RVP 10-K & 10-Q changes, risk factors and insider trading

Recently enacted tariffsTariffs on our products are expectedcontinue to have a material negative impact to our results of operations and financial position. We are working to lessen the financial impact of the tariffs, including shifting a larger portion of manufacturing of 1mL, 3mL, and EasyPoint® needles to our domestic manufacturing facility, but these actions are expensive, and the timeline remains uncertain. In addition, the tariffs implemented in 2025 are expanded beyond the original 2024 tariffs placed on syringes and needles.facility. Notwithstanding our efforts to shift the majority of our manufacturing to our domestic facility, we are still reliant on our Chinese manufacturers to provide products we are not able to manufacture. We expect a material increase in the costs of imported goods which is expected to materially impact our operations. However, we have recently adapted some equipment to increase our domestic manufacturing capabilities.

For instance, Becton, Dickinson and Company (“BD”), a global company which we had previously considered our primary competitor, spun off a portion of its syringe, needle, and injection product division as Embecta Corp. (“Embecta”) in April 2022. Though newly formed, Embecta licenses existing BD intellectual property and has continued to use the BD branding on its products and is provided with certain other services by BD. Embecta’s 20242025 annual report indicated that the company had 2,1001,850 employees, as compared to our workforce of 227201 employees. With resources greatly in excess of our own, we expect Embecta will be a formidable competitor.

Inflationary Price Pressures and Uncertain Availability of Commodities, Raw Materials, Utilities, Labor or Other Inputs Used by us and our Suppliers, or Instability in Logistics and Related Costs, Could Negatively Impact our Profitability Increases in the price of commodities, raw materials, utilities, labor or other inputs that we or our suppliers use in manufacturing and supplying products, components and parts, along with logistics and other related costs, may lead to higher production and shipping costs for our products, parts, and components. Further, increasing global demand for, and uncertain supply of, such materials could disrupt our or our suppliers’ ability to obtain such materials in a timely manner to meet our supply needs and/or could lead to increased costs. A material increase in the cost of inputs to our production could lead to higher costs for our products and could negatively impact our operating results. The full impact of greater domestic production on our sourcing materials through our supply chain is not yet known and difficult to estimate. We expect that as we increase our materials acquisition levels for domestic production, we will be able to achieve economies of scale and greater volume-purchasing agreements with our suppliers, but there is no guarantee such benefits will materialize.

Overall demand may be affected by public sentiment and acceptance of the safety and efficacy of vaccinations. While some products in our catalog of products are unrelated to the administration of vaccines, changes in the acceptance of vaccinations could have a material impact on our business. In addition to public sentiment regarding vaccinations, U.S. public health policy and recommendations by the U.S. Centers for Disease Control and Prevention (CDC) may negatively impact demand for our products used in vaccine administration.

As a manufacturer and provider of safety needle products, we face an inherent business risk of exposure to product liability claims. Additionally, our success depends on the quality, reliability, and safety of our products and defects in our products could damage our reputation. If a product liability claim is made and damages are in excess of our product liability coverage, our competitive position could be weakened by the amount of money we could be required to pay to compensate those injured by our products. In the event of a recall, we have recall insurance. Historically, we have not incurred a negative material impact from product recalls of our products. We and our contract manufacturers adhere to stringent quality control standards and processes to ensure that our products are of the highest quality and remain safe and effective. The safety of healthcare workers and patients remains our highest priority.

Certain statements included by reference in this filing containing the words “could,” “may,” “believes,” “anticipates,” “intends,” “expects,” and similar such words constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Any forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among others, tariffs, material changes in demand, tariffs, our ability to maintain liquidity, our maintenance of patent protection, our ability to maintain favorable third party manufacturing and supplier arrangements and relationships, foreign trade risk, our ability to access the market, production costs, the impact of larger market players in providing devices to the safety market, and other factors referenced in Item 1A. Risk Factors. Given these uncertainties, undue reliance should not be placed on forward-looking statements.

On September 13, 2024, the Office of the U.S. Trade Representative (“USTR”) revealed final adjustments to increase tariffs on certain goods imported from China under Section 301 of the Trade Act of 1974. Among those products included were syringes and needles, at a rate of 100%. Additionally, effective February 4th and March 4th of 2025, tariffs on Chinese imports were increased by an aggregate total of 20%. The increase of 20% applied not only to syringes and needles, but to other products we import from China. While we have manufacturing capabilities to manufacture most of the products we currently sell domestically, some of our products are sourced exclusively from China. AsWe previouslyobtained noted, 83.9%62.6% of theour products the Company obtained in 2024 were purchased from our manufacturers in China,China in 2025, most of which are impacted by the tariffs.tariffs, Thehowever, adjusteda portion was shipped directly to international customers, on which no tariffs were effective on September 27, 2024.assessed. Tariffs are expected to continue to have a material impact to our results of operations and financial position. Approximately $1.6$1.8 million was spentincurred onin tariff expensesexpense fromin September - December 2024 when the tariff rate was 100% on syringes and needles imported from China. From January 1 to March 21, 2025 under a system of increasing tariffs, we have paid a total of approximately $951,000 on tariff expenses.2025. We are working to lessen the financial impact of the tariffs, including shifting a larger portion of manufacturing of 1mL, 3mL, and EasyPoint® needles to our domestic manufacturing facility,facility. butWe whileimplemented these actions would decrease tariff expenses, they have led to an annualized estimated $3.8 million increasereductions in compensationforce in the second and benefitsthird expensequarters asof we2025 havein hired additionalboth manufacturing personnel.and non-manufacturing functions.

We have recently adapted some equipment to increase our domestic manufacturing capabilities. The adaptations to existing equipment will allow us to produce 0.5 mL syringes domestically. Once operational, we will no longer rely on imports for these products, and they will no longer be affected by tariff costs.products. We expectcurrently anticipate that commercial quantities will bebecome availableavailable, as market demand necessitates, in the second half of 2025.2026.

Recent additions of manufacturing equipment and facilities under the 2020 TIA have increased our production capacity and our overhead costs. Under the TIA and its successor agreement, until June 30, 2030 we must continue to abide by ongoing terms which include maintenance of equipment, availability of capacity, and USU.S. government preference in the event of a public health emergency.

Over the past several years, we have experienced certain cost increases in raw materials. Those costs primarily affected our domestic manufacturing because the finished goods we purchased from China (being 83.9% of our products in 2024) were subject to a long-term fixed price contract. Sensitivity to cost fluctuations mayis likely to become more pronounced as we transition away from production under such a fixed price contract. Other factors that could affect our unit costs include tariffs, supplier cost increases, increases in workforce costs associated with increased domestic production, and changing production volumes. Increases in costs may not be recoverable through price increases of our products.

We believe domestic customers have retained products provided for vaccination purposes in inventory. Customers have reported that demand was diminished due to their remaining syringe inventory. It is difficult to estimate how muchmuch, if any, of the remaining inventory might still remain in the market.

As detailed in Note 4 to the financial statements, we held $40.3$34.4 million in debt and equity securities as of December 31, 2024,2025, which represented 25.1%24.1% of our total assets. During 2024, we liquidated $6 million in mutual funds for operating purposes.

Historically, unit sales have increased during the flu season. From 2020-2022, seasonal effects of the flu season on our revenues were less impactful due to the dramatic increase in sales attributable to COVID-19 vaccinations. Seasonal trends for syringe sales may now be following pre-pandemic patterns. Additionally, there may be more demand for EasyPoint® products during the flu season, particularly in the retail pharmacy market. OverallPurchases demandfrom our retail pharmacy customers may bediffer affectedfrom bypurchasing public sentiment and acceptancepatterns of thegeneral safetyline anddistributors. efficacyEasyPoint® ofsales vaccinations.volumes Whileincreased someprimarily productsfor inthis our catalog of products are unrelated to the administration of vaccines, changes in the acceptance of vaccinations could have a material impact on our business.reason.

In 1995, we entered into a license agreement with Thomas J. Shaw for the exclusive right to manufacture, market, and distribute products utilizing his patented automated retraction technology and other patented technology. This technology is the subject of various patents and patent applications owned by Mr. Shaw. The license agreement generally provides for quarterly payments of a 5% royalty fee on gross sales of products subject to the license and he receives fifty percent (50%50)% of the royalties paid to us by certain sublicensees of the technology subject to the license.

Domestic sales accounted for 88.9%84.2% and 79.4%88.9% of the revenues in 20242025 and 2023,2024, respectively. Domestic revenues decreasedincreased 15.1%9.7% principally due to aan decreaseincrease in theVanishPoint® average selling price, largely due to higher sales of ourand EasyPoint® needlesneedle which typically have a lower average selling price combined with higher transactional and order fulfillment costs with our distributors.sales. Domestic unit sales decreasedincreased 4.3%.3.6%. Domestic unit sales were 87.7%73.7% of total unit sales for 2024.2025. International revenues decreasedincreased 59.1%64.0%, predominantlyprimarily driven by higher EasyPoint® needle sales, while international unit volume increased 164.7%. Revenue growth was lower than unit growth due to fewerdiscounted pricing on international vaccination-relatedunits, sales.which had a negative impact on gross margin. Overall unit sales decreasedincreased 19.1%23.3% and our overall revenues decreasedincreased by 24.2%.15.8%. There is uncertainty as to the timing of future international orders.

Tariffs are expected to materially increase our costs in future periods. Approximately $1.6$1.8 million was spentincurred onin tariff expensesexpense fromin September - December 2024.2025. These costs are included in Cost of manufactured product.

As a result of the above, gross profit margins decreasedincreased from 20.9% in 2023 to (3.1)% in 2024.2024 to 0.1% in 2025.

The loss from operations was $21.1$21.2 million as compared to a loss from operations of $11.5$21.1 million in 2023. The increased loss was due to lower gross profit for the year.2024.

The unrealized gainloss on debt and equity securities in 2025 was $10.8$5.0 million due to the increaseddecreased market values of those securities. A $5.6 million gain was realized from the sale of debt and equity securities in 2025.

The provision for income taxes was $8.4$291 millionthousand as compared to a benefitprovision for income taxes of $1.9$8.4 million as for 2023.2024. The difference is primarily related to fully reserving our deferred tax asset in the second quarter of 2024. For a detailed description of the determination and components of calculating the provision, please refer to Note 11 of the financial statements.

Cash flow used by operations was $11.6$7.1 million in 20242025 due to a number of factors. Aside from the various reconciling items used in determining the overall use of cash, our net loss for the year was the predominant factor. We recognized approximately $5.9$6.0 million in other income from the TIA, offset by an increase of $8.4 million in valuation allowance related to deferred tax assets which is material to the adjustments to total cash flow from operations.TIA. Changes in working capital also impacted cash flows from operating activities. Accounts receivable decreasedincreased by $2.0$451 million,thousand, inventories increased by $1.6$197 million,thousand, and accounts payable decreased by $488$1.0 thousand.million.

Cash usedflow byfrom financinginvesting activities was $535$6.0 thousandmillion forin 2024.2025 This wasdue primarily due to repaymentsthe sale of long-term$37.1 million in debt and paymentequity of preferred stock dividends.securities.

The imposition of tariffs on our products will continue to have a material effect on our operating results and liquidity. AdditionalRecent capital improvements and increases to our manufacturing workforce will also increase expenses in the near-termnear term as a result of the tariffs and our expected increase in domestic manufacturing. The conversion of existing equipment plus the purchase of additional molds to produce products0.5 mL syringes which have never been produced domestically is expected to cost approximately $1 million.million in 2025. Those products accounted for roughly 10.5%11% of our overall domestic unit sales and 16.6%10.1% of our domestic syringe unit sales.sales Thein overall impact of additional workforce needed to produce these and other products is an increase of approximately $3.8 million on an annual basis.2025.

Our margins have experienced significant fluctuations over the past two years. Most recently in 2024,recently, our margins have faced negative pressure from numerous factors. The tariffs enacted in 20242024-2026 have had a direct negative impact on products we import from China in 2024 and to date in 2025.date. In reaction to the tariffs, we have acted to increase our domestic production and reduce, to the extent possible, our reliance on imports. While we believe these efforts will enable us to avoid some of the impact of the tariffs, we will be forced to import the products we are unable to produce in the U.S. The decline in units sold in 2024 has also had a negative impact on our margins. As we work to increase our domestic production and achieve manufacturing efficiencies, we expect to incur higher manufacturing costs in the near term but will continue to work to minimize our reliance on imported products.

We believe we will have adequate means to meet our short-term needs to fund operations for at least 12 months from the date of issuance of the financial statements. Besides cash reserves and expected income from operations,reserves, we also have access to our investments which may be liquidated in the event that we need to access the funds for operations. Expected short-term uses of cash include payroll and benefits, royalty expense, inventory purchases, tariffs, contractual obligations, payment of income taxes, quarterly preferred stock dividends, and other operational priorities. Our year-end liabilities are detailed in our financial statements, including Notes 77, 8 and 89 to the financial statements. We believe we will have adequate means to meet our currently foreseeable long-term liquidity needs, although the new tariffs and our costs related to an increase in domestic manufacturing will increase our expenses materially. For the next 1-3 years, we believe our liquidity will decline materially, but we expect that we may be able to satisfy our long-term cash requirements using a combination of cash and liquidation of our equity investments. If cash needs cannot be met using existing cash and investments, management would reduce operational costs.costs, similar to reductions in administrative support in the second quarter of 2025. In the event that the foregoing is insufficient, we may liquidate certain assets.

We are responsible for developing estimates for amounts reported as assets and liabilities, and revenues and expenses in conformity with U.S. generally accepted accounting principles (“GAAP”). Those estimates require that we develop assumptions of future events based on past experience and expectations of economic factors. Among the more critical estimates management makes is the estimate for customer rebates. The amount reported as a contractual allowance for rebates involves examination of past historical trends related to our sales to distributors and the related credits issued once our distributors have satisfied their contractual obligations. The estimate includes consideration of historical redemption rates, discount rates, and a combination of estimated distributor inventories based on tracking information provided by the distributors or if known, inventory turnover rates. The establishment of a liability for future claims of rebates against sales in the current period requires that we have an understanding of the relevant sales with respect to product categories, sales distribution channels, and the likelihood of contractual obligations being satisfied. We examine the results of estimates against actual results historically and use the determination to further develop our basis for assumptions in future periods, as well as the accuracy of past estimates. Based on distributors’ purchasing and claiming rebates practices, we do not expect significant changes to the current inputs and assumption used in the estimate calculations. While we believe that we have sufficient historical data, and a firm basis for establishing reserves for contractual obligations, there is an inherent risk that our estimates and the underlying assumptions may not reflect actual future results. In the event that these estimates and/or assumptions are incorrect, adjustments to our reserves may have a material impact on future results. As of December 31, 2024,2025, we estimate that the total potential future credits to be issued as a result of prior purchases which have not yet been claimed is $2.1$2.4 million.

We have been manufacturing and marketing our products since 1997. Syringes comprised 80.8%83.8% of our sales in the first quartersix months of 2026. In the first six months of 2026, EasyPoint® products accounted for 13.8%11.4% andof sales, while other products, including our IV safety catheter and blood collection products,products wereaccounted 5.4%for 4.8% of our sales in the first quarter.six months of 2026.

We expect international sales of VanishPoint syringes and EasyPoint needles to increase in the second half of 2026 following the recent certification under the European Union Medical Device Regulation 2017/745 which is required for the sale of medical devices within the European Union. We are currently in the process of implementing the inclusion of the certification on our packaging and operational documents.

On September 13, 2024, the Office of the U.S. Trade Representative (“USTR”) revealed final adjustments to increase tariffs on certain goods imported from China under Section 301 (“Section 301”) of the Trade Act of 1974 (“Trade Act”). Among those products included were syringes and needles, at a rate of 100%. Throughout much of 2025, additional widespread tariffs were imposed on most products imported into the U.S. citing authority under the International Emergency Economic Powers Act (“IEEPA”). Those tariffs were in addition to the Section 301 tariffs which existed at the time. The prevailing tariff rates on various products and certain countries of origin, including many of our products, fluctuated greatly during 2025. These fluctuations negatively impacted our ability to predict the cost of importing certain goods or groups of goods and negatively impacted our business. In February 2026, the U.S. Supreme Court ruled that the President’s use of IEEPA to impose reciprocal tariffs exceeded his authority and that the IEEPA tariffs must be vacated. The 2024 Section 301 tariff of 100% on syringes and needles from China remains unchanged. Effective February 20, 2026, a 10% ad valorem duty went into effect under Section 122 of the Trade Act. ThisEffective July 24, 2026, the 10% duty has been replaced with a new Section 301 tariff of 12.5%. The newly announced 12.5% tariff is in addition to the above-mentioned 100% Section 301 tariffs.

As of MayAugust 1, 2026, the prevailing tariff rate on most syringe and needle products imported from China was 110%.112.5%. Other products we import from China, which do not fall under the category of needles and syringes, are subject to a 10%12.5% tariff rate. As foreign trade policy continues to evolve, including the impact of the Supreme Court’s ruling, uncertainty as to future tariff rates and affected products remains. Tariffs aremay expectedcontinue to have a continuing material impact on our ability to source finished goods and certain raw materials and component parts, and to our results of operations and financial position. We continue working to lessen the financial impact of the tariffs through strategic ordering of products from our Chinese suppliers and continuing to manufacture 1mL, 3mL, and EasyPoint® needles in our domestic manufacturing facility.

During 2024 and 2025, certain tariffs were incorrectly assessed on a portion of our imported finished goods. During 2025, we filed claims with U.S. Customs and Border Protection seeking corrections of those tariff assessments. During the threesix months ended MarchJune 31,30, 2026, we received approximately $137$329 thousand in tariff refunds related to these claims. In addition, we received approximately $467$1.3 thousand,million, including interest, in tariff refunds that were processed incorrectly and are subject to potential repayment.repayment in the six months ended June 30, 2026. Accordingly, these amounts have been recorded as a liability within other accrued liabilities on our condensed balance sheets. None of the foregoing tariff refunds relate to the IEEPA tariffs or the 10% ad valorem duty imposed in 2026.

While we have manufacturing capabilities to manufacture most of the products we currently sell domestically, some of our products are sourced exclusively from China. We obtained 61.0%57.6% of ourunits productsmanufactured during the first six months of 2026 from our manufacturers in China in the first quarter of 2026,China, most of which are impacted by the tariffs, however, a portion was shipped directly to international customers, on which no tariffs were assessed. Tariffs may continue to have a material impact to our results of operations and financial position. Approximately $11.6$58 thousand was incurred in tariff expense in the first quartersix months of 2026. We are working to lessen the financial impact of the tariffs,tariffs includingby continuing to manufacture 1mL, 3mL, and EasyPoint® needles in our domestic manufacturing facility.

In the first quarterhalf of 2026, we made payments to certain consultants in the approximate total amount of $300$423 thousand and charitable product donations in the approximate total amount of $593$959 thousand. Such costs increased our operating expenses and are non-recurring. The charitable product donations were related to certain overstock inventory items. These products were not included in our first quarter 2026 inventory write down, as the items were not within 12 months of expiration. We continue to monitor market demand for these products and currently believe there remain potential sales channels available prior to the products reaching the 12 month expiration threshold.

As detailed in Note 4 to the financial statements, we held $32.8$37.2 million in debt and equity securities as of MarchJune 31,30, 2026, which represented 23.9%26.3% of our total assets. The unrealized gain on debt and equity securities was $192$13 thousand due to the increased market values of those securities. The realized gain from the sale of equity was $6.4 million in the second quarter of 2026.

Historically, unit sales have increased during the flu season. Additionally, there may be more demand for EasyPoint® products during the flu season, particularly in the retail pharmacy market. Purchases from our retail pharmacy customers may differ from purchasing patterns of general line distributors. While the majority of flu season sales typically occur in the third quarter, in 2025, purchasing patterns differed with unusually high unit sales related to flu season products in the second quarter of 2025, impacting comparability to second quarter 2026 unit sales related to flu season products which follows a more traditional purchasing pattern.

The following discussion may contain trend information and other forward-looking statements that involve a number of risks and uncertainties. Our actual future results could differ materially from our historical results of operations and those discussed in any forward-looking statements. All period references are to periods ended MarchJune 31,30, 2026 or 2025, as applicable. Dollar amounts have been rounded for ease of reading.

Comparison of Three Months Ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025

Domestic sales accounted for 82.9%81.6% and 89.6%81.3% of total revenues for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Domestic revenues decreased 20.0%,30.8%, while domestic unit sales decreased 11.5%.35.1%. Domestic unit sales represented 72.1%70.3% of total unit sales for the three months ended MarchJune 31,30, 2026 compared to 84.9%68.9% for the same period last year. The decrease in sales and units was not proportional to the decrease in unit sales, primarily due to athe decreasetiming inof averageEasyPoint® sellingproduct price,orders from certain customers, which wascan duefluctuate tobetween changeperiods inbased producton mixcustomer andpurchasing higher transaction costs associated with distributor agreements.patterns.

International revenues for the three months ended MarchJune 31,30, 2026 increaseddecreased 42.4%32.2% compared to the same period in 2025. The increasedecrease in international sales was primarily driven by increasea decrease in EasyPoint® needle sales. Traditionally, international sales carry lower average selling prices compared to our domestic sales. There remains uncertainty regarding the timing of future international orders.

Overall, units sales increaseddecreased 3.6%.36.4% due to a decrease in EasyPoint® needle sales.

Cost of manufactured product decreased 3.1%34.7% compared to the same period last year primarily due to a decrease in freight and tariff expensesales. Royalty expense decreased 7.0%20.8% due to the decrease in gross sales.

Tariffs may continue to materially impact our costs in future periods. Approximately $11.6$46 thousand was spent on tariff expenses in the firstsecond quarter of 2026. The reduction in tariff costs compared to prior periods is attributable to ongoing mitigation efforts, including strategic sourcing decisions and increased domestic production. These costs are included in Cost of manufactured product.

The unrealized gainloss on debt and equity securities was $192$179 thousand for the threesecond monthquarter period ended March 31,of 2026 due to the increaseddecreased market values of those securities. InThe contrast,realized theregain from the sale of equity was a$6.4 materialmillion unrealizedin lossthe onsecond debt and equity securitiesquarter of $7.2 million for the three month period ended March 31, 2025.2026.

The provisionloss forfrom income taxesoperations was $1.8$11.3 thousand asmillion compared to a benefit for income taxesloss of $286approximately thousand$9.8 million for the same period inlast 2025.year. The changeincrease isin loss from operations was primarily duedriven toby a decrease in netrevenue lossand increase in theoperating currentexpenses period.due to donation expense.

Cash flow used by operations was $1.4$3.1 million for the threesix months ended MarchJune 31,30, 2026 due to a number of factors. Aside from the various reconciling items used in determining the overall use of cash, our net loss for the period was the predominant factor. We recognized approximately $1.5$2.9 million in other income from the TIA. Changes in working capital also impacted cash flows from operating activities. Accounts receivable increased by $1.3 million, inventories decreased by $926 thousand, inventories increased by $107$370 thousand, accounts payable increased by $44$1.4 thousand,million, and accrued liabilities increased by $794$2.4 thousand.million.

Cash flow from investing activities was $1.7$3.5 million for the threesix months ended MarchJune 31,30, 2026, primarily reflecting net investment activity driven by a reallocationgain betweenof debt$6.4 andmillion from the sale of equity securities withinin the investment portfolio and liquidation of $2 million of investments to support operating activities during the firstsecond quarter of 2026. The funds were used to support operating activities during the first quarter of 2026.

Cash used by financing activities was $147$345 thousand for the first quartersix months of 2026. This was primarily due to repayments of long-term debt and payment of preferred stock dividends.

We have historically funded operations primarily from the proceeds from revenues, private placements, investment proceeds, and loans. We may fund operations going forward from revenues, cash reserves, and investments in tradingdebt and equity securities should the need to access those funds arise. In the second quarter of 2026, a series of material transactions resulted in $3.5 million in increased liquidity, primarily from a gain on the sale of equity securities.

As of MarchJune 31,30, 2026, there were no commitments for material capital expenditures.

We are responsible for developing estimates for amounts reported as assets and liabilities, and revenues and expenses in conformity with U.S. generally accepted accounting principles (“GAAP”). Those estimates require that we develop assumptions of future events based on past experience and expectations of economic factors. Among the more critical estimates management makes is the estimate for customer rebates. The amount reported as a contractual allowance for rebates involves examination of past historical trends related to our sales to distributors and the related credits issued once our distributors have satisfied their contractual obligations. The estimate includes consideration of historical redemption rates, discount rates, and a combination of estimated distributor inventories based on tracking information provided by the distributors or if known, inventory turnover rates. The establishment of a liability for future claims of rebates against sales in the current period requires that we have an understanding of the relevant sales with respect to product categories, sales distribution channels, and the likelihood of contractual obligations being satisfied. We examine the results of estimates against actual results historically and use the determination to further develop our basis for assumptions in future periods, as well as the accuracy of past estimates. Based on distributors’ purchasing and claiming rebates practices, we do not expect significant changes to the current inputs and assumption used in the estimate calculations. While we believe that we have sufficient historical data, and a firm basis for establishing reserves for contractual obligations, there is an inherent risk that our estimates and the underlying assumptions may not reflect actual future results. In the event that these estimates and/or assumptions are incorrect, adjustments to our reserves may have a material impact on future results. As of MarchJune 31,30, 2026, we estimate that the total potential future credits to be issued as a result of prior purchases which have not yet been claimed is $2.8$4.0 million.