Foreign Exchange Risk The majority of our revenues and most of our costs and expenses are denominated in renminbi. Our exposure to foreign exchange risk primarily relates to cash and cash equivalents denominated in U.S. dollar from international sales. Furthermore, the renminbi prices of some of the materials and supplies for reagent kits that are imported from companies in the United States, Sweden, and the United Kingdom may be affected by fluctuations in the value of renminbi against the currencies of those countries. We also incur professional, investor relations, director compensation and miscellaneous fees related to our operations as a public company that are denominated in U.S. dollar. The conversion of renminbi into foreign currencies, including U.S. dollars, is based on rates set forth on Bloomberg. The renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of renminbi against the U.S. dollar and other currencies is affected by changes in China's political and economic conditions and by China's foreign exchange policies, among other things. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between renminbi and the U.S. dollar in the future. The PRC government has indicated that it will make efforts to widen the trading band of the renminbi exchange rate, which increases the possibility of sharp fluctuations in the renminbi's value in the future as well as increased unpredictability of the renminbi's exchange rate. By way of example, assuming we had converted a U.S. dollar denominated cash balance of $1.0 million as of December 31, 2025 into renminbi at the exchange rate of $1.00 for RMB6.9891 as quoted on Bloomberg as of December 31, 2025, such a cash balance would have been RMB6.99 million. Assuming a 1% appreciation/depreciation of the renminbi against the U.S. dollar, such a cash balance would have decreased/increased by RMB69,891 as of December 31, 2025. Our financial statements are expressed in U.S. dollars, but the functional currency of our Chinese Mainland Subsidiaries is renminbi. The value of Sinovac Antigua's shares will be affected by the foreign exchange rate between U.S. dollars and renminbi. To the extent we hold assets denominated in U.S. dollars, any appreciation of the renminbi against the U.S. dollar could result in a change to our statement of comprehensive income and a reduction in the value of our U.S. dollar denominated assets. On the other hand, a decline in the value of renminbi against the U.S. dollar could reduce the U.S. dollar equivalent amounts of our financial results, the value of the investment in our company and the dividends we may pay in the future, if any, all of which may have a material adverse effect on the prices of Sinovac Antigua's shares. Interest Rate Risk Our exposure to interest rate risk relates primarily to the interest expense associated with our short-term and/or long-term bank borrowings as well as interest income earned on excess cash invested in demand deposits, tim deposits, and other investments placed with financial institutions. Such borrowing and interest-earning instruments carry a degree of interest rate risk. We have not historically used, and do not expect to use in the future, any derivative financial instruments to manage our exposure to interest rate risk. However, we do not believe our exposure has been, or is expected to be, material. The weighted effective interest rate on our outstanding bank loans was 2.43%, 2.79%, and 2.83% for the years ended December 31, 2025, 2024, and 2023, respectively. A hypothetical increase or decrease in interest rates of 1% would increase or decrease our annual interest and financing expenses by $4.9 million based on our outstanding indebtedness as of December 31, 2025. Concentration of Credit Risks Financial instruments that potentially subject us to concentration of credit risks consist primarily of cash and cash equivalents, restricted cash, short-term investment and accounts receivable, the balances of which, as stated on the consolidated balance sheets, represent our maximum exposure. We place our cash and cash equivalents, restricted cash, and short-term investment in financial institutions of good credit quality in Hong Kong and the Chinese mainland. Concentration of credit risks with respect to accounts receivable is linked to the concentration of revenue. Our customers are mainly various government agencies. For the year ended December 31, 2025, the Pan American Health Organization ("PAHO") accounted for approximately 18% of the total sales. No single customer accounted for more than 10% of the total sales for the years ended December 31, 2024 and 2023. For the years ended December 31, 2025 and 2024, no single customer accounted for more than 10% of the total accounts receivable. To manage credit risk, we perform ongoing credit evaluations of customers' financial condition. PRC state-owned banks, such as Bank of China, are subject to a series of risk control regulatory standards, and PRC bank regulatory authorities are empowered to take over the operation and management when any of those banks faces a material credit crisis. We do not foresee substantial credit risk with respect to cash and cash equivalents, restricted cash and short-term investments held at the PRC state-owned banks. In May 2015, a Deposit Insurance System ("DIS") managed by the People's Bank of China was implemented by the Chinese government. Deposits in licensed banks in the Chinese mainland are protected by DIS, up to a limit of RMB0.5 million. Hong Kong has an official Deposit Protection Scheme ("DPS"). Deposits in the licensed banks in Hong Kong are protected by DPS, up to a limit of HKD0.8 million. In the event of bankruptcy of one of the financial institutions in which we have deposits or investments, we may be unable to claim our deposits or investments back in full. We have selected reputable international financial institutions with high credit ratings to place our foreign currencies. We regularly monitor the credit ratings of these international financial institutions to avoid any potential defaults. There has been no recent history of default in relation to these financial institutions. 88