SEC FORM 4

SEC Form 4

FORM 4

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934
or Section 30(h) of the Investment Company Act of 1940

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Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

1. Name and Address of Reporting Person^*

Wasserstein Bruce

(Last)

(First)

(Middle)

C/O WASSERSTEIN & CO.

1301 AVENUE OF THE AMERICAS, 44TH FLOOR

(Street)

NEW YORK,

10021

(City)

(State)

(Zip)

2. Issuer Name and Ticker or Trading Symbol
NEPHROS INC [ NEP ]

5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)

Director	X	10% Owner
Officer (give title below)		Other (specify below)

3. Date of Earliest Transaction (Month/Day/Year)
09/24/2004

4. If Amendment, Date of Original Filed (Month/Day/Year)

6. Individual or Joint/Group Filing (Check Applicable Line)

X	Form filed by One Reporting Person
	Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	3. Transaction Code (Instr. 8)		4. Securities Acquired (A) or Disposed Of (D) (Instr. 3, 4 and 5)			5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4)	6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	Code	V	Amount	(A) or (D)	Price		6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
Common Stock	09/24/2004		C		56,820	A	⁽¹⁾	56,820	I	See Footnotes⁽²⁾⁽¹⁵⁾
Common Stock	09/24/2004		C		676,230	A	⁽³⁾	733,050	I	See Footnotes⁽⁴⁾⁽¹⁶⁾
Common Stock	09/24/2004		C		146,459	A	⁽⁵⁾	879,509	I	See Footnotes⁽⁶⁾⁽¹⁵⁾⁽¹⁶⁾
Common Stock	09/24/2004		C		50,204	A	⁽⁷⁾	929,713	I	See Footnotes⁽⁸⁾⁽¹⁶⁾
Common Stock	09/24/2004		C		426,370	A	⁽⁹⁾	1,356,083	I	See Footnotes⁽¹⁰⁾⁽¹⁵⁾⁽¹⁶⁾⁽¹⁷⁾⁽¹⁸⁾
Common Stock	09/24/2004		C		253,547	A	⁽¹¹⁾	1,609,630	I	See Footnotes⁽¹²⁾⁽¹⁵⁾⁽¹⁷⁾⁽¹⁸⁾
Common Stock	09/24/2004		C		319,095	A	⁽¹³⁾	1,928,725	I	See Footnotes⁽¹⁴⁾⁽¹⁵⁾⁽¹⁷⁾⁽¹⁸⁾

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	4. Transaction Code (Instr. 8)		5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5)		6. Date Exercisable and Expiration Date (Month/Day/Year)		7. Title and Amount of Securities Underlying Derivative Security (Instr. 3 and 4)		8. Price of Derivative Security (Instr. 5)	9. Number of derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)	10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	Code	V	(A)	(D)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares	8. Price of Derivative Security (Instr. 5)		10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
Series A Convertible Preferred Stock	⁽¹⁾	09/24/2004		C			200,000	⁽¹⁾	⁽¹⁾	Common Stock	56,820	⁽¹⁾	0	I	See Footnotes⁽²⁾⁽¹⁵⁾
Series B Convertible Preferred Stock	⁽³⁾	09/24/2004		C			1,866,666	⁽³⁾	⁽³⁾	Common Stock	676,230	⁽³⁾	0	I	See Footnotes⁽⁴⁾⁽¹⁶⁾
Series C Convertible Preferred Stock	⁽⁵⁾	09/24/2004		C			410,250	⁽⁵⁾	⁽⁵⁾	Common Stock	146,459	⁽⁵⁾	0	I	See Footnotes⁽⁶⁾⁽¹⁵⁾⁽¹⁶⁾
Series C Convertible Preferred Stock	⁽⁷⁾	09/24/2004		C			150,000	⁽⁷⁾	⁽⁷⁾	Common Stock	50,204	⁽⁷⁾	0	I	See Footnotes⁽⁸⁾⁽¹⁶⁾
Series D Convertible Preferred Stock	⁽⁹⁾	09/24/2004		C			948,244	⁽⁹⁾	⁽⁹⁾	Common Stock	426,370	⁽⁹⁾	0	I	See Footnotes⁽¹⁰⁾⁽¹⁵⁾⁽¹⁶⁾⁽¹⁷⁾⁽¹⁸⁾
Series D Convertible Preferred Stock	⁽¹¹⁾	09/24/2004		C			571,178	⁽¹¹⁾	⁽¹¹⁾	Common Stock	253,547	⁽¹¹⁾	0	I	See Footnotes⁽¹²⁾⁽¹⁵⁾⁽¹⁷⁾⁽¹⁸⁾
Series D Convertible Preferred Stock	⁽¹³⁾	09/24/2004		C			729,672	⁽¹³⁾	⁽¹³⁾	Common Stock	319,095	⁽¹³⁾	0	I	See Footnotes⁽¹⁴⁾⁽¹⁵⁾⁽¹⁷⁾⁽¹⁸⁾

Explanation of Responses:

1. Each share of Series A Convertible Preferred Stock converted into approximately 0.2841 shares of common stock immediately prior to the initial public offering of Nephros, Inc. (the "Issuer").

2. Represents 56,820 shares of common stock issuable to BW Employee Holdings, LLC ("BW Holdings") upon conversion of 200,000 shares of Series A Convertible Preferred Stock held by BW Holdings.

3. Each share of Series B Convertible Preferred Stock, together with all accrued and unpaid dividends thereon as of May 31, 2004, converted into approximately 0.362266 shares of common stock immediately prior to the Issuer's initial public offering.

4. Represents approximately 676,230 shares of common stock issuable to WPPN, LP ("WPPN") upon conversion of 1,866,666 shares of Series B Convertible Preferred Stock held by WPPN, including all accrued and unpaid dividends thereon as of May 31, 2004.

5. Each share of Series C Convertible Preferred Stock purchased as of July 1, 2000, together with all accrued and unpaid dividends thereon as of May 31, 2004, converted into approximately 0.357001 shares of common stock immediately prior to the Issuer's initial public offering.

6. Represents (i) approximately 114,240 shares of common stock issuable to WPPN upon conversion of 320,000 shares of Series C Convertible Preferred Stock held by WPPN and (ii) approximately 32,219 shares of common stock issuable to BW Holdings upon conversion of 90,250 shares of Series C Convertible Preferred Stock held by BW Holdings. In each case, such amounts include the conversion of all accrued and unpaid dividends thereon as of May 31, 2004.

7. Each share of Series C Convertible Preferred Stock purchased as of August 10, 2001, together with all accrued and unpaid dividends thereon as of May 31, 2004, converted into approximately 0.334694 shares of common stock immediately prior to the Issuer's initial public offering.

8. Represents approximately 50,204 shares of common stock issuable to WPPN upon conversion of 150,000 shares of Series C Convertible Preferred Stock held by WPPN, including all accrued and unpaid dividends thereon as of May 31, 2004.

9. Each share of Series D Convertible Preferred Stock purchased as of September 11, 2003, together with all accrued and unpaid dividends thereon as of May 31, 2004, converted into approximately 0.449642 shares of common stock immediately prior to the Issuer's initial public offering.

10. Represents (i) approximately 78,127 shares of common stock issuable to WPPN upon conversion of 173,755 shares of Series D Convertible Preferred Stock held by WPPN, (ii) approximately 303,874 shares of common stock issuable to Wasserstein SBIC Ventures II, LP ("SBIC") upon conversion of 675,814 shares of Series D Convertible Preferred Stock held by SBIC, (iii) approximately 1,975 shares of common stock issuable to WV II Employee Partners, LLC ("WV II") upon conversion of 4,392 shares of Series D Convertible Preferred Stock held by WV II, and (iv) approximately 42,394 shares of common stock issuable to BW Holdings upon conversion of 94,283 shares of Series D Convertible Preferred Stock held by BW Holdings. In each case, such amounts include the conversion of all accrued and unpaid dividends thereon as of May 31, 2004.

11. Each share of Series D Convertible Preferred Stock purchased as of December 1, 2003, together with all accrued and unpaid dividends thereon as of May 31, 2004, converted into approximately 0.443903 shares of common stock immediately prior to the Issuer's initial public offering.

12. Represents (i) approximately 227,024 shares of common stock issuable to SBIC upon conversion of 511,427 shares of Series D Convertible Preferred Stock held by SBIC, (ii) approximately 1,475 shares of common stock issuable to WV II upon conversion of 3,324 shares of Series D Convertible Preferred Stock held by WV II, and (iii) approximately 25,048 shares of common stock issuable to BW Holdings upon conversion of 56,427 shares of Series D Convertible Preferred Stock held by BW Holdings. In each case, such amounts include the conversion of all accrued and unpaid dividends thereon as of May 31, 2004.

13. Each share of Series D Convertible Preferred Stock purchased as of March 3, 2004, together with all accrued and unpaid dividends thereon as of May 31, 2004, converted into approximately 0.437314 shares of common stock immediately prior to the Issuer's initial public offering.

14. Represents (i) approximately 298,205 shares of common stock issuable to SBIC upon conversion of 681,903 shares of Series D Convertible Preferred Stock held by SBIC, (ii) approximately 1,938 shares of common stock issuable to WV II upon conversion of 4,432 shares of Series D Convertible Preferred Stock held by WV II, and (iii) approximately 18,952 shares of common stock issuable to BW Holdings upon conversion of 43,337 shares of Series D Convertible Preferred Stock held by BW Holdings. In each case, such amounts include the conversion of all accrued and unpaid dividends thereon as of May 31, 2004.

15. BW Holdings may be deemed controlled by the Reporting Person. However, the Reporting Person disclaims beneficial ownership of shares reported herein as beneficially owned by BW Holdings, except to the extent of his pecuniary interest therein. The Reporting Person has a pecuniary interest in approximately 33,600 shares of the Issuer's Series A Convertible Preferred Stock, 15,162 shares of Series C Convertible Preferred Stock and 32,600 shares of Series D Convertible Preferred Stock held by BW Holdings, which converted into an aggregate of approximately 29,473 shares of the Issuer's common stock immediately prior to the Issuer's initial public offering.

16. The general partner of WPPN is Cypress Management Partners, LLC, the sole member of which is Cypress Capital Assets, LP, the general partner of which is Cypress Capital Advisors, LLC, an entity that may be deemed controlled by the Reporting Person. However, the Reporting Person disclaims beneficial ownership of shares reported herein as beneficially owned by WPPN.

17. The general partner of SBIC is Wasserstein Levered Venture Partners II, LLC, the sole member of which is Wasserstein Investments LLC, the sole member of which is Wasserstein Holdings, LLC, an entity that may be deemed controlled by the Reporting Person. However, the Reporting Person disclaims beneficial ownership of shares reported herein as beneficially owned by SBIC.

18. The managing member of WV II is Wasserstein & Co., L.P., an entity controlled by Wasserstein Investments, LLC, the sole member of which is Wasserstein Holdings, LLC, an entity that may be deemed controlled by the Reporting Person. However, the Reporting Person disclaims beneficial ownership of shares reported herein as beneficially owned by WV II.

	/s/ W. Townsend Ziebold, Jr. for Bruce Wasserstein pursuant to a Power of Attorney filed with the Securities and Exchange Commission and attached hereto as Exhibit 24.1	09/28/2004
	** Signature of Reporting Person	Date
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