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Operator
Good afternoon, everyone, and welcome to the NEFROS Incorporated first quarter 2023 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touchtone telephones. To withdraw your question, you may press star and two. Please also note that today's event is being recorded. At this time, I'd like to turn the floor over to Kieran Smith, Investor Relations. Please go ahead.
Kieran Smith
Good afternoon, everyone. This is Kieran Smith with PCG Advisory. Thank you all for participating in NEFROS' first quarter 2023 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 NEFROS. I encourage you to review Nefros' filings with the Securities and Exchange Commission, including without limitation the company's forms 8A and 10Q, 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 future results include, but are not limited to, Nefros' ability to successfully, timely, and cost-effectively market and sell its products and services offerings, the rate of adoption of its products and services by hospitals and other healthcare providers, the success of its commercialization efforts, and the effect of existing and new regulatory requirements on NEPHRO's 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, May 10th, 2023. 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 NEPHRO's President and Chief Executive Officer, Andy Astor. Andy, please go ahead.
Kieran Smith
Thank you, Karen, and good afternoon, everyone, and welcome to the call. I am pleased to report and comment on our first quarter 2023 results. which reflects significant improvements in our operating performance. I am particularly pleased to report that net revenue for the quarter was $3.7 million, a 71% increase over last year. Some of the growth was the result of an unusually large emergency response order. However, even without that order, revenue would have been $3.1 million, a 40% increase over last year. A second highlight is that we achieved positive cash flow this quarter, several months earlier than our target of mid-year 2023. While future net cash flows may fluctuate somewhat, our first quarter results confirm our belief that we are well on the path to financial self-sustainability coupled with higher revenue growth rates and profitability in the near future thereafter. As I have commented in prior calls, NEFROS took multiple actions over the past year in the pursuit of these results, including broad headcount and other expense reductions, the disposition of our pathogen detection systems business segment, and the recent cessation of operations by our subsidiary specialty renal products. We also implemented two price increases during 2022, doubled the size of our sales team, and relaunched our commercial filtration business. With Nefros now in a stronger position, the timing is excellent for us to put in place a succession plan and for me to retire in the coming months. As we announced on Monday, Robert Banks has joined us and tomorrow will assume the title of president and CEO. I will remain with the company as an advisor and interim CFO until we recruit and train a permanent CFO. And I'm very pleased now to invite Robert to say a few words to you after which I will return with a financial summary. Robert, please go ahead.
Karen
Good afternoon, everyone. I am very excited to be here today. I'm still new, so I will spend just a few minutes introducing myself with more substantive presentations in the near future. I spent most of my career at GE and bring 20 plus years of experience in the water industry. along with a consistent record of growing sales in a wide variety of commercial and industrial markets. After obtaining my mechanical engineering degree from the University of Delaware, I began my career as an applications engineer. Soon thereafter, I moved into field solutions where I worked closely with customers to solve water problems such as microbiological proliferation, surface scale, and corrosion propagation using chemical means. When the options for administering such chemicals were suboptimal, I branched into product management, where I led efforts to develop technologies for milk control, monitoring, and dosing. I also augmented my wet chemistry expertise by taking on mechanical water filtration with reverse osmosis and ultrafiltration product lines. My last water-specific role just before crossing into the industrial space, took me through deionization and ultra-pure water in semiconductors and commercial applications. My broad water-centered experience, along with the rigor of Six Sigma training, an MBA from the University of Maryland, and participation in world-class leadership training programs have all prepared me for this leadership role at NEPRIS. It is a pleasure and honor to be part of the journey especially at this juncture when we have achieved cash flow positive performance and return to higher growth rates. NetForce is building a reputation for best-in-class technologies and extraordinary relationships with its partners and customers. This is an exciting time in the company's lifecycle, and I look forward to taking it to the next level. Back to you, Andy.
Kieran Smith
Thank you, Robert. And once again, welcome aboard. I will now turn to our financial results for the quarter ended March 31, 2023. We reported first quarter net revenue, as I said, of 3.1 million, a 71% increase over the corresponding period in 2022. Net loss for continuing operations for the quarter was 0.3 million compared with a $1.6 million loss during the same period in 2022. Adjusted EBITDA from continuing operations in the quarter was positive 0.1 million compared with negative 1.2 million during the same period in 2022. Gross margins in the quarter were 57% compared with 49% in 2022, an 8% increase and a return to our targeted range of 55 to 60%. Research and development expenses in the quarter were 0.2 million compared to 0.4 million for the same quarter in 2022. And sales, general, and administrative expenses in the quarter were 2.1 million, a decrease from 2.2 million for the corresponding period in 2022. Net cash provided from operating activities was 0.3 million or 0.3 million for Q1 2023 compared with negative 1.8 million in 2022. And our cash balance on March 31, 2023 increased to 3.8 million from 3.6 million as of December 31, 2022. Please refer to today's press release for more details about the calculation of adjusted EBITDA and its reconciliation to GAAP net income or law. Additional information about our results will be found in our filing on Form 10-Q, which actually we filed about 15 minutes ago. That concludes the financial discussion. And as always, and in this case in particular, I would like to thank each of our Nefros employees and our strategic partners. Fiscal 2022 was not an easy one, but it has been an extremely rewarding year for the company, positioning us for success, frankly, more strongly than at any time in the past. Going forward, we will continue to provide unsurpassed products and services to our customers and partners. This time, however, under new leadership, which I'm very excited about, And of course, thanks also to our devoted investors for your continued confidence. This concludes our formal presentation remarks, and we will now take questions from the audience. Operator, please open the call for questions. Thank you.
Operator
Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one on your touchtone telephones. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality. To withdraw your questions, you may press star and two. Again, that is star and then one.
spk00
To join the question queue, we'll pause momentarily to assemble the roster. Our first question today comes from Nick Sherwood from Maxim Group.
Operator
Please go ahead with your question.
Nick
Hey, how's everyone doing? Congrats on the great quarter.
Kieran Smith
Thanks, Nick. Good to hear from you.
Nick
Can you tell us a little bit about the number of active customer sites you had at the end of the first quarter, please?
Kieran Smith
Oh, that is a great question, and I apologize, but we didn't publish that. I can do so. I will do that for you tomorrow.
Nick
Okay. Thank you. I noticed that there's a large drop in inventory due to the large one-time order. Do you plan on slowly rebuilding inventory back to that level in order to be able to meet some of these large purchases? Or what sort of is your plan going forward about managing that inventory, knowing that you might receive these large orders?
Kieran Smith
Sure. We have a pretty generous policy about our inventory. We try to keep several months of inventory on certainly our most popular products at all times just for the event, just in case there is an event of an outbreak or some such. So yes, we will absolutely build our inventory back and have already placed orders to do so. But it's also true, Nick, that we had too much inventory. We had bulked up early in the pandemic, as some of you will remember, to ensure our supply chain. And we allowed that to bleed out quite intentionally to levels that are more appropriate for us. And we've certainly accomplished that. And so we will be building it back up to appropriate levels.
Nick
Awesome. Thank you for that detail. And then my last question will be, how has the new agreement with Donna Star been progressing and sort of any details that you might have for the last couple of months?
Kieran Smith
Thank you. Thank you. It's a great question. Donna Star is a strong partner and they're doing quite well. We don't break out our sales. We don't publish publicly our individual markets. between commercial and dialysis and infection control. But suffice it to say that we're really happy to be working with Donistar, and we see great things in the future with them.
Nick
Perfect. Well, thank you again for answering all my questions, and I'll return to the queue. You're very welcome.
Kieran Smith
Thank you, Nick.
Operator
And once again, if you would like to ask a question, please press star and then 1.
spk00
To remove yourself from the queue, you may press star and 2.
Operator
And at this time, and showing no additional questions, I'd like to turn the floor back over to management for any closing remarks.
Kieran Smith
Thank you, Jamie. I guess all I will say is that it has been a great pleasure over the last six and a half years or so in helping to build Nefros to where it is today. And I'm very excited to be turning the reins over to Robert officially tomorrow. And again, I will stay on as interim CFO for some period of time. So I will, I'm sure I'll see you all again next quarter. Have a great, spring and early summer, and we'll talk to you soon. Take care, everybody.
Operator
Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.
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