Nephros completes its shareholders rights offering, related private placement financing

Nephros, Inc. (OTC Bulletin Board: NEPH), a medical device company developing and marketing filtration products for therapeutic applications, infection control, and water purification, today announced the completion of its rights offering and private placement that together will result in gross proceeds of approximately $3.2 million to Nephros.

"Nephros is pleased to have successfully completed its shareholders rights offering and related private placement financing," said James S. Scibetta, Chairman of Nephros.  "The proceeds from these transactions will provide Nephros with funds to pursue the further development and commercialization of our filtration products."

Nephros' stockholders subscribed for 99,297,082 units in its previously announced rights offering and Nephros accepted all basic subscription rights and oversubscription privileges.  The subscription period for the rights offering expired at 5:00 p.m. Eastern Time on March 3, 2011.  Gross proceeds to Nephros from the sale of these units in the rights offering will be approximately $2.0 million.

Under the terms of the rights offering, Nephros distributed at no charge non-transferable subscription rights to purchase up to an aggregate of 175,000,000 units to stockholders who owned shares of Nephros common stock as of the close of business on January 31, 2011, which was the record date for the rights offering.  Each subscription right entitled the holder to purchase 4.185496618 units at a subscription price of $0.02 per unit.  Each unit consists of one share of common stock and a warrant to purchase 0.924532845 shares of common stock at an exercise price of $0.02 per share for a period of five years following the issue date of the warrant.  Based on the results of the rights offering, Nephros will issue an aggregate of 99,297,082 shares of its common stock and warrants to purchase an aggregate of approximately 91.8 million shares of its common stock to stockholders who subscribed.  

Based on the results of the rights offering and the satisfaction by Nephros of certain conditions, Lambda Investors, LLC, Nephros' largest stockholder, has agreed to purchase in a private placement 60,194,266 units at the same per unit purchase price of $0.02, pursuant to a purchase agreement between Nephros and Lambda Investors.  Nephros will issue to Lambda Investors an aggregate of 60,194,266 shares of its common stock and warrants to purchase an aggregate of 55,651,575 shares of its common stock.  Nephros will receive approximately $1.2 million in gross proceeds from its sale of units to Lambda Investors.

Nephros anticipates finalization of both the rights offering and the private placement to Lambda Investors on March 10, 2011.  On March 11, 2011, Nephros intends to effect a 1-for-20 reverse stock split, which was approved by the Nephros stockholders at the annual meeting of stockholders held on January 10, 2011.