Nephros Reports First Quarter 2007 Financial Results Revenues Increase 70%, Net Loss is Reduced

Reports First Quarter 2007 Financial Results

Increase 70%, Net Loss is Reduced

May 15, 2007 - Nephros, Inc. (AMEX: NEP) announced today financial results

the three months ended March 31, 2007.

quarter ended March 31, 2007, Nephros reported net revenue of $296,000,

attributable to sales of its OLp r(TM)

series (which currently consists of the MD190 and MD220 diafilters) products

Europe, compared with $174,000 in the corresponding period of 2006. Our sales

increase of approximately 70% is primarily due to increased sales to our

principal European distributor as the number of clinics and patients using

products has expanded.

Company's net loss was $1,571,000 for the first quarter of 2007 versus a net

loss of $1,679,000 in the first quarter of 2006. Nephros reported a net loss

attributable to common stockholders in the first quarter of 2007 of $0.13 per

basic and diluted share, compared to a net loss of $0.14 per basic and diluted

share in the year-earlier period. The average number of basic and diluted common

shares for the quarter ended March 31, 2007 was 12,317,992, compared to

12,314,294 for the quarter ended March 31, 2006. The Company's net loss was

reduced as the current quarter benefited from higher gross profit on higher

sales levels and lower operating costs, offset by the interest expense incurred

related to the Convertible Notes issued in June 2006.

had cash, cash equivalents and short-term investments of approximately

$1,313,000 and $803,000 as of March 31, 2007 and May 14, 2007,

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

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,

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

the ESRD patient. Nephros products are currently being used in over fifty

clinics in Europe, and are distributed in Italy, France, Spain, Greece, the

United Kingdom, Germany, Norway, Sweden, Denmark, The Netherlands and

also markets a line of water filtration products, the Dual Stage Ultrafilter

(DSU). Nephros's 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

reliable water filtration. The DSU is based

Nephros's proprietary water filtration technology originally designed for

medical use in its H2H machine,

complimentary product line to Nephros's main focus, the ESRD therapy

information on Nephros please visit the company's website,

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

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) 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) Nephros's technology and products may not be

accepted in current or future target markets, which could lead to the failure

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;

(vi) Nephros may not be able to satisfy its debt obligations when they become

due and payable and meet its anticipated cash needs and may not be successful

obtaining additional funding in order to continue operations or fund its

clinical trials; (vii) Nephros may not be able to build key relationships with

physicians, clinical groups and government agencies, pursue or increase sales

opportunities in Europe or elsewhere, or be the first to introduce

hemodiafiltration therapy in the United States; (viii) Nephros may not be able

to secure or enforce adequate legal protection, including patent protection,

its products; and (ix) 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

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, 2006. Investors and security 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

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thousands, except share amounts)

CONSOLIDATED STATEMENTS OF OPERATIONS