RETRACTABLE TECHNOLOGIES INC

1. BUSINESS OF THE COMPANY AND BASIS OF PRESENTATION

Business of the Company

Retractable Technologies, Inc. (the “Company”) was incorporated in Texas on May 9, 1994, and designs, develops, manufactures, and markets safety syringes and other safety medical products for the healthcare profession. The Company began to develop its manufacturing operations in 1995. The Company’s manufacturing and administrative facilities are located in Little Elm, Texas. The Company’s products are the VanishPoint® 0.5mL insulin syringe; 1mL tuberculin, insulin, and allergy antigen syringes; 0.5mL, 1mL, 2mL, 3mL, 5mL, and 10mL syringes; the small diameter tube adapter; the blood collection tube holder; the EasyPoint®blood collection tube holder with needle; the allergy tray; the IV safety catheter; the Patient Safe® syringes; the Patient Safe® Luer Cap; the VanishPoint® Blood Collection Set; and the EasyPoint® needle, as well as a standard 3mL syringe packaged with an EasyPoint® needle. The Company also sells VanishPoint® autodisable syringes in the international market in addition to the Company’s other products.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. The amount reported as a contractual allowance for rebates involves examination of past historical trends related to sales to customers and the related credits issued once contractual obligations of the customers have been met. The establishment of a liability for future claims of rebates against sales in the current period requires that the Company has an understanding of the relevant sales with respect to product categories, sales distribution channels, and the likelihood of contractual obligations being satisfied.

Cash and cash equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash, money market accounts, and investments with original maturities of three months or less.

Accounts receivable

The Company records trade receivables when revenue is recognized. No product has been consigned to customers. The Company’s allowance for credit losses is primarily determined by review of specific trade receivables based on historical collection rates and specific knowledge regarding the current creditworthiness of the customers. Those accounts that are doubtful of collection are included in the allowance. The Company considers historical experience, the current economic environment, customer credit ratings or bankruptcies, legal disputes, collections on past due amounts, pricing discrepancies, and reasonable and supportable forecasts to develop its allowance for credit losses. Management reviews these factors quarterly to determine if any adjustments are needed to the allowance. Trade receivables are charged off when there is certainty as to their being uncollectible. Trade receivables are considered delinquent when payment has not been made within contract terms. The allowance for credit losses was $187 thousand and $668 thousand as of December 31, 2025 and 2024, respectively.

The Company requires certain customers to make a prepayment prior to beginning production or shipment of their order. Customers may apply such prepayments to their outstanding invoices or pay the invoice and continue to carry forward the deposit for future orders. Such amounts are included in Other accrued liabilities on the Balance Sheets and are shown in Note 7, Other Accrued Liabilities.

The Company records an allowance for estimated returns as a reduction to Accounts receivable and Gross sales. Historically, returns have been insignificant.

Inventories

Inventories are valued at the lower of cost or net realizable value, with cost being determined using actual average cost. The Company compares the average cost to the net realizable value and records the lower value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

Management considers such factors as the amount of inventory on hand and in the distribution channel, estimated time to sell such inventory, the shelf life of inventory, and current market conditions when determining excess or obsolete inventories. Once inventory items are deemed to be either excess or obsolete, they are written down to their net realizable value. For the year ended December 31, 2025, the Company recorded inventory write-downs of approximately $2.2 million. These amounts are included in Cost of sales in the Statements of Operations. For the year ended December 31, 2024, inventory write-downs were not material. These write-downs were primarily related to certain product lots approaching their expiration dates.

Investments in debt and equity securities

In the periods presented, the Company held mutual funds, debt, and equity securities as investments. These assets were held as trading securities and are carried at fair value as of the date of the Balance Sheets. Net unrealized and realized gains or losses on these investments are reflected separately on the Statements of Operations. Realized gains or losses on investments are recognized using the specific identification method.

Property, plant, and equipment

Property, plant, and equipment are stated at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to operations as incurred. Cost includes major expenditures for improvements and replacements which extend useful lives or increase capacity and interest costs associated with significant capital additions. Gains or losses from disposals are included in Interest and other income.

The Company's property, plant, and equipment primarily consists of buildings, land, assembly equipment, molding machines, molds, office equipment, furniture, and fixtures. Depreciation and amortization are calculated using the straight-line method over the following useful lives:

Long-lived assets

The Company assesses the recoverability of long-lived assets when indicators of impairments are present using an assessment of the estimated undiscounted future cash flows related to such assets. In the event that assets are found to be carried at amounts which are in excess of estimated gross future cash flows, the assets will be adjusted for impairment to a level commensurate with fair value determined using a discounted cash flow analysis or appraised values of the underlying assets.

During 2025, the Company recognized an impairment charge of $954 thousand associated with certain long-term assets. These assets primarily included older manufacturing equipment that had not been placed in service and were replaced by newer, higher-efficiency equipment acquired under the TIA contract. No cash flows are expected to be generated by these assets. Accordingly, the Company reduced the carrying value of these assets to an estimated fair value of zero. The impairment charge is included in Operating expenses in the Statements of Operations.

Fair value measurements

For assets and liabilities that are measured using quoted prices in active markets, total fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs. Assets and liabilities that are measured using significant other observable inputs are valued by reference to similar assets or liabilities, adjusted for contract restrictions and other terms specific to that asset or liability. For these items, a significant portion of fair value is derived by reference to quoted prices of similar assets or liabilities in active markets. For all remaining assets and liabilities, fair value is derived using a fair value model, such as a discounted cash flow model or Black-Scholes model.

Financial instruments

The Company estimates the fair value of financial instruments through the use of public market prices, quotes from financial institutions, and other available information. Judgment is required in interpreting data to develop estimates of fair value and, accordingly, amounts are not necessarily indicative of the amounts that could be realized in a current market exchange. Short-term financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and other liabilities, consist primarily of instruments without extended maturities, the fair value of which, based on Management’s estimates, equals their recorded values. Investments in debt and equity securities have consisted primarily of individual equity securities and mutual funds and are reported at their fair value based upon quoted prices in active markets. The fair value of long-term liabilities, based on Management’s estimates, approximates their reported values.

Concentration risks

The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash, cash equivalents, certificates of deposit, exchange-traded and closed-end funds, mutual funds, equity securities, and/or accounts receivable. Cash balances, some of which exceed federally insured limits, are maintained in financial institutions; however, Management believes the institutions are of high credit quality. The majority of accounts receivable are due from companies that are well-established entities. The Company assesses market risk in equity securities through consultation with its outside investment advisors. Management is responsible for directing investment activity based on current economic conditions. Management considers any exposure from concentrations of credit risks to be limited.

The following table reflects the Company’s significant customers in 2025, 2024, and 2023:

The Company manufactures some of its products in Little Elm, Texas, as well as utilizing manufacturers in China. The Company obtained roughly 62.6% of its products in 2025 from its Chinese manufacturers. Purchases from Chinese manufacturers aggregated 83.9% and 88.4% of products in 2024 and 2023, respectively. In the event that the Company becomes unable to purchase product from its Chinese manufacturers or produce those products domestically, the Company may need to find an alternate manufacturer for the blood collection set, IV catheter, Patient Safe® syringe, 0.5mL insulin syringe, 0.5mL autodisable syringe, and 2mL, 5mL, and 10mL syringes. Even with increased domestic production, the Company may not be able to avoid a disruption in supply.

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%. Beginning in early 2025 and

throughout much of the year, 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. Throughout 2025, the prevailing tariff rates on various products and certain countries of origin, including many of the Company’s products, fluctuated greatly. These fluctuations negatively impacted the Company’s ability to predict the cost of importing certain goods or groups of goods and negatively impacted the Company’s 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. Looking forward after the Supreme Court’s ruling, the 2024 Section 301 tariff of 100% on syringes and needles from China remains unchanged. Additionally, following the Supreme Court’s ruling on the tariffs imposed under IEEPA, effective February 20, 2026 a 10% ad valorem duty went into effect under Section 122 of the Trade Act, which is in addition to the above-mentioned Section 301 tariffs.

As of March 9, 2026, the prevailing tariff rate on most syringe and needle products imported from China was 120%. Other products the Company imports from China, which do not fall under the category of needles and syringes, are subject to a 20% 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 are expected to have a continuing material impact on the Company’s ability to source finished goods and certain raw materials and component parts, and to its results of operations and financial position. The Company plans to continue working to lessen the financial impact of the tariffs through strategic ordering of products from Chinese suppliers and shifting a larger portion of manufacturing of 1mL, 3mL, and EasyPoint® needles to its domestic manufacturing facility.

Revenue recognition

The Company recognizes revenue when control of performance obligations passes to the customer, generally when the product ships. Payments from customers with approved credit terms are typically due 30 days from the invoice date. Under certain contracts, revenue is recorded on the basis of sales price to distributors, less contractual pricing allowances. Contractual pricing allowances consist of: (i) rebates granted to distributors who provide tracking reports which show, among other things, the facility that purchased the products, and (ii) a provision for estimated contractual pricing allowances for products for which the Company has not received tracking reports. When rebates are issued, they are applied against the customer’s receivable balance. Distributors receive a rebate for the difference between the Wholesale Acquisition Cost and the appropriate contract price as reflected on a tracking report provided by the distributor to the Company. If product is sold by a distributor to an entity that has no contract, there is a standard rebate (lower than a contracted rebate) given to the distributor. One of the purposes of the rebate is to encourage distributors to submit tracking reports to the Company. The provision for contractual pricing allowances is recognized in the period the related sales are recognized and is reviewed at the end of each quarter and adjusted for changes in levels of products for which there is no tracking report. Additionally, if it becomes clear that tracking reports will not be provided by individual distributors, the provision is further adjusted. The estimated contractual allowance is included in Accounts payable in the Balance Sheets and deducted from Revenues in the Statements of Operations. Accounts payable included estimated contractual allowances for $2.4 million and $2.1 million as of December 31, 2025 and 2024, respectively. The terms and conditions of contractual pricing allowances are governed by contracts between the Company and its distributors. Revenue for shipments directly to end-users is recognized when title and risk of ownership pass from the Company. End-users do not receive any contractual allowances on their purchases. Any product shipped or distributed for evaluation purposes is expensed.

The Company provides product warranties that: i) the products are fit for medical use as generally defined within the boundaries of United States FDA approval; ii) the products are not defective; and iii) the products will conform to the descriptions set forth in their respective labeling, provided that they are used in accordance with such labeling and the Company’s written directions for use. The Company has historically not incurred significant warranty claims.

The Company’s domestic return policy provides that a customer may return incorrect shipments within 10 days following arrival at the distributor’s facility. In all such cases, the distributor must obtain an authorization code from the Company and affix the code to the returned product.

The Company’s domestic return policy also generally provides that a customer may return product that is overstocked. Overstocking returns are limited totwo times in each 12-month period up to 1% of distributor’s total purchase of products for the prior 12-month period. All product overstocks and returns are subject to inspection and acceptance by the Company. The Company has not historically incurred significant returns.

The Company’s international distribution agreements generally do not provide for any returns.

The Company periodically recognizes revenue from licensing agreements of its intellectual property. Such licensing agreements provide the licensee with right to use the Company’s intellectual property. The Company accounts for revenue generated under these licensing agreements in accordance with ASC 606. A license may be perpetual or time limited in its application. The Company has concluded that its licensing agreement is distinct as the customer can benefit from the license on their own. In accordance with ASC 606, the licensing agreement is considered functional as it is without professional services, updates and technical support. The Company has determined that the current licensing agreement is sales-based or usage-based as defined in ASC 606. In accordance with ASC 606, the Company recognizes revenue from sales-based or usage-based license at the later of a) subsequent sale or usage occurrence or b) the performance obligation to which some or all of the sales-based or usage-based royalty has been allocated has been satisfied (or partially satisfied). The Company recognizedno licensing fees for the year ended December 31, 2025. The Company recognized $189 thousand and $778 thousand in licensing fees for years ended December 31, 2024 and 2023, respectively. If the Company licenses its products for sale and the customers of the sublicensee are not known to the Company, the Company is obligated to pay Thomas J. Shaw, the owner of certain patented technology, fifty percent (50%) of such revenue pursuant to the terms of the Technology License Agreement between the Company and Mr. Shaw.

Disaggregated information of revenue recognized from contracts with customers and licensing fees recognized are as follows:

Income taxes

The Company evaluates tax positions taken or expected to be taken in a tax return for recognition in the financial statements based on whether it is “more-likely-than-not” that a tax position will be sustained based upon the technical merits of the position. Measurement of the tax position is based upon the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

The Company provides for deferred income taxes through utilizing an asset and liability approach for financial accounting and reporting based on the tax effects of differences between the financial statement and tax bases of assets and liabilities, based on enacted rates expected to be in effect when such differences reverse in future periods. Deferred tax assets are periodically reviewed for realizability.

As of December 31, 2025, Management concluded that an $11.6 million valuation allowance is needed on the net deferred tax asset. As of December 31, 2024, such valuation allowance was $9.1 million.

Earnings per share

The Company computes basic earnings per share (“EPS”) by dividing net earnings for the period (adjusted for any cumulative dividends for the period) by the weighted average number of common shares outstanding during the period. Diluted EPS includes the determinants of basic EPS and, in addition, reflects the dilutive effect, if any, of the common stock deliverable pursuant to stock options and/or common stock issuable upon the conversion of convertible preferred stock.

The calculation of diluted EPS under the treasury stock method included the following shares in 2025, 2024, and 2023:

Preferred stock was excluded from the calculation of diluted EPS because the effect was antidilutive.

The potential dilution, if any, is shown on the following schedule:

Shipping and handling costs

The Company classifies shipping and handling costs as part of Cost of sales in the Statements of Operations.

Share-based Compensation

The Company’s share-based payments are accounted for using the Black-Scholes fair value method. The Company generally records share-based compensation expense on a straight-line basis over the requisite service period. The Company records forfeitures as they occur.

Self-insured employee benefit costs

The Company self-insures certain health insurance benefits for its employees under certain policy limits. The Company has additional coverage provided by an insurance company for any individual with claims in excess of $110,000 and/or total plan claims in excess of $1.7 million for the plan year.

Research and development costs

Research and development costs are expensed as incurred.

Leases

The Company determines if an arrangement is a lease at inception. Operating and finance leases are included in Other assets, Other accrued liabilities, and Other long-term liabilities on the Balance Sheets. Right of use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the incremental borrowing rate based on information available at the commencement date was used in determining the present value of lease payments.

The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of twelve months or less are not recorded on the Balance Sheets; however, rent expense is recognized on a straight-line basis over the lease term.

Finance leases that transfer substantially all the risks and rewards of ownership are amortized over the shorter of the lease term or the useful life of the underlying asset. Lease payments for finance leases are allocated between interest expense on the lease liability and reduction of the lease liability using the effective interest method. The present value of lease payments is determined using the lease’s implicit rate, if it is determinable, otherwise, the Company uses its incremental borrowing rate at lease commencement.

Technology Investment Agreement (TIA)

Effective July 1, 2020, the Company entered into a Technology Investment Agreement (“TIA”) with the United States Government Department of Defense, U.S. Army Contracting Command-Aberdeen Proving Ground, Natick Contracting Division & Edgewood Contracting Division (ACC-APG, NCD & ECD) on behalf of the Biomedical Advanced Research and Development Authority (BARDA), as amended, for $81,029,518 in government funding for expanding the Company’s domestic production of needles and syringes. At the request of the US government, the TIA was transferred to a successor agreement, identified as Other Transaction Agreement in April 2023. Such agreement contains no additional requirements and, for the purposes of this report, the agreement shall continue to be referred to herein as the “TIA”. Under this agreement, the Company has made significant additions to its facilities which allow the Company to increase domestic production capacity. For further explanation, please refer to Note 10 – Technology Investment Agreement.

As reimbursements were received from the U.S. government for expenditures under the TIA, the Company recorded a deferred liability. In 2021, the deferred liability began to be systematically amortized as a gain over the life of the related property, plant, and equipment and is presented as Other income – TIA on the Statements of Operations. For any reimbursements received for expenditures not capitalized as property, plant, and equipment, Other income – TIA was recognized in the same period as the expense.

Recently Adopted Pronouncements

In December of 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The updated accounting guidance improves transparency of income tax disclosures, including the disaggregation of existing disclosures related to the effective tax rate reconciliation and income taxes paid. ASU No. 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted. For all other entities, it is effective for annual periods beginning after December 15, 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. Prospective application is required, with retrospective application permitted. The Company adopted ASU 2023-09 for the fiscal year beginning January 1, 2025 on a prospective basis. The adoption did not have a material impact on Company’s financial statements.

In March 2024, the FASB issued ASU 2024-02, “Codification Improvements — Amendments to Remove References to the Concepts Statements”, which amends the Codification to remove references to various concepts statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. ASU 2024-02 is effective for public business entities for fiscal periods beginning after December 15, 2024. For all other entities, it is effective for fiscal years, including interim periods within those fiscal years beginning after December 15, 2025. Early adoption is permitted for all entities for any fiscal year or interim period for which financial statements have not yet been issued or made available for issuance. The Company adopted ASU 2024-02 as of January 1, 2025 with no impact on the Company’s financial statements.

Recently Issued Pronouncements

In November 2024, the FASB issued ASU 2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." This update enhances the requirements for public companies to provide more detailed and structured disclosures of their expenses, aiming to improve transparency in financial reporting. The new guidance is effective for fiscal reporting periods beginning after December 15, 2026, and for interim periods starting after December 15, 2027. Early adoption is permitted for fiscal financial statements that have not yet been issued or made available for issuance. Companies can choose to apply the amendment either prospectively to periods beginning after the effective date or retrospectively to prior periods presented in their financial statements. The Company is evaluating the adoption of the amendments and the potential impact it may have, if any, on its financial statements. Refer to Note 18 - Segment Information for required disclosures.

In December 2025, the Financial Accounting Standards Board issued ASU 2025-11, Interim Reporting (Topic 270): Narrow Scope Improvements. This update is intended to clarify and improve the guidance within Topic 270, including the form and content of interim financial statements and related disclosure requirements. The update also emphasizes the need to disclose material events and changes in circumstances occurring since the end of the most recent annual reporting period. The guidance is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those annual periods, with early adoption permitted. The Company is currently assessing the potential impact this guidance may have on its financial statements and disclosures.

In December 2025, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2025-12, Codification Improvements. This update includes various technical corrections, clarifications, and other minor improvements intended to enhance the consistency and usability of the FASB Accounting Standards Codification. The amendments affect multiple topics within the Codification but are not expected to significantly change existing accounting conclusions. The guidance is effective for annual reporting periods beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2025-12 may have on its financial statements and related disclosures.

3. INVENTORIES

Inventories consist of the following:

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC 820, “Fair Value Measurements”, defines fair value, establishes a framework for measuring fair value and requires additional disclosures regarding certain fair value measurements. ASC 820 establishes a three-tier hierarchy for measuring fair value, as follows:

The Company considers any potential impairment of property, plant, and equipment, including construction in progress, to be a Level 3 fair value measurement.

The following tables summarize the values of assets designated as Investments in debt and equity securities:

The investment assets are held as trading securities and are carried at fair value as of the date of the Balance Sheets.

The Company intends to hold these assets for possible future operating requirements.

The following table summarizes gross unrealized gains and losses from Investments in debt and equity securities:

Unrealized losses on investments were $5.0 million for the year ended December 31, 2025. Unrealized gains on investments were $10.81 million for the year ended December 31, 2024. Unrealized losses on investments were $10.52 million for the year ended December 31, 2023.

5. PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment consist of the following:

Depreciation expense for the years ended December 31, 2025, 2024, and 2023 was $7.8 million; $7.6 million; and $7.5 million, respectively.

6. LICENSE AGREEMENT

In 1995, the Company entered into a license agreement with the Chief Executive Officer of the Company, Thomas J. Shaw, for the exclusive right to manufacture, market, and distribute products utilizing automated retraction technology, which agreement has been amended. This technology is the subject of various patents and patent applications owned by Mr. Shaw. The license agreement provides for quarterly payments of a 5% royalty fee on gross sales. Additionally, if the Company sublicenses the technology and the sublicensee’s customers are not known to the Company, then Mr. Shaw shall be entitled to receive from the Company fifty percent (50)% of the royalties actually paid to the Company by such sublicensee. The royalty fee expense is recognized in the period in which it is earned. Royalty fees of $3,113,118; $2,919,519; and $3,594,130 are included in Cost of sales for the years ended December 31, 2025, 2024, and 2023, respectively. Royalties payable under this agreement aggregated $748,213 and $789,358 at December 31, 2025 and 2024, respectively. Gross sales upon which royalties are based were $62,191,021; $57,019,782; and $64,883,761 for 2025, 2024, and 2023, respectively.

On November 16, 2021, the Company and Mr. Shaw entered into the Third Amendment to Technology License Agreement (the “Amendment”). The Amendment expands the scope of the Technology License Agreement and provides additional protection to the parties in the event of a Hostile Takeover, as defined by the Amendment. Under the Amendment, under certain conditions, Mr. Shaw is granted the unilateral right to terminate the Technology License Agreement or cancel or convert a license thereunder from exclusive to nonexclusive following a Hostile Takeover.

7. OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of the following:

8. LEASES

During the year ended December 31,2025, the Company entered into a finance lease arrangement for servers. The lease has a term ofthree years and includes a purchase option that the Company is reasonably certain to exercise, resulting in a finance lease classification under ASC 842. Finance lease right of use assets and corresponding lease liabilities are recognized at the commencement date based on the present value of remaining lease payments, using the lease’s implicit rate, if determinable, or the Company’s incremental borrowing rate at lease commencement.

Finance lease cost for the year ended December 31, 2025 consisted of the following:

Finance lease right of use assets and lease liabilities consisted of the following at December 31, 2025:

The finance lease right-to-use assets are included in Other assets, and finance lease liabilities are included in Other accrued liabilities (current) and Other long-term liabilities (non-current) on the Balance Sheets.

The weighted average remaining lease term at December 31, 2025 was 2.83 years. The weighted average discount rate at December 31, 2025 was 7%.

Future minimum finance lease payments as of December 31, 2025 are as follows:

9. LONG-TERM DEBT

Long-term debt consists of the following:

The fair value of long-term liabilities, based on Management’s estimates, approximates their reported values.

The aggregate maturities of long-term debt as of December 31, 2025, are as follows:

10. TECHNOLOGY INVESTMENT AGREEMENT

Effective July 1, 2020, the Company entered into the Technology Investment Agreement (TIA) with the U.S. government to expand the Company’s manufacturing capacity for hypodermic safety needles in response to the worldwide COVID-19 global pandemic. The award is an expenditure-type TIA, whereby the U.S. government has made payments to the Company for the Company’s expenditures for equipment and supplies related to the expansion. The Company’s contributions under the terms of the TIA include providing facilities, technical expertise, labor and maintenance for the TIA-funded equipment for aten-year term. In May of 2021, the Company and the U.S. government amended the TIA agreement to includetwo additional assembly lines and additional controlled environment space.

The Company has received all equipment, has completed all property construction required by the TIA, and all reimbursement requests have been submitted. No further amounts for expansion under the TIA are expected to be submitted or collected.

At the request of the U.S. government, the TIA was transferred to a successor agreement, identified as Other Transaction Agreement in April 2023. Such agreement contains no additional requirements, and, for the purposes of this report, the agreement shall continue to be referred to herein as the “TIA”. The successor agreement governs ongoing terms established by the TIA until June 30, 2030, which includes maintenance of equipment, availability of capacity, and U.S. government preference in the event of a public health emergency.

Under the TIA, reimbursable amounts are reflected as Other long-term liabilities on the Balance Sheets until the time the deferred income can be systematically amortized over a period matching the useful life of the purchased assets. Other long-term liabilities from the TIA were $57,921,037 and $63,872,553 at December 31, 2025 and 2024, respectively.

11. INCOME TAXES

The provision (benefit) for income taxes consists of the following:

The Company uses the recognition and measurement provisions of the FASB ASC Topic 740,Income Taxes (“Topic 740”), to account for income taxes. The provisions of Topic 740 require a company to record a valuation allowance when the “more likely than not” criterion for realizing net deferred tax assets cannot be met. Furthermore, the weight given to the potential effect of such evidence should be commensurate with the extent to which it can be objectively verified. The Company reviewed the operating results, as well as all of the positive and negative evidence related to realization of such deferred tax assets, to evaluate the need for a valuation allowance. As of December 31, 2025, the Company concluded that a full $11.6 million valuation is needed on the net deferred tax assets. As of December 31, 2024, the Company recorded a full valuation allowance of $9.1 million against its net deferred tax asset.

As of December 31, 2025, the Company had federal net operating losses of $44.8 million with no expiration date and state net operating losses of $4.9 million which will begin to expire in 2029.

Utilization of the federal net operating loss carry forwards and credits may be subject to a substantial annual limitation due to the ownership change limitations under Internal Revenue Code Section 382. State net operating losses and credits are subject to limitations under similar rules.

Deferred taxes are provided for those items reported in different periods for income tax and financial reporting purposes. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:

*Certain totals may not reconcile due to rounding.

Deferred income tax calculations reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss carry forwards, and are stated at the U.S. tax rate of 21%. Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years.

Under the Tax Cuts and Jobs Act, net operating losses incurred after December 31, 2017 can only offset 80% of taxable income. However, these net operating losses may be carried forward indefinitely instead of limited to twenty years under previous tax law. Carryback of these losses is no longer permitted.

The CARES Act temporarily removed the 80% of taxable income limitation to allow NOL carryforwards to fully offset income. For tax years beginning after 2021, the Company can take: (1) a 100% deduction of NOLs arising in tax years prior to 2018, and (2) a deduction limited to 80% of modified taxable income for NOLs arising in tax years after 2017.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law, introducing significant changes to corporate income tax rates and deductions. For fiscal year 2025, the OBBBA did not have a material impact on the Company’s effective tax rate. The Company will continue to evaluate the future impact of the OBBBA for those provisions that are effective after fiscal year 2025.

The Company adopted ASU 2023-09 as of January 1, 2025. As a result, the Company enhanced its income tax disclosures, including additional disaggregation of effective tax rate reconciliation and income taxes paid.

A reconciliation of the federal statutory corporate tax rate to the Company’s effective tax rate is as follows:

The Company files income tax returns in the U.S. federal jurisdiction and in various state and local jurisdictions. The Company’s federal income tax returns for all tax years ended on or after December 31, 2022 remain subject to examination by the Internal Revenue Service. The Company’s state and local income tax returns are subject to examination by the respective state and local authorities over various statutes of limitations, most ranging from three tofive years from the date of filing.

Cash paid for income taxes, net of refunds, for the year ended December 31, 2025 were as follows:

12. DIVIDENDS

In June 2021, the Board of Directors approved payments to its Series II, Series III, and former Series IV and Series V Class B Preferred Shareholders in the cumulative amount of $5,056,945 representing all current dividends, dividends in arrears, as well as dividends still owed to shareholders who converted their preferred stock in the past. The dividends were paid on July 22, 2021 to all shareholders who had been contacted and confirmed as the rightful owner entitled to payment. The Company has not yet established contact with all former shareholders, most of whom converted their shares prior to 2001. The Company is continuing its efforts to establish contact with approximately 90 former shareholders who are entitled to approximately $1.4 million. This, along with the current declared dividends, are reflected in Dividends payable on the Balance Sheets.

A payment of $39,050 was paid within one month of each quarter’s end in 2025, 2024, and 2023 to Series II preferred shareholders. As of the fourth quarter of 2023 and for all quarters of 2024 and 2025, a payment of $18,561 was made

to Series III shareholders within one month of each quarter’s end. Series III preferred shareholders were paid a cash $19,061 within one month of the end of each of the first three quarters of 2023.

13. STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue 5,000,000 shares of Preferred Stock Class A with a par value of One Dollar ($1.00) per share;5,000,000 shares of Preferred Stock Class B with a par value of One Dollar ($1.00) per share; and 5,000,000 shares of Preferred Stock Class C with a par value of One Dollar ($1.00) per share.

The Company hasone class of Preferred Stock outstanding: Class B Convertible Preferred Stock (“Class B Stock”). The Class B Stock hastwo series: Series II and Series III. Series I, Series IV, and Series V were cancelled by Board resolution effective March 16, 2021.

The Class B Series II and III stock had 156,200 and 74,245 shares outstanding, respectively, at December 31, 2025. The remaining 4,769,555 authorized shares have not been assigned a series.

Series II Class B Stock

There were 156,200 shares of $1 par value Series II Class B Stock outstanding at December 31, 2025 and 2024. Holders of Series II Class B Stock are entitled to receive a cumulative annual dividend of $1.00 per share, payable quarterly if declared by the Board of Directors. Holders of Series II Class B Stock generally have no voting rights until dividends are in arrears and unpaid fortwelve consecutive quarters. In such case, the holders of Series II Class B Stock have the right to electone-third of the Board of Directors of the Company. The Company paid dividends of $156,200 in each of 2025 and 2024. At December 31, 2025, no dividends were in arrears.

Series II Class B Stock is redeemable at the option of the Company at a price of $15.00 per share plus all unpaid dividends. Each share of Series II Class B Stock may, at the option of the stockholder, be converted toone share of Common Stock. No shares were converted in 2025 or 2024. In the event of voluntary or involuntary dissolution, liquidation, or winding up of the Company, holders of Series II Class B Stock then outstanding are entitled to $12.50 per share, plus all unpaid dividends, prior to any distributions to holders of Series III Class B Stock or Common Stock.

Series III Class B Stock

There were 74,245 shares of $1 par value Series III Class B Stock outstanding at December 31, 2025 and 2024, respectively. Holders of Series III Class B Stock are entitled to receive a cumulative annual dividend of $1.00 per share, payable quarterly if declared by the Board of Directors. The Company paid dividends of $74,245 in each of 2025 and 2024. At December 31, 2025, no dividends were in arrears.

Series III Class B Stock is redeemable at the option of the Company at a price of $15.00 per share, plus all unpaid dividends. Each share of Series III Class B Stock may, at the option of the stockholder, be converted toone share of Common Stock. No shares were converted in 2025 or 2024. In the event of voluntary or involuntary dissolution, liquidation, or winding up of the Company, holders of Series III Class B Stock then outstanding are entitled to $12.50 per share, plus all unpaid dividends, after distribution obligations to Series II Class B Stock have been satisfied and prior to any distributions to holders of Common Stock.

Common stock

The Company is authorized to issue 100,000,000 shares ofno par value Common Stock, of which 29,937,159 shares were outstanding at December 31, 2025 and 2024. At December 31, 2025 and 2024,4,087,145 shares were held as treasury stock and were not deemed outstanding. Additionally, as of December 31, 2025, a total of 352,595 shares of Common Stock were issuable upon the conversion of Preferred Stock and the exercise of stock options.

14. TREASURY STOCK

The Company accounts for any purchased shares under the cost method as Common Stock Held in Treasury – at cost, which represents the cost of the shares and, if applicable, the cost of acquiring the shares through the Company’s broker.

15. RELATED PARTY TRANSACTIONS

The Company has a license agreement with the Chief Executive Officer of the Company. See Note 6.** **

16. STOCK OPTIONS

Stock options

Options for the purchase of 3,649,508 shares of Common Stock have been issued under the 2008 Stock Option Plan. Options for the purchase of 122,150 shares under the 2008 Stock Option Plan were outstanding as of December 31, 2024. No shares are available for future issuance under the 2008 Stock Option Plan, which expired July 25, 2018.

Options for the purchase of 2,000,000 shares of Common Stock are available for future issuance under the 2021 Stock Option Plan.

The Compensation and Benefits Committee administers the Company’s stock option plans.

Stock option exercises

No stock options were exercised in 2025, 2024, or 2023.

Director, officer, and employee options

A summary of Director, officer, and employee options granted and outstanding under the 2008 Stock Option Plan is presented below:

The following table summarizes information about Director, officer, and employee options outstanding under the 2008 Stock Option Plan at December 31, 2025:

Non-employee options

There wereno non-director and non-employee options outstanding in 2025, 2024, or 2023.

Stock-based Compensation

No stock-based compensation expense was recorded in 2025, 2024, or 2023.

** **Options Pricing Models – Assumptions

The expected life is based on the Company’s historical experience with option exercise trends. The assumptions for expected volatility are based on a calculation of volatility over thefive years preceding the grant date. Risk-free interest rates are set using grant-date U.S. Treasury yield curves. In its calculations, the Company assumedno dividends. The Company elected a policy to account for forfeitures as they occur, rather than on an estimated basis.

17. 401(k) PLAN

The Company implemented an employee savings and retirement plan (the “401(k) Plan”) in 2005 that is intended to be a tax-qualified plan covering substantially all employees. The 401(k) Plan is available to all employees on the first day of the month after 90 days of service. Under the terms of the 401(k) Plan, employees may elect to contribute up to 88% of their compensation, or the statutory prescribed limit, if less. The Company may, at its discretion, match employee contributions. For 2023-2025, the Company matched each participant’s elective deferrals up to 3% of the participant’s compensation for the pay period. The total match was $284,253; $239,569; and $240,635 in 2025, 2024, and 2023, respectively.

18. BUSINESS SEGMENT

The Company operates in asingle reportable segment, referred to as safety medical syringes and other safety medical devices. The business is managed by the chief executive officer who is the Chief Operating Decision Maker (CODM). The CODM evaluates segment performance based on operating income (loss) for purposes of allocating resources and evaluating financial performance. The accounting policies of the Company’s single reportable segment are the same as those for the Company as a whole.

The following are summaries of the Company’s sales and long-lived assets by geography:

Shipments to international customers generally require a prepayment either by wire transfer or an irrevocable confirmed letter of credit. The Company does extend credit to international customers on some occasions depending upon certain criteria, including, but not limited to, the credit worthiness of the customer, the stability of the country, banking restrictions, and the size of the order. All transactions are in U.S. currency.

19. PRIVATE EXCHANGES AND REDEMPTION

Effective November 2023, the Company entered into a privately negotiated transaction with a preferred shareholder to redeem 2,000 shares of Series III Class B Stock for a purchase price equal to approximately $6 thousand.

20. SUBSEQUENT EVENTS

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. Looking forward after the Supreme Court’s ruling, the 2024 Section 301 tariff of 100% on syringes and needles from China remains unchanged. Additionally, following the Supreme Court’s ruling on the tariffs imposed under IEEPA, effective February 20, 2026 a 10% ad valorem duty went into effect under Section 122 of the Trade Act, which is in addition to the Section 301 tariffs.