{"url_path":"/sec/cphi/10-q/2026/item-2","section_key":"item-2","section_title":"Item 2 Management’s Discussion","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1106644/0001213900-26-057705-index.html","accession_number":"0001213900-26-057705","cik":"0001106644","ticker":"CPHI","issuer_name":"CHINA PHARMA HOLDINGS, INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1106644/0001213900-26-057705-index.html","primary_entity_key":"0001106644","primary_entity_name":"CHINA PHARMA HOLDINGS, INC."},"word_count":4081,"has_tables":true,"body_markdown":"**Item 2. Management’s Discussion\nand Analysis of Financial Condition and Results of Operations.**\n\n \n\nThe statements contained in this report with respect\nto our financial condition, results of operations and business that are not historical facts are forward-looking statements. Forward-looking\nstatements can be identified by the use of forward-looking terminology, such as “anticipate,” “believe,” “expect,”\n“plan,” “intend,” “seek,” “estimate,” “project,” “could,” or the\nnegative thereof or other variations thereon, or by discussions of strategy that involve risks and uncertainties. Management wishes to\ncaution the readers that any such forward-looking statements contained in this report reflect our current beliefs with respect to future\nevents and involve known and unknown risks, uncertainties and other factors, including, but not limited to, economic, competitive, regulatory,\ntechnological, key employees, and general business factors affecting our operations, markets, growth, services, products, licenses and\nother factors, some of which are described in this report and some of which are discussed in our other filings with the Securities and\nExchange Commission (the “SEC”). These forward-looking statements are only estimates or predictions. No assurances can be\ngiven regarding the achievement of future results, as actual results may differ materially as a result of risks facing our company, and\nactual events may differ from the assumptions underlying the statements that have been made regarding anticipated events.\n\n \n\nThese risk factors should be considered in connection\nwith any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. All written and oral\nforward-looking statements made in connection with this report that are attributable to our company or persons acting on our behalf are\nexpressly qualified in their entirety by these cautionary statements. Given these uncertainties, we caution investors not to unduly rely\non our forward-looking statements. We do not undertake any obligation to review or confirm analysts’ expectations or estimates or\nto release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or\nto reflect the occurrence of unanticipated events, except as required by applicable law or regulation.\n\n \n\n**Business Overview & Recent Developments**\n\n** **\n\nChina Pharma Holding Inc. (“China Pharma”)\nis not a Chinese operating company but a Nevada holding company. All of our operations are conducted in the PRC through Hainan Helpson\nMedical & Biotechnology Co., Ltd (“Helpson”), our wholly owned subsidiary incorporated under the laws of the People’s\nRepublic of China (the “PRC”), where the manufacturing facilities are located. Helpson is principally engaged in the development,\nmanufacture and marketing of pharmaceutical products for human use in connection with a variety of high-incidence and high-mortality diseases\nand medical conditions prevalent in the PRC. It manufactures pharmaceutical products in the form of dry powder injectables, liquid injectables,\ntablets, capsules, and cephalosporin oral solutions. The majority of its pharmaceutical products are sold on a prescription basis and\nall of them have been approved for at least one or more therapeutic indications by the National Medical Products Administration (the “NMPA”,\nformerly China Food and Drug Administration, or CFDA) based upon demonstrated safety and efficacy.\n\n \n\nChina’s consistency evaluation of generic\ndrugs continues to proceed for the three months ended March 31, 2026. Helpson has always taken the task of promoting consistency evaluation\nas a top priority and worked on them actively. However, for each drug’s consistency evaluation, due to the continuous dynamic changes\nof the detailed consistency evaluation policies, market trends, expected investments, and expected returns of investment (“ROI”),\nthe whole industry, including Helpson, has been making slow progresses in terms of the consistency evaluation. One of the flagship products,\nCandesartan tablets, a hypertension product, passed generic-drug-consistency-evaluation in early August 2023.\n\n \n\nIn response to the evolving macro-environment\nof pharmaceutical sales in China, Helpson has adopted a more prudent and flexible approach to the initiation and advancement of consistency\nevaluation projects for its existing products. In 2018, the relevant competent authorities in China decided to launch pilot Centralized\nProcurement (“CP”) programs in 11 selected pilot cities, including four municipalities directly under the Central Government\nand seven other cities. As of March 31, 2026, a total of eleven rounds of national-level CP have been implemented. Among them, the first\nto eighth batches of CP have successfully completed unified renewal procurement cycles, covering 316 commonly used drugs across 26 therapeutic\nareas. These CP initiatives have significantly reduced the prices of bid-winning drugs and reshaped the competitive landscape of the pharmaceutical\nmarket. In addition, consistency evaluation has long been established as a core qualification criterion for enterprises to participate\nin CP programs. Consequently, before making decisions on whether to participate in CP for any of its products, Helpson evaluates the potential\nmarket access opportunities provided by CP against the financial and time investments required to obtain CP qualification, as well as\nthe risk of significant price declines for drugs included in the CP catalog.\n\n \n\n17\n\n \n\n \n\nIn addition, Helpson continues to explore the\nfield of comprehensive healthcare. Comprehensive healthcare is a general concept proposed by the Chinese government according to the development\nof the times, social needs and changes in disease spectrum. According to the Outline of “Healthy China 2030” issued by Chinese\ngovernment in October 2016, the total size of China’s health service industry is expected to reach RMB 16 trillion (approximately\n$2.5 trillion) by 2030. This industry focuses on people’s daily life, aging and diseases, pays attention to all kinds of risk factors\nand misunderstandings affecting health, calls for self-health management, and advocates comprehensive care throughout the entire process\nof life. It covers all kinds of health-related information, products, and services, as well as actions taken by various organizations\nto meet health needs. Responding to industry development trends, Helpson launched noni enzyme at the end of 2018, a natural antioxidant\ndietary supplement rich in xeronine. In 2020, the Company introduced no-rinse disinfectant and protective mask products to meet market\ndemand driven by the COVID-19 pandemic in China. At the end of 2022, the Company obtained the medical device registration certificate\nfor its N95 medical protective masks. Accordingly, the Company has sufficient production capacity for medical masks, surgical masks, KN95\nmasks and N95 masks, which enabled it to support demand for public and personal protective equipment related to respiratory infectious\ndisease prevention.\n\n \n\nIn April 2024, Helpson began serving as a Contract\nManufacturing Organization (CMO) for a project, undertaking R&D and post-market commercial production activities. This initiative\ngenerated approximately $50,000 in revenue in 2024. In 2025, the CMO project generated $33,227 in revenue. Under the contract terms, following\nthe launch of the customer’s product, the Company expects to continue providing production services, which may contribute to additional\nsales revenue and ensure sustained cash inflows. The project completed process validation in January 2025 and is currently undergoing\nstability testing. The registration application submission to the National Medical Products Administration (NMPA) was finalized in the\nthird quarter of 2025 and is currently under regulatory review. Moving forward, the Company intends to leverage its competitive advantages\nas a CMO, including its highly skilled technical team, state-of-the-art facilities, multiple production lines, ample capacity, extensive\nmanufacturing expertise, and a robust quality management system.\n\n* *\n\n**Results of Operations for the Three Months\nended March 31, 2026**\n\n** **\n\n*Revenue*\n\n** **\n\nRevenue was $0.98 million for the three months\nended March 31, 2026, representing a decrease of $0.16 million compared to $1.14 million for the three months ended March 31, 2025. This\ndecline was mainly due to an increasing number of drugs from other medicine providers being included in the national CP program, while\nHelpson’s comparable products had not passed consistency evaluation and were not qualified to participate in CP. As a result, sales\nof these products decreased.\n\n \n\nSet forth below are our revenues by product category\nin millions (USD) for the three months ended March 31, 2026 and 2025:\n\n \n\n** **** **\n**Three Months Ended March 31,**** **** **\n** **** **** **\n** **** **\n\n**Product Category**** **\n**2026**** **** **\n**2025**** **** **\n**Net Change**** **** **\n**% Change**** **\n\nCNS Cerebral & Cardio Vascular \n 0.51  \n 0.34  \n 0.17  \n 50%\n\nAnti-Viral/ Infection & Respiratory \n 0.41  \n 0.72  \n -0.31  \n -43%\n\nDigestive Diseases \n 0.05  \n 0.06  \n -0.01  \n -17%\n\nOther \n 0.01  \n 0.02  \n -0.01  \n -50%\n\n \n\nThe “CNS Cerebral & Cardio Vascular”\nproduct category generated $0.51 million in sales revenue for the three months ended March 31, 2026, compared to $0.34 million for the\nsame period in 2025, representing an increase of $0.17 million. This increase was primarily attributable to higher sales of Gastrodin\nInjection and Candesartan Cilexetil. The increase in Gastrodin Injection sales was supported by its selection in centralized procurement\nprograms across 15 provinces and municipalities, while Candesartan Cilexetil benefited from inclusion in the renewal procurement of the\nfirst eight batches of national centralized procurement.\n\n \n\n18\n\n \n\n \n\nThe largest revenue decline in dollar terms were\nin the “Anti-Viral/ Infection & Respiratory” product category, which generated $0.41 million for the three months ended\nMarch 31, 2026, compared to $0.72 million for the three months ended March 31, 2025, representing a decrease of $0.31 million. This decrease\nwas primarily due to lower sales of Roxithromycin Dispersible Tablets and Cefaclor Dispersible Tablets caused by market fluctuations.\n\n \n\nThe “Digestive” product category generated\n$0.05 million in sales revenue for the three months ended March 31, 2026, compared to $0.06 million for the same period last year, representing\na decrease of $0.01 million. This decrease was primarily due to lower sales of Omeprazole affected by market volatility.\n\n \n\nThe “Other” product category generated\n$0.01 million for the three months ended March 31, 2026, compared to $0.02 million for the three months ended March 31, 2025, representing\na decrease of $0.01 million. This decrease was primarily due to lower sales of Vitamin B6 for Injection affected by market fluctuations.\n\n \n\n** **** **\n**Three Months Ended March 31,**** **\n\n**Product Category**** **\n**2026**** **** **\n**2025**** **\n\nCNS Cerebral & Cardio Vascular \n 52.2% \n 29.9%\n\nAnti-Viral/ Infection & Respiratory \n 41.7% \n 63.4%\n\nDigestive Diseases \n 4.7% \n 5.0%\n\nOther \n 1.4% \n 1.7%\n\n \n\nIn terms of revenue mix, our product revenue structure\nchanged during the three months ended March 31, 2026, compared with the same period in 2025. The revenue proportion of the “CNS\nCerebral & Cardio Vascular” product category increased from 29.9% to 52.2%, making it the Company’s largest revenue contributor.\nThe revenue share of “Anti-Viral/ Infection & Respiratory” product category declined from 63.4% to 41.7%, which was primarily\ndue to market conditions, centralized procurement policies and intensified industrial competition. Although this category remains the\nsecond-largest business segment, its relative revenue contribution has decreased. Revenue proportions for “Digestive Diseases”\nand “Other” product categories remained generally stable, with mild year-on-year decreases.\n\n \n\nCore cardiovascular and cerebrovascular products\nachieved higher sales during the period supported by policy benefits such as successful bids in multi-regional centralized procurement\nprograms and renewal of national centralized procurement, which contributed to changes in our product mix. In contrast, the shrinking\nproportion of respiratory and anti-infection products was primarily attributable to changes in market demand and increased competition.\nGoing forward, we expect to focus on the cardiovascular and cerebrovascular sectors, optimize its product portfolio, and manage weaker\nproduct lines, with the objective of steadily enhancing overall profitability and operational resilience.\n\n \n\n*Cost of Revenue*\n\n \n\nFor the three months ended March 31, 2026, our\ncost of revenue was $0.70 million, or 71.0% of total revenue, which represented a decrease of $0.57 million from $1.27 million, or 112.0%\nof total revenue, for the same period in 2025. The decrease was primarily due to lower depreciation expense, as certain property and equipment\n(“PP&E”) became fully depreciated.\n\n** **\n\n*Gross Profit/ (Loss) and Gross Profit/ (Loss)\nMargin*\n\n* *\n\nGross margin for the three months ended March\n31, 2026 was $0.29 million, compared to a gross loss of $0.14 million for the same period of 2025. The gross profit margin was 29.0% for\nthe three months ended March 31, 2026, compared to a gross loss margin of 12.0% for the same period in 2025.\n\n \n\nThe increase in gross margin was mainly attributable\nto certain machinery and equipment reaching the end of their estimated useful lives and being fully depreciated, which reduced product\ncosts and contributed to the shift from gross loss to gross profit.\n\n \n\n19\n\n \n\n \n\n*Selling Expenses*\n\n \n\nOur selling expenses for the three months ended\nMarch 31, 2026 were $0.10 million, an increase of $0.01 million compared to $0.09 million for the same period in 2025. Selling expenses\naccounted for 9.7% of total revenue for the three months ended March 31, 2026, compared to 7.7% for the same period in 2025. The increase\nin proportion was primarily due to lower sales revenue.\n\n \n\n*General and Administrative Expenses*\n\n \n\nOur general and administrative expenses for the\nthree months ended March 31, 2026 were $1.23 million, an increase of $0.72 million compared to $0.51 million for the same period in 2025. General\nand administrative expenses accounted for 124.7% and 44.6% of our total revenues for the three months ended March 31, 2026 and 2025, respectively.\nThe increase was mainly attributable to the Company’s acquisition of five new patented technologies since August 2025, which resulted\nin higher amortization expenses for intangible assets..\n\n \n\n*Research and Development Expenses*\n\n* *\n\nOur research and development expenses were $0.08\nmillion for the three months ended March 31, 2026, compared to $0.03 million for the same period in 2025. Research and development expenses\naccounted for 8.5% and 2.6% of our total revenues for the three months ended March 31, 2026 and 2025, respectively. These expenditures\nwere primarily related to the consistency evaluation of existing products.\n\n \n\n*Credit Gains*\n\n \n\nOur credit gains for the three months ended March\n31, 2026 were $2,881, compared to $1,323 for the same period in 2025.\n\n \n\nIn general, our normal customer credit or payment\nterms are 90 days. This has not changed in recent years. Such relatively long credit term is due to the peculiar environment affecting\nthe Chinese pharmaceutical market, as deferred payments by state-owned hospitals to local drug distributors are common, and their deferred\npayments will indirectly delay the payments from our customers to us. Due to the timeliness requirements of the NMPA for logistics of\ndrug sales, Helpson, like most other pharmaceutical companies in China, sells substantially all the drugs to local drug distributors,\ncertified by GSP (Good Supply Practice), the standard of products supply, which is a standard protocol to control the quality of the products\nduring circulation. These GSP certified distributors then sell the drugs to state-owned hospitals. The GSP certified distributors’\npayments to us are usually delayed as they will pay us after they receive payment from the state-owned hospitals. Therefore, as most of\nour customers are GSP certified distributors, we have adopted a unified policy for bad debt allowance reserves for GMP’s customers\nwho are typically GSP certified distributors. As is typical in the Chinese pharmaceutical market, there are no written contracts between\nthe Company and any of its GSP certified distributors requesting the distributors to pay the Company’s account receivable upon their\nreceipt of funds from the distributors’ customers, or state-owned hospitals. Nevertheless, the Company’s customers typically\nprocess the payment of the account receivable to the Company upon their receipt of payment from their customers, i.e., the state-owned\nhospitals, as a matter of implied consensus or industry standard. In the event the length of collection term is deviated from any of the\npast patterns of any particular customer, the Company will adjust its credit term.\n\n \n\nThe amount of net accounts receivable that was\npast due (or the amount of accounts receivable that was more than 180 days old) was $0.06 million and $0.06 million as of March 31, 2026\nand December 31, 2025, respectively.\n\n \n\n20\n\n \n\n \n\nThe following table illustrates our trade accounts\nreceivable aging distribution in terms of the percentage of the total accounts receivable, respective gross accounts receivables as well\nas the allocated allowance for credit losses as of March 31, 2026 and December 31, 2025:\n\n \n\n  \nMarch, 31  \nDecember 31, \n\n  \n2026  \n2025 \n\n1 - 180 Days \n 67.09% \n 72.38%\n\n180 - 365 Days \n 25.6% \n 24.61%\n\n365 - 720 Days \n 4.84% \n 1.17%\n\nOver 720 Days \n 2.47% \n 1.84%\n\nTotal \n 100% \n 100%\n\n \n\n  \nGross Accounts\nReceivable Amount  \nAllocated Allowance for\nDoubtful Accounts \n\n  \nMar-31-26  \nDec-31-25  \nMar-31-26  \nDec-31-2025 \n\n1-180 Days \n 138,002  \n 184,159  \n 448  \n - \n\n180-365 Days \n 52,657  \n 62,624  \n 3,418  \n 6,262 \n\n365-720 Days \n 9,967  \n 2,973  \n 497  \n 2,081 \n\nOver 720 Days \n 5,070  \n 4,680  \n 5,070  \n 4,680 \n\nTotal \n 205,696  \n 254,435  \n 9434  \n 13,023 \n\n \n\nOur allowance for credit losses estimate practice\nusing the current expected credit loss method considers accounts receivable balances aged within 180 days current, except for any individual\nuncollectible account assessed by management.\n\n \n\nOur allowance for credit losses as a percentage\nof accounts receivable of trade accounts receivable was 4.6% and 5.1% as of March 31, 2026 and December 31, 2025, respectively.\n\n \n\nWe conduct analysis and review of accounts receivables\nfor customers on a specific, per-customer basis in the fourth fiscal quarter of each fiscal year. For customers (i) whose business license\nhas been cancelled or expired; (ii) whose key business certificates such as GSP (Good Supply Practice) license have been invalid or revoked;\n(iii) who have no ability to continue operations, or (iv) who are encountering other issues that lead to accounts receivable unrecoverable,\nthe receivable will be written-off as per the resolution of our Board of Directors.\n\n \n\nWe recognize credit losses per actual write-offs\nas well as changes of allowance for credit losses. To the extent that our current allowance for credit losses is higher than that of the\nprevious period, we recognize a bad debt expense for the difference during the current period, and when the current allowance is lower\nthan that of the previous period, we recognize a credit gain for the difference. The allowance for credit losses balances was $0.009 million\nas of March 31, 2026 and $0.01 million as of December 31, 2025, respectively. The changes in the allowances for credit losses of trade\naccounts receivable during the three months ended March 31, 2026 and 2025 were as follows:\n\n \n\n  \nFor the Three Months \n\n  \nEnded March 31, \n\n  \n2026  \n2025 \n\nBalance, Beginning of Period \n 13,023  \n 13,587,182 \n\n(Reversal) Credit losses expenses \n (3,779) \n (1,323)\n\nForeign currency translation adjustment \n 190  \n 19,298 \n\nBalance, End of Period \n 9,434  \n 13,605,157 \n\n \n\nOur credit gains for the three months ended March\n31, 2026 were $3,779, compared to $1,323 for the same period in 2025. As we previously disclosed in our annual report for the fiscal year\nended December 31, 2025, the write-off of long-outstanding accounts receivable during 2025 reduces both gross accounts receivable and\nthe allowance for doubtful accounts by the same amount.\n\n \n\n21\n\n \n\n \n\n**Loss from Operations**\n\n \n\nOur operating loss for the three months ended\nMarch 31, 2026 was $1.12 million, compared to $0.76 million in the same period in 2025. The increase in operating loss was mainly attributable\nto higher amortization of intangible assets\n\n \n\n**Net Interest Expense**\n\n** **\n\nNet interest expense was $0.03 million for both\nthe three months ended March 31, 2026 and 2025, remained unchanged year-over-year.\n\n \n\n**Net Loss**\n\n \n\nNet loss for the three months ended March 31,\n2026 was $1.14 million, compared to $0.79 million for the same period in 2025. The increase in net loss was primarily driven by an increase\nin amortization of intangible assets.\n\n \n\nLoss per basic and diluted common share was $0.04\nfor the three months ended March 31, 2026 and $0.24 for the three months ended March 31, 2025, respectively. The number of basic and diluted\nweighted-average outstanding shares used to calculate loss per share was 25,602,002 for the three months ended March 31, 2026, as compared\nto 3,261,911 for the same period in 2025.\n\n \n\n**Liquidity and Capital Resources**\n\n \n\nOur principal source of liquidity is cash generated\nfrom operations and bank lines of credit. Currently, we have not encountered or expect to encounter any difficulties in refinancing these\nlines of credit this year. As of March 31, 2026, we received an aggregate advance of $1.47 million from our CEO for use in operations.\nOur cash and cash equivalents totaled $0.17 million, representing 0.4% of our total assets, as of March 31, 2026, compared to $0.41 million,\nor 2.9% of total assets, as of March 31, 2025. All of the $0.17 million of cash and cash equivalents as of March 31, 2026 is considered\nto be reinvested indefinitely in our Chinese subsidiary, Helpson, and is not expected to be available for payment of dividends or for\nother payments to us as the parent company or to our shareholders.\n\n \n\nWe obtained various lines of credit, as described\nin Note 8 to our unaudited condensed consolidated financial statements included in this Report, which are incorporated by reference herein.\n\n \n\nWe cannot guarantee the achievement of our future\nstrategic goals, including the launch of new products. This raises substantial doubt about our ability to continue as a going concern.\nAlthough our Chairperson and Chief Executive Officer had advanced funds for working capital for the three months ended March 31, 2026,\nthere can be no assurances that this support will continue in the future. We may seek additional debt or equity financing as necessary\nwhen market conditions are favorable and/or may need to reduce certain discretionary spending, which could have a material adverse effect\non our ability to achieve our business objectives.  There can be no assurance that any additional financing will be available\non acceptable terms, if at all.\n\n \n\n**Operating Activities**\n\n \n\nNet cash used in our operating activities was $0.06 million for the\nthree months ended March 31, 2026, compared to $0.07 million for the same period in 2025.\n\n \n\nAs of March 31, 2026, our net trade accounts receivable\nwas $0.20 million, a decrease of $0.04 million from $0.24 million as of December 31, 2025.\n\n \n\nAs of March 31, 2026, our total inventory was\n$1.50 million, compared to $1.62 million as of December 31, 2025.\n\n \n\n22\n\n \n\n \n\n**Investing Activities**\n\n \n\nDuring the three months ended March 31, 2026,\nnet cash used in investing activities totaled $0, while the same period in 2025 saw net cash used in investing activities of $0.06 million.\n\n \n\n**Financing Activities**\n\n** **\n\nCash flow used by financing activities was $79,325 in the three months\nended March 31, 2026, compared to $76,820 provided for the same period for the three months ended March 31, 2025.\n\n \n\nAccording to relevant PRC laws, companies registered\nin the PRC, including our PRC subsidiary, Helpson, are required to allocate at least ten percent (10%) of their after-tax net income,\nas determined under the accounting standards and regulations in the PRC, to statutory surplus reserve accounts until the reserve account\nbalances reach fifty percent (50%) of the companies’ registered capital prior to their remittance of funds out of the PRC.  Allocations\nto these reserves and funds can only be used for specific purposes and are not transferrable to the parent company in the form of loans,\nadvances or cash dividends. As of March 31, 2026 and December 31, 2025, Helpson’s net assets totaled ($8,884,096) and ($8,251,000),\nrespectively. Due to the restriction on dividend distribution to overseas shareholders, the amount of Helpson’s net assets that\nwas designated for general and statutory capital reserves, and thus could not be transferred to our parent company as cash dividends,\nwas 50% of Helpson’s registered capital, which was both $8,145,000 as of March 31, 2026 and December 31, 2025, respectively. The\namount that Helpson must set aside for the statutory surplus fund accounts exceeds its total net assets as of March 31, 2026 and December\n31, 2025.  There were no allocations to the statutory surplus reserve accounts during the three months ended March 31, 2026.\n\n \n\nThe Chinese government also imposes controls on\nthe conversion of RMB into foreign currencies and the remittance of currencies out of China. Our businesses and assets are primarily\ndenominated in RMB. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized\nto buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency\npayments by the People’s Bank of China or other regulatory institutions requires the submission of a payment application form together\nwith certain invoices and executed contracts. The currency exchange control procedures imposed by Chinese government authorities\nmay restrict Helpson, our Chinese subsidiary, from transferring its net assets to our parent company through loans, advances or cash dividends.\n\n \n\n**Off-Balance Sheet Arrangements**\n\n \n\nAs of March 31, 2026, we did not have any off-balance\nsheet arrangements.\n\n \n\n**Critical Accounting Policies**\n\n \n\nManagement’s discussion and analysis of\nour financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance\nwith United States generally accepted accounting principles. Our financial statements reflect the selection and application of accounting\npolicies which require management to make significant estimates and judgments. The discussion of our critical accounting policies contained\nin Note 1 to our consolidated financial statements, “Organization and Significant Accounting Policies”, included in the Company’s\nannual report on Form 10-Q for the three months ended March 31, 2026, which is incorporated herein by reference.\n\n \n\n23"}