This is what it looks like to me.. Let's say you own 10k shares.
Lets say those 10k shares cost you $10,000.
1. You exercise option and buy max 4.185 shares @ 2cents each. You now own 41,850 plus original 10k shares for a total 51,850 shares. The additional shares cost you $837.
2. Reverse split 10-1. You now own 5185 shares. 4185 of those shares allow you the option in the next 5 years to purchase .9245 shares each @ 2 cents per share.
3. 2012, NEPH share price reaches $4.00 per share.
4. You exercise option and purchase max shares (4185 shares x .9245 per share) which amounts to an additional 3869 shares. The cost for those shares is $77.00 and a few cents.
5. Total cost for shares is $10,914.
6. Total shares owned = 8354 shares.
7. You sell all your shares grossing a total amount of $33,416. Less $10,914 cost for all shares = $22502 gross profit.
8. Total dilution if all options exercised is approximately $914 dollars per 10k shares currently owned. Or $91.40 per 1k shares; or $9.14 per hundred shares; or $.91 and a fraction cents per currently owned shares.