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Item 7. Management’s Discussion and Analysis

2026-03-02 compared with 2025-02-27 · 188 added, 139 removed, 304 unchanged (52% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of financial condition and results of operations (MD&A) should be read in conjunction with our consolidated financial statements, related notes and other financial information appearing elsewhere in this Annual Report on Form 10-K.

In addition to historical consolidated financial information, the following discussion contains forward-looking statements that involve risks and uncertainties.

Our actual results could differ materially from those discussed in the forward-looking statements as a result of a variety of factors, including but not limited to those discussed in “Risk Factors” and “Forward-Looking Statements” in this Annual Report on Form 10-K.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.

In addition to historical financial information, the following discussion contains forward-looking statements based upon current plans, expectations, and beliefs that involve risks and uncertainties.

Our actual results could differ materially from those discussed in the forward-looking statements as a result of a variety of factors, including but not limited to those discussed in “Item 1A.

Risk Factors” and “Forward-Looking Statements” in this Annual Report on Form 10-K.

A discussion of our financial condition and results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024 is presented below.

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By offering devices and integrated software to members, we have expanded our addressable market to provide members of all ages with a vertically integrated, cross-platform solution of scale.

We also generate other revenue from partnerships, including through the placement of ads within our platform, and the sale of aggregated, non-personally identifiable data for data insight purposes.

For the years ended December 31, 2025 and 2024, we generated:

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• Gross profit of $380.8 million and $279.2 million, respectively, representing year-over-year growth of 36%;

• Net loss of $4.6 million and $28.2 million, respectively.

• Net income of $150.8 million and net loss of $4.6 million, respectively;

• Operating cash flows of $88.6 million and $32.6 million, respectively.

Key Factors Affecting Our Performance

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We strongly believe in our vision to become the indispensable safety membership for families, with a suite of safety services that span every life stage of the family.

Our business model and future success are dependent on the value and reputation of the Life360, Jiobit and Tile brands.

Our business model and future success are dependent on the value and reputation of the Life360 and Tile by Life360, Inc.

(“Tile”) brands.

Our brand is trusted by approximately 96 million members as of December 31, 2025, and because we know the value of trust is immeasurable, we will continue to work tirelessly to provide useful, reliable, trustworthy, and innovative products and services.

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We continue to develop new monetization features leveraging our core technologies to offer additional services, expand into more stages of families and enter new verticals to increase adoption.

Many factors will affect the ARPPC including the number of Paying Circles, mix of monetization offerings on our platform, as well as demographic shifts and geographic differences across these variables.

Many factors will affect the Average Revenue per Paying Circle (“ARPPC”) including the number of Paying Circles, mix of monetization offerings on our platform, as well as demographic shifts and geographic differences across these variables.

Expanding the Offerings on Our Platform .

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For example, our acquisition of Tile gave our members the ability to seamlessly leverage Bluetooth wireless technology enabled smart trackers, which can equip nearly any item—such as wallets, keys or remotes—with location-based finding technology.

Likewise, our acquisition of Jiobit enabled subscribers to track family members and pets wearing Jiobit devices via GPS-enabled trackers on the Jiobit app.

In addition, the launch of our Life360 Pet GPS trackers in October 2025 enables families to seamlessly monitor the location of pets directly within the Life360 mobile application.

We will continue to invest in and launch products where we see opportunities to grow our platform.

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We experience seasonality in our member growth, engagement, Paying Circles growth, and monetization on our platform.

Life360 has historically experienced member and subscription growth in the United States in the third quarter of each calendar year, driven by the back to school period for many of our members.

Hardware sales have historically experienced comparatively higher seasonal growth in the fourth quarter of each calendar year, which includes the important selling periods in November (Black Friday and Cyber Monday) and December (Christmas and Hanukkah) in large part due to seasonal holiday demand.

As the majority of revenue is generated within the United States, our seasonality primarily relates to U.S.

Life360 has historically experienced member and subscription growth in the U.S.

in the third quarter of each calendar year, driven by the back to school period for many of our members.

As the majority of revenue is generated within the U.S., our seasonality primarily relates to U.S.

Accordingly, an unexpected decrease in sales over those traditionally high-volume selling periods may impact our revenue, result in surplus inventory, and could have a disproportionate effect on our operating results for the entire fiscal year.

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International Expansion .

We believe our global opportunity is significant, and to address this opportunity, we intend to continue to invest in sales and marketing efforts and infrastructure and personnel to support our international expansion.

We believe our global opportunity is significant, and to address this opportunity, we intend to continue to invest in sales and marketing efforts, infrastructure, and personnel to support our international expansion.

Our growth will depend in part on the adoption and sales of our products and services in international markets.

Growth and Monetization of Advertising Offerings .

Advertising represents an additional revenue opportunity for our business, and our ability to grow and effectively monetize our advertising offerings will impact our operating results.

Our success in this area will depend on our ability to successfully integrate acquired technology, operations, and personnel, scale advertiser demand, maintain advertiser relationships, and balance monetization opportunities with a positive member experience.

Advertising revenue may also be affected by macroeconomic conditions, changes in advertiser spending, competition, and evolving privacy and data protection regulations.

Key Components of Our Results of Operations

The following discussion describes certain line items in our Consolidated Statements of Operations and Comprehensive Loss.

The Company currently operates as one reportable and operating segment because its chief operating decision maker (“CODM”), which is its Chief Executive Officer, reviews its financial information on a consolidated basis for purposes of making decisions regarding allocating resources and assessing performance.

The Company has no segment managers who are held accountable by the CODM for operations, operating results, and planning for levels of components below the consolidated unit level.

The following discussion describes certain line items in our consolidated statements of operations and comprehensive income (loss).

The Company generates revenue from direct and indirect streams.

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Subscription Revenue

We generate revenue primarily from sales of subscriptions on our platform, including Life360, Jiobit and Tile.

We generate revenue primarily from sales of subscriptions on our platform, including Life360 and Tile.

Revenue is recognized ratably over the related contractual term generally beginning on the date that our platform is made available to a customer.

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Hardware Revenue

We generate our hardware revenue from the sale of the Jiobit and Tile hardware tracking devices and related accessories.

We generate our hardware revenue from the sale of hardware tracking devices and related accessories.

For hardware and accessories, revenue is recognized at the time products are delivered.

We sell hardware tracking devices and accessories through a number of channels including our websites, brick and mortar retail and online retail.

We sell hardware tracking devices and accessories through a number of channels including our website, brick and mortar retail, and online retail.

Other Revenue

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The agreement permits commercialization of certain aggregated and de-identified data and provides for fixed and variable monthly revenue amounts.

We generate partnership revenue through agreements with third parties which grant them access to anonymized data insights or advertising on the Company’s mobile platform.

We generate partnership revenue through agreements with third parties which grant them access to anonymized data insights or advertising on the Company’s mobile platform, and through the recognition of revenue related to a warrant to purchase common stock of a related party (“Related Party Warrant”).

Cost of Revenue and Gross Margin

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Cost of Hardware Revenue

Cost of hardware revenue consists of product costs, including hardware production, contract manufacturers for production, shipping and handling, packaging, fulfillment, personnel-related expenses, manufacturing and equipment depreciation, warehousing, tariff costs, customer support costs, credit card and transaction processing fees, warranty replacement, and write-downs of excess and obsolete inventory.

Personnel-related expenses include salaries, bonuses, benefits, and stock-based compensation for operations personnel.

Cost of Other Revenue

Cost of other revenue includes cloud-based hosting costs, as well as costs of product operations functions and personnel-related costs associated with our data and advertising platforms.

Cost of other revenue includes cloud-based hosting costs, software and technology costs, amortization of acquired intangibles, costs of product operations functions, and personnel-related costs associated with our data and advertising platforms.

Personnel-related expenses include salaries, bonuses, benefits, and stock-based compensation for operations personnel.

Gross Profit and Gross Profit Margin

Our gross profit has been, and may in the future be, influenced by several factors, including timing of capital expenditures and related depreciation expense, increases in infrastructure costs, component costs, contract manufacturing and supplier pricing, and foreign currency exchange rates.

Our gross profit has been, and may in the future be, influenced by several factors, including timing of capital expenditures and related depreciation expense, increases in infrastructure costs, component costs, tariffs, contract manufacturing and supplier pricing, and foreign currency exchange rates.

Gross profit and gross profit margin may fluctuate over time based on the factors described above.

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Sales and Marketing

Our sales and marketing expenses consist primarily of commissions to the Company’s third-party platforms (each a “Channel Partner”), personnel-related costs, brand marketing costs, lead generation costs, sales incentives, sponsorships and amortization of acquired intangibles, and bad debt expense.

Commission payments to Channel Partners in connection with annual subscription sales of the Company’s mobile application on third-party store platforms are considered to be incremental and recoverable costs of obtaining a contract with a customer and are deferred and typically amortized over an estimated period of benefit of two to three years depending on the subscription type.

Our sales and marketing expenses consist primarily of commissions to the Company’s Channel Partners, personnel-related costs, brand marketing costs, lead generation costs, sales incentives, sponsorships, amortization of acquired intangibles, bad debt expense, and allocated overhead.

Commission payments to Channel Partners in connection with annual subscription sales of the Company’s mobile application on third-party store platforms are considered to be incremental and recoverable costs of obtaining a contract with a customer and are expensed as incurred or deferred and amortized over an estimated period of benefit of three years depending on the subscription type.

We plan to continue to invest in sales and marketing to grow our member base and increase our brand awareness, including marketing efforts to continue to drive our business model.

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Our general and administrative expenses consist primarily of employee-related costs for our legal, finance, human resources, and other administrative teams, as well as certain executive officers.

In addition, general and administrative expenses include allocated overhead, outside legal, accounting and other professional fees, change in fair value of contingent consideration for business combinations, and non-income-based taxes.

We expect our general and administrative expenses will increase in absolute dollars as our business grows.

In addition, general and administrative expenses include allocated overhead, outside legal, accounting and other professional fees, and non-income-based taxes.

We expect general and administrative expenses will increase in absolute dollars as our business grows.

Other Income (Expense)

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Derivative liability fair value adjustment relates to the change in the fair value of the embedded conversion and redemption features associated with the July 2021 Convertible Notes prior to their conversion to common stock in June 2024.

Gain on Change in Fair Value of Investment

Gain on change in fair value of investment relates to the revaluation of a warrant held to purchase shares of preferred stock of a data revenue partner in connection with an observable price change.

Gain on Settlement of Derivative Liability

Gain on settlement of the derivative liability relates to the conversion by the holders of the July 2021 Convertible Notes, which settled the embedded share-settled redemption features bifurcated from the Company’s July 2021 Convertible Notes.

Loss on Settlement of Convertible Notes

Loss on settlement of convertible notes relates to the conversion of the July 2021 Convertible Notes into common stock, which resulted in a loss recognized upon settlement.

Gain on Settlement of Derivative Liability

Gain on settlement of derivative liability relates to the conversion by the holders of the July 2021 Convertible Notes, which settled the embedded share-settled redemption features bifurcated from the Company’s July 2021 Convertible Notes.

Gain on Change in Fair Value of Investments

The Company measures certain non-marketable equity securities and warrant investments at fair value on a nonrecurring basis in accordance with ASC 321, Investment - Equity Securities.

In April 2025, the SAFE investment in a related party (the “Related Party SAFE”) converted into shares of preferred stock (the “Related Party Investment”), as a result of an observable price change.

Additionally, the Company measures and reports certain assets at fair value each reporting period.

In May 2025, the Company entered into a series of transactions with Aura Consolidated Group, Inc.

(“Aura”), which included a convertible note investment by the Company into Aura (“Convertible Note Investment”).

The Company elected to apply the fair value option in accordance with ASC 825, Financial Instruments .

Gain on change in fair value of investments relates to the change in fair value associated with the Convertible Note Investment and the observable price change upon the conversion of the Related Party SAFE into the Related Party Investment.

Interest Income

Interest income consists of interest earned on our cash and cash equivalents balances received from bank deposits and our investments in money market funds.

Other Income (expense), net

Other income (expense), net consists of interest income earned on our cash and cash equivalents balances, foreign currency exchange (losses)/gains related to the remeasurement of certain assets and liabilities of our foreign subsidiaries that are denominated in currencies other than the functional currency of the subsidiary and foreign exchange transactions gains/(losses) and interest expense primarily related to the Convertible Notes, and our U.S.

IPO transaction costs.

Other income (expense), net consists of foreign currency exchange gains/(losses) related to the remeasurement of certain assets and liabilities of our foreign subsidiaries that are denominated in currencies other than the functional currency of the subsidiary, foreign exchange transactions gains/(losses), and interest expense primarily related to convertible notes.

Provision for (Benefit from) Income Taxes

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federal and state income taxes and foreign income taxes in jurisdictions in which we conduct business.

We maintain a full valuation allowance on our federal and state deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized.

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Results of Operations

The following tables set forth our consolidated statement of operations and comprehensive loss for the years ended December 31, 2024, 2023, and 2022 (in thousands, except percentages).

The following tables set forth our consolidated statement of operations and comprehensive income (loss) for the years ended December 31, 2025, 2024, and 2023 (in thousands, except percentages).

We have derived this data from our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

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Subscription revenue $ 369,253 $ 277,845 $ 220,794

Hardware revenue (including related party revenue of $55, $0, and $0, respectively)

Hardware revenue

51,816 57,589 58,178

Other revenue

68,412 36,050 25,546

Total revenue 489,481 371,484 304,518

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Cost of hardware revenue

51,175 47,225 47,384

Cost of other revenue 6,496 4,088 3,522

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Total operating expenses 362,016 287,133 252,620

Loss from operations (7,976) (29,983) (94,411)

Income (loss) from operations 18,826 (7,976) (29,983)

Other income (expense):

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Gain on settlement of derivative liability — 1,924 —

Gain on change in fair value of investment 5,389 — —

Gain on change in fair value of investments 609 5,389 —

Interest income

13,705 6,009 3,083

Other income (expense), net (481) (7,217) 145

Total other income (expense), net 13,833 3,350 2,428

Loss before income taxes (4,626) (27,555) (91,317)

Income (loss) before income taxes 32,659 (4,626) (27,555)

Provision for (benefit from) income taxes (118,173) (71) 616

Net loss (4,555) (28,171) (91,629)

Net income (loss) 150,832 (4,555) (28,171)

Change in foreign currency translation adjustment 4 35 15

Total comprehensive loss $ (4,520) $ (28,156) $ (91,635)

Total comprehensive income (loss) $ 150,836 $ (4,520) $ (28,156)

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2025 2024 % Change

Cost of revenue

Subscription costs $ 730 $ 651 12 %

Hardware costs 798 1,096 (27) %

Other costs 4 43 (91) %

Cost of subscription revenue $ 1,869 $ 730 156 %

Cost of hardware revenue 1,476 798 85 %

Cost of other revenue 8 4 100 %

Total cost of revenue 3,353 1,532

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Total operating expenses 74 % 77 % 83 %

Loss from operations (2) % (10) % (41) %

Income (loss) from operations 4 % (2) % (10) %

Other income (expense):

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Gain on settlement of derivative liability — % 1 % — %

Gain on change in fair value of investment 1 % — % — %

Gain on change in fair value of investments — % 1 % — %

Interest income 3 % 2 % 1 %

Other income (expense), net — % (2) % — %

Total other income (expense), net 3 % 1 % 1 %

Loss before income taxes (1) % (9) % (40) %

Income (loss) before income taxes 7 % (1) % (9) %

Provision for (benefit from) income taxes (24) % — % — %

Net loss (1) % (9) % (40) %

Net income (loss) 31 % (1) % (9) %

Change in foreign currency translation adjustment — % — % — %

Total comprehensive loss (1) % (9) % (40) %

Total comprehensive income (loss) 31 % (1) % (9) %

Comparison of the years ended December 31, 2025 and 2024:

Year Ended December 31, Change

2024 2023 $ %

(in thousands, except percentages) 2025 2024 $ %

Subscription revenue $ 369,253 $ 277,845 $ 91,408 33 %

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Total revenue $ 489,481 $ 371,484 $ 117,997 32 %

Subscription revenue increased $57.1 million, or 26%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to a 19% growth in total subscriptions and a 25% growth in Paying Circles.

Additionally, subscription revenue in the current period benefited from the impact of price increases for existing U.S.

Android Life360 subscriptions, which were fully implemented during the three months ended June 30, 2023.

Hardware revenue decreased $0.6 million, or 1%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to a $4.6 million decrease in retail sales driven by a delay in a new product launch, which led to lower sales volume.

This decline was partially offset by a $4.0 million decrease in discounts and returns.

Other revenue increased $10.5 million, or 41%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023, due to a $5.5 million increase in partnership revenue, which includes advertising revenue, and a $5.0 million increase in data revenue, which was primarily attributable to the Amended and Restated Data Services and License Agreement with Placer.ai we entered into in July 2024 (the “A&R Placer Agreement”).

Subscription revenue increased $91.4 million, or 33%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to 26% growth in Paying Circles and 17% growth in total subscriptions.

Additionally, subscription revenue in the current period benefited from a 7% uplift in ARPPC.

Please refer to the “Key Performance Indicators” section for definitions of key performance indicators (“KPIs”).

Hardware revenue decreased $5.8 million, or 10%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024.

Although net hardware units shipped increased 7%, contributing to $6.3 million of revenue, this increase was more than offset by an $8.5 million increase in discounts and a $3.6 million reduction in revenue related to bundled offerings.

Other revenue increased $32.4 million, or 90%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024.

This was primarily due to a $26.3 million increase in partnership revenue, which includes advertising revenue, and reflects growth in advertising activity from both existing arrangements and an increased number of partners.

In addition, data revenue increased $6.1 million, primarily attributable to the Amended and Restated Data Services and License Agreement with Placer.ai entered into in July 2024, and increased data volumes resulting from user growth.

Cost of Revenue, Gross Profit, and Gross Margin

Year Ended December 31, Change

2024 2023 $ %

Subscription costs $ 41,014 $ 30,975 $ 10,039 32 %

Hardware costs 47,225 47,384 (159) 0 %

Other costs 4,088 3,522 566 16 %

(in thousands, except percentages) 2025 2024 $ %

Cost of subscription revenue $ 50,968 $ 41,014 $ 9,954 24 %

Cost of hardware revenue 51,175 47,225 3,950 8 %

Cost of other revenue 6,496 4,088 2,408 59 %

Total cost of revenue 108,639 92,327 16,312

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Other 91 % 89 %

Cost of subscription revenue increased $10.0 million, or 32%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily related to increases of $4.0 million in technology expenses, $1.9 million in costs related to premium membership offerings, and $1.8 million benefit related to the discontinuation of certain battery related membership benefits recognized in 2023.

The Company also saw increases of $1.8 million in personnel-related and stock-based compensation costs and $0.5 million in other cost of subscription revenue expenses, attributable to Company growth.

Subscription gross margin decreased to 85% during the year ended December 31, 2024 from 86% during the year ended December 31, 2023, primarily due to the discontinuation of certain battery-related membership benefits that positively impacted 2023.

Cost of hardware revenue decreased by $0.2 million, remaining relatively flat during the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to a decrease of $1.2 million in hardware product costs related to the reduced number of units sold and $0.7 million in costs related to the discontinuation of certain battery related membership benefits which took place in 2023.

These decreases were partially offset by an increase of $1.1 million in hardware freight costs related to a shift in channel mix and $0.6 million in other fixed costs attributable to Company growth.

Hardware gross margin decreased to 18% during the year ended December 31, 2024 from 19% during the year ended December 31, 2023, primarily due to an increase in freight costs associated with the shift in channel mix, a decrease in units sold, and an increase in fixed hardware costs in line with Company growth.

Cost of other revenue increased by $0.6 million, or 16%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023, due to an increase of $0.3 million in technology related expenses to support the existing customer base and $0.3 million in other costs associated with the growth in partnership revenue, which includes advertising revenue.

Cost of subscription revenue increased $10.0 million, or 24%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024, primarily due to increases of $4.1 million in personnel-related and stock-based compensation costs, $3.1 million in technology expenses, $2.6 million in amortization of internally developed software related to the release of new features and significant updates on our platform, all attributable to Company growth, and $0.2 million in costs associated with premium membership offerings.

Subscription gross margin increased to 86% during the year ended December 31, 2025 from 85% during the year ended December 31, 2024, primarily due to price increases for new and existing Life360 subscriptions implemented during the second half of 2024 and continuing into 2025, consistent with the increase in ARPPC.

Subscription gross margin also benefited from ongoing technology efficiency initiatives implemented by the Company.

Please refer to “Key Performance Indicators” for definitions of KPIs.

Cost of hardware revenue increased by $4.0 million, or 8%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024.

This was driven by increases of $3.9 million in tariff costs due to increases in tariff rates and changes in product mix, and $0.5 million in product and other costs due to a 7% increase in net hardware units shipped.

Additional increases include $2.5 million in personnel-related and stock-based compensation costs, attributable to Company growth.

The increases were partially offset by decreases of $1.7 million in freight costs and $1.2 million in fulfillment costs, both related to a shift in channel mix.

Hardware gross margin decreased to 1% during the year ended December 31, 2025 from 18% during the year ended December 31, 2024, primarily due to an increase in discounts and tariff costs.

Cost of other revenue increased by $2.4 million, or 59%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024, due to an increase of $2.4 million in technology and other related expenses.

Other gross margin increased to 91% during the year ended December 31, 2025 from 89% during the year ended December 31, 2024, primarily due to revenue outpacing the increase in costs.

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Year Ended December 31, Change

2024 2023 $ %

(in thousands, except percentages) 2025 2024 $ %

Research and development $ 128,409 $ 113,071 $ 15,338 14 %

Research and development expenses increased $15.3 million, or 14%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024.

This was primarily due to increases of $11.5 million in personnel-related and stock-based compensation costs, $4.1 million in technology and other expenses, $2.3 million in contractor spend, and $0.3 million in professional and outside services, attributable to Company growth.

The increases were partially offset by a $4.3 million increase in capitalized costs related to internal use software, a $0.9 million increase related to a raw material inventory write-off which negatively impacted the year ended December 31, 2023, and a $0.9 million increase in capitalized construction in progress costs.

This was primarily due to increases of $13.2 million in personnel-related and stock-based compensation costs, $4.1 million in technology and other expenses, and $0.9 million in professional and outside services, all attributable to Company growth.

The increases were partially offset by higher capitalized costs of $2.2 million for internally developed software related to the development of new features and significant updates to our platform, and higher capitalized construction in progress costs of $0.7 million, in line with our product development roadmap.

Sales and Marketing

Year Ended December 31, Change

2024 2023 $ %

(in thousands, except percentages) 2025 2024 $ %

Sales and marketing $ 154,963 $ 113,350 $ 41,613 37 %

Sales and marketing expenses increased $41.6 million, or 37%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024.

This was primarily due to increases of $10.2 million in commissions to Channel Partners, which was inline with the 19% growth in subscriptions, $6.6 million in other marketing spend, $1.6 million in personnel-related and stock-based compensation costs, $0.7 million in technology and other expenses, and $0.4 million in professional and outside services, attributable to Company growth.

The increases were partially offset by a $4.2 million decrease in paid user acquisition costs due to planned shifts in the allocation of spend to other marketing and a $1.0 million decrease in contractor spend.

This was primarily due to increases of $16.8 million in commissions to the Company’s Channel Partners, in line with the increase in subscription revenue, and $14.4 million in growth media spend to support strategic initiatives.

Additional increases include $7.9 million in personnel-related and stock-based compensation costs, $1.3 million in marketing and other spend related to production and public relations, and $1.2 million in technology expenses, all attributable to Company growth.

General and Administrative

Year Ended December 31, Change

2024 2023 $ %

(in thousands, except percentages) 2025 2024 $ %

General and administrative $ 78,644 $ 60,712 $ 17,932 30 %

General and administrative expense increased $8.1 million, or 15%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023.

This was primarily due to increases of $3.6 million in personnel-related and stock-based compensation costs and $1.0 million in technology expenses, attributable to Company growth.

In addition, the Company saw a $3.5 million increase in professional and outside service costs driven by public company compliance costs in connection with the U.S.

IPO, ongoing public company compliance costs, and corporate and strategic matters.

General and administrative expenses increased $17.9 million, or 30%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024.

This was primarily due to increases of $12.2 million in personnel-related and stock-based compensation costs, $1.0 million in technology expenses, and $0.7 million in insurance and other costs, all attributable to Company growth.

Additional increases include $2.0 million in professional and outside services spend, primarily driven by transaction costs incurred related to acquisitions, $1.3 million for travel and entertainment costs primarily related to the Company’s annual event, and $0.7 million in warehouse relocation costs related to the move of certain hardware manufacturing operations.

Convertible Notes Fair Value Adjustment

For the years ended December 31, 2024 and 2023, the Company recorded losses associated with the convertible notes fair value adjustment of $0.6 million and $0.7 million, respectively.

The changes in fair value were primarily driven by the share price volatility and reduction in time to convert.

In April and June 2024, the September 2021 Convertible Notes and the July 2021 Convertible Notes, respectively, were converted to common stock.

As a result, the Company recorded no gain or loss associated with the Convertible Notes fair value adjustment for the year ended December 31, 2025.

The Company recorded a $0.6 million loss associated with the Convertible Notes fair value adjustment for the year ended December 31, 2024.

Derivative Liability Fair Value Adjustment

For the years ended December 31, 2024 and 2023, the Company recorded losses associated with the derivative liability fair value adjustment of $1.7 million and $0.1 million, respectively.

The changes were due to the revaluation of the derivative liability at each reporting period and are related to embedded redemption features bifurcated from the July 2021 Convertible Notes issued to investors.

In June 2024, the holders of the July 2021 Convertible Notes converted their notes and accrued interest to common stock and the embedded derivative liability was settled as a result of the conversion.

As a result, the Company recorded no gain or loss and a $1.7 million loss associated with the derivative liability fair value adjustment for the years ended December 31, 2025 and 2024, respectively.

Loss on Settlement of Convertible Notes

In April and June 2024, the September 2021 Convertible Notes and the July 2021 Convertible Notes, respectively, were converted to common stock.

A loss of $0.4 million associated with the settlement of the Convertible Notes was recorded for the year ended December 31, 2024.

There were no such transactions during the year ended December 31, 2023.

As a result, the Company recorded no gain or loss related to the settlement of the September 2021 Convertible Notes and July 2021 Convertible Notes for the year ended December 31, 2025.

The Company recorded a $0.4 million loss associated with the settlement of the July 2021 Convertible Notes and the September 2021 Convertible Notes for the year ended December 31, 2024.

Gain on Settlement of Derivative Liability

In June 2024, the holders of the July 2021 Convertible Notes converted their notes and accrued interest to common stock and the derivative liability was settled as a result of the conversion.

A gain of $1.9 million associated with the settlement of the derivative liability was recorded for the year ended December 31, 2024.

There were no such transactions during the year ended December 31, 2023.

As a result, the Company recorded no gain or loss related to the settlement of the derivative liability for the year ended December 31, 2025.

The Company recorded a $1.9 million gain related to the settlement of the derivative liability upon conversion of the July 2021 Convertible Notes for the year ended December 31, 2024.

Gain on Change in Fair Value of Investments

In April 2025, an observable price change related to the conversion of the Related Party SAFE into the Related Party Investment took place.

As a result, a $0.9 million gain related to the observable price change was recognized during the year ended December 31, 2025.

In addition, in May 2025, the Company entered into a series of transactions with Aura, which included a $25.0 million convertible note investment by the Company into Aura.

The Company elected to apply the fair value option in accordance with ASC 825, Financial Instruments .

As a result, a $0.3 million loss related to the revaluation of the Convertible Note Investment was recognized during the year ended December 31, 2025.

In July 2024, an observable price change related to our investment in a warrant held to purchase shares of preferred stock of a data revenue partner took place.

The observable price change resulted in a fair value adjustment and gain of $5.4 million recorded for the year ended December 31, 2024.

No such gains were recorded for the year ended December 31, 2023.

Interest Income

Interest income increased $7.7 million, or 128%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024, resulting from higher average gross yields attributable to an increased cash and cash equivalents balance.

Other Income (Expense), Net

Other income (expense), net includes transaction costs, interest income, dividend income, foreign exchange losses, and interest expense associated with the July 2021 Convertible Notes.

Other income (expense), net decreased $4.4 million, or 137%, during the year ended December 31, 2024 as compared to the year ended December 31, 2023.

The decrease was primarily driven by a $5.6 million increase in transaction costs incurred in connection with our U.S.

IPO and $2.1 million increase due to unfavorable changes in the impact of currency revaluation.

The increase in expenses were partially offset by a $3.0 million increase in dividend and interest income resulting from higher average gross yields primarily due to an increased cash and cash equivalents balance.

Other income (expense), net includes U.S.

IPO transaction costs, foreign exchange gains and losses, and interest expense associated with the July 2021 Convertible Notes and the convertible notes issued to investors in June 2025 (the “June 2025 Convertible Notes”).

Other income (expense), net increased $6.7 million, or 93%, during the year ended December 31, 2025 as compared to the year ended December 31, 2024.

This was primarily driven by a $5.6 million decrease in transaction costs incurred in the prior period in connection with our U.S.

IPO, a $1.9 million increase in foreign exchange gains, and a $0.3 million decrease in other costs.

This was partially offset by a $1.1 million increase in interest expense related to the June 2025 Convertible Notes.

Provision for (Benefit from) Income Taxes

An income tax benefit of $0.1 million and an income tax provision of $0.6 million was recorded for the years ended December 31, 2024 and 2023, respectively.

We maintain a full valuation allowance on our federal and state deferred tax assets as we have concluded that it is not more likely than not that the deferred tax assets will be realized.

We recognized an income tax benefit of $118.2 million during the year ended December 31, 2025, compared to an income tax benefit of $0.1 million during the year ended December 31, 2024.

Our income tax benefit consisted primarily of a $118.4 million benefit related to the release of a valuation allowance on our U.S.

deferred tax assets during the year ended December 31, 2025.

We regularly assess the need for a valuation allowance on our deferred tax assets.

In making this assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all the deferred tax assets will not be realized.

As of December 31, 2025, based on all available positive and negative evidence, having demonstrated sustained U.S.

profitability, which is objective and verifiable, and taking into account anticipated future earnings, we have concluded it is more likely than not that we will realize our U.S.

federal and states deferred tax assets, with the exception of California state and Canadian tax credits.

We continue to maintain a valuation allowance against these deferred tax assets as they have not met the “more likely than not” realization criterion.

Key Performance Indicators

We review several operating metrics, including the following key performance indicators, to evaluate our business, measure our performance, identify trends affecting our business, develop financial forecasts and make strategic decisions.

We believe these key performance indicators are useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making, and they may be used by investors to help analyze the health of our business.

We review several operating metrics, including the following KPIs, to evaluate our business, measure our performance, identify trends affecting our business, develop financial forecasts, and make strategic decisions.

We believe these KPIs are useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making, and they may be used by investors to help analyze the health of our business.

Key operating metrics are presented in millions, except ARPPC, Average Revenue per Paying Subscription (“ARPPS”) and Average Sales Price (“ASP”), however percentage changes are calculated based on actual results.

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AMR $ 478.0 $ 367.6 30 %

MAUs 79.6 61.4 30 %

95.8 79.6 20 %

Paying Circles 2.8 2.3 26 %

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This does not represent revenue under GAAP on an annualized basis, as the operating metric can be impacted by start and end dates and renewal rates.

AMR as of December 31, 2024, and 2023 was $367.6 million and $274.1 million, respectively, representing an increase of 34% year-over-year.

AMR as of December 31, 2025, and 2024 was $478.0 million and $367.6 million, respectively, representing an increase of 30% year-over-year, which is largely attributable to continued subscriber growth as well as an increase in other recurring revenue.

Monthly Active Users

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A Life360 monthly active user (“MAU”) is defined as a unique member who engages with our Life360 branded services each month, which includes both paying and non-paying members, and excludes certain members who have a delayed account setup.

As of December 31, 2024 and 2023, we had approximately 79.6 million and 61.4 million MAUs on the Life360 Platform, respectively, representing an increase of 30% year-over-year.

As of December 31, 2025 and 2024, we had approximately 95.8 million and 79.6 million MAU on the Life360 platform, respectively, representing an increase of 20% year-over-year.

We believe this has been driven by continued strong new member growth and retention.

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As of December 31, 2025 and 2024, we had approximately 2.8 million and 2.3 million paid subscribers to services under our Life360 brand, respectively, representing an increase of 26% year-over-year.

We grow the number of Paying Circles by increasing our free member base, converting free members to subscribers, and retaining them over time with the provision of high-quality family and safety services.

Average Revenue per Paying Circle

We define Average Revenue per Paying Circle (“ARPPC”) as annualized subscription revenue recognized and derived from the Life360 mobile application, excluding revenue related to bundled Life360 subscription and hardware offerings, for the reported period, divided by the Average Paying Circles during the same period.

We define ARPPC as annualized subscription revenue recognized and derived from the Life360 mobile application, excluding revenue related to bundled Life360 subscription and hardware offerings, for the reported period, divided by the Average Paying Circles during the same period.

Average Paying Circles are calculated by adding the number of Paying Circles as of the beginning of the period to the number of Paying Circles as of the end of the period, and then dividing by two.

For the years ended December 31, 2025 and 2024, our ARPPC was $136.63 and $128.00, respectively, representing a 7% increase year-over-year.

ARPPC is a key indicator utilized by Life360 to determine our effectiveness at monetizing Paying Circles through tiered product offerings.

ARPPC has benefited from price increases for existing U.S.

Android Life360 subscriptions that took effect during the three months ended June 30, 2023 as well as a shift in product mix towards higher priced products.

International ARPPC has benefited from price increases for existing subscribers in August 2024 followed by the launch of dual tier memberships in September 2024 across all non-triple tier countries.

In addition, price increases for existing subscribers began in January 2024 in the United Kingdom (“UK”) and March 2024 in ANZ, while the triple tier memberships launched in October 2023 and April 2024, respectively.

The positive impacts seen from the price increases were partially offset by an increase in international subscribers, which overall, have lower priced subscriptions.

ARPPC is a key indicator utilized by the Company to determine our effectiveness at monetizing Paying Circles through tiered product offerings.

The year-over-year growth in ARPPC primarily reflects U.S.

price increases for new and existing annual subscribers implemented in the second half of 2024 and continuing into 2025, a shift in product mix toward higher-priced offerings, and the introduction of higher-priced membership tiers across select international markets throughout 2024 and 2025.

Subscriptions

We define Subscriptions as the number of paying subscribers associated with the Life360, Tile and Jiobit brands who have been billed as of the end of the period.

As of December 31, 2024 and 2023, we had approximately 2.9 million and 2.4 million paid subscribers to services under Life360, Tile, and Jiobit brands, respectively, representing an increase of 19% year-over-year.

We define subscriptions as the number of paying subscribers associated with the Life360 and Tile brands who have been billed as of the end of the period.

As of December 31, 2025 and 2024, we had approximately 3.4 million and 2.9 million paid subscribers to services under Life360 and Tile brands, respectively, representing an increase of 17% year-over-year.

We grow the number of subscriptions by selling hardware units and increasing our free member base, converting free members to subscribers, and retaining them over time with the provision of location tracking and high-quality family and safety services.

Average Revenue per Paying Subscription

We define ARPPS as annualized total subscription revenue recognized and derived from Life360, Tile and Jiobit subscriptions, excluding revenue related to bundled Life360 subscription and hardware offerings, for the reported period divided by the average number of paying subscribers during the same period.

We define ARPPS as annualized total subscription revenue recognized and derived from Life360 and Tile subscriptions, excluding revenue related to bundled Life360 subscription and hardware offerings, for the reported period divided by the average number of paying subscribers during the same period.

The average number of paying subscribers is calculated by adding the number of paying subscribers as of the beginning of the period to the number of paying subscribers as of the end of the period, and then dividing by two.

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ARPPS for the years ended December 31, 2025 and 2024 was $118.17 and $106.16, respectively, representing an increase of 11% year-over-year.

ARPPS has increased year over year as a result of the growth in subscriptions following price increases for existing U.S.

Android Life360 subscriptions that took effect during the three months ended June 30, 2023 and a shift in product mix towards higher priced products in the U.S.

Price increases in non-triple tier countries for existing subscribers were implemented in August 2024 and dual tier memberships launched in September 2024.

In addition, price increases for existing subscribers began in January 2024 in the UK and March 2024 in ANZ, while the triple tier memberships launched in October 2023 and April 2024, respectively.

The positive impacts seen from the price increases were partially offset by an increase in international subscribers, which overall, have subscriptions priced at lower prices.

ARPPS has increased year-over-year as a result of U.S.

price increases for new and existing annual subscribers implemented in the second half of 2024 and continuing into 2025, a shift in product mix towards higher-priced offerings, and the introduction of higher-priced membership tiers across select international markets throughout 2024 and 2025.

Net Hardware Units Shipped

Net hardware units shipped represents the number of tracking devices sold during a period, excluding certain hardware units related to bundled Life360 subscription and hardware offerings, net of returns by our retail partners and directly to consumers.

Selling units contributes to hardware revenue and ultimately increases the number of users eligible for a Tile or Jiobit subscription.

For the years ended December 31, 2024 and 2023, Life360 sold approximately 3.9 million and 4.0 million, respectively, representing a 4% decrease year-over-year.

The decrease was primarily driven by a delay in our new product launch which took place during the third quarter of 2024.

Selling units contributes to hardware revenue and ultimately increases the number of members eligible for a subscription.

For the years ended December 31, 2025 and 2024, Life360 sold approximately 4.2 million and 3.9 million, respectively, representing a 7% increase year-over-year.

The increase in net hardware units shipped was primarily due to an increase in online retail sales.

Net Average Sales Price

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ASP is largely driven by the price we charge customers, including the price we charge our retail partners, net of customer allowances, and directly to consumers.

For the years ended December 31, 2024 and 2023, the net ASP of a unit was $13.72 and $13.48, respectively, representing a 2% increase year-over-year.

The increase was primarily driven by fewer returns and discounts offered.

For the years ended December 31, 2025 and 2024, the net ASP of a unit was $12.25 and $13.72, respectively, representing an 11% decrease year-over-year.

The decrease in net ASP was primarily due to a shift in channel mix and an increase in discounts.

Liquidity and Capital Resources

On June 6, 2024, we completed our U.S.

IPO, selling a total of 3,703,704 shares of common stock and raising net proceeds of $93.0 million after deducting underwriting discounts and commissions.

An additional $5.5 million of expenses were paid on behalf of selling securityholders.

As of December 31, 2025, we had cash and cash equivalents of $494.3 million and restricted cash of $1.6 million.

As of December 31, 2024, we had cash and cash equivalents of $159.2 million and restricted cash of $1.2 million.

We believe our existing cash and cash equivalents and cash provided by sales of our subscriptions and hardware devices will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.

The increase in cash and cash equivalents was primarily related to the issuance of the June 2025 Convertible Notes and positive net cash provided by operating activities for the year ended December 31, 2025.

We believe our existing cash and cash equivalents, together with cash generated from subscriptions, hardware tracking devices, partnerships, including through the placement of ads within our platform, and the sale of aggregated, non-personally identifiable data for data insight purposes will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.

We may from time to time seek to raise additional capital based on a variety of factors, including our capital requirements and the relative favorability of conditions in the capital markets.

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2025 2024 2023

Net cash provided by (used in) operating activities $ 32,612 $ 7,524 $ (57,055)

Net cash provided by operating activities $ 88,630 $ 32,612 $ 7,524

Net cash used in investing activities (35,333) (10,132) (2,221)

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Operating Activities

Our largest source of operating cash is cash collection from our paying members for subscriptions to our platform and hardware device sales.

Our primary sources of operating cash are cash collections from our paying members for subscriptions to our platform, hardware tracking device sales, partnership revenue, which includes advertising, and revenue generated from the sale of aggregated, non-personally identifiable data for data insight purposes.

Our primary uses of cash from operating activities are for employee-related expenditures, costs to acquire inventory, infrastructure-related costs, commissions paid to Channel Partners, and other marketing expenses.

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For the year ended December 31, 2025, net cash provided by operating activities was $88.6 million.

The primary factors affecting our operating cash flows during this period were our net loss of $4.6 million, impacted by $48.4 million of non-cash adjustments, and $11.2 million of cash used by changes in our operating assets and liabilities.

The non-cash adjustments primarily consisted of $42.3 million of stock-based compensation expense, $9.8 million of depreciation and amortization, and $5.4 million of gain on change in fair value of investment.

The primary factors affecting our operating cash flows during this period were our net income of $150.8 million, impacted by $47.6 million of non-cash adjustments, and $14.6 million of cash used by changes in our operating assets and liabilities.

The non-cash adjustments primarily consisted of stock-based compensation expense, and depreciation and amortization.

The cash used by changes in our operating assets and liabilities was primarily due to increases in accounts receivable and prepaid expenses and other current assets.

These cash outflows were offset by increases in accounts payable, inventory, and accrued expenses and other current liabilities.

For the year ended December 31, 2024, net cash provided by operating activities was $32.6 million.

The primary factors affecting our operating cash flows were our net loss of $4.6 million, impacted by $48.4 million of non-cash adjustments, and $11.2 million of cash used by changes in our operating assets and liabilities.

The non-cash adjustments primarily consisted of stock-based compensation expense, depreciation and amortization, and gain on the change in fair value of investment.

The cash used by changes in our operating assets and liabilities was primarily due to an increase in accounts receivable, net, an increase in costs capitalized to obtain contracts with customers, and an increase in inventory.

These amounts were partially offset by an increase in deferred revenue, and an increase in accrued expenses and other liabilities.

For the year ended December 31, 2023, net cash provided by operating activities was $7.5 million.

The primary factors affecting our operating cash flows during this period were our net loss of $28.2 million, impacted by $49.1 million of non-cash charges, and $13.4 million of cash used by changes in our operating assets and liabilities.

The non-cash charges primarily consisted of $38.5 million in stock-based compensation and $9.1 million of depreciation and amortization.

The cash used by changes in our operating assets and liabilities was primarily due to an increase of $9.1 million in accounts receivable, net, a decrease of $7.9 million in accounts payable, and an increase of $6.7 million in prepaid expenses and other assets.

These amounts were partially offset by a decrease of $5.8 million in inventory, an increase of $4.6 million in deferred revenue, and an increase of $2.2 million in accrued expenses and other liabilities.

Investing Activities

For the year ended December 31, 2024, net cash used in investing activities was $10.1 million, which primarily related to the Related Party SAFE of $5.0 million, the capitalization of internal use software costs of $3.9 million in accordance with ASC 350-40, Intangibles - Goodwill and Other, Internal-Use Software, and purchases of property and equipment of $1.2 million.

For the year ended December 31, 2023, net cash used in investing activities was $2.2 million, which related to $1.7 million of capitalization of internal use software costs in accordance with ASC 350-40, Intangibles - Goodwill and Other, Internal-Use Software and $0.5 million of purchases of property and equipment.

For the year ended December 31, 2025, net cash used in investing activities was $35.3 million, which primarily related to the $25.0 million Convertible Note Investment.

Net cash used in investing activities also included capitalization of internally developed software costs in accordance with ASC 350-40, Intangibles - Goodwill and Other, Internal-Use Software , and cash paid for an acquisition.

Refer to Note 6, "Business Combinations" for additional information on the acquisition.

For the year ended December 31, 2024, net cash used in investing activities was $10.1 million, which primarily related to the Related Party SAFE of $5.0 million, the capitalization of internally developed software costs of $3.9 million in accordance with ASC 350-40, Intangibles - Goodwill and Other, Internal-Use Software , and purchases of property and equipment of $1.2 million.

Financing Activities

For the year ended December 31, 2024, net cash provided by financing activities was $67.3 million, which primarily related to net proceeds of $93.0 million after deducting underwriting discounts and commissions from our U.S.

IPO, and $14.6 million of proceeds from the exercise of options and warrants and restricted stock settlements, offset by $34.0 million of taxes paid for the net settlement of equity awards, and $6.3 million in payments related to the U.S.

For the year ended December 31, 2023, net cash used in financing activities was $25.0 million, which primarily related to $13.1 million of released funds placed in an indemnity escrow fund for general representations and warranties related to the Tile acquisition, $14.0 million of taxes paid related to net settlement of equity awards, and $3.9 million of repayment of notes due to affiliates, offset by $5.8 million of proceeds from the exercise of options.

For the year ended December 31, 2025, net cash provided by financing activities was $282.1 million, which primarily related to net proceeds of $320.0 million from the issuance of the June 2025 Convertible Notes offset by payments of $10.9 million for debt issuance costs.

In connection with the issuance of the June 2025 Convertible Notes, the Company paid $33.7 million in capped call transactions.

Refer to Note 8, "Convertible Notes" for more information on the June 2025 Convertible Notes and the June 2025 Capped Calls.

Financing activities also included $62.8 million of employee taxes paid for the net settlement of equity awards, offset by $69.5 million of proceeds related to employee tax withholdings on restricted stock settlements and the exercise of stock options and warrants.

For the year ended December 31, 2024, net cash provided by financing activities was $67.3 million.

This was primarily related to net proceeds of $93.0 million after deducting underwriting discounts and commissions from our U.S.

IPO, which closed on June 6, 2024 and involved the sale of 3,703,704 shares of common stock.

Additionally, financing activities also included $14.6 million of proceeds from the exercise of options and warrants and restricted stock settlements, offset by $34.0 million of taxes paid for the net settlement of equity awards, and $6.3 million in payments related to the U.S.

Obligations and Other Commitments

Our principal commitments consist of operating leases for office space, and other purchase commitments.

Our principal commitments consist of obligations under our operating leases for office space, and other purchase commitments.

Information regarding our non-cancellable lease and other purchase commitments as of December 31, 2025, can be found in Note 7, "Balance Sheet Components" and Note 10, "Commitments and Contingencies" to our consolidated financial statements.

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To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.

We believe that of our significant accounting policies, which are described in Note 2, "Summary of Significant Accounting Policies" to our consolidated financial statements, the following accounting policies and specific estimates involve a greater degree of judgement and complexity.

We believe that of our significant accounting policies, which are described in Note 2, "Summary of Significant Accounting Policies" to our consolidated financial statements, the following accounting policies, and specific estimates involve a greater degree of judgment and complexity.

Revenue Recognition

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Any change in judgments with respect to these assumptions and estimates could impact the timing or amount of revenue recognition.

Management is required to exercise judgment in determining our provision for income taxes.

The provision for income taxes is determined by taking into account guidance related to uncertain tax positions.

Judgment is required in assessing the timing and amounts of deductible and taxable items.

Deferred tax assets are amounts available to reduce income taxes payable on taxable income in future years and are initially recognized at enacted tax rates.

We regularly assess the need for a valuation allowance against our deferred tax assets.

In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets as well as the nature of the deferred tax attribute to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized.

For the year ended December 31, 2025, the valuation allowance was released on U.S.

and state deferred tax assets, with the exception of California state and Canadian tax credits, due to positive evidence that the assets are more likely than not to be realized in future years.

The Company will continue to assess all available evidence during future periods to evaluate any changes to the realization of its deferred tax assets.

All of the factors that the Company considers in evaluating whether and when to establish or release all or a portion of the deferred tax asset valuation allowance involve significant judgment.

Although we believe that we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different.

We make adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate.

To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences may affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and results of operations.

Recent Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis