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Contact:
Marc Panoff, CFO / Garth Russell / Todd Fromer
Nephros, Inc. KCSA Worldwide
Tel: 212-781-5113 212-896-1250 / 212-896-1215
                                                                                   FOR IMMEDIATE RELEASE
Nephros, Inc. Reports Third Quarter 2004
Financial Results

New York -November 16, 2004 - Nephros, Inc. (AMEX: NEP) announced today financial results for the third quarter and nine months ended September 30, 2004.

Nephros reported net revenue of $46,379 for the three months ended September 30, 2004 compared with no revenue in comparable period of the prior year. The Company reported net loss of $1,881,849 for three months ended September 30, 2004, as compared to $1,841,086 for the same period in 2003. Nephros reported net loss applicable to common stockholders of $8,864,795, or $3.89 per share for the three months ended September 30, 2004, as compared to $2,139,086, or $1.34 per share, for the same period in 2003. The net loss applicable to common shareholders includes losses attributed to preferred dividends and accretion of beneficial conversion features and issuance costs in connection with the issuance of convertible preferred stock. Total preferred dividends and accretion amounted to $6,982,946 for the three months ended September 30, 2004, compared to $298,000 for the same period in 2003.

Nephros reported net revenue of $46,379 for the nine months ended September 30, 2004 compared with no revenue in the comparable period of the prior year. For the nine months ended September 30, 2004, The Company reported net loss of $5,579,615, as compared to $5,669,593 for the same period in 2003. Nephros reported net loss applicable to common stockholders of $17,314,148, or $9.49 per share, as compared to $6,149,593, or $3.86 per share, for the same period in 2003. The net loss applicable to common shareholders includes losses attributed to preferred dividends and accretion of beneficial conversion features and issuance costs in connection with the issuance of convertible preferred stock. Total preferred dividends and accretion amounted to $11,734,533 for the nine months ended September 30, 2004, compared to $480,000 for the same period in 2003.

Norman Barta, chief executive officer of Nephros, commented, "This has been a very exciting quarter for Nephros; we’ve achieved several important milestones for the company. During the quarter we completed our initial public offering. As expected, we have started to generate revenue from our sales in Europe, and we have our strategy in place to target measurable sales growth throughout the region going forward, and ultimately expand into other geographic areas as planned."

The Company reported $13,439,411 in cash and cash equivalents at September 30, 2004, as compared to $4,121,263 at December 31, 2003. Cash and cash equivalents at September 30, 2004 includes $10,784,586 in net proceeds from the Company's initial public offering completed on September 24, 2004. The Company sold 2,100,000 shares of common stock in its initial public offering at a price of $6.00 per share.

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