Nephros, Inc.

Good afternoon, everyone, and welcome to the Nefrosync 4th Quarter 2025 Financial Results Conference. 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 touch-tone telephones. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I would like to turn the floor over to Kieran Smith, Investor Relations. Please go ahead.

Thank you, Jamie, and good afternoon, everyone. This is Kieran Smith with TCG Advisory. Thank you all for participating in NEPHRO's 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 make those actual results or events differ materially from those described in the forward-looking statements. Factors that may affect the company's results include but are not limited to Nefros' 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 healthcare providers, the success of its commercialization efforts, and the effect of existing and new regulatory requirements on Nefros' business and other economic and competitive factors. The contents of this conference call contains time-sensitive information that is accurate only as of the date of the live call today, March 12th, 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 NAFROS's President and Chief Executive Officer, Robert Banks. Robert, please go ahead. Thank you, Gary. Good afternoon, everyone, and thank you for taking the time to join us today. 2025 is 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. You know, clean water is essential for healthcare, 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 nonpatient 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 built a clear strategy to deliver on that message. And today, the strategy is anchored around three core pillars, products, services, and education. Together, these pillars are driving our growth and positioning methods as a leader in water safety solutions. Our first pillar, products, is our differentiated portfolio. It remains the foundation of our success. Nefros 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 steel processing environments. These are everyday touchpoints 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 to 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. Methods of 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 lifecycle solution. This includes rapid product delivery, professional installation, scheduled replacement programs, and ongoing technical support and training. Offering these services directly, We reduce barriers to adoption and strengthen long-term customer relationships. Most importantly, this model supports recurring revenue through 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 healthcare, hospitality, and public facilities. However, many organizations lack the expertise needed to manage waterborne pathogen risks effectively. To address this gap, we launched the Nefros 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 NECROs 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 three-pillar strategy is already visible in our financial performance. In 2025, Netflix delivered 33% revenue growth, reaching 18.8 million 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 NECROS is positioned at the intersection of several powerful trends. Increased awareness of waterborne pathogens, rising regulatory expectations around water safety, aging infrastructure in healthcare 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 Nefris team for their hardworking commitment Now, let me turn it over to our CFO, Judy Crandall, to go over the financials. Judy?

Thanks, Robert. I will now provide a closer look at Nefros' 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 of 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 over just over 1,680 as of the end of 2025, as compared to just over 1,500 as of December 31st, 2024. Gross margin was 62% for both of the years ending December 31st, 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 22nd, 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 31st, 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 to 0.3 million in the fourth quarter of 24, 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, with $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 growth margins and increase 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 24. For the full year of 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 31st, 2025, compared to net cash used in operating activities of approximately half a million for the year ended December 31st, 2024. Net tax provided by operating activities in 25 is primarily due to net income of approximately $1.2 million and 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 24 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. And 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. And additional information about our results can be found in our filing of 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.