Good afternoon, everyone, and welcome to the Nephros Inc. Fourth Quarter 2025 Financial Results Conference Call. Please note today's event is being recorded. I would like to turn the floor over to Kirin Smith, Investor Relations. Please go ahead.

Thank you, Jamie, and good afternoon, everyone. This is Kirin Smith with PCG Advisory. Thank you all for participating in Nephros' Fourth Quarter and Fiscal Year 2025 Conference Call. Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements regarding the operations and future results of Nephros. I encourage you to review Nephros' filings with the Securities and Exchange Commission, including, without limitation, the company's Forms 10-K and 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Factors that may affect the company's results include, but are not limited to, Nephros' ability to successfully, timely and cost-effectively market and sell its products and service offerings, the rate of adoption of its products and services by hospitals and other health care providers, the success of its commercialization efforts, and the effects of existing and new regulatory requirements on Nephros' business and other economic and competitive factors. The content of this conference call contains time-sensitive information that is accurate only as of the date of the live call today, March 12, 2026. The company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call, except as required by law. I would now like to turn the call over to Nephros' President and Chief Executive Officer, Robert Banks. Robert, please go ahead.

Thank you, Kirin. Good afternoon, everyone, and thank you for taking the time to join us today. 2025 was a great year, and I'm extremely proud of the team and all their amazing accomplishments. I've been excitedly awaiting this day so I can share with you the results of the great things that have happened since our last full year's recap. Clean water is essential for health care, hospitality, food services, and everyday life. We have the right products to address these needs and have been doing so successfully in patient care situations. We've made great progress in non-patient care applications over the past year. We look forward to developing channels to penetrate other markets, such as residential and commercial through key relationships that we are creating. Over the past several years, we've built a clear strategy to deliver on that message. And today, the strategy is anchored around 3 core pillars: products; services; and education. Together, these pillars are driving our growth and positioning Nephros as a leader in water safety solutions. Our first pillar, Products, is our differentiated portfolio. It remains the foundation of our success. Nephros develops advanced filtration technologies designed to remove bacteria, viruses, and other contaminants that threaten water safety. These products are trusted in hospitals, laboratories, and commercial facilities where reliability is critical. Innovation continues to expand our reach. Recent product launches allow us to address new high-impact applications, including ice machines, drinking fountains, bottle filling stations, and sterile processing environments. These are everyday touch points where water safety matters. By delivering filtration solutions that are both high performance and easy to deploy, we are expanding our addressable market well beyond traditional patient care applications. This product innovation pipeline is a key driver core to our continued growth. In 2025, we launched our second pillar, Services. While products start the relationship with customers, Services sustain it. Water filtration systems require regular replacement, monitoring, and installation expertise. Historically, this has been fragmented and difficult for facility operators to manage. Nephros is solving that problem. Under the leadership of our service organization, we've expanded our installation and replacement capabilities, enabling us to provide customers with a complete life cycle solution. This includes rapid product delivery, professional installation, scheduled replacement programs, and ongoing technical support and training. By offering these services directly, we reduced barriers to adoption and strengthen long-term customer relationships. Most importantly, this model supports recurring revenue to programmatic filter replacements, which creates a more predictable and scalable business. Our newest and recently launched pillar is the strategy around Education. It represents one of the most exciting developments for our company. We've touched over 1,000 people through our webinar series and conducted numerous site-based training sessions. Water safety is becoming an increasingly important topic across health care, hospitality, and public facilities. However, many organizations lack the expertise needed to manage waterborne pathogen risks effectively. To address this gap, we launched the Nephros Water Institute; this institute is dedicated to expanding knowledge around waterborne pathogen mitigation, facility water safety programs, and compliance-driven filtration solutions. Through education and engagement with industry stakeholders, we are establishing Nephros as a trusted authority in water safety. This initiative does more than just share knowledge; it builds a long-term demand for filtration, services, and compliance solutions. In other words, education strengthens our entire ecosystem. The impact of this 3-pillar strategy is already visible in our financial performance. In 2025, Nephros delivered 33% revenue growth, reaching $18.8 million in total revenue, while continuing to scale our operations. We also reported net income of approximately $1.2 million, marking our second consecutive year of profitability, a significant milestone for the company. These results reflect strong order reactivity, growth in active customer sites, expansion of service capabilities, and increasing demand for our solutions. At the same time, we remain debt-free and financially disciplined with approximately $5.4 million in cash at the year-end. Looking forward, we believe Nephros is positioned at the intersection of several powerful trends: increased awareness of waterborne pathogens, rising regulatory expectations around water safety, aging infrastructure in health care and hospitality, and a growing need for a reliable filtration solution. Our integrated strategy—products, services, and education—allows us to address all three challenges simultaneously. It also creates a business model built not just on filter sales, but on long-term relationships and recurring value creation. I'd like to thank the entire Nephros team for their hard work and commitment. Now let me turn it over to our CFO, Judy Krandel, to go over the financials. Judy?

Thanks, Robert. I will now provide a closer look at Nephros' financial performance in the fourth quarter and full year of 2025. We reported fourth quarter 2025 net revenue of $4.7 million, a 22% increase over the corresponding period in 2024. And for the full year 2025, net revenue grew 33% to $18.8 million from $14.2 million. This increase was primarily driven by higher programmatic revenue, reflecting strong reorder activity and the addition of several new active sites. In addition, we experienced solid growth in our emergency response business as well as significant growth in service revenue. Active customer sites continued to grow, and we're just over 1,680 as of the end of 2025 as compared to just over 1,500 as of December 31, 2024. Gross margin was 62% for both of the years ending December 31, 2025, and 2024, respectively. Gross margin for the fourth quarter of 2025 was 58% compared with 64% in the fourth quarter of 2024. Although we achieved higher margins during the first half of fiscal 2025, those margins eroded somewhat during the second half of the year, primarily due to the impact of tariffs. Since April 2025, we have been subject to a 15% tariff on all goods imported from Italy, which was reduced to 10% as of February 22, 2026. While this reduction provides some near-term relief, U.S. tariff policy remains unpredictable, creating uncertainty around potential future margin impacts. Research and development expenses for the years ended December 31, 2025, and 2024, were $1.3 million and $0.9 million, respectively. R&D expenses for the fourth quarter of 2025 were $0.4 million compared with $0.3 million in the fourth quarter of 2024, an increase of 57%, primarily due to higher headcount and bonuses. Selling, general, and administrative expenses for the year ended 2025 were $9 million compared with $7.7 million in 2024, an increase of 17% due to an increase in bonuses and sales commissions. Selling, general, and administrative expenses for the fourth quarter of 2025 were approximately $2.3 million compared with $1.9 million in 2024, an increase of 24% due primarily to an increase in bonuses and sales commissions. SG&A expenses in the fourth quarter also had some one-time expenses associated with product development and market analysis work. Net income for the year ended December 31, 2025, was $1.2 million compared with $0.1 million in 2024. Net income for the fourth quarter of 2025 was $0.1 million compared with $0.3 million during the same period in 2024, primarily reflecting the decline in gross margins and increases in bonuses and sales commissions. Our improvement in 2025 net income was largely due to our increased sales revenue. We are extremely pleased to report positive net income for the second consecutive year, the only two in the company's history. Adjusted EBITDA in the fourth quarter was a positive $131,000 compared to positive $481,000 during the same period in 2024. For the full year 2025, adjusted EBITDA was a positive $1.6 million versus positive $548,000 in 2024. Net cash provided by operating activities was $1.6 million for the year ended December 31, 2025, compared to net cash used in operating activities of approximately $0.5 million for the year ended December 31, 2024. Net cash provided by operating activities in 2025 was primarily due to net income of approximately $1.2 million, an increase in accrued expenses of approximately $1 million, an increase in accounts payable of approximately $0.3 million, offset by an increase in accounts receivable of approximately $0.6 million and an increase in inventory of approximately $0.7 million. Net cash used in operating activities in 2024 was primarily due to an increase in accounts receivable of approximately $0.3 million, a decrease in accounts payable and accrued expenses of approximately $0.2 million each, offset by an increase in inventory impairments and write-offs of approximately $0.3 million. Our cash balance on December 31, 2025, was $5.4 million compared to $5.2 million as of September 30, 2025, and $3.8 million as of December 31, 2024. We continue to be debt-free. Please refer to today's press release for more details about the calculation of adjusted EBITDA and its reconciliation to GAAP net income or loss. Additional information about our results can be found in our filing on Form 10-K, which we filed earlier today. I will now turn the call back to Robert for some closing remarks. Robert, please go ahead.

Thank you, Judy. In closing, Nephros is proving that a focused, disciplined company with the right technology and strategy can create a meaningful impact. We are improving water safety. We are expanding into new markets, and we are building a durable platform for long-term growth. Thank you for your time today and your continued interest in Nephros. This concludes our formal presentation remarks. We'll now take time for questions from the audience. Operator, please open the call for questions.

And our first question today comes from Anthony Vendetti from Maxim Group.

Yes, a couple of questions. One is on the programmatic sales, what percent of revenues for the fourth quarter and the full year were programmatic sales? And do you have an outlook on how you expect that to evolve in 2026? And then your active customer sites, do you have a count on that number as of 12/31, '25?

Yes, certainly. I'll answer the second part first and then turn it over to Judy for the first part of your question. Programmatic sales, just under 1,700. So that was 1,681 sites, and that's a significant and steady growth, well above what we were when we finished the year ahead. And it's really due to some efforts that we're making for customer retention and also outreach in areas of conferences, trade shows, but most of that new business is coming from customers who tell a friend, who are happy and delighted with what they've experienced with us, the problems we've solved, and then they have a neighboring facility or related, and they let them know. So we pick up that business as well. So I'm really proud of that active sites number. As it continues to grow, it just reflects the excellent work from our sales team who have been doing a great job of selling our products. Judy?

Yes. We don't give out exact numbers. But Anthony, in the fourth quarter, what's programmatic was certainly 90% plus of our business, which is similar for the year. Emergency response was helpful and did grow, but it was in the high single digits, similar type number.

High single-digit growth in programmatic sales. Okay.

I think you were asking about what percentage of our sales came from programmatic versus emergency response.

Yes, yes. Okay. Okay. And emergency response, what was the number you cut out for a second.

High single digits were noted, and although it was slightly lower in the fourth quarter compared to the full year, the figures were somewhat comparable.

Great. On a broader level, clean water, whether in hospitals or outside of them, is clearly a growing trend and an increasing need globally. I'm curious about the potential opportunities in the commercial sector, such as hospitality or restaurants. Can you share your thoughts on that pipeline and how you see it developing in 2026 or over the next few years?

Sure, certainly. When you think about the business, the core business of Nephros, getting its start in dialysis and then really focusing on the hospital market, patient care, those are areas that are highly regulated. We've got different rules and joint commissions and inspections that all really drive action. Testing occurs and there are results and problems that need to be solved. Once you step outside of the patient care world, you don't have those same regulatory environments that are driving the growth. And that's why this pillar I introduced recently, education, is so important. We've got to let different people in different markets know why it's important, why it matters, the impact to their facilities, and really the return on investment for investing in the Nephros filtration as a medical device in a non-medical application. So I see that growth happening as the education improves as we get more and more people that we touch via outreach. And that's the main barrier you're selling against doing nothing. The second barrier that we have to overcome is what may be perceived complexity around installation. It's not just as simple as when you walk up to your refrigerator or a filter and then your sink, where you twist it off and put a new one on. There's some cleaning and sanitations involved. So that's why our services group and portfolio is so important. We start to remove the barriers for why someone might be interested in a solution because they may not be interested in going through some of the work required to get an effective result from the filtration system. So as we grow and build those markets, we create an ecosystem of people that understand that there is a solution. They don't have to handle and deal with microplastics or other problems they might be dealing with, and we have the answers for those. Building that whole solution from just you've got a problem, here's your problem, here's how you can solve it, to let us implement that solution for you and take care of it going forward, is how we're growing that business. If you remember, it took a while, even after some of the regulations in the hospital market for us to really capitalize on that and grow that hospital business. And I anticipate it will take the same as we're going into the non-healthcare, non-patient care market as we work to build those markets up.

Okay. So if I had to sum it up, you would say this is a multiyear strategy to build these other verticals.

Yes. But we've been starting on this for some time already. We're not entering it fresh in '26. So as those markets in the past mature, we have already seen a few of those in some of the big areas. It's not a significant part of our business right now. I anticipate it will be a larger and larger portion going forward.

Our next question comes from Ralph Weil from R. Weil Investment Management.

I believe it was likely an accident or a misdial, and since I didn't have a question ready, could you elaborate on the new markets and your strategies there, particularly regarding education? Can you provide more details on some of the successes you've had so far? I understand that penetrating new markets can be challenging, but could you share a bit about the successes you've experienced to date?

Yes. So you're referring to the education successes or just anything in general?

Yes. No, we're in the newer markets. I mean, hospitals have been your big market and medical facilities. In the newer markets that you've entered, can you comment just a little more on where you may have seen successes on which you're basing your optimism going forward? And I really didn't press the button. But since it was a misdial.

I understand, Ralph. To address your question, our focus has been on hospital and patient care along with non-patient care applications where we have seen some successes. We are looking at areas with large populations where entities are interested in maintaining the health of those they oversee. For example, in correctional facilities, illness can easily spread. Similarly, in schools and universities, large groups of people in one location can be vulnerable to various pathogens. While schools are not like jails, they do have large populations susceptible to spreading illnesses. We have also observed concerns in certain aviation facilities where governments are worried about potential contaminants in water. I have been surprised by the number of drinking water fountains that have stayed shut down since COVID. Facilities face a dilemma of either removing them, which is costly, or attempting to reopen them. We are able to clean and restore fountains that have been out of service for an extended period. We also target large numbers of bottle fillers and drinking fountains. In newer non-patient applications, we have found success in sterile processing facilities that deal with instruments and probes needing to be rinsed with virus-free water. Additionally, we are starting to gain traction in areas such as eyewash stations and emergency showers, especially where stagnant water can lead to bacterial growth. The opportunities are numerous and varied, which is why our educational efforts are vital. We are actively informing people about how our work can assist them in achieving their goals, and we've had over 1,000 attendees at our seminars. I encourage anyone interested to participate; they will find a level of interaction and transparency that is uncommon in similar fields. This demonstrates Nephros as an authority in the industry, committed to sharing solutions to various problems, which clients really value. They come back, trusting us, regardless of whether they are property management companies or others responsible for keeping individuals safe from contamination. This has been an exciting and rewarding experience for us, allowing us to expand our communication beyond hospital jargon. Our team has done a fantastic job of making educational advancements and reaching new audiences.

They return because they trust us, whether it's a property management company or others who manage people and want to avoid contamination risks. This situation is exciting and refreshing. We've learned to communicate outside of hospital terminology. The team has stepped up impressively and has been exceptional in making educational advances and reaching out to other sectors.

Okay. So it looks like there are not any other calls in the queue. So just to close it out, I just want everyone to know, I'm extremely excited about Nephros products and what the future holds. Just thank you so much for your support and believing in Nephros. And please stay tuned and give us a call and reach out if you do have any questions or want to know more. Thank you and have a great rest of your evening.

And with that, everyone, we'll be concluding today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.