EX-99 2 kl00540_ex99-1.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 [GRAPHIC OMITTED][GRAPHIC OMITTED] 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 CORRECTING and REPLACING Nephros Reports First Quarter 2005 Financial Results NEW YORK--(BUSINESS WIRE)--May 16, 2005--In BW5725 issued May 16, 2005: Second graph, second sentence of release should read: The Company's net loss was $392,887 for the first quarter of 2005 versus a net loss of $2,017,732 in the comparable period last year (sted: The Company's net loss was $448,892 for the first quarter of 2005 versus a net loss of $2,017,732 in the comparable period last year). The corrected release reads: NEPHROS REPORTS FIRST QUARTER 2005 FINANCIAL RESULTS Nephros, Inc. (AMEX: NEP) announced today financial results for the first quarter ended March 31, 2005. For the quarter ended March 31, 2005, Nephros reported net revenue of $1,901,665 compared with no revenue in 2004. The Company's net loss was $392,887 for the first quarter of 2005 versus a net loss of $2,017,732 in the comparable period last year. Nephros reported a net loss attributable to common stockholders in the first quarter of 2005 of $392,887, or $0.03 loss per basic and diluted share, compared to a loss of $4,089,232, or $2.57 loss per basic and diluted share, in the year-earlier period. The net loss applicable to common shareholders for the three months ended March 31, 2004 includes losses of $2,071,500 attributed to preferred dividends and accretion of beneficial conversion features and issuance costs in connection with the issuance of convertible preferred stock. There were no such losses for the three months ended March 31, 2005 because all of the Company's shares of preferred stock were converted into common stock upon the completion of the Company's initial public offering in September 2004. Revenue recognized from product sales was $151,665 in the first quarter of 2005. Product revenue is recognized once a customer's right of return has expired. First quarter revenue also included non-recurring revenue of $1.75 million resulting from the Company's licensing agreement with Asahi Kasei Medical Co., Ltd., announced March 2, 2005. As of March 31, 2005, cash, cash equivalents and short-term investments were $10,310,473, compared to $9,715,121 as of December 31, 2004. "I am pleased with our strong start in 2005 and the positive momentum we have established. We continue to increase awareness in the European market and build upon our initial sales. In March 2005, we filed our 510(k) application for our OLpur HD190 with the FDA. We believe this will play a key role as we move forward with our OLpur MD190 and OLpur H2H FDA submissions," stated Norman Barta, chief executive officer of Nephros. "In the first quarter, we announced a significant licensing agreement with Asahi Kasei Medical Co., Ltd. Under the agreement, Asahi will be able to develop and market its own products in Japan based on our mid dilution hemodiafiltration technology. Forging a relationship with this leader in the dialysis market, and the largest filter provider in Japan, is a key milestone for Nephros and our mid-dilution hemodiafiltration therapy. We believe our relationship with Asahi will complement our sales and marketing efforts for the OLpur MD190 in Europe and help to build greater brand recognition worldwide." About Nephros Inc. Nephros, 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 by the irreversible loss of kidney function. Nephros believes that its products are designed to remove a range of harmful substances more effectively, and more cost-effectively, than existing 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, to mortality in the ESRD patient. Forward Looking Statements This news 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, we claim the protection of the Private Securities Litigation Reform Act of 1995. Forward-looking 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) potential products that appeared promising in early research or clinical trials to Nephros may not demonstrate efficacy or safety in subsequent pre-clinical or clinical trials; (ii) Nephros may not obtain appropriate or necessary governmental approvals; (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 may not be able to obtain funding if and when needed; (v) Nephros may encounter unanticipated internal control deficiencies or weaknesses or ineffective disclosure controls and procedures; (vi) HDF therapy may not be accepted in the United States and/or Nephros's technology and products may not be accepted in target markets; (vii) Nephros may not be able to sell its products at competitive prices or profitably; and (viii) 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, 2004 and its Quarterly Report on Form 10-QSB filed with the SEC for the fiscal quarter ended March 31, 2005. 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 our forward-looking statements as a result of new information, future events or otherwise.
NEPHROS, INC. AND SUBSIDIARY Condensed Consolidated Balance Sheets (unaudited) March 31, December 31, 2005 2004 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 4,315,093 $ 3,719,181 Short-term investments 5,995,380 5,995,940 Accounts receivable 221,312 174,797 Inventory 586,877 653,351 Prepaid expenses and other current assets 508,834 468,355 ------------ ------------ Total current assets 11,627,496 11,011,624 Property and equipment, at cost less accumulated depreciation of $653,348 and $584,130 at March 31, 2005 and December 31, 2004, respectively 1,230,145 1,191,856 Other assets 5,322 3,822 ------------ ------------ Total assets $ 12,862,963 $ 12,207,302 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) Current liabilities: Accounts payable $ 549,245 $ 629,814 Accrued expenses 432,386 362,789 Deferred revenue 40,395 64,058 Accrued liabilities 1,500,000 1,500,000 ------------ ------------ Total current liabilities 2,522,026 2,556,661 ------------ ------------ Stockholders' equity: Preferred stock, $.001 par value, 31,000,000 shares authorized at March 31, 2005 and December 31, 2004; no shares issued and outstanding at March 31, 2005 and December 31, 2004 -- -- Common stock, $.001 par value; 49,000,000 shares authorized at March 31, 2005 and December 31, 2004; 12,304,498 and 12,120,248 shares issued and outstanding at March 31, 2005 and December 31, 2004, respectively 12,304 12,120 Additional paid-in capital 54,739,869 53,740,171 Deferred compensation (2,311,987) (2,479,317) Accumulated other comprehensive income - foreign currency translation 72,964 156,433 Accumulated other comprehensive loss - unrealized losses on available-for-sale securities (4,620) (4,060) Accumulated deficit (42,167,593) (41,774,706) ------------ ------------ Total stockholders' equity 10,340,937 9,650,641 ------------ ------------ Total liabilities and stockholders' equity $ 12,862,963 $ 12,207,302 ============ ============
NEPHROS, INC. AND SUBSIDIARY Condensed Consolidated Statements of Operations (unaudited) Three Months Ended March 31, ------------------------------- 2005 2004 ------------ ------------ Net contract revenues $ 1,750,000 $ -- Net product revenues 151,665 -- ------------ ------------ Net revenues 1,901,665 -- ------------ ------------ Operating costs and expenses: Cost of product revenue 135,368 12,618 Research and development 462,701 690,024 Selling, general and administrative 1,752,488 1,316,435 ------------ ------------ Total operating expenses 2,350,557 2,019,077 ------------ ------------ Loss from operations (448,892) (2,019,077) ------------ ------------ Other income: Interest income 56,005 1,345 ------------ ------------ Total other income 56,005 1,345 ------------ ------------ Net loss (392,887) (2,017,732) Dividends and accretion to redemption value of redeemable convertible preferred stock -- (2,071,500) ------------ ------------ Net loss attributable to common stockholders $ (392,887) $ (4,089,232) ============ ============ Basic and diluted net loss attributable to common stockholders per common share $ (0.03) $ (2.57) ============ ============ Shares used in computing basic and diluted net loss attributable to common stockholders per common share 12,150,956 1,593,659 ============ ============
NEPHROS, INC. AND SUBSIDIARY Condensed Consolidated Statements of Cash Flows (unaudited) Three months ended March 31, ------------------------------ 2005 2004 ------------ ----------- Operating activities Net loss $ (392,887) $(2,017,732) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 73,775 31,935 Noncash stock-based compensation 167,330 417,608 (Increase) decrease in operating assets Accounts receivable (46,515) (21,559) Prepaid expenses and other current assets (40,479) (565,685) Inventory 66,474 37,853 Other assets (1,500) (3,000) Increase (decrease) in operating liabilities Accounts payable and accrued expenses (10,972) (22,430) Deferred revenue (23,663) 21,559 ----------- ----------- Net cash used in operating activities (208,437) (2,121,451) ----------- ----------- Investing activities Purchase of property and equipment (112,064) (213,478) ----------- ----------- Net cash used in investing activities (112,064) (213,478) ----------- ----------- Financing activities Proceeds from issuance of preferred stock, net -- 3,811,538 Proceeds from issuance of common stock subsequent to the initial public offering 955,521 -- Proceeds from initial public offering of common stock 44,361 -- ----------- ----------- Net cash provided by financing activities 999,882 3,811,538 ----------- ----------- Effect of exchange rates on cash (83,469) (30,877) ----------- ----------- Net increase in cash and cash equivalents 595,912 1,445,732 Cash and cash equivalents, beginning of period 3,719,181 4,121,263 ----------- ----------- Cash and cash equivalents, end of period $ 4,315,093 $ 5,566,995 =========== =========== Supplemental disclosure of cash flow information Cash paid for income taxes $ 11,630 $ 723
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