NEPHROS INC
For the period ended Mar 31, 2026. Filed May 7, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 7, 2026
NEPH$2.79-9.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-06.
0001493152-25-021061
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001493152-26-021701
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 82 previous paragraphs and 72 current paragraphs.
29 unchanged; 25 reworded; 17 added; 27 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 8 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Current report
Across our product portfolio, we characterize revenue as either programmatic or emergency response. Programmatic revenue reflects recurring procurement of filters used within ongoing clinical, treatment, or operational workflows, and following a replacement schedule based on filter life. Emergency response revenue represents the rapid deployment of filtration solutions in response to acute water-quality events, such as outbreaks, contamination concerns, system disruptions, or precautionary advisories, and is predominantly associated with infection control filtration. Emergency response orders are generally non-recurring in nature, although emergency deployments may lead to subsequent routine purchasing.
Current report
Additional Use Cases
Current report
Beyond healthcare and foodservice settings, Nephros filters are also deployed in laboratories, manufacturing facilities, aviation environments, and government buildings, where water purity is critical to safety, compliance, or system performance. With the recent addition of Total PFAS reduction capability, we also anticipate growing relevance in schools and other federally regulated facilities, where adherence to standards such as the Safe Drinking Water Act is a key consideration. We continue to evaluate opportunities to expand into new verticals where our filtration technologies provide measurable value.
Current report
Hospitals and Other Healthcare Facilities. Nephros infection control filters are a leading tool for proactive protection to patients in high-risk areas (e.g., ice machines, surgical rooms, NICUs) and reactive protection to patients in broader areas during periods of water pathogen outbreaks. Our products are used in hundreds of medical facilities to aid in infection control, both proactively and reactively.
Current report
According to the American Hospital Association’s most recent annual survey data (2023), there are approximately 6,093 hospitals in the U.S., representing more than 913,000 beds and approximately 34.4 million inpatient admissions annually. These facilities rely on extensive internal water systems to support patient care, including handwashing, bathing, medical device reprocessing, dialysis, and other clinical and operational uses.
Current report
According to a June 2025 report from the U.S. Centers for Disease Control and Prevention (“CDC”), on any given day, approximately one in 31 hospitalized patients has at least one healthcare-associated infection (“HAI”), underscoring the scale of infection risk within hospital environments. The CDC further identifies waterborne pathogens such asLegionella,Pseudomonas, and nontuberculous mycobacteria as significant contributors to HAIs, noting that these organisms can proliferate in aging, complex premise plumbing systems commonly found in healthcare facilities and be transmitted through sinks, showers, ice machines, and other water outlets.
Current report
CDC surveillance of waterborne disease outbreaks indicates that premise plumbing is a leading source of water-related illness, hospitalizations, and deaths in the United States, with healthcare facilities representing a higher-risk environment due to susceptible patient populations and frequent water exposure. These factors underscore the importance of effective water management and point-of-use filtration strategies to mitigate microbiological risk in critical-use healthcare settings.
Current report
Since 2017, Centers for Medicare and Medicaid Services (“CMS”) has required Medicare- and Medicaid-certified healthcare facilities to implement policies and procedures to reduce the risk of growth and spread of Legionella and other opportunistic waterborne pathogens in building water systems. Compliance with these expectations is evaluated through routine survey and certification activities, during which CMS surveyors and accrediting organizations review whether facilities have established and implemented formal water management programs (“WMPs”), including documented governance, monitoring protocols, corrective actions, and records demonstrating ongoing execution. CMS guidance directs facilities to align their WMPs with prevailing industry standards, including ASHRAE Standard 188 and the Centers for Disease Control and Prevention (“CDC”) water management toolkit. While the underlying CMS expectations have remained in effect since 2017, enforcement and documentation requirements have become increasingly embedded in standard survey practice over time, particularly as healthcare facilities have faced heightened scrutiny of waterborne infection risks. We believe that continued enforcement of these requirements and the growing emphasis on effective water management programs may have a positive impact on demand for our HAI-inhibiting micro- and ultrafilters.
Current report
To perform hemodialysis, dialysis clinics rely on dedicated water purification systems to produce ultrapure water and bicarbonate concentrate, the two essential ingredients for preparing dialysate, the fluid used to remove waste material from the blood during treatment. As of early 2025, there are approximately 7,556 dialysis clinics in the United States serving more than 500,000 patients. While precise counts of hemodialysis machines in use are not publicly reported on a routine national basis, industry sources indicate that the installed base in the United States likely exceeds 200,000 hemodialysis units, consistent with estimates used in market analyses. These dialysis facilities and machines represent a significant sustained demand environment for water purification and treatment technologies that support patient safety and the reliable operation of clinical dialysis care.
Current report
Net Revenues
Current report
Gross profit margin was approximately 57% for the three months ended March 31, 2026 compared to approximately 65% for the three months ended March 31, 2025. The decrease of approximately 8 percentage points was primarily driven by higher product costs due to the decline in the US Dollar relative to the Euro and the impact of tariffs implemented in May 2025. Gross margins were also impacted by the mix of revenues as commercial revenues were a larger part of total revenue in the quarter ended March 31, 2026 vs. last year’s comparable quarter. Gross margins are lower on commercial revenues versus our infection control revenues.
Current report
Selling, General and Administrative Expense
Current report
Selling, general and administrative expense increased $267,000, or 12%, primarily due to an increase in headcount and an increase in professional fees.
Current report
Research and Development Expense
Current report
Research and development expense increased by approximately $51,000 primarily due to higher salary expense driven by increased headcount.
Current report
Net cash provided by financing activities was approximately $289,000 for the three months ended March 31, 2026, primarily due to cash exercises of stock options, compared to approximately $1,000 for the same period in 2025, primarily due to payments on our equipment financing debt.
Removed paragraphs (27)
Previous report
Hospitals and Other Healthcare Facilities. Nephros infection control filters are widely used by hospitals and healthcare facilities seeking to reduce exposure to waterborne pathogens and meet infection prevention and water management goals. Our products help mitigate microbiological risks in potable water systems, particularly in areas of patient vulnerability and during periods of elevated waterborne threat.
Previous report
The U.S. Centers for Disease Control and Prevention (CDC) estimates that one in every 31 hospital patients acquire a healthcare-associated infection (HAI), totaling over one million patients in 2023. Many of these infections are caused by waterborne bacteria or viruses that proliferate in premise plumbing systems, particularly in aging infrastructure or where water is stagnant, warm, or aerosolized.
Previous report
In response to risks posed byLegionella and other opportunistic pathogens, regulatory and accreditation bodies have emphasized the need for proactive water management. The Centers for Medicare and Medicaid Services (CMS) require hospitals and long-term care facilities to implement documented water management programs that align with ANSI/ASHRAE Standard 188 and CDC guidance. Similarly, The Joint Commission includes oversight of utility system safety, water quality, and building risk within its physical environment standards, formerly part of the Environment of Care (EC) chapter. Although TJC is reorganizing these standards under a new Physical Environment (PE) chapter, the underlying compliance obligations remain active and enforceable. In parallel, newly introduced standards, such as ANSI/ASHRAE Standard 514 and ANSI/AAMI ST108, signal a broader regulatory shift toward formalized water safety and medical device reprocessing quality, even when not yet codified as survey requirements.
Previous report
According to the American Journal of Kidney Diseases, approximately 7,100 dialysis clinics in the United States provide care for over 500,000 patients annually. Nephros is a recognized provider of ultrafiltration solutions to dialysis machine manufacturers, water system integrators, and clinical service providers. All Nephros dialysis filters are FDA 510(k)-cleared and meet current regulatory expectations for microbial retention in water and bicarbonate lines.
Previous report
Our commercial market focus is on food service and hospitality industries, including hotels, restaurants, and convenience stores. In March 2022, we entered into an agreement with Donastar LLC to provide water filtration systems to an organization that services approximately 3,000 Quick Service Restaurants (“QSR”). Effective January 1, 2023, we entered into a new supply agreement with Donastar, which superseded the March 2022 agreement. Under the January 2023 agreement, we engaged Donastar to be our exclusive distributor to the food service and hospitality sectors. Effective September 2024, we ended our exclusivity arrangement with Donastar though Donastar continues to distribute our products on a non-exclusive basis and expand our reach within their target markets.
Previous report
Revenue
Previous report
Overall, net revenues increased by $1.2 million, or 35%, for the three months ended September 30, 2025, compared to the same period in 2024. This increase was primarily driven by higher programmatic revenue, reflecting strong reorder activity and the addition of several new active sites, and significant growth in our service revenue.
Previous report
Gross margin was approximately 61% for the three months ended September 30, 2025, consistent with approximately 61% for the three months ended September 30, 2024. An increase in handling expenses including tariffs was mostly offset by a reduction in inventory reserve adjustments.
Previous report
Selling, General and Administrative Expenses
Previous report
Selling, general and administrative expense increased by approximately $508,000, or 30%, for the three months ended September 30, 2025, compared to the same period in the prior year. The increase was primarily driven by higher sales commissions and higher accrual for employee bonuses.
Previous report
Research and Development Expenses
Previous report
Research and development expense increased approximately $150,000, or 80%, due to higher accrual for employee bonuses and higher salary expense.
Previous report
Depreciation and amortization expense were approximately $34,000 for the three months ended September 30, 2025 and 2024 respectively.
Previous report
Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024
Previous report
Revenue
Previous report
Gross Profit Margin
Previous report
Gross margin was approximately 63% for the nine months ended September 30, 2025 compared to approximately 61% for the nine months ended September 30, 2024. The increase of approximately 2 percentage points was primarily driven by a reduction in inventory reserve adjustments and lower product costs resulting from a more favorable product mix, both of which contributed to lower cost of goods sold.
Previous report
Selling, General and Administrative Expenses
Previous report
Selling, general and administrative expense increased $880,000, or 15%, for the nine months ended September 30, 2025 compared to the same period in the prior year. The increase was primarily driven by higher sales commissions, increased employee bonus accruals, and higher stock-based compensation.
Previous report
Research and Development Expenses
Previous report
Research and development expense increased $290,000, or 44%, primarily due to due to higher accrual for employee bonuses and higher salary expense.
Previous report
Depreciation and Amortization Expense
Previous report
Interest Income
Previous report
Interest income was approximately $85,000 for the nine months ended September 30, 2025, compared to approximately $66,000 for the nine months ended September 30, 2024.
Previous report
Other Income (Expense), net
Previous report
Other expense was approximately $68,000 and $29,000 respectively for the nine months ended September 30, 2025 and September 30, 2024, primarily a result of losses on foreign currency transactions.
Previous report
Net cash used in financing activities was approximately $4,000 for the nine months ended September 30, 2025 and September 30, 2024, respectively, primarily due to payments on finance leases.
Reworded paragraphs (25)
Previous wording
The following discussion should be read in conjunction with our condensed financial statements and notes thereto included in Item 1 of Part I of this Quarterly Report on Form 10-Q. This discussion includes forward-looking statements about our business, financial condition and results of operations including discussions about management’s expectations for our business. These statements represent projections, beliefs and expectations based on current circumstances and conditions and in light of recent events and trends, and these statements should not be construed either as assurances of performances or as promises of a given course of action. Instead, various known and unknown factors are likely to cause our actual performance and management’s actions to vary, and the results of these variances may be both material and adverse.
Current wording
The following discussion should be read in conjunction with our financial statements and notes thereto included in Item 1 of Part I of this Quarterly Report on Form 10-Q. This discussion includes forward-looking statements about our business, financial condition and results of operations including discussions about management’s expectations for our business. These statements represent projections, beliefs and expectations based on current circumstances and conditions and in light of recent events and trends, and these statements should not be construed either as assurances of performances or as promises of a given course of action. Instead, various known and unknown factors are likely to cause our actual performance and management’s actions to vary, and the results of these variances may be both material and adverse.
Previous wording
Nephros is a commercial-stage company that develops and markets high-performance water filtration solutions for points of use, with a core focus on medical-grade water filtration. Our portfolio includes two primary product lines: infection control and dialysis water. The infection control segment features both microfilters (0.1 micron) and ultrafilters (0.005 micron), used to help prevent infections from waterborne pathogens such asLegionella andPseudomonas. The dialysis segment consists exclusively of ultrafilters designed to remove biological contaminants, particularly endotoxins, from water and bicarbonate concentrate used in dialysis treatment. All of our medical-grade filters are FDA 510(k)-cleared as Class II medical devices—a distinguishing feature that affirms their validated safety and performance in critical-use environments. While these filters are widely used in healthcare settings, they have also been adopted across a range of other industries—including manufacturing, laboratories, aviation, and federal facilities—where water purity is essential to operational safety and compliance.
Current wording
Nephros is a commercial-stage company that develops and markets high-performance water filtration solutions for points of use, with a core focus on medical-grade water filtration. Our medical filtration portfolio includes two product lines: infection control and dialysis water. The infection control products feature both microfilters (0.1 micron), which retain bacteria, and ultrafilters (0.005 micron), which retain bacteria, viruses, and endotoxins to address a broader spectrum of waterborne pathogens including and beyond Legionella and Pseudomonas. The dialysis products consist exclusively of ultrafilters, extending the same microbial and endotoxin retention capabilities to the purification of water and bicarbonate concentrate used in dialysis treatment, where endotoxin control is especially critical. All of our medical-grade filters are FDA 510(k)-cleared as Class II medical devices—a distinguishing feature that affirms their validated safety and performance in critical-use environments. While these filters are widely used in healthcare settings, they have also been adopted across a range of other industries—including manufacturing, laboratories, aviation, and federal facilities—where water purity is essential to operational safety and compliance.
Previous wording
In addition, we offer a line of commercial water filters that improve taste and odor, reduce biofilm formation and scale buildup, and remove cysts, particulates, and lead from water systems. With the recent release of our newest solution, validated for the reduction of Total PFAS (a mixture of seven PFAS compounds including PFOA, PFOS, PFHxS, PFNA, PFHpA, PFBS, and PFDA), further enhancing our portfolio of products and their ability to address a broad spectrum of emerging and persistent waterborne contaminants. These products are broadly applicable across industries and are especially valuable when used in tandem with our medical-grade filters to deliver comprehensive water-quality protection. Whether in clinical care, industrial operations, or public infrastructure, Nephros solutions support the universal need for safe, high-quality water.
Current wording
In addition, we offer a line of commercial water filters that improve taste and odor, reduce biofilm formation and scale buildup, and remove cysts, particulates, and lead from water systems. With the recent release of our newest solution, validated for the reduction of Total PFAS (a mixture of seven PFAS compounds including PFOA, PFOS, PFHxS, PFNA, PFHpA, PFBS, and PFDA), our portfolio of products is further enhanced with the ability to address a broad spectrum of emerging and persistent waterborne contaminants. Our commercial filtration products are broadly applicable across industries and are especially valuable when used in tandem with our medical-grade filters to deliver comprehensive water-quality protection. Whether in clinical care, industrial operations, or public infrastructure, Nephros solutions support the universal need for safe, high-quality water.
Previous wording
We develop and sell water filtration products used in both medical and commercial applications. Our water filtration products employ multiple filtration technologies, as described below.
Current wording
We develop and sell point-of-use water filtration products used in both medical and commercial applications. Our water filtration products employ multiple filtration technologies, as described below.
Previous wording
In medical markets, we manufacture both ultra- and microfilters using polysulfone hollow fiber membranes that retain microbiological contaminants through physical size exclusion. Our ultrafilters, with a 0.005-micron pore size, retain bacteria, viruses, and endotoxins, providing a unique alternative to charged membrane solutions and featuring one of the smallest pore sizes available. Our microfilters, with a 0.1-micron pore size, also retain bacteria, a critically important function given the prevalence ofLegionella in premise plumbing and the risks associated with Legionnaires’ disease. Across both filter types, Nephros filters are distinguished by exceptional membrane surface area and longer service life, particularly in comparison to our competitors, making Nephros filters well-suited to support improved water safety within the demands of clinical environments.
Current wording
For medical applications, we manufacture both ultra- and microfilters using polysulfone hollow fiber membranes that retain microbiological contaminants through physical size exclusion. Our ultrafilters, with a 0.005-micron pore size, retain bacteria, viruses, and endotoxins, provide a unique alternative to charged membrane solutions and feature one of the smallest pore sizes available. Our microfilters, with a 0.1-micron pore size, also retain bacteria, a critically important function given the prevalence ofLegionella in premise plumbing and the risks associated with Legionnaires’ disease. Across both filter types, Nephros filters are distinguished by exceptional membrane surface area and longer service life, particularly in comparison to our competitors, making Nephros filters well-suited to support improved water safety within the demands of highly regulated environments.
Previous wording
Our primary sales strategy in medical markets is to sell through distributors (also termed as value-added resellers, or “VARs”). Leveraging VARs has enabled us to rapidly expand our access to target customers with limited sales staff expansion. In addition, while we are currently focused on medical markets, the VARs that support these customers also support a wide variety of commercial and industrial customers. We believe that our VAR relationships have and will continue to facilitate growth in filter sales outside of the medical industry. In addition to VARs, we also utilize a direct salesforce that targets key geographic regions throughout the country, as well as focuses on the hospital and dialysis markets.
Current wording
Our primary sales strategy for medical applications is to sell within healthcare through distributors (also termed as value-added resellers, or “VARs”). Leveraging VARs has enabled us to rapidly expand our access to target customers with limited sales staff expansion. In addition, while we are currently focused on healthcare as a primary customer base, the VARs that support these facilities also support a wide variety of commercial and industrial businesses. We believe that our VAR relationships have and will continue to facilitate growth in filter sales outside of the medical industry. In addition to VARs, we also utilize a direct salesforce that targets key geographic regions throughout the country, while focusing on the hospital and dialysis customers.
Previous wording
In commercial markets, we develop filters designed to improve water quality through the reduction of aesthetic and functional contaminants. This segment includes both carbon-based and carbon-free solutions to reduce a number of issues including taste, odor, scale buildup, fine particulate, lead, cysts, and Total PFAS (otherwise known as “forever chemicals”). Like our infection control segment, our commercial filters support a wide range of applications; they also play a key role in enhancing equipment performance and reducing maintenance needs.
Current wording
For commercial applications, we develop filters to improve water quality through the reduction of aesthetic and functional contaminants. This segment includes both carbon-based and carbon-free solutions to reduce a number of issues including taste, odor, scale buildup, fine particulate, lead, cysts, and Total PFAS (otherwise known as “forever chemicals”). Like our infection control segment, our commercial filters support a wide range of applications; they also play a key role in enhancing equipment performance and reducing maintenance needs.
Previous wording
Our commercial sales model combines both direct and indirect channels. Through our internal sales team, we sell directly to customers across a range of industries, including healthcare, where our commercial solutions are an effective complement to our medical-grade, infection control filters. We also partner with VARs, including one non-exclusive partner focused only on food service and hospitality sectors, such as quick-service restaurants (QSRs), convenience stores, and restaurants. In contrast to our channel partners who offer both medical and commercial products, this VAR expands our reach in high-volume, commercial food and beverage markets.
Current wording
Our commercial application sales model also combines both direct and indirect channels. Through our internal sales team, we sell directly to customers across a range of industries, including healthcare, where our commercial solutions are an effective complement to our medical-grade, infection control filters. We also partner with VARs, including one non-exclusive partner focused only on food service and hospitality sectors, such as quick-service restaurants (QSRs), convenience stores, and restaurants. In contrast to our channel partners who offer both medical and commercial products, this VAR expands our reach in high-volume, commercial food and beverage markets.
Previous wording
Dialysis Settings. Nephros ultrafiltration products are widely deployed in both acute and chronic dialysis environments to enhance water safety and support the production of ultrapure dialysate. Our filters provide retention of bacteria, viruses, and endotoxins in water and bicarbonate lines used to treat patients with kidney failure.
Current wording
Dialysis Settings. Nephros dialysis water filters are widely deployed in both acute and chronic dialysis environments to enhance water safety and support the production of ultrapure dialysate. Our solutions provide retention of bacteria, viruses, and endotoxins in water and bicarbonate lines used to treat patients with kidney failure.
Previous wording
Commercial and Industrial Facilities. Our commercial product portfolio includes both carbon-based and carbon-free filtration solutions that address a variety of water-quality concerns common in foodservice and hospitality industries. These include but are not limited to: taste and odor compounds, scale-forming minerals, and various particulates, with several membrane-based models capable of retaining particles down to 0.005 micron. In addition, our newest offering supports the validated reduction of Total PFAS, expanding our reach to customers concerned with long-term exposure to “forever chemicals” in water-fed equipment.
Current wording
Foodservice and Hospitality. Our commercial product portfolio includes both carbon-based and carbon-free filtration solutions that address a variety of water-quality concerns common in foodservice and hospitality industries. These include but are not limited to taste and odor compounds, scale-forming minerals, and various particulates, with several membrane-based models capable of retaining particles down to 0.005 micron. In addition, our newest offering supports the validated reduction of Total PFAS, expanding our reach to customers concerned with long-term exposure to “forever chemicals” in water-fed equipment.
Previous wording
Over time, we believe that the same water safety management programs currently underway at medical facilities may migrate to commercial markets. As the epidemiology of waterborne pathogens expands, links to contamination sources will become more efficient and the data more readily available. In cases where those sources are linked to restaurants, hotels, office buildings and residential complexes, the corporate owners of those facilities will likely face increasing liability exposure. We expect that building owners will come to understand ASHRAE-188, which outlines risk factors for buildings and their occupants, and provides water safety management guidelines. We believe, in time, most commercial buildings will need to follow the basic requirements of ASHRAE-188: create a water management plan, perform routine testing, and establish a plan to treat the building in the event of a positive test.
Current wording
Over time, we believe that the same water safety management programs currently underway at medical facilities may migrate to commercial markets. As the epidemiology of waterborne pathogens expands, links to contamination sources will become more efficient and the data more readily available. In cases where those sources are linked to restaurants, hotels, office buildings and residential complexes, the owners of those facilities may face increasing liability exposure. We expect that building owners will come to understand ASHRAE-188, which outlines risk factors for buildings and their occupants, and provides water safety management guidelines. We believe, in time, most commercial buildings will need to follow the basic requirements of ASHRAE-188: create a water management plan, perform routine testing, and establish a plan to treat the building in the event of a positive test.
Previous wording
As demand for water testing and microbiological filtration grows, we will be ready to deploy our expertise and solutions based on years of experience servicing the medical market. We believe that we have an opportunity to offer unique expertise and products to the commercial market, and that our future revenue from the commercial market could even surpass our infection control revenue.
Current wording
As demand for water testing and microbiological filtration grows, we intend to be ready to deploy our expertise and solutions based on our years of experience servicing the medical market. We believe that we have an opportunity to offer unique expertise and products to the commercial market.
Previous wording
For the nine-month period ended September 30, 2025, there were no significant changes to our critical accounting policies as identified in our Annual Report on Form 10-K for the year ended December 31, 2024.
Current wording
Our critical accounting policies are described in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 17, 2026. There have been no material changes to these policies for the three months ended March 31, 2026.
Previous wording
To recognize revenue for contracts that include a combination of products and services, we allocate the transaction price for the contract among the identified performance obligations on a relative standalone selling price basis. We establish standalone selling price basis for our products based on the observable price of the respective product. For services where the standalone selling price is not directly observable through historical transactions, we estimate standalone selling price using expected cost-plus margin based on management judgment by considering available data, such as labor cost of providing the services and internal margin objectives which include market and competitive conditions. Standalone selling prices for our products and services are reassessed periodically.
Current wording
To recognize revenue for contracts that include a combination of products and services, we allocate the transaction price for the contract among the identified performance obligations on a relative standalone selling price basis. We establish standalone selling price for our products based on the observable price of the respective product. For services where the standalone selling price is not directly observable through historical transactions, we estimate standalone selling price using expected cost-plus margin based on management judgment by considering available data, such as labor cost of providing the services and internal margin objectives which include market and competitive conditions. Standalone selling prices for our products and services are evaluated on a periodic basis using updated observable inputs and market information to ensure they continue to reflect an appropriate estimate of the price at which we would sell each promised good or service on a standalone basis.
Previous wording
We are subject to recently issued accounting standards, accounting guidance and disclosure requirements. For a description of these new accounting standards, see Note 2, “Basis of Presentation and Liquidity,” of the Notes to our Unaudited Condensed Interim Financial Statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
Current wording
We are subject to recently issued accounting standards, accounting guidance and disclosure requirements. For a description of these new accounting standards, see Note 2, “Basis of Presentation and Liquidity,” of the Notes to our Unaudited Interim Financial Statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
Previous wording
Our results of operations have fluctuated significantly from period to period in the past, including recently, and are likely to continue to do so in the future. We anticipate that our annual results of operations will be impacted in the foreseeable future by several factors, including market acceptance of our products, expense management, and continued ability to achieve positive operating cash flow. Due to these fluctuations, we believe that the period-to-period comparisons of our operating results are not a good indication of our future performance.
Current wording
Our results of operations have fluctuated significantly from period to period in the past, including recently, and are likely to continue to do so in the future. We anticipate that our annual results of operations will be impacted in the foreseeable future by several factors, including market acceptance of our products, expense management, and our progress toward achieving positive operating cash flow.
Previous wording
Overall, net revenues increased by $3.8 million or 37% for the nine months ended September 30, 2025 compared to the same period in 2024. This increase was primarily driven by increased revenue in both programmatic and emergency response. The growth in programmatic revenue reflects strong reorders and a number of new active sites. The growth in emergency response sales reflects more opportunities in the first half of 2025 compared to limited opportunities in the prior year period. Service revenue also showed significant growth.
Current wording
Net revenue increased by $335,000, or 7%, in the first quarter of 2026 compared to the same period in 2025. This increase was primarily driven by increased product revenue due to programmatic growth. The growth in programmatic revenue was offset somewhat by a decline in emergency response business. We had significant emergency response business in the first quarter of 2025 that did not fully repeat in 2026.
Previous wording
Depreciation and amortization expenses were approximately $108,000 and $101,000, respectively, for the nine months ended September 30, 2025 and 2024.
Current wording
Depreciation and amortization expenses were approximately $29,000 and $39,000, respectively, for the three months ended March 31, 2026 and 2025. The decrease was primarily due to the extension of the Medica license period.
Previous wording
Interest income was approximately $41,000 for the three months ended September 30, 2025 compared to approximately $20,000 for the three months ended September 30, 2024.
Current wording
Interest income was approximately $32,000 for the three months ended March 31, 2026 compared to approximately $13,000 for the three months ended March 31, 2025. The increase was primarily due to higher balances in our money market account.
Previous wording
Other expense of approximately $15,000 for the three months ended September 30, 2025 is primarily a result of losses on foreign currency transactions. Other expense of approximately $43,000 for the three months ended September 30, 2024 was also primarily a result of losses on foreign currency transactions.
Current wording
Other income was approximately $11,000 for the three months ended March 31, 2026, and other expense of approximately $21,000 for the three months ended March 31, 2025, primarily as a result of gains and losses on foreign currency transactions.
Previous wording
At September 30, 2025, we had an accumulated deficit of $143.2 million. Although we were profitable in the quarter ended September 30, 2025, the nine months ended September 30, 2025, and the full year ended December 31, 2024, we may incur future operating losses if we are unable to maintain or increase our revenue.
Current wording
As of March 31, 2026, we had an accumulated deficit of $143 million. Although we were profitable in the quarter ended March 31, 2026 and the full year ended December 31, 2025, we may incur future operating losses if we are unable to maintain or increase our revenue.
Previous wording
Based on cash that is available for our operations and projections of our future operations, we believe that our cash balances will be sufficient to fund our current operating plan through at least the next 12 months from the date of issuance of the condensed financial statements in this Quarterly Report on Form 10-Q. Additionally, our operating plans are designed to help control operating costs and to increase revenue so we can continue to generate sufficient cash flows to fund operations. If there were a decrease in the demand for our products due to either economic or competitive conditions, or if we are otherwise unable to achieve our plan or achieve our anticipated operating results, there could be a significant reduction in liquidity due to our possible inability to cut costs sufficiently. In such event, the Company may need to take further actions to reduce its discretionary expenditures, including further reducing headcount, reducing spending on R&D projects, and reducing other variable costs.
Current wording
Based on cash that is available for our operations and projections of our future operations, we believe that our cash balances will be sufficient to fund our current operating plan through at least the next 12 months from the date of issuance of the financial statements in this Quarterly Report on Form 10-Q. Additionally, our operating plans are designed to help control operating costs and to increase revenue so we can continue to generate sufficient cash flows to fund operations. If there were a decrease in the demand for our products due to either economic or competitive conditions, or if we are otherwise unable to achieve our plan or achieve our anticipated operating results, there could be a significant reduction in liquidity due to our possible inability to cut costs sufficiently. In such event, the Company may need to take further actions to reduce its discretionary expenditures, including further reducing headcount, reducing spending on R&D projects, and reducing other variable costs.
Previous wording
Net cash provided by operating activities was $1.4 million for the nine months ended September 30, 2025, compared to net cash used in operating activities of approximately $1.8 million for the nine months ended September 30, 2024. Net cash provided by operating activities in 2025 was primarily due to net income of approximately $1.1 million and an increase in accrued expenses of approximately $0.7 million, offset by an increase in accounts receivable of approximately $0.9 million. Net cash used in operating activities in 2024 was primarily due to an increase in inventory of approximately $0.8 million, a decrease in accounts payable and accrued expenses of approximately $0.5 million each, and a net loss of approximately $0.3 million, offset by an increase in inventory impairments and write-offs of approximately $0.2 million.
Current wording
Net cash used in operating activities was approximately $1.7 million for the three months ended March 31, 2026, compared to net cash provided by operating activities of approximately $0.3 million for the three months ended March 31, 2025. Net cash used in operating activities in 2026 was primarily due to an increase in accounts receivable of $1.1 million and a decrease in accrued expenses of approximately $0.8 million offset by $0.1 million of net income. Net cash provided by operating activities in 2025 was primarily due to net income of approximately $0.6 million, a decrease in inventory of approximately $0.7 million, offset by an increase in accounts receivable of approximately $0.9 million.
Previous wording
We had no investing activities for the nine months ended September 30, 2025. Net cash used in investing activities was approximately $50,000 in the nine months ended September 30, 2024 due primarily to purchases of property and equipment.
Current wording
We had no investing activities for both the three months ended March 31, 2026 and March 31, 2025.
Previous wording
More detailed information about us and the risk factors that may affect the realization of forward-looking statements, including the forward-looking statements in this Quarterly Report on Form 10-Q, is set forth in our filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, our Quarterly Report on Form 10-Q for the period ended March 31, 2025,and our other reports filed with the SEC. We urge investors and security holders to read those documents free of charge at the SEC’s web site at www.sec.gov. We do not undertake to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise, except as required by law.
Current wording
More detailed information about us and the risk factors that may affect the realization of forward-looking statements, including the forward-looking statements in this Quarterly Report on Form 10-Q, is set forth in our filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and our other reports filed with the SEC. We urge investors and security holders to read those documents free of charge at the SEC’s web site at www.sec.gov. We do not undertake to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise, except as required by law.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Nephros dialysis filters are validated for physical retention of bacteria, viruses, and endotoxins through size exclusion. All models are FDA 510(k)-cleared and installed within dialysis water systems, where they support the production of ultrapure water and bicarbonate concentrate used in hemodialysis treatment.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The following table sets forth our summarized, results of operations for the nine months ended September 30, 2025 and 2024 (in thousands, except percentages):