Nephros Awarded $2 Million Contract Expansion by the Office of Naval Research

Awarded $2 Million Contract Expansion by the Office of Naval

August 31, 2009 - Nephros,

Inc. (OTC Bulletin Board: NEPH), a medical device company developing and

marketing filtration products for therapeutic applications, infection control,

and water purification, today reported that it has received approval from

the Office of Naval Research (ONR) to expand the Company's development of new

potable water filtration systems for military field use.

has been awarded a new research contract from the Office of Naval Research (ONR)

for development of a potable dual-stage military water purifying filter. The

research contract is an expansion of the Company's current ONR contract which is

being performed as part of the Marine Corps Advanced Technology Demonstration

(ATD) project. The primary objective of this expanded research program is to

select concepts and functional prototype filter/pump units which were developed

during the first phase of the project, and further develop them into smaller

field-testable devices that can be used for military evaluation purposes. An

advantage of the Nephros ultrafilter is the removal of viruses which are not

removed with commercially available off-the-shelf microfilter devices. Such

devices generally rely on a secondary chemical disinfection step to make the

water safe to drink. The expanded contract also includes research geared toward

improving membrane performance, improving device durability, developing larger

squad-level water purifier devices, and investigating desalination filter/pump

devices for emergency-use purposes.

is pleased to continue its collaboration with the U.S. Military," said Ernest

Elgin, President & CEO of Nephros. "We look forward to providing

portable DSU systems to create potable water for our troops in the field. The

Company believes that the military product development efforts will have broad

consumer applications as well."

Nephros, Inc., headquartered in River

Edge, New Jersey, is a medical device company developing and marketing

filtration products for therapeutic applications, infection control, and water

The Nephros hemodiafiltration ("HDF")

system is 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. The Nephros HDF system removes a range of

harmful substances more effectively, and with greater capacity, than existing

ESRD treatment methods, particularly with respect to substances known

collectively as "middle molecules." These molecules 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 ESRD products are sold and distributed throughout Europe and

are currently being used in over fifty clinics in Europe.

The Nephros Dual Stage Ultra-filter

(DSU) is the basis for Nephros's line of water filtration products. The patented

dual stage cold sterilization ultrafilter has the capability to filter out

bacteria and, due to its exceptional filtration levels, filter out many viruses,

parasites and biotoxins. Sale of the DSU has begun at several major U.S. medical

centers for infection control and has been selected for further development by

the U.S. Marine Corps for purification of drinking water by soldiers in the

For more information about Nephros,

please visit our website at http://www.nephros.com/

Statements in this news release that are

not historical facts constitute "forward-looking statements" within the meaning

of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). Such

statements may be preceded by words such as "may," "plans," "expects,"

"believes," "hopes," "potential" or similar words. For such statements, Nephros

claims the protection of the PSLRA.

Forward-looking statements are not

guarantees of future performance, are based on assumptions and are subject to

various known and unknown risks and uncertainties, many of which are beyond

Nephros' control. Actual results may differ materially from the expectations

contained in the forward-looking statements. Factors that may cause such

differences include the risks that Nephros may not be able: (i) to obtain

funding when needed or on favorable terms; (ii) to continue as a going concern;

(iii) to demonstrate in pre-clinical or clinical trials the anticipated

efficacy, safety or cost savings of products that appeared promising to Nephros

in research or clinical trials; (iv) to obtain appropriate or necessary

governmental approvals to achieve its business plan or effectively market its

products; (v) to have its technologies and products accepted in current or

future target markets; or (vi) to secure or enforce adequate legal protection,

including patent protection, for its products. 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 SEC, including Nephros'

Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

Investors and security holders are encouraged to read these documents on the

SEC's website at http://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.