Nephros Receives Non-compliance Notification from

Receives Non-compliance Notification from AMEX

YORK - July 21, 2006 - Nephros, Inc. (AMEX:NEP)

announced that the Company has received notice from the American Stock Exchange

(AMEX) that AMEX has determined that the Company is not in compliance with

certain conditions of the continued listing standards of Section 1003 of the

AMEX Company Guide. Specifically, AMEX noted the Company's failure to comply

with Section 1003(a)(ii) of the AMEX Company Guide relating to shareholders'

equity of less than $4,000,000 and losses from continuing operations and/or

losses in three out of its four most recent fiscal years and Section

1003(a)(iii) of the AMEX Company Guide relating to shareholders' equity of less

than $6,000,000 and losses from continuing operations and/or net losses in

five most recent fiscal years. The notice was based on a review by the AMEX

the Company's Form 10 QSB for the three months ended March 31, 2006, which

publicly disclosed the financial status of the Company at that

Company has been afforded the opportunity to submit a plan of compliance to

AMEX by August 17, 2006 advising AMEX of the action the Company has taken,

will take, that would bring it into compliance with the continued listing

standards listed above by January 17, 2008. If AMEX accepts the plan, the

Company may be able to continue its listing during the plan period of up to

eighteen months, during which time the Company will be subject to periodic

review to determine whether it is making progress consistent with the plan.

AMEX does not accept the Company's plan, or even if accepted, if the Company is

not in compliance with the continued listing standards at the end of the plan

period or the Company does not make progress consistent with the plan during

such period, then AMEX may initiate delisting proceedings.

Company is considering what actions it may take to regain compliance with the

AMEX listing standards and intends to submit a compliance plan to the AMEX

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. Nephros also markets filtration products

complimentary to its core ESRD therapy business. ESRD is a disease state

characterized by the irreversible loss of kidney function.

believes that its products 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

such conditions as dialysis related amyloidosis, carpal tunnel syndrome,

degenerative bone disease and ultimately, to mortality in the ESRD

company's dual stage filter architecture, Nephros has developed a new

proprietary water filtration device that is designed to remove a broad range

bacteria, viral agents and toxic substances, including salmonella, hepatitis,

HIV, Ebola virus, ricin toxin, legionella, fungi and e-coli. Nephros received

its first order for a water filter product from a major New York City hospital

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

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.

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:

Nephros may be unsuccessful in devising a practicable plan of action to timely

regain compliance with the AMEX listing standards; (ii) 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; (iii) Nephros may not obtain appropriate or necessary

governmental approvals to achieve its business plan or effectively market its

products; (iv) 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 ESRD

or water filtration products at competitive prices or profitably; and (vi)

Nephros may not be able 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'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, 2005. Investors and security holders

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