VICOR CORP

Previous wording

The applications in which our Advanced Products and Brick Products are used are typically in the higher-performance, higher-power segments of the market segments we serve. With our Advanced Products, we generally serve large Original Equipment Manufacturers (“OEMs”), Original Design Manufacturers (“ODMs”), and their contract manufacturers, with sales currently concentrated in the data center and hyperscaler segments of enterprise computing, in which our products are used for power delivery on server motherboards, in server racks, and across datacenter infrastructure. We have established a leadership position in the emerging market segment for powering high-performance processors used for acceleration of applications associated with artificial intelligence (“AI”). Our customers in the AI market segment include the leading innovators in processor and accelerator design, as well as early adopters in cloud computing and high performance computing. We also serve applications in aerospace and aviation, defense electronics, satellites, factory automation, instrumentation, test equipment, transportation, telecommunications and networking infrastructure, and vehicles (notably in the autonomous driving, electric vehicle, and hybrid vehicle niches of the vehicle segment). With our Brick Products, we generally serve a fragmented base of large and small customers, concentrated in aerospace and defense electronics, industrial equipment, instrumentation and test equipment, and transportation (notably in rail and heavy equipment applications). With our strategic emphasis on larger, high-volume customers, we expect to experience over time a greater concentration of sales, including from intellectual property licensing, among relatively fewer customers. Aggregate royalty revenues of $88,000,000 from our patent licensing arrangements and income of $45,000,000 from certain patent litigation settlements relating to Vicor’s power-conversion technology (as described in more detail in Note 11 to the Condensed Consolidated Financial Statements) have resulted in combined gross cash proceeds to the Company of approximately $133,000,000 since January 1, 2021.

Current wording

The applications in which our Advanced Products and Brick Products are used are typically in the higher-performance, higher-power segments of the market segments we serve. With our Advanced Products, we generally serve large Original Equipment Manufacturers (“OEMs”), Original Design Manufacturers (“ODMs”), and their contract manufacturers, with sales currently concentrated in the data center and hyperscaler segments of enterprise computing, in which our products are used for power delivery on server motherboards, in server racks, and across datacenter infrastructure. We have established a leadership position in the emerging market segment for powering high-performance processors used for acceleration of applications associated with artificial intelligence (“AI”). Our customers in the AI market segment include the leading innovators in processor and accelerator design, as well as early adopters in cloud computing and high performance computing. We also serve applications in aerospace and aviation, defense electronics, satellites, factory automation, instrumentation, test equipment, transportation, telecommunications and networking infrastructure, and vehicles (notably in the autonomous driving, electric vehicle, and hybrid vehicle niches of the vehicle segment). With our Brick Products, we generally serve a fragmented base of large and small customers, concentrated in aerospace and defense electronics, industrial equipment, instrumentation and test equipment, and transportation (notably in rail and heavy equipment applications). With our strategic emphasis on larger, high-volume customers, we expect to experience over time a greater concentration of sales, including from intellectual property licensing, among relatively fewer customers. Aggregate royalty revenues of $110,000,000 from our patent licensing arrangements and income of $45,000,000 from certain patent litigation settlements relating to Vicor’s power-conversion technology (as described in more detail in Note 11 to the Condensed Consolidated Financial Statements) have resulted in combined gross cash proceeds to the Company of approximately $155,000,000 since January 1, 2021.

Previous wording

Summary of Second Quarter 2025 Financial Performance Compared to First Quarter 2025 Financial Performance

Current wording

Summary of Third Quarter 2025 Financial Performance Compared to Second Quarter 2025 Financial Performance

Previous wording

The following summarizes our financial performance for the second quarter of 2025, compared to the first quarter of 2025:

Current wording

The following summarizes our financial performance for the third quarter of 2025, compared to the second quarter of 2025:

Previous wording

Net revenues increased 2.2% to $96,046,000 for the second quarter of 2025, from $93,968,000 for the first quarter of 2025. Net revenues for Brick Products increased 4.0% compared to the first quarter of 2025, primarily due to improved market demand. Advanced Products net revenues increased 1.2% compared to the first quarter of 2025, primarily due to available capacity for increased demand offset by lower royalty revenue.

Current wording

Net revenues increased 15.0% to $110,423,000 for the third quarter of 2025, from $96,046,000 for the second quarter of 2025. Net revenues for Brick Products increased 26.6% compared to the second quarter of 2025, primarily due to improved market demand. Advanced Products net revenues increased 8.2% compared to the second quarter of 2025, primarily due to higher royalty revenue.

Previous wording

Export sales represented approximately 51.9% of total net revenues in the second quarter of 2025 as compared to 60.8% in the first quarter of 2025.

Current wording

Export sales represented approximately 42.8% of total net revenues in the third quarter of 2025 as compared to 51.9% in the second quarter of 2025.

Previous wording

Gross margin for the second quarter of 2025 increased $49,357,000, or 115.4%, to $92,128,000, from $42,771,000 for the second quarter of 2024. Gross margin, as a percentage of total net revenues and patent litigation settlement, increased to 65.3% for the second quarter of 2025, compared to 49.8% for the second quarter of 2024. The increase in gross margin dollars and gross margin percentage was primarily attributable to the $45,000,000 patent litigation settlement payment received by the Company in the second quarter of 2025 and the favorable impact from higher sales volume and improved sales mix on that revenue, including royalty revenue, offset by the unfavorable impact of production inefficiencies including an increase in freight-in and tariff spending of $2,305,000 (net of approximately $0 in duty drawback recovery in the second quarter of 2025 and $662,000 in duty drawback recovery in the second quarter of 2024 of previously paid tariffs).

Current wording

Gross margin decreased to $63,513,000 for the third quarter of 2025 from $92,128,000 for the second quarter of 2025, with gross margin, as a percentage of total net revenues and patent litigation settlement, decreasing to 57.5% for the third quarter of 2025 from 65.3% for the second quarter of 2025. The decrease in gross margin dollars and gross margin percentage was primarily attributable to the $45,000,000 patent litigation settlement payment received by the Company in the second quarter of 2025 in connection with the resolution of lawsuits, arbitrations, and appeals related to certain intellectual property litigation (as described in more detail in Note 11 to the Condensed Consolidated Financial Statements), offset by the favorable impact from higher sales volume and improved product mix in the third quarter and the favorable impact from higher royalty revenue in the third quarter combined with production efficiencies including a decrease in freight-in and tariff spending of $1,071,000 (net of approximately $712,000 in duty drawback recovery in the third quarter of 2025 and $0 in duty drawback recovery in the second quarter of 2025 of previously paid tariffs).

Previous wording

Backlog, which represents the total value of orders for products for which shipment is scheduled within the next 12 months, was approximately $155,214,000 at the end of the second quarter of 2025, as compared to $171,745,000 at the end of the first quarter of 2025.

Current wording

Backlog, which represents the total value of orders for products for which shipment is scheduled within the next 12 months, was approximately $152,809,000 at the end of the third quarter of 2025, as compared to $155,214,000 at the end of the second quarter of 2025.

Previous wording

We reported net income for the second quarter of 2025 of $41,192,000, or $0.91 per diluted share, compared to net income of $2,539,000, or $0.06 per diluted share, for the first quarter of 2025.

Current wording

We reported net income for the third quarter of 2025 of $28,292,000, or $0.63 per diluted share, compared to net income of $41,192,000, or $0.91 per diluted share, for the second quarter of 2025.

Previous wording

For the second quarter of 2025, depreciation and amortization totaled $5,190,000 and capital additions totaled $6,204,000 as compared to depreciation and amortization of $5,189,000 and capital additions of $4,550,000 for the first quarter of 2025.

Current wording

For the third quarter of 2025, depreciation and amortization totaled $5,236,000 and capital additions totaled $4,021,000 as compared to depreciation and amortization of $5,190,000 and capital additions of $6,204,000 for the second quarter of 2025.

Previous wording

Inventories decreased by approximately $3,022,000, or 3.1%, to $95,493,000 at June 30, 2025, compared to $98,515,000 at March 31, 2025.

Current wording

Inventories decreased by approximately $3,199,000, or 3.3%, to $92,294,000 at September 30, 2025, compared to $95,493,000 at June 30, 2025.

Previous wording

Net revenues for the second quarter of 2025 were $96,046,000, an increase of $10,192,000, or 11.9%, as compared to $85,854,000 for the second quarter of 2024. Net revenues, by product line, for the three months ended June 30, 2025 and 2024 were as follows (dollars in thousands):

Current wording

Net revenues for the third quarter of 2025 were $110,423,000, an increase of $17,257,000, or 18.5%, as compared to $93,166,000 for the third quarter of 2024. Net revenues, by product line, for the three months ended September 30, 2025 and 2024 were as follows (dollars in thousands):

Previous wording

The increase in net revenues for Advanced Products was primarily due to available capacity for increased demand. The decrease in net revenues for Brick Products was primarily due to reduced market demand.

Current wording

The increase in net revenues for Advanced Products was primarily due to improved market demand and higher royalty revenue. The increase in net revenues for Brick Products was primarily due to improved market demand.

Previous wording

Selling, general and administrative expenses were $27,952,000 for the second quarter of 2025, an increase of $4,634,000, or 19.9%, from $23,318,000 for the second quarter of 2024. Selling, general and administrative expenses as a percentage of total net revenues and patent litigation settlement, decreased to 19.8% for the second quarter of 2025 from 27.2% for the second quarter of 2024. The components of the $4,634,000 increase in selling, general and administrative expenses for the second quarter of 2025 compared to the second quarter of 2024 were as follows (dollars in thousands):

Current wording

Selling, general and administrative expenses were $22,747,000 for the third quarter of 2025, a decrease of $651,000, or 2.8%, from $23,398,000 for the third quarter of 2024. Selling, general and administrative expenses as a percentage of total net revenues and patent litigation settlement, decreased to 20.6% for the third quarter of 2025 from 25.1% for the third quarter of 2024. The components of the $651,000 decrease in selling, general and administrative expenses for the third quarter of 2025 compared to the third quarter of 2024 were as follows (dollars in thousands):

Previous wording

Research and development expenses were $18,791,000 for the second quarter of 2025, an increase of $1,852,000, or 10.9%, compared to $16,939,000 for the second quarter of 2024. As a percentage of total net revenues and patent litigation settlement, research and development expenses decreased to 13.3% for the second quarter of 2025 from 19.7% for the second quarter of 2024. The components of the $1,852,000 increase in research and development expenses for the second quarter of 2025 compared to the second quarter of 2024 were as follows (dollars in thousands):

Current wording

Research and development expenses were $19,859,000 for the third quarter of 2025, an increase of $2,899,000, or 17.1%, compared to $16,960,000 for the third quarter of 2024. As a percentage of total net revenues and patent litigation settlement, research and development expenses decreased to 18.0% for the third quarter of 2025 from 18.2% for the third quarter of 2024. The components of the $2,899,000 increase in research and development expenses for the third quarter of 2025 compared to the third quarter of 2024 were as follows (dollars in thousands):

Previous wording

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 favorable foreign currency exchange rate fluctuations in the second quarter of 2025 compared to the second quarter of 2024.

Current wording

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 unfavorable foreign currency exchange rate fluctuations in the third quarter of 2025 compared to the third quarter of 2024.

Previous wording

Income before income taxes was $49,042,000 for the second quarter of 2025, as compared to $3,021,000 for the second quarter of 2024.

Current wording

Income before income taxes was $23,314,000 for the third quarter of 2025, as compared to $9,099,000 for the third quarter of 2024.

Previous wording

The provision for income taxes and the effective income tax rates for the three months ended June 30, 2025 and 2024 were as follows (dollars in thousands):

Current wording

The benefit for income taxes and the effective income tax rates for the three months ended September 30, 2025 and 2024 were as follows (dollars in thousands):

Previous wording

Net revenues for the six months ended June 30, 2025 were $190,014,000, an increase of $20,288,000, or 12.0%, from $169,726,000 for the six months ended June 30, 2024. Net revenues, by product line, for the six months ended June 30, 2025 and the six months ended June 30, 2024 were as follows (dollars in thousands):

Current wording

Net revenues for the nine months ended September 30, 2025 were $300,437,000, an increase of $37,545,000, or 14.3%, from $262,892,000 for the nine months ended September 30, 2024. Net revenues, by product line, for the nine months ended September 30, 2025 and the nine months ended September 30, 2024 were as follows (dollars in thousands):

Previous wording

The increase in net revenues for Advanced Products was primarily due to available capacity for increased demand and increased royalty revenue. The decrease in net revenues for Brick Products was primarily due to reduced market demand.

Current wording

The increase in net revenues for Advanced Products was primarily due to improved market demand and higher royalty revenue. The decrease in net revenues for Brick Products was primarily due to reduced market demand.

Previous wording

During the six months ended June 30, 2025, the Company received a patent litigation settlement payment of $45,000,000.

Current wording

During the nine months ended September 30, 2025, the Company received a patent litigation settlement payment of $45,000,000 (as described in more detail in Note 11 to the Condensed Consolidated Financial Statements).

Previous wording

Gross margin for the six months ended June 30, 2025 increased $48,599,000, or 55.3%, to $136,493,000 from $87,894,000 for the six months ended June 30, 2024. Gross margin, as a percentage of total net revenues and patent litigation settlement, increased to 58.1% for the six-month period ended June 30, 2025, as compared to 51.8% for the six-month period ended June 30, 2024. The increase in gross margin dollars and gross margin percentage was primarily attributable to the $45,000,000 patent litigation settlement payment received by the Company in the second quarter of 2025 and the favorable impact from higher sales volume and improved sales mix on that revenue, including royalty revenue, when compared to the first six months of 2024, offset by the unfavorable impact of production inefficiencies including an increase in freight-in and tariff spending of $1,985,000 (net of approximately $0 in duty drawback recovery in the first six months of 2025 and $662,000 in duty drawback recovery in the first six months of 2024 of previously paid tariffs).

Current wording

Gross margin for the nine months ended September 30, 2025 increased $66,368,000, or 49.7%, to $200,006,000 from $133,638,000 for the nine months ended September 30, 2024. Gross margin, as a percentage of total net revenues and patent litigation settlement, increased to 57.9% for the nine-month period ended September 30, 2025, as compared to 50.8% for the nine-month period ended September 30, 2024. The increase in gross margin dollars and gross margin percentage was primarily attributable to the $45,000,000 patent litigation settlement payment received by the Company in the second quarter of 2025 and the favorable impact from higher sales volume and improved sales mix on that revenue, including royalty revenue, when compared to the first nine months of 2024, offset by the unfavorable impact of production inefficiencies including an increase in freight-in and tariff spending of $2,070,000 (net of approximately $712,000 in duty drawback recovery in the first nine months of 2025 and $717,000 in duty drawback recovery in the first nine months of 2024 of previously paid tariffs).

Previous wording

Selling, general and administrative expenses were $53,089,000 for the six months ended June 30, 2025, an increase of $3,772,000, or 7.6%, compared to $49,317,000 for the six months ended June 30, 2024. Selling, general and administrative expenses as a percentage of total net revenues and patent litigation settlement, decreased to 22.6% for the six months ended June 30, 2025 from 29.1% for the six months ended June 30, 2024. The components of the $3,772,000 increase in selling, general and administrative expenses for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 were as follows (dollars in thousands):

Current wording

Selling, general and administrative expenses were $75,836,000 for the nine months ended September 30, 2025, an increase of $3,121,000, or 4.3%, compared to $72,715,000 for the nine months ended September 30, 2024. Selling, general and administrative expenses as a percentage of total net revenues and patent litigation settlement, decreased to 22.0% for the nine months ended September 30, 2025 from 27.7% for the nine months ended September 30, 2024. The components of the $3,121,000 increase in

Previous wording

Research and development expenses were $38,168,000 for the six months ended June 30, 2025, an increase of $3,190,000, or 9.1%, from $34,978,000 for the six months ended June 30, 2024. As a percentage of total net revenues and patent litigation settlement, research and development expenses decreased to 16.2% for the six months ended June 30, 2025 from 20.6% for the six months ended June 30, 2024. The components of the $3,190,000 increase in research and development expenses for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 were as follows (dollars in thousands):

Current wording

Research and development expenses were $58,027,000 for the nine months ended September 30, 2025, an increase of $6,089,000, or 11.7%, from $51,938,000 for the nine months ended September 30, 2024. As a percentage of total net revenues and patent litigation settlement, research and development expenses decreased to 16.8% for the nine months ended September 30, 2025 from 19.8% for the nine months ended September 30, 2024. The components of the $6,089,000 increase in research and development expenses for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 were as follows (dollars in thousands):

Previous wording

Increase primarily attributable to an increase in waste disposal activities of Advanced Products related to improving production process capabilities.

Current wording

Increase primarily attributable to an increase in waste disposal activities related to improving production process capabilities for our Advanced Products.

Previous wording

Increase primarily attributable to a decrease in deferred costs capitalized for certain non-recurring engineering projects for which the related revenues had been deferred.

Current wording

Increase primarily attributable to lower deferred costs capitalized for certain non-recurring engineering projects for which the related revenues had been deferred.

Previous wording

Litigation-contingency expense related to the SynQor litigation was $0 for the six months ended June 30, 2025 as compared to $19,500,000 for the six months ended June 30, 2024. See Note 11 to the Condensed Consolidated Financial Statements for additional information regarding the SynQor litigation.

Current wording

Litigation-contingency expense related to the SynQor litigation was $0 for the nine months ended September 30, 2025 as compared to $19,500,000 for the nine months ended September 30, 2024. See Note 11 to the Condensed Consolidated Financial Statements for additional information regarding the SynQor litigation.

Previous wording

The significant components of ''Other income (expense), net'' for the six months ended June 30, 2025 and the six months ended June 30, 2024 and the changes from period to period were as follows (in thousands):

Current wording

The significant components of ''Other income (expense), net'' for the nine months ended September 30, 2025 and the nine months ended September 30, 2024 and the changes from period to period were as follows (in thousands):

Previous wording

Our exposure to market risk fluctuations in foreign currency exchange rates relates to the operations of Vicor Japan Company, Ltd., 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 favorable foreign currency exchange rate fluctuations in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Current wording

Our exposure to market risk fluctuations in foreign currency exchange rates relates to the operations of Vicor Japan Company, Ltd., 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 favorable foreign currency exchange rate fluctuations in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

Previous wording

Income (loss) before income taxes was $52,027,000 for the six months ended June 30, 2025, as compared to $(10,370,000) for the six months ended June 30, 2024.

Current wording

Income (loss) before income taxes was $75,341,000 for the nine months ended September 30, 2025, as compared to $(1,271,000) for the nine months ended September 30, 2024.

Previous wording

The provision for income taxes and the effective income tax rates for the six months ended June 30, 2025 and 2024 were as follows (dollars in thousands):

Current wording

The provision for income taxes and the effective income tax rates for the nine months ended September 30, 2025 and 2024 were as follows (dollars in thousands):

Previous wording

The effective tax rates differ from the statutory tax rates for the six months ended June 30, 2025 and 2024 primarily due to the Company’s full valuation allowance position against net domestic deferred tax assets. The provision for income taxes for the six months ended June 30, 2025 and 2024 included estimated federal, state, and foreign income taxes in jurisdictions in which the Company does not have sufficient tax attributes.

Current wording

The effective tax rates differ from the statutory tax rates for the nine months ended September 30, 2025 and 2024 primarily due to the Company’s full valuation allowance position against net domestic deferred tax assets. The provision for income taxes for the nine months ended September 30, 2025 and 2024 included estimated federal, state, and foreign income taxes in jurisdictions in which the Company does not have sufficient tax attributes.

Previous wording

We reported net income for the six months ended June 30, 2025 of $43,731,000, or $0.97 per diluted share, as compared to a net loss of $(15,669,000), or $(0.35) per diluted share, for the six months ended June 30, 2024.

Current wording

We reported net income for the nine months ended September 30, 2025 of $72,023,000, or $1.59 per diluted share, as compared to a net loss of $(4,117,000), or $(0.09) per diluted share, for the nine months ended September 30, 2024.

Previous wording

As of June 30, 2025, we had $338,541,000 in cash and cash equivalents. The ratio of total current assets to total current liabilities was 7.0:1 as of June 30, 2025 and 7.5:1 as of December 31, 2024. Working capital, defined as total current assets less total current liabilities, increased $39,727,000 to $440,941,000 as of June 30, 2025 from $401,214,000 as of December 31, 2024.

Current wording

As of September 30, 2025, we had $362,382,000 in cash and cash equivalents. The ratio of total current assets to total current liabilities was 7.6:1 as of September 30, 2025 and 7.5:1 as of December 31, 2024. Working capital, defined as total current assets less total current liabilities, increased $62,010,000 to $463,224,000 as of September 30, 2025 from $401,214,000 as of December 31, 2024.

Previous wording

The primary sources of cash for the six months ended June 30, 2025 were $85,353,000 generated from operations and $4,140,000 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 uses of cash during the six months ended June 30, 2025 were for the repurchases of Common Stock of $17,609,000 and property and equipment of $10,754,000.

Current wording

The primary sources of cash for the nine months ended September 30, 2025 were $123,840,000 generated from operations and $8,935,000 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 uses of cash during the nine months ended September 30, 2025 were for the repurchases of Common Stock of $32,978,000 and property and equipment purchases of $14,775,000.

Previous wording

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 June 30, 2025, we had approximately $82,028,000 remaining available for repurchases of our Common Stock under the New Repurchase Authorization.

Current wording

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 September 30, 2025, we had approximately $66,440,000 remaining available for repurchases of our Common Stock under the New Repurchase Authorization.

Previous wording

As of June 30, 2025, we had a total of approximately $4,894,000 of cancelable and non-cancelable capital expenditure commitments, principally for manufacturing and production equipment, which we intend to fund with existing cash, and approximately $2,279,000 of capital expenditure items and internal-use software which had been received and included in Property, plant and equipment, net in the accompanying Condensed 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 purchases, for both the short and long term.

Current wording

As of September 30, 2025, we had a total of approximately $3,666,000 of cancelable and non-cancelable capital expenditure commitments, principally for manufacturing and production equipment, which we intend to fund with existing cash, and approximately $1,862,000 of capital expenditure items and internal-use software which had been received and included in Property, plant and equipment, net in the accompanying Condensed 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 purchases, for both the short and long term.

Previous wording

The Company licenses its intellectual property under right to use licenses, in which royalties due to the Company are generally based upon a percentage of the licensee’s sales. For these licensing transactions, the Company utilizes the exception under the revenue recognition guidance for the recognition of sales- or usage-based royalties, in which the royalties are not recognized until the later of when 1) the customer’s subsequent sales or usages occur, or 2) the performance obligation to which some or all of the sales- or usage-based royalty has been allocated is satisfied or partially satisfied. In certain right to use licenses where payment is not based on sales-or-usage-based royalties, the Company estimates consideration it expects to be entitled to considering minimum expected payments and potential price concessions. Revenue for these licenses is recognized in an amount that is probable that a significant reversal in the cumulative amount of revenue recognized would not occur.

Current wording

The Company licenses its intellectual property under right to use licenses, in which royalties due to the Company are generally based upon a percentage of the licensee’s sales. For these licensing transactions, the Company utilizes the exception under the revenue recognition guidance for the recognition of sales- or usage-based royalties, in which the royalties are not recognized until the later of when 1) the customer’s subsequent sales or usages occur, or 2) the performance obligation to which some or all of the sales- or usage-based royalty has been allocated is satisfied or partially satisfied. In certain right to use licenses where payment is not based on sales-or-usage-based royalties, the Company estimates consideration it expects to be entitled to considering minimum expected payments and potential price concessions. Revenue for these licenses is recognized in an amount that is probable that a significant reversal in the cumulative amount of revenue recognized would not occur. In certain right-to-use license arrangements, the Company recognizes revenue upon receipt of payment, consistent with the alternative revenue recognition model prescribed by ASC 606. This policy is re-evaluated periodically based on the facts and circumstances of each licensee.