Note 3—Accounts Receivable, Net:

Accounts receivable, net consisted of the following (in thousands):

Trade accounts receivable consist entirely of amounts owed from the Company’s customers related to product sales. Royalty revenue receivable represents amounts owed related to royalty revenue recognized based on the Company’s sub-licensees’ sales in their respective territories in the periods ended  September 30, 2026 and  December 31, 2025.

For all accounts receivable, the Company recognizes lifetime expected credit losses in selling, general and administrative expense in the condensed consolidated statements of operations. In estimating expected credit losses, the Company considers historical loss rates, current economic conditions, and reasonable and supportable forecasts of future economic conditions.

The Company recorded no provision for, or recovery of, credit losses for the three and nine months ended  September 30, 2026, compared to recoveries of $0.2 million and $0.4 million for the three and nine months ended  September 30, 2025, respectively.