VICR 10-K & 10-Q changes, risk factors and insider trading

Our operating results, including revenues, gross margins, operating expenses, and net income (loss), have fluctuated on a quarterly and annual basis. Our strategic focus on higher volume opportunities with OEMs, ODMs, and contract manufacturers has caused the actions of a relative few such customers to disproportionately influence our operating results. Unanticipated delays in purchase orders from, and shipments to, certain large customers have resulted in lower than expected revenue. Similarly, our strategic focus on the development of market-leading technologies and manufacturing processes, often implemented in proprietary semiconductor circuitry, materials, and packaging, has exposed the Company to the risks and costs of delays in such development and the use of a relatively few number of suppliers of proprietary circuits and materials or providers of proprietary services.

For the years ended December 31, 2025, 2024, and 2023, and 2022,net revenues from sales outside the United States were 50.8%, 48.2%, 63.1%, and 67.6%,63.1%, respectively, of our total net revenues. Net revenues from customers in China and Hong Kong, accounted for approximately 11.9% in 2025, approximately 12.6% in 2024, and approximately 17.7% in 2023, and approximately 18.8% in 20222023 of our total net revenues. We expect international sales, notably in Asia, will continue to be a significant component of total sales, since many of the OEMs and ODMs we target as customers are domiciled offshore, and such customers increasingly utilize offshore contract manufacturers, and rely upon those contract manufacturers to place orders directly with us.

To date, we have not experienced material delays or reduced raw material availability as a result of trade disputes between the U.S. and China, including the imposition in 2018 of import tariffs under the provisions of Section 301 of the Trade Act of 1974 (19 U.S.C. § 2411) (“Section 301 Tariffs”) on certain Chinese goods imported into the United States. However, the costs of Section 301 Tariffs have had a material impact on our profitability. For the year ended December 31, 2024,2025, Section 301 Tariffs totaled approximately $4,189,000,$7,375,000, aan decreaseincrease of 47.5%76.1% compared to $7,985,000$4,189,000 incurred for 2023.2024. For the year ended December 31, 2022,2023, costs associated with tariffs totaled approximately $10,201,000.$7,985,000. For 2024,2025, 20232024 and 2022,2023, Section 301 Tariffs totaled approximately 1.2%,1.8%, 2.0%1.2% and 2.6%,2.0%, respectively, of total annual revenue,net revenues, representing a reduction in our gross profit margin as a percentage of total annual revenue.net revenues.

We depend heavily on our computing and communications infrastructure to achieve our business objectives, particularly for our financial and operational record keeping, our computer-integrated manufacturing processes controlling all aspects of our operations in our manufacturing facility in Andover, Massachusetts, our public website, and our email communications. We also rely on trusted third parties to provide certain infrastructure support services to us. If we or a third party service provider encounter a problem that impairs this infrastructure, the resulting disruption could impede the accuracy and timeliness of our financial reporting processes, and our ability to record or process customer orders, manufacture, and ship in a timely manner, or otherwise carry on business in the normal course. Our image and reputation also could be negatively affected by such circumstances. Additionally, we could incur material liabilities associated with the harm such impairment and disruption of our infrastructure may have on third parties including those associated with the unintentional release of confidential information and /or sensitive data. While we carry business interruption insurance to offset financial losses from such an interruption, and cyber-risk insurance to address potential liabilities from such circumstances, such insurance may be insufficient to compensate us for the potentially significant costs or liabilities incurred. Any such events, if prolonged, could have a material and adverse effect on our operating results and financial condition.

We have in the past and may in the future encounter legal action from customers, vendors, or others concerning product warranty or other claims. We generally offer a two-year warranty from the date title passes from us for all of our standard products. The warranty period is three years for a range of H Grade, M Grade and MI Family DC-DC legacy products.

Government actions, including trade protection and national security policies of U.S. and foreign government bodies, such as tariffs, import or export regulations, including deemed export restrictions, trade and economic sanctions, decrees, quotas or other trade barriers and restrictions could affect our ability or the ability of our customers and end users to sell products in certain countries and thereby have a material adverse effect on our business, revenue and results of operations. In recent years, the U.S. government has continued to expand the number of foreign entities on the Entity List (a restricted party list that imposes additional licensing requirements on shipments to listed parties). These export controls are, in part, intended to restrict the ability of the People’s Republic of China to obtain advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors. The implementation, interpretation and impact on our business of these rules and other regulatory actions taken by the U.S. government is uncertain and evolving, and these rules, other regulatory actions or changes, and other actions taken by the governments of either the U.S. or China, or both, that have occurred and may continue to occur in the future could materially and adversely affect our business, revenue and results of operations.

A discussion regarding our results of operations for the year ended December 31, 2023,2024, compared to the year ended December 31, 2022,2023, was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023,2024, on pages 27-2924 and 26-28 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, which was filed with the SEC on FebruaryMarch 28,3, 2024.2025.

Our quarterly consolidated operating results can be difficult to forecast and have been subject to significant fluctuations. We plan our production and inventory levels based on management’s estimates of customer demand, customer forecasts, and other information sources. Customer forecasts, particularly those of OEM, ODM, and contract manufacturing customers to which we supply Advanced Products in high volumes, are subject to scheduling changes on short notice, contributing to operating inefficiencies and excess costs. In addition, external factors such as supply chain uncertainties, which are often associated with the cyclicality of the electronics industry, regional macroeconomic and trade-related circumstances, and force majeure events (most recently evidenced by the COVID-19 pandemic),events, have caused our operating results to vary meaningfully. Supply chain disruptions, including those associated with our reliance on outsourced package process steps that are essential in the production of some of our Advanced Products, and those relating, for example, to the procurement of raw material, have in the past negatively impacted and may in the future negatively impact our operating results. We have taken steps to mitigate the impact of supply chain disruptions by, among other things and in varying degrees, moving outsourced manufacturing steps in-house to the Company, ordering supplies with extended lead times, paying higher prices for certain supplies or outsourced production, and expediting deliveries at a cost premium. The resulting impact of the steps taken to mitigate supply chain disruptions have, to varying degrees and at different times, reduced our revenue, gross margin, operating profit and cash flow and may continue to do so in the future. Our quarterly gross margin as a percentage of total net revenues may vary, depending on production volumes, licensing income, average selling prices, average unit costs, the mix of products sold during that quarter, and the level of importation of raw materials subject to tariffs. Our quarterly operating margin as a percentage of total net revenues also may vary with changes in revenue and product level profitability, but our operating costs are largely associated with compensation and related employee costs, which are not subject to sudden or significant changes.

NetTotal net revenues decreasedincreased 11.4%13.5% to $407,701,000 for 2025, from $359,058,000 for 2024, from $405,059,000 for 2023.2024. Net revenues for Advanced Products for 20242025 decreasedincreased compared to 2023,2024, primarily due to continuedimproved softnessmarket indemand underpenetratedand markets, partially offset by increasedhigher royalty revenue associated with intellectual property licensing.revenue. The decrease in net revenues for Brick Products was primarily due to reduced market demand.

Export sales, as a percentage of total net revenues, represented approximately 50.8% in 2025 and 48.2% in 2024 and 63.1% in 2023.2024.

Operating expenses for 20242025 increaseddecreased $31,737,000,$7,707,000, or 20.7%,4.2%, to $185,308,000$177,601,000 from $153,571,000$185,308,000 for 2023.2024. Litigation-contingency expense was $0 for 2025, as compared to $19,500,000 for 2024, which related to the litigation with SynQor, Inc. ("SynQor"), as compared to $0 for 2023.. See Note 16 to the Consolidated Financial Statements for additional information regarding the SynQor litigation-contingency expense.

In 2024,2025, as a result of atwo full yearyears of activities in our expanded manufacturing facility and the related capital equipment being placed in service during the2024 year,and 2025, depreciation and amortization totaled $18,626,000,$20,786,000, and capital expenditures were $23,602,000,$20,318,000, compared to $17,240,000$18,626,000 and $33,452,000,$23,602,000, respectively, for 2023.2024.

The following table sets forth certain items of selected consolidated financial information as a percentage of total net revenues and patent litigation settlement for the years ended December 31, 2025, 2024, 2023, and 2022.2023. This table and the subsequent discussion should be read in conjunction with the Consolidated Financial Statements and related notes contained elsewhere in this report.

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, and our associated judgments, including those related to inventories, income taxes, contingencies, and litigation. We base our estimates, assumptions, and judgments on historical experience, knowledge of current conditions, and on various other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We also have other policies we consider key accounting policies (See Note 2 to the Consolidated Financial Statements – Significant Accounting Policies – Impact of newly adopted and recently issued but not adopted accounting standards). However, the application of these other policies does not require us to make significant estimates and assumptions difficult to support quantitatively.

Significant management judgment is required in determining whether deferred tax assets will be realized in full or in part. We assess the need for a valuation allowance on a quarterly basis. We record a valuation allowance to reduce our deferred tax assets to the amount we believe is more likely than not to be realized. In assessing the need for a valuation allowance, we consider all positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and past financial performance. Despite recent positive operating results, we face uncertainties in forecasting our operating results due to the unpredictability of customer orders in certain markets, product transitions, new program introductions and adoption times of new technology offerings. This operating uncertainty also makes it difficult to predict the availability and utilization of tax benefits over the next several years. AsPrior a result, management has concluded, as ofto December 31, 2024,2025, the Company maintained a valuation allowance against a significant portion of its deferred tax assets, consisting of net operating loss carryforwards, tax credit carryforwards, and deductible temporary differences. Based on the Company's history of cumulative earnings before taxes for financial reporting purposes over a 12-quarter period and expected future taxable income, management determined it iswas more likely than not oura netsignificant domesticportion of the deferred tax assets will notwould be realized,realized. andAs a fullresult, at December 31, 2025, the Company reversed $43,648,000 of its valuation allowance related to certain deductible temporary differences expected to be realized in future periods. This tax benefit was partially offset by estimated federal, state, and foreign income taxes. As of December 31, 2025, the Company has a remaining valuation allowance of approximately $17,931,000 against allcertain netdeferred domestictax assets, for which realization cannot be considered more likely than not at this time. Such deferred tax assets isprincipally stillrelate warranted as of December 31, 2024. The valuation allowance against these deferredto tax assetscredit may require adjustment in the future based on changes in the mix of temporary differences, changes in tax laws, and operating performance. If the positive operating results continue, and our concerns about the unpredictability of customer orderscarryforwards in certain markets,state productjurisdictions transitions,for newwhich program introductions and adoption times of new technology offerings are resolved, and we believe futuresufficient taxable income canfor utilization cannot be moreprojected reliablyat forecasted,this wetime, or the credits may releaseexpire allwithout orbeing a portion of the valuation allowance in the near-term. Certain state tax credits, though, will likely never be released by the valuation allowance.utilized. If and when wemanagement determinedetermines the remaining valuation allowance should be released (i.e., reduced),released, the adjustment would result in a tax benefit reported in that period’sthe Consolidated Statements of Operations,Operations theand effect of which wouldmay be an increase in reported net income.material.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that we adopt as of the specified effective date. Unless otherwise discussed, we believe the impact of recently issued accounting standards will not have a material impact on our future financial condition and results of operations. See Note 2 – Significant Accounting Policies – Impact of newly adopted and recently issued but not adopted accounting standards, to the Consolidated Financial Statements for a description of newly adopted and recently issued andbut not adopted accounting pronouncements, including the dates of adoption and expected impact on our financial position and results of operations.

Consolidated total net revenues for 20242025 were $359,058,000,$407,701,000, aan decreaseincrease of $46,001,000,$48,643,000, or 11.4%,13.5%, as compared to $405,059,000$359,058,000 for 2023.2024.

NetTotal net revenues, by product line, for the years ended December 31 were as follows (dollars in thousands):

The decreaseincrease in net revenues for Advanced Products was primarily due to continuedimproved softnessmarket indemand underpenetratedand markets, partially offset by increasedhigher royalty revenue. The decrease in net revenues for Brick Products was primarily due to reduced market demand.

Selling, general, and administrative expenses were $96,886,000$99,031,000 for 2024,2025, an increase of $11,172,000,$2,145,000, or 13.0%,2.2%, as compared to $85,714,000$96,886,000 for 2023.2024. As a percentage of total net revenues, selling, general, and administrative expenses increaseddecreased to 24.3% in 2025 from 27.0% in 2024 from 21.2% in 2023.2024.

Increase primarily attributable to an increase in post-judgmentcomputer interestsoftware services relating to thenew SynQorinternal-use litigation-contingencysoftware accrual.implementation.

Increase primarily attributable to an increase in auditpost-judgment interest and taxother fees.costs relating to the litigation-contingency accrual with respect to our litigation with SynQor.

IncreaseDecrease primarily attributable to an increasedecreases in thesales use of consultantssupport and outsidemarketing services relating to new internal-use software implementation.expenses.

Research and development expenses increased $1,065,000,$9,648,000, or 1.6%,14.0%, to $78,570,000 in 2025 from $68,922,000 in 2024 from $67,857,000 in 2023.2024. As a percentage of total net revenues, research and development expenses increased to 19.3% in 2025 from 19.2% in 2024 from 16.8% in 2023.2024.

Increase primarily attributable to an increase in wastethe disposal activitiesuse of Advancedoutside Productsservice relatedproviders tofor improvingour productionmanufacturing process capabilities.facility.

Increase primarily attributable to anequipment increase in utilitiesset-up and buildingcalibration maintenancefor expenses.Advanced Products production.

Litigation-contingency expense was $0 for 2025, as compared to $19,500,000 for 2024, which related to the SynQor litigation, as compared to $0 for 2023.litigation. See Note 16 to the Consolidated Financial Statements for additional information regarding the SynQor litigation-contingency expense.

Our exposure to market risk fluctuations in foreign currency exchange rates relates to the operations of Vicor Japan Company, Ltd. ("VJCL"), for which the functional currency is the Japanese Yen, and all other subsidiaries in Europe and Asia, for which the functional currency is the U.S. Dollar. These subsidiaries in Europe and Asia experienced more unfavorablefavorable foreign currency exchange rate fluctuations in 20242025 compared to 2023.2024. In 2024,2025, interest income increased due to higher balances of cash and cash equivalents held by the Company.

The (benefit) provision for income taxes and the effective income tax rate for the years ended December 31 were as follows (dollars in thousands):

The effective tax rates differ from the statutory tax rates for the years ended December 31, 20242025 and 20232024 primarily due to the release of a portion of the valuation allowance and the Company’s full valuation allowance position against netcertain domestic deferred tax assets. The provision for income taxes for the years ended December 31, 2024 and 2023 included estimated federal, state, and foreign income taxes in jurisdictions in which the Company does not have sufficient tax attributes.

See Note 15 to the Consolidated Financial Statements for disclosure regarding our current assessment of the release of a significant portion of the valuation allowance against all net domestic deferred tax assets, and the possible release (i.e., reduction) of the allowance in the future.assets.

The primary sources of cash for the year ended December 31, 20242025 were $50,842,000 of cash$139,548,000 generated from operations and $8,490,000 of cash$41,495,000 received in connection with the exercise of options to purchase our Common Stock awarded under our stock option plans and the issuance of Common Stock under our 2017 Employee Stock Purchase Plan. The primary useuses of cash during the year ended December 31, 20242025 waswere $23,602,000$35,175,000 used for the purchaserepurchases of machineryCommon Stock and equipment$20,318,000 used for purchases of property and internal-use software.equipment.

In November 2000, our Board of Directors authorized the repurchase of up to $30,000,000 of our Common Stock (the “November 2000 Plan”). In July 2024, our Board of Directors authorized the repurchase of up to $100,000,000 of our Common Stock (the “New Repurchase Authorization”). The New Repurchase Authorization replaces the November 2000 Plan in its entirety and no further repurchases will be made pursuant to the November 2000 Plan. As of December 31, 2024,2025, we had approximately $99,503,000$64,327,000 remaining available for repurchases of our Common Stock under the New Repurchase Authorization. The timing and amounts of Common Stock repurchases under the New Repurchase Authorization are at the discretion of the Company's President and Chief Executive Officer based upon economic and financial market conditions.

As of December 31, 2024,2025, we had a total of approximately $12,669,000$3,877,000 of cancelable and non-cancelable capital expenditure commitments, principally for manufacturing and production equipment, which we intend to fund with existing cash, and approximately $1,946,000$1,144,000 of capital expenditure items and internal-use software which had been received and included in Property, plant and equipmentequipment, net in the accompanying Consolidated Balance Sheets, but not yet paid for. Our primary needs for liquidity are for making continuing investments in manufacturing and production equipment. We believe cash generated from operations together with our available cash and cash equivalents will be sufficient to fund planned operational needs and capital equipment purchasespurchases, for both the foreseeableshort future.and long term.

There have been no material changes in the risk factors and uncertainties related to our business described in Part I, Item 1A – “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The Company’s consolidated operating results are affected by a wide variety of factors that could materially and adversely affect revenues and profitability, including the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. As a result of these and other factors, the Company may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect its business, consolidated financial condition, operating results, and the share price of its Common Stock. This document and other documents filed by the Company with the Securities and Exchange Commission (“SEC”) include forward-looking statements regarding future events and the Company’s future results that are subject to the safe harbor afforded under the Private Securities Litigation Reform Act of 1995 and other safe harbors afforded under the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Forward-looking statements are based on our current beliefs, expectations, estimates, forecasts, and projections for the future performance of the Company and are subject to risks and uncertainties. Forward-looking statements are identified by the use of words denoting uncertain, future events, such as “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “future,” “goal,” “if,” “intend,” “may,” “plan,” “potential,” “project,” “prospective,” “seek,” “should,” “target,” “will,” or “would,” as well as similar words and phrases, including the negatives of these terms, or other variations thereof. Forward-looking statements also include, but are not limited to, statements regarding: our ability to address certain supply chain risks; our ongoing development of power conversion architectures, switching topologies, materials, packaging, and products; the ongoing transition of our business strategically, organizationally, and operationally from serving a large number of relatively low-volume customers across diversified markets and geographies to serving a small number of relatively large volume customers; our intent to enter new market segments; the levels of customer orders overall and, in particular, from large customers and the delivery lead times associated therewith; anticipated new and existing customer wins; the financial and operational impact of customer changes to shipping schedules; the derivation of a portion of our sales in each quarter from orders booked in the same quarter; our intent to expand the percentage of revenue associated with licensing our intellectual property to third parties; our plans to invest in expanded manufacturing capacity, including the implementation of new manufacturing processes; our belief that cash generated from operations together with our available cash and cash equivalents will be sufficient to fund planned operational needs and capital equipment purchases, for the foreseeable future; our outlook regarding tariffs and the impact thereof on our business; our belief that we have limited exposure to currency risks; our intentions regarding the declaration and payment of cash dividends; our intentions regarding protecting our rights under our patents; and our expectation that no current litigation or claims will have a material adverse impact on our financial position or results of operations. These forward-looking statements are based upon our current expectations and estimates associated with prospective events and circumstances that may or may not be within our control and as to which there can be no assurance. Actual results could differ materially from those implied by forward-looking statements as a result of various factors, including but not limited to those described above, as well as those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 under Part I, Item 1 — “Business,” under Part I, Item 1A — “Risk Factors,” under Part I, Item 3 — “Legal Proceedings,” and under Part II, Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and those described in this Quarterly Report on Form 10-Q, particularly under Part I, Item 2 –— “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The discussion of our business contained herein, including the identification and assessment of factors that may influence actual results, may not be exhaustive. Therefore, the information presented should be read together with other documents we file with the SEC from time to time, including our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K, which may supplement, modify, supersede, or update the factors discussed in this Quarterly Report on Form 10-Q. Any forward-looking statement made in this Quarterly Report on Form 10-Q is based on information currently available to us and speaks only as of the date on which it is made. We do not undertake any obligation to update any forward-looking statements as a result of future events or developments, except as required by law.

Summary of FirstSecond Quarter 2026 Financial Performance Compared to FourthFirst Quarter 20252026 Financial Performance

The following summarizes our financial performance for the firstsecond quarter of 2026, compared to the fourthfirst quarter of 20252026:

Total net revenues increased 5.3%26.9% to $143,352,000 for the second quarter of 2026, from $112,969,000 for the first quarter of 2026, from $107,264,000 for the fourth quarter of 2025.2026. Net revenues for Brick Products increased 7.7%2.4% compared to the fourthfirst quarter of 2025,2026, primarily due to improved market demand. Advanced Products net revenues increased 3.7%45.0% compared to the fourthfirst quarter of 2025,2026, primarily due to improved market demand and higher royalty revenue.

Export sales represented approximately 48.9%46.0% of total net revenues in the firstsecond quarter of 2026 as compared to 49.3%48.9% in the fourthfirst quarter of 2025.2026.

Gross margin for the second quarter of 2026 increased $20,754,000, or 33.3% to $83,120,000 from $62,366,000 for the first quarter of 2026 increased $18,001,000, or 40.6%, to $62,366,000, from $44,365,000 for the first quarter of 2025.2026. Gross margin, as a percentage of total net revenues,revenues and patent litigation settlement, increased to 58.0% for the second quarter of 2026 from 55.2% for the first quarter of 2026, compared to 47.2% for the first quarter of 2025.2026. The increase in gross margin dollars and gross margin percentage was primarily attributable to the favorable impact from higher sales volume and improved sales mix on that revenue,volume, including higher royalty revenue, and the favorable impact of production efficiencies offset by increasedan increase in freight-in and tariff spending of $2,219,000$704,000 (net of approximately $11,000 in duty drawback recovery in the second quarter of 2026 and $193,000 in duty drawback recovery in the first quarter of 2026 and $0 in duty drawback recovery in the first quarter of 2025 of previously paid tariffs).

Selling, general and administrative expenses were $23,192,000$27,601,000 for the firstsecond quarter of 2026, a decrease of $1,945,000,$351,000, or 7.7%,1.3%, from $25,137,000$27,952,000 for the firstsecond quarter of 2025. Selling, general and administrative expenses as a percentage of total net revenues and patent litigation settlement decreased to 20.5%19.3% for the firstsecond quarter of 2026 from 26.8%19.8% for the firstsecond quarter of 2025. The components of the $1,945,000$351,000 decrease in selling, general and administrative expenses for the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025 were as follows (dollars in thousands):

Decrease primarily attributable to a decrease in post-judgment interest and other costs relating to the uselitigation-contingency ofaccrual consultants.with respect to our litigation with SynQor, Inc.

Increase primarily attributable to tax withholdings and employer taxes associated with an increase in stock option exercises, annual compensation adjustments in May 20252026 and higher stock-based compensation expense associated with stock options awarded in May 2025.2026.

Research and development expenses were $22,290,000$20,641,000 for the firstsecond quarter of 2026, an increase of $2,913,000,$1,850,000, or 15.0%,9.8%, compared to $19,377,000$18,791,000 for the firstsecond quarter of 2025. As a percentage of total net revenues,revenues and patent litigation settlement, research and development expenses decreasedincreased to 19.7%14.4% for the firstsecond quarter of 2026 from 20.6%13.3% for the firstsecond quarter of 2025. The components of the $2,913,000$1,850,000 increase in research and development expenses for the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025 were as follows (dollars in thousands):