Good afternoon, everyone, and welcome to the Nephros Inc. Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please also note today's event is being recorded. At this time, 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…

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 '24, an increase of 57%, primarily due to higher headcount and bonuses. Selling, general and administrative expenses for the year ended 2025 were $9…

Thank you, Judy. In closing, Nephros is proving that a focused, disciplined company with the right technology and strategy can create 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.

[Operator Instructions] 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 other -- 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 delightful 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 really proud of that active sites number. And as it continues to grow, it just reflects the excellent work from our sales women and men who have been doing a great of selling our products. Judy?

Yes. We don't give out exact numbers. But Anthony, 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 sort of high single digits, similar type number.

High single-digit growth in programmatic sales. Okay.

No, no, you talked -- I mean I think you wanted to know what percent, if I recall, apologize, of our sales were programmatic versus emergency response?

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

Okay. Yes. High single digits, round figures similarly -- was a little less in the fourth quarter than it was for the full year, but somewhat similar.

Okay. Okay. Great. And then just maybe just on an even higher level. Just as -- I think, obviously, I'm sure you agree, clean water, whether it's hospital-based or outside of the hospital is probably a growing trend and a growing need worldwide. I'm just wondering, as you look towards the other opportunities outside of medical, in the commercial space, whether that's hospitality or restaurants. Can you talk a little bit about that pipeline potential and how you see that sort of evolving either in '26 or over the next couple of years?

Sure, certainly. When you think about the business, the core business of Nephros, getting it 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, 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, the 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 nonmedical 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 the -- 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, I guess, work required in order 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 it's -- 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 past mature, we already have 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.

[Operator Instructions] Our next question comes from Ralph Weil from R. Weil Investment Management.

I really -- it must have been an accident or a b*** call, but since I didn't have a question prepared, can you just -- and I know you're talking about the new markets and what you're doing there and how you're going about it with the education, et cetera, et cetera. Can you elaborate a little more on some of the successes that you may have had so far? And I know it doesn't come easily when you're trying to penetrate new markets. But can you -- just comment a little about the successes so far.

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 b*** call.

I understand, Ralph. So if I can try to address that. If you think about where we've been focusing, we're in a hospital in patient care. So non-patient care applications where we've found some successes. We were looking at areas where there's large populations of people. We've got a party that's interested in keeping the mass of people under them, healthy. If you think of correctional facilities where if someone gets sick or ill, they can spread and contaminate to other places, schools and universities where there are groups of people in one room or one area. Not to say that a school is similar to a jail, but where you've got large groups of people who might be susceptible to different pathogens spreading. We've also seen in some aviation facilities where governments are concerned about what might be passed through water there. And I'm really surprised that the number of just drinking water fountain applications where people have felt that may have been shut down since COVID where they're facing the risk -- situation where they either rip them off the wall, which is very expensive or try to get them running again. We're able to go in, clean them up and reopen fountains that have been shut down for quite some while. So wherever we see large numbers of bottle fillers and drinking fountains, those are also the targets. I think some of the newer non-patient has also been sterile processing. Facilities that have instruments and probes and other stuff that go -- that come in contact with humans by rinsing them with water that's free of viruses and the toxins and other potential contaminants, we are finding a good amount of success there. Some of the newer areas, which are starting to gain traction are eyewash stations,…

[Operator Instructions]

Okay. So it looks like there is 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.