Form 8K Current Report
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
__________________________
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
report (Date of earliest event reported) August
21, 2006
Nephros,
Inc.
(Exact
Name of Registrant as Specified in Charter)
Commission
File Number: 001-32288
|
Delaware
|
|
13-3971809
|
|
(State
or other Jurisdiction of
Incorporation)
|
|
(I.R.S.
Employer Identification No.)
|
3960
Broadway, New York, New York 10032
(Address
of Principal Executive Offices)
(Zip
Code)
(212)
781-5113
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
r
Written
communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
r
Soliciting
material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
r
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
r
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit
Report or Completed Interim Review.
(a) On
August
21, 2006, the management, Board of Directors and Audit Committee of the Board
of
Directors of Nephros, Inc. (the “Company”) concluded that the previously
reported financial statements covering the three months ended March 31, 2006
should no longer be relied upon as such financial statements need to be restated
in order to reflect a correction related to stock-based compensation expense.
The decision to restate was primarily based on the materiality of the
misstatement of expense relative to the statement of operations for the three
months ended March 31, 2006. The error, which occurred during the process of
adopting the new standard of accounting for stock options under Statement of
Financial Accounting Standards No. 123 (Revised 2004), “Share-Based
Payment,” resulted in the overstatement of $368,197 in the non-cash stock-based
compensation expense for the three months ended March 31, 2006.
Additionally,
the Company determined it had not properly allocated such non-cash compensation
expense among the research and development and selling, general and
administrative expense categories. The Company has appropriately accounted
for
these matters in the condensed consolidated financial statements included in
the
Company’s Quarterly Report on Form 10-QSB for the three months ended June 30,
2006 (the “Second Quarter 10-QSB”), which was filed with the Securities and
Exchange Commission (“SEC”) on August 22, 2006. The impact of the restatement on
the first quarter 2006 financial statements may be found in the Second Quarter
10-QSB and is incorporated by reference in this Item 4.02.
The
Company intends to restate its financial statements for the three months ended
March 31, 2006 and file an amended Quarterly Report on Form 10-QSB/A with the
SEC as soon as practicable. The Company has identified a material weakness
in
its internal control over financial reporting relating to the item discussed
above, which weakness is in the process of
being remedied.
The
Audit
Committee has discussed with Deloitte & Touche LLP the matters disclosed in
this filing pursuant to this Item 4.02(a).
On
August
22, 2006, the Company issued a press release regarding the restatement described
in this Current Report on Form 8-K, a copy of which is attached hereto as
Exhibit 99.1 and incorporated by reference in this Item 4.02.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Press
Release issued by Nephros, Inc. dated August 22, 2006.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date:
August 22, 2006
NEPHROS,
INC.
By:
/s/
Mark W.
Lerner
Mark
W.
Lerner
Chief
Financial
Officer
(Principal
Financial and Accounting Officer)