3.          INVENTORY

Inventory costs include materials, labor, and factory overhead. Inventories are stated at the lower of cost or net realizable value, primarily determined on a moving average unit cost basis. Appropriate consideration is given to obsolescence, valuation, and other factors in determining net realizable value. Revisions of these estimates could result in the need for adjustments.

Inventories, net of reserves, consisted of the following:

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For the three- and six-month periods ended June 30, 2026 and 2025, the Company did not recognize impairment of inventory.

As of June 30, 2026 and December 31, 2025, the Company’s balances are presented net of inventory reserves of $8.1 million and $6.3 million, respectively.