year ended December 31, 2006 compared to $5,103,948 used in operating activities for the year ended December 31, 2005.

For the year ended December 31, 2006, Nephros reported net revenue of $793,489, primarily attributable to sales of its OLpur™ MDHDF products in Europe, compared to $2,424,483 in the corresponding period of 2005, which included contract revenue of a one-time, upfront fee of $1,750,000 resulting from Nephros' license agreement with Asahi Kasei Medical Co., Ltd., the largest filter provider in Japan.

Nephros reported a net loss attributable to common stockholders in the year ended December 31, 2006 of $8,012,911, or $0.65 loss per basic and diluted share, compared to a loss of $5,468,177, or $0.45 loss per basic and diluted share, for the same period last year. The average number of basic and diluted common shares for the year ended December 31, 2006 was 12,317,080, compared to 12,269,054 for the year ended December 31, 2005.

The information disclosed in this announcement does not represent any change or amendment to Nephros' financial statements or to its Annual Report on Form 10-KSB as filed with the Securities and Exchange Commission.

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, particularly its Mid-Dilution Hemodiafiltration therapy, are designed to remove a range of harmful substances more effectively, and more cost-effectively, than existing ESRD 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, mortality in the ESRD patient. Nephros products are currently being used in over fifty clinics in Europe, and are distributed in Italy, France and Belgium.

Nephros also markets a line of water filtration products, the Dual Stage Ultrafilter (DSU). Nephros' patented dual stage cold sterilization Ultrafilter has the capability to filter out bacteria and, due to its exceptional filtration levels, filter out many viruses and parasites. The DSU proprietary design provides dual-stage filtration reducing the risk of filtration failure. With initial focus on health care, the DSU is in a pilot-use program at a major medical center and has been selected for further development by the U.S. Marine Corps. Nephros considers the DSU a significant breakthrough in providing affordable and reliable water filtration. The DSU is based on Nephros' proprietary water filtration technology originally designed for medical use in its H2H machine, and is a complementary product line to Nephros' main focus, the ESRD therapy business.

For more information on Nephros please visit the company's website, www.nephros.com.

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' technologies, 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 to Nephros in research or clinical trials 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 or effectively market its products; (iii) Nephros may not to satisfy its debt obligations when they become due and payable and meet our anticipated cash needs and may not be successful in obtaining additional funding in order to continue operations or fund its clinical trials; and (iv) Nephros may be unable to show progress consistent with its plan of compliance to meet the American Stock Exchange's continued listing standards or may be otherwise unable to timely regain compliance with the AMEX listing standards. More detailed information about Nephros and the risk factors that may affect the realization of forward-looking statements is set forth in Nephros' filings with the Securities and Exchange Commission, including Nephros' Annual Report on Form 10-KSB filed with the SEC for the fiscal year ended December 31, 2006. Investors and security holders are urged to read this document 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.

Contact Information

  • CONTACTS:
    Norman Barta
    Nephros, Inc.
    212 781-5113

    Paul G. Henning
    Cameron Associates
    212 554-5462
    Email Contact