What changed in this filing

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Item 1. Legal Proceedings

2025-04-23 compared with 2024-10-23 · 106 added, 103 removed, 525 unchanged (28% of the section changed)

13 unchanged sentences

• Reader ICs:

Phychips Inc, Shanghai Fudan Microelectronics Group and MagicRF.

Phychips Inc, Shanghai Fudan Microelectronics Group, MagicRF and NationRFID.

• Readers and gateways:

Most major reader and gateway suppliers leverage, or have a stated intent to leverage, our platform.

• Test and measurement systems:

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When we introduce new products and services, our success in ramping adoption depends, in part, on us making those products and services easy for our partners and end users to deploy and use.

For example, for our new M800-family endpoint ICs, we are currently significantly supporting our inlay partners to produce high-performing, high-quality inlays.

Until our partners are able to deploy our products widely, adoption and our operating results could suffer.

For example, when we launched our M800-family endpoint ICs, we supported our inlay partners in producing high-performing, high-quality M800-based inlays.

Without this support, M800 adoption would have been delayed and our operating results would have suffered.

We cannot guarantee we will be able to provide sufficient support for future products, in which case our operating results could suffer.

Our ability to deliver enterprise solutions at scale are nascent.

We believe we are still at a very early stage in our ability to deliver enterprise solutions.

We are developing solutions for retail self-checkout and loss prevention and SC&L package routing that have been, or that we expect to be, deployed by the industry-leading enterprise end users.

However, to fully capitalize on our platform's potential, we must make our current offerings repeatable across multiple enterprises as well as deliver additional solutions to enterprise needs.

If we do not succeed in identifying, developing, selling and deploying enterprise solutions with top-tier partners and end users across a range of markets and use cases, then our business prospects will suffer.

We have developed, and continue developing, solutions for retail self-checkout and loss prevention and SC&L package routing that have been, or that we expect to continue being, deployed by industry-leading enterprise end users.

We have also launched features in Gen2X that we believe will improve RAIN’s ability to deliver cost-effective solutions to enterprises.

However, to fully capitalize on our platform's potential, we must make our current offerings repeatable across multiple enterprises and in a variety of market segments.

We must also develop relationships with top-tier solution partners to gain access to and address challenging new use cases.

If we do not succeed in identifying, developing, selling and deploying enterprise solutions, particularly solutions that rely on autonomous reading, with top-tier partners and end users and across a range of markets and use cases, then our business prospects will suffer.

Delivering enterprise solutions requires a network of partner products and services that complement our own product offerings and that together address enterprise needs.

We and our partners may be unable to successfully acquire customers for our enterprise solutions, or to successfully address our market opportunity.

Delivering enterprise solutions requires a network of partner products and services that complement our own and that together address enterprise needs.

Convincing enterprises to partner with us to solve their business problems—including evaluation, design, deployment, operations and services, as well as integrating RAIN data into the enterprise's information systems—requires tight coordination among our and our partners' sales, marketing, operations and engineering teams.

We, or our partners, may be unable to successfully acquire customers for our enterprise solutions, or successfully address our market opportunity.

Although we have partners who can successfully introduce our platform, or aspects of it, to their customers, even today their knowledge of our platform and RAIN in general is often still nascent.

If we do not build our network of solutions, and partners to deliver those solutions, and broaden our efforts to deliver solutions that leverage our platform in large, complex enterprise opportunities, then our business prospects will suffer.

If we do not build our enterprise solutions platform and our partner network to deliver these solutions effectively, our business prospects will suffer.

We rely on endpoint IC sales to generate most of our revenue.

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To compete profitably, we must continually improve our technology and processes, reduce unit costs in line with lower selling prices, and introduce new, higher margin products.

If we are unable to offset ASP reductions with increased sales volumes or reduced product costs, or if we are unable to introduce new products that command higher prices and better gross margins, then our overall revenue and gross margins will suffer.

If we are unable to offset ASP reductions with increased sales volumes or reduced

product costs, or if we are unable to introduce new products that command higher prices and better gross margins, then our overall revenue and gross margins will suffer.

Though less common, we have also increased prices from time to time, especially during times of increasing wafer costs.

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For example, some contracts specify future IC, reader or gateway pricing or contain most-favored-customer pricing for certain products.

Other agreements contain exclusivity terms that prevent us from pursuing certain business with other customers during the exclusivity period.

Other agreements may contain exclusivity terms that prevent us from pursuing certain business with other customers during the exclusivity period.

Reducing prices or offering favorable terms to one customer could adversely affect our ability to negotiate favorable terms with other customers.

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Even when convinced, they often undertake long pilot programs and qualifications prior to placing orders.

These pilot programs and qualifications can be time-consuming and expensive, and there is no assurance they will

result in an order for our products.

These pilot programs and qualifications can be time-consuming and expensive, and there is no assurance they will result in an order for our products.

If we fail to develop new products that adequately or competitively address end users’ or our partners’ needs, then we may not receive product orders, which could adversely affect our business, prospects and operating results.

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We have historically taken a leadership position in developing RAIN industry standards, including with GS1 and ISO, and have designed our products to comply with those standards.

We could lose that leadership position;

our influence in standards development could diminish;

or we could choose not to participate in certain standards activities.

For any number of reasons we could lose that leadership position or our influence in standards development, or we could choose not to participate in certain standards activities.

New or changed industry standards could affect us negatively.

If industry standards diverge from our or the RAIN market’s needs, then our products may fail to keep pace with the market or cause end users to delay their deployments.

Moreover, the adoption or expected adoption of new or changed standards could slow sales of our existing products before we can introduce new products that meet the new or changed standards.

New standards or changes to existing standards could also limit our ability to implement new features in our products.

If industry standards were to diverge from our or the RAIN market’s needs, then our products could fail in the market or cause end users to delay their deployments.

Moreover, the adoption or expected adoption of new or changed standards could slow sales of our existing products before we can introduce new products that meet the new or changed standards, and could also limit our ability to implement new features.

The lost opportunities as well as time and expense to develop new products or change our existing products to comply with new or changed standards could be substantial, and we may not ultimately succeed in developing products that comply with the new or changed standards.

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Our readers and gateways are collectively certified for use in more than 40 countries worldwide, including the United States, Canada, Mexico, China, Japan, South Korea and every country in the European Union, or the EU.

Our products operate in spectrum bands in which governments permit the use of RFID/RAIN technology.

If spectrum regulations or the application or enforceability or such regulations should change, or if our products were found to be noncompliant despite being certified, we could need to redesign our products, potentially resulting in significant costs, including costs associated with obsolete inventory.

Our products operate in spectrum bands where they are certified to transmit.

If the spectrum regulations were to change, or if our products were found to be noncompliant despite being certified to operate, then we would need to redesign our products, potentially resulting in significant costs, including costs associated with obsolete inventory.

Regulatory changes may also cause us to forego opportunities, adversely affecting our business.

In April 2024, NextNav Inc.

asked the Federal Communications Commission, or the FCC, to initiate a proceeding that would consider whether to reconfigure the 902–928 MHz ISM spectrum, or Lower 900 MHz Band, in which RAIN and other unlicensed

services operate to enable a terrestrial backup to the U.S.

Global Positioning System.

To pay for the backup system, NextNav also asked for a license to use certain spectrum bands, including parts of the Lower 900 MHz Band used for RAIN operations, to deliver 5G broadband services.

If approved as proposed, this ISM spectrum reconfiguration could interfere with RAIN radio transmissions and negatively impact the RAIN industry.

We and other RAIN providers and end users, as well as other Lower 900 MHz Band users, have already registered our opposition to NextNav’s petition and asked the FCC to reject it quickly.

If the FCC declines to do so then we expect there to be a protracted decision-making process.

The FCC would be required to consider all relevant comments and material of record before it decides whether to proceed with the proposal, issue a new or modified proposal, or take no action on the proposal.

The fate of NextNav’s petition is uncertain at this time, but if the FCC were to adopt NextNav's proposal and customers were not able to consistently use our RAIN products without interference, then our business would be significantly and negatively affected.

asked the Federal Communications Commission, or FCC, to initiate a proceeding to reconfigure the 902–928 MHz ISM band, or Lower 900 MHz Band, in which we and other unlicensed services operate, to create a terrestrial backup to the U.S.

Global Positioning System to provide positing, navigation and timing, or PNT, data.

To pay for their proposed system, NextNav also asked to be able to license certain spectral bands, including parts of the Lower 900 MHz Band, to others to deliver 5G

broadband services.

If approved as proposed, this ISM band reconfiguration could interfere with our RAIN radio transmissions and negatively impact us and our industry.

We and other RAIN providers and end users, as well as other Lower 900 MHz Band users, have already registered opposition to NextNav’s petition and asked the FCC to reject it.

In March 2025, the FCC launched a Notice of Inquiry to explore the ways in which the FCC could support alternative PNT technologies and solutions.

The NOI process will delay consideration of NextNav's petition.

The fate of NextNav’s petition is uncertain at this time, but if the FCC were to adopt NextNav's proposal and our end users were not able to use our RAIN products without harmful interference, then our business would be significantly and negatively affected.

Sales of some of our products could cannibalize revenue from other products.

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While we believe we have valuable RAIN intellectual property and aspire to monetize that intellectual property by licensing it to third parties, including third parties who compete with us to some extent, our experience in doing so is nascent, and our ability to grow licensing revenue remains subject to numerous risks and uncertainties.

To materially grow our licensing program and revenues, we will need to maintain and grow our intellectual property portfolio and continue to research and develop RAIN innovations that will generate and maintain demand for licenses to our technology and features.

We will also need to develop and maintain an ability to monitor infringement of our intellectual property rights by others and possibly seek enforcement action against those who attempt to infringe our intellectual property rights.

To materially grow our licensing program and revenue, we will need to maintain and grow our intellectual property portfolio and continue to research and develop RAIN innovations that will generate and maintain demand for licenses to our technology and features.

We must also develop and maintain an ability to monitor infringement of our intellectual property rights by others and possibly seek enforcement action against those who attempt to infringe our intellectual property rights.

These enforcement actions could require significant investments in management time and attention as well as cash as we incur legal and other expenses.

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These are just some of the risks and uncertainties we face with respect to our nascent licensing program.

We currently derive a substantial share of our licensing revenues from NXP, our primary endpoint IC competitor, based on our Settlement Agreement with them.

We currently derive a substantial share of our licensing revenue from NXP, our primary endpoint IC competitor, based on our Settlement Agreement with them.

For more information regarding the terms of our Settlement Agreement with NXP, please refer to Note 6 of our condensed consolidated financial statements included elsewhere in this report.

If NXP were to breach its license payment obligations, or if NXP were to design around our intellectual property rights and exercise its right to terminate our license before the end of the agreement's 10-year term, our licensing revenues would decline and our overall results of operations and cash flows would suffer.

If NXP were to breach its license payment obligations, or if NXP were to design around our intellectual property rights and exercise its right to terminate our license before the end of the agreement's 10-year term, our licensing revenue would decline and our overall results of operations and cash flows would suffer.

Risks Relating to Our Personnel and Business Operations

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If our suppliers fail to manufacture our products at reasonable prices or with satisfactory quality levels, then our ability to bring those products to market and our reputation could both suffer.

If supplier capacity diminishes, whether from equipment failures, closures, bankruptcy, capacity allocation, in response to public health events (such as Covid-19), catastrophic loss of facilities or otherwise, then we could have difficulty fulfilling orders, our revenue could decline and our growth prospects could be impaired.

If supplier capacity diminishes, whether from equipment failures, closures, bankruptcy, capacity allocation, in response to macroeconomic conditions or public health events (such as Covid-19), catastrophic loss of facilities or otherwise, then we could have difficulty fulfilling orders, our revenue could decline and our growth prospects could be impaired.

Transitioning our product manufacturing to new providers would take many months and, in the case of ICs, could take years.

transition would require a requalification by our customers or end users, which could also adversely affect our ability to sell our products as well as our operating results.

Shortages of silicon wafers, integrated-circuit (IC) post-processing capacity or components used in our readers and gateways may adversely affect our ability to meet demand for our products and adversely affect our revenue and/or gross margins.

Any transition would require a requalification by our customers or end users, which could also adversely affect our ability to sell our products as well as our operating results.

Shortages of silicon wafers, IC post-processing capacity or components used in our readers and gateways may adversely affect our ability to meet demand for our products and adversely affect our revenue and/or gross margins.

Wafer shortfalls limit sales and may cause market-share losses.

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We procure wafers on a purchase-order basis, so our wafer supply is not guaranteed, and we may not receive adequate supply from our foundry partners when shortages occur.

Wafer shortages may also artificially increase bookings as customers over-order our products, and then cause sales declines as those customers consume their accumulated inventory.

Wafer shortfalls may also artificially increase bookings as customers over-order our products, and then cause sales declines as those customers consume their accumulated inventory.

Additionally, if our suppliers charge us more but we are unable to raise our prices to cover those higher costs, our gross margins and other financial results could suffer.

Shortages of our silicon products can also occur due to post-processing constraints.

Shortfalls of our silicon products can also occur due to post-processing constraints.

To convert the wafers we receive from our foundry partner into saleable ICs, we perform additional steps including testing, thinning, bumping and dicing.

If our third-party suppliers are unable to efficiently perform these steps, and our production capacity is constrained as a result, we may be unable to satisfy demand for our products, and our financial results could suffer.

We have also experienced shortages and price increases for components we use in our readers and gateways, as well as in packaging and test capacity for our reader ICs, and we may continue to experience such shortages and price increases in the future.

Any such shortages or price increases will negatively impact our product availability and costs and our financial results will suffer.

We bear inventory risks because our products have relatively long lead times, demand for our products are hard to accurately forecast, and we rely on partners to sell and distribute our products.

We may also experience shortfalls and price increases for components we use in our readers and gateways, as well as in packaging and test capacity for our reader ICs.

Any such shortfalls or price increases will negatively impact our product availability and costs and our financial results will suffer.

We bear inventory risks because our products have relatively long lead times, demand for them is hard to accurately forecast, and we rely on partners to sell and distribute them.

We maintain inventory to meet customer demand.

To guard against wafer shortages, and to allow for production risks given the relatively long lead times for our many of our products, we may invest in inventory to support anticipated business growth, like we did with endpoint IC inventory in 2017, 2020 and late 2022/early 2023.

To guard against wafer shortages, and to allow for production risks given the relatively long lead times for our many of our products, we have in the past and may invest again in inventory to support anticipated business growth.

When we introduce new products, we may also initially carry higher inventory or have slower inventory turns depending on market acceptance.

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Changes in global trade policies could have a material adverse effect on us.

Changes in U.S.

and foreign laws and policies governing foreign trade, manufacturing, development and investment in the jurisdictions where we currently develop and sell products, and any negative consequences resulting from such changes, could materially affect our business.

government has imposed significant tariffs on a variety of items imported from other countries, particularly China.

China responded by imposing significant tariffs on a variety of items imported from the United States.

These tariffs could materially and adversely affect our ability to compete internationally.

Although the United States and China signed a preliminary trade agreement in early 2020, the tariffs remain in place as negotiations between the countries continue.

The future of these tariffs, as well as the possibility for new tariffs, remains uncertain.

Changes in U.S.

and Chinese industrial policy also contribute to uncertainty regarding the global trade environment.

Other causes of uncertainty include the effects of sanctions and other actions against Russia after Russia invaded Ukraine.

While we do not today have business with Russian partners or end users, the effect of these sanctions on global trade and macroeconomic conditions generally—such as increasing energy costs and inflation—could nevertheless negatively affect our business.

The state of tariffs and other trade measures worldwide remains very uncertain.

Trade is a focus of the current U.S.

administration, and the administration has been very active in this area.

Overall, whether and when tariffs will be implemented and their amount, scope and nature, are unclear.

Also unclear, is how other countries will respond to the United States’ trade proposals and actions.

As of now, high reciprocal tariffs are in effect between China and United States and the United States has announced, but paused, tariffs on goods imported from many other countries, including Mexico, Canada, Taiwan, Malaysia and the European Union.

Significant trade partners such as Mexico, Canada and the European Union have announced retaliatory tariffs.

Further, while the United States has exempted certain technology products such as semiconductors and electronics such that our products are not subject to the announced tariffs, it has also initiated Section 232 investigations on such products, possibly leading to the imposition of specific tariffs on these products or on products that incorporate them.

Given this dynamic environment, it is not possible to know with any degree of certainty what the negative direct and indirect consequences of tariffs could be on our business and financial results.

We believe the direct impact of U.S.

tariffs on our endpoint IC business is likely to be manageable because we import only a small portion of our wafers into the United States.

However, the indirect effects of U.S.

tariffs on products containing our endpoint ICs could be significant.

China remains a key producer of the goods our endpoint ICs connect, and a key producer of readers using our reader ICs, so the imposition of high U.S.

tariffs on imports from China could significantly and negatively affect our business and financial results.

We are subject to risks inherent in operating abroad and may not be able to successfully maintain or expand our international operations.

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• inflation and fluctuations in foreign currency exchange and interest rates;

• restrictions, or changes thereof, on foreign trade or investment, including currency-exchange controls, including as a result of sanctions against Russia;

• changes in a country’s or region’s political, regulatory, legal or economic conditions, including, for example, global and regional economic disruptions caused by any future public health outbreaks or pandemics, including a resurgence of Covid-19;

• restrictions, or changes thereof, on foreign trade or investment, including trade wars and currency-exchange controls, including as a result of sanctions against Russia;

• political, social and economic instability abroad;

wars and other armed conflicts, such as those in Ukraine and the Gaza Strip;

wars and other armed conflicts, such as those in Ukraine;

geopolitical tensions, such as those between the United States, China and Taiwan;

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• inequities or difficulties obtaining or maintaining export and import licenses;

• differing labor regulations, including where labor laws may be more advantageous to employees than in the United States;

• differing labor regulations, including where labor laws may be more advantageous to employees outside the United States;

• restrictions on earnings repatriation;

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• regulations, and changes thereof, relating to data privacy, cybersecurity and the unauthorized use of, or access to, commercial and personal information, particularly in Europe.

We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets.

We must export and import our products in compliance with U.S.

export controls, including the Commerce Department’s Export Administration Regulations and economic and trade sanctions established by the Treasury Department’s Office of Foreign Assets Controls, as well as similar controls established in the countries in which we do business.

We are subject to governmental export and import controls, and trade and economic sanctions that could impair our ability to compete in international markets and subject us to liability if we fail to comply.

We must export and import our products and conduct our business activities in compliance with U.S.

export controls and trade and economic sanctions, including the Commerce Department’s Export Administration Regulations and economic and trade sanctions established by the Treasury Department’s Office of Foreign Assets Controls, as well as similar controls established in the countries in which we do business.

For example, the U.S.

Commerce Department recently strengthened rules regarding semiconductor- and supercomputer-related products and restrictions against sending certain chips and chip-related technology and software to China without an export license.

The modifications included an expansion of the products and destinations that require licensing.

government has continued to expand controls restricting the ability to send certain products and technology related to semiconductors and semiconductor manufacturing to and within China and additional destinations.

These expanded controls include imposing additional licensing requirements on exports, re-exports, and transfers of certain ICs and products containing those ICs to and within China and additional destinations.

In addition, the United States and other countries continue to expand the economic sanctions and export control restrictions imposed against Russia and Belarus and certain Russian nationals and entities after Russia invaded Ukraine.

We must undertake additional diligence efforts to comply with these rules, which may be time-consuming and result in delayed or lost opportunities.

We must undertake additional diligence efforts to comply with these, and other, rules, which may be time-consuming and result in delayed or lost opportunities.

We may not always be successful in obtaining necessary export or import licenses, and our failure to obtain required export or import approval for our products or limitations on our ability to export or sell our products may harm our domestic and international sales and negatively affect our revenue.

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or changes in the countries, persons or technologies targeted by these regulations could delay us introducing new products in international markets, decrease use of our products by, or decrease our ability to export or sell our products to, existing or potential customers with international operations, adversely affecting our business and results of operations.

Instability or deterioration in the political, social, business or economic conditions in key jurisdictions could harm our supply or development of products.

Instability or deterioration in the political, legal, social, business or economic conditions in the U.S.

or in key jurisdictions could harm our business.

Political, legal, social, business or economic instability in the United States could negatively affect our business.

For example, more restrictive immigration laws or more restrictive enforcement of existing laws in the United States where we are headquartered could negatively affect our ability to hire and retain qualified personnel in vital roles.

Deterioration in the political, social, business or economic conditions in any jurisdictions in which we have significant suppliers, distributors or end users—including as a result of natural disasters, labor strikes, public health crises, geopolitical events or other developments—could slow or halt product shipments or disrupt our ability to manufacture, test or post-process our products, as well as our ability to effectively and timely execute on end-user deployments.

We outsource our manufacturing and production to suppliers in a small number of Asian jurisdictions including Thailand, Malaysia, Taiwan and China.

Some of these jurisdictions experienced significant restrictions during the Covid-19 pandemic.

These jurisdictions have also experienced significant changes in political, social, business or economic conditions in the past and may experience them in the future.

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Any such developments could materially and adversely affect our business, financial condition and results of operations.

Our business operations could be adversely affected by public health outbreaks and pandemics, or by natural disasters.

Starting in 2020, Covid-19 created significant worldwide economic volatility, uncertainty and disruption, and presented our business with several risks and challenges.

Although the Covid-19 global health emergency officially ended in 2023, experts caution that Covid-19 remains a public health risk, and the extent to which any public health outbreak or pandemic could impact future market demand and our business results is uncertain.

In addition, other disasters, whether natural or manmade, could decrease demand for our products, disable our facilities, disrupt operations or cause catastrophic losses.

Our business operations could be adversely affected by natural disasters or public health outbreaks and pandemics.

Natural disasters, whether natural or manmade, could decrease demand for our products, disable our facilities, disrupt operations or cause catastrophic losses.

We have facilities in areas with known seismic activity, such as our headquarters in Seattle, Washington.

We have facilities in areas with known flooding, such as our office in Shanghai, China.

We have a wafer post-processing

subcontractor in Thailand, a region with a known, and recent, history of flooding.

We have a wafer post-processing subcontractor in Thailand, a region with a known, and recent, history of flooding.

A loss at any of these or other of our or our suppliers’ facilities could disrupt operations, delay production and shipments, reduce revenue and engender potentially large expenses.

We do not carry insurance covering potential losses caused by pandemics, earthquakes, floods or other disasters.

Covid-19 created significant worldwide economic volatility, uncertainty and disruption, and presented our business with significant risks and challenges.

The Covid-19 global health emergency officially ended in 2023.

However, the Covid-19 experience highlights the significant negative impacts a public health outbreak or pandemic could impose on future market demand and our business results.

Risks Relating to Our Relationships with Partners and End Users

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If we fail to retain our endpoint IC, reader IC, reader or gateway partners or distributors or fail to establish relationships with new partners, then our business, financial condition or operating results could be harmed.

In 2023, sales to tag OEMs Avery Dennison and Arizon accounted for 33% and 11% of our total revenue, respectively.

In 2024, sales to three major customers accounted for 60% of our total revenue.

Sales concentration to a small number of OEMs decreases our bargaining power and increases the risk that our pricing or sales could decline based on actions taken by our competitors or our own failure to compete effectively.

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Our reserve estimates for products stocked by our distributors are based primarily on reports provided to us by those distributors, typically monthly.

If the inventory and resale information our partners and distributors provide is inaccurate, or if we do not receive it in a timely manner, then we may not have a reliable view of products being sold to end users which could negatively impact our operating results.

If the inventory and resale information our partners and distributors provide is inaccurate, or if we do not receive it in a timely manner, then we may not have a reliable view of products expected to be sold to end users which could ultimately have a negative impact on our operating results.

If our partners overestimate demand, they may invest in building too much capacity, which would put pricing pressure on the RAIN industry.

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For example, our operating results may suffer if our efforts developing partner relationships increase our costs but do not increase revenue.

Partner relationships may also include exclusivity provisions, multiple levels of distribution, discounted pricing or investments in other companies.

Partner relationships may also include exclusivity provisions, multiple levels of distribution,

discounted pricing or investments in other companies.

The cost of developing and maintaining these partner relationships may go unrecovered and our efforts may not generate a corresponding revenue increase.

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• managing both positive and negative publicity.

Product supply shortages have challenged our ability to meet market needs and we have increased prices in response to our suppliers increasing their prices to us.

From time to time, product supply shortages have challenged our ability to meet market needs and we have increased prices in response to our suppliers increasing their prices to us.

Our inability to supply partners and end users with products they need, and/or our need to increase our prices could result in long-lasting, negative consequences to our relationships with those partners and end users, to RAIN adoption and to our business overall.

Increasing attention to environmental, social and governance and regulatory matters may cause us to incur additional costs or expose us to additional risks.

Investors, governmental and nongovernmental organizations, partners and end users are increasingly focusing on environmental, social and governance, or ESG, practices.

Investors, governmental and nongovernmental organizations, partners and end users remain focused on environmental, social and governance, or ESG, practices.

Our ESG practices may not meet their standards, and they as well as advocacy groups may campaign for us to change our business or practices to address their ESG-related concerns.

Our failure, or perceived failure, to adequately respond to any such campaigns could harm our business and reputation and negatively impact the market price of our securities.

Moreover, with the continued evolution of ESG practices and reporting and disclosure requirements, our costs related to those ESG practices and reporting and disclosure requirements could increase, which could negatively affect our operating results.

For example, the SEC has adopted final rules regarding climate-related disclosures in public companies’ periodic reporting, and compliance with these rules—including the implementation of necessary internal controls and reporting procedures—may lead to increased expenses and additional demands on our management and board of directors.

Moreover, our costs related to those ESG practices and reporting and disclosure requirements could increase, which could negatively affect our operating results.

We are subject to disclosure and reporting requirements for companies that use “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries in their products, whether or not these products are manufactured by third parties.

These requirements could affect the sourcing and availability of minerals that are used in the manufacture of our products.

We have to date incurred costs and expect to incur significant additional costs associated with complying with the disclosure requirements, including for example, due diligence in regard to the sources of any conflict minerals used in our products, in addition to the cost of remediation and other changes to products, processes or sources of supply as a consequence of such verification activities.

These requirements could affect the sourcing and availability of minerals used in manufacturing our products.

Additionally, we may face reputational challenges with our customers and other stakeholders if we are unable to sufficiently verify the origins of all minerals used in our products through the due diligence procedures that we implement.

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• our intellectual property rights will provide competitive advantages to us;

• our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties;

• our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes successfully;

• any of our pending or future patent applications will issue or have the coverage we originally sought;

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These damages could be sizable and disproportionate to the business we derive from those partners or end users.

Moreover, we may not know whether we are infringing a third party’s intellectual property rights due to the

large number of RAIN-related patents or other systemic factors.

Moreover, we may not know whether we are infringing a third party’s intellectual property rights due to the large number of RAIN-related patents or to other systemic factors.

For example, patent applications in the United States are maintained in confidence for up to 18 months after filing or, in some instances, for the entire time prior to patent issuance.

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These concerns include unauthorized parties potentially collecting personal information or personal data, tracking consumers, stealing identities or causing other issues relating to privacy or data protection.

Any such incident could cause our or our partners’ or end users’ operations to be disrupted and subject us or them to regulatory investigations or proceedings and claims, demands or litigation;

consequently, we could face potential liability and significant costs and expenses to remediate or otherwise respond to the incident.

Any such incident could cause our or our partners’ or end users’ operations to be disrupted and subject any of us to regulatory investigations or proceedings and claims, demands or litigation.

Consequently, we could face potential liability and significant costs

and expenses to remediate or otherwise respond to the incident.

Any failure or perceived failure to comply with any privacy- or security-related laws, regulations or contractual or other obligations to which we are or may be subject may result in regulatory actions, claims or litigation;

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and fines, penalties or other liabilities.

Any actions or concerns about security and privacy may be expensive to defend, cause us to expend substantial time and resources and damage our reputation and operating results or negatively impact overall RAIN industry development, even if unfounded.

We cannot be sure that any limitation-of-liability provisions in our agreements with customers, contracts with third-party vendors and service providers or other contracts are enforceable or adequate or will protect us from any liabilities or damages against claims relating to a security breach or other privacy- or security-related issue.

Any actions or concerns about security and privacy may be expensive to defend, cause us to expend substantial time and resources and damage our reputation and operating results and/or negatively impact overall RAIN industry development, even if unfounded.

We cannot be sure that any limitation-of-liability provisions in our agreements with customers, contracts with third-party vendors and service providers or other contracts will protect us from liabilities or damages against claims relating to a security breach or other privacy- or security-related issue.

Government regulations and guidelines and other standards relating to consumer privacy and cybersecurity may adversely impact adoption of our products, require us to make design changes or constrain our ability to implement new and desired product features, and actual or alleged violations of laws relating to privacy or cyber security may result in claims, proceedings and liability.

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and continued evolution of these laws, regulations, standards, guidelines and other actual and asserted obligations, as well as their interpretation and enforcement, may require us to modify our products, practices and policies, which we may not be able to do on commercially reasonable terms or at all, and otherwise could cause us to incur substantial costs and expenses.

Any failure or perceived failure by us or any third parties with which we do business to comply with these laws and regulations or other actual or asserted obligations may result in claims or litigation;

Any failure or perceived failure by us or any third parties with which we do business to comply with these laws and regulations or other actual or asserted obligations relating to privacy, data protection or security may result in claims or litigation;

actions against us by governmental entities;

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Additionally, if we fail to develop products that meet end-user privacy requirements, then end users may choose not to use our products.

Although the Gen2 V3 protocol includes features for addressing consumer privacy and authenticating a tag, and although we have incorporated custom features in our products designed to further protect consumer privacy, a third party may still breach these features, including as implemented in our products, in which case our reputation could be damaged and our business and prospects could suffer.

The RAIN radio protocol includes features addressing consumer privacy and authentication, and we have incorporated additional features in our products that further protect consumer privacy.

Nevertheless, a third party could still breach these features and, if such breach occurs, our reputation could be damaged and our business and prospects could suffer.

A breach of security or other security incident impacting our systems or others used in our business could have an adverse effect on our business.

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We cannot be certain that we will attain or sustain profitability in the future.

We have incurred losses since our inception in 2000, with a net loss of $43.4 million for the year ended December 31, 2023, and an accumulated deficit of $430.2 million as of December 31, 2023.

Although we reported GAAP net income for the first three quarters of 2024, there can be no assurance that we will be able to sustain profitability in the future.

Until 2024, we have incurred losses each year since our inception in 2000.

Our ability to attain or sustain profitability depends on numerous factors, many of which are out of our control, including continued RAIN industry adoption and us maintaining or growing our market share.

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Material factors that contribute to fluctuations in our operating results include:

• macroeconomic conditions, including inflation, recession or economic slowdown, and their impact on our business and that of our suppliers, partners and end users;

• macroeconomic conditions, including tariffs and trade wars, inflation, recession or economic slowdown, and their impact on our business and that of our suppliers, partners and end users;

• fluctuations or delays in RAIN adoption and deployment by end users;

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and foreign research and development expenditures over five and 15 tax years, respectively.

We have accounted for

these changes in accordance with our understanding of the guidance available as of the date of this filing and as described in more detail in our financial statements.

We have accounted for these changes in accordance with our understanding of the guidance available as of the date of this filing and as described in more detail in our financial statements.

The CHIPS and Science Act, enacted August 9, 2022, provides tax credits for semiconductor manufacturing activities within the United States, but because we outsource our semiconductor manufacturing we do not expect to be entitled to these tax credits.

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• changes in governmental regulations or in the status of our regulatory approvals;

• unstable political and economic conditions, including instability resulting from wars and other armed conflicts, such as those in Ukraine and the Gaza Strip, or geopolitical tensions, such as those between the U.S., China and Taiwan;

• unstable political and economic conditions, including instability resulting from tariffs and trade wars, wars and other armed conflicts, such as those in Ukraine and the Gaza Strip, or geopolitical tensions, such as those between the United States, China and Taiwan;

• the trading volume of our stock;

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This activity could cause a decrease in our stock price.

For more information on the 2019 Notes, the 2021 Notes and the capped-call transactions, see Note 7 of our condensed consolidated financial statements included elsewhere in this report.

For more information on the 2019 Notes, the 2021 Notes and the capped-call transactions, see Note 8 of our consolidated financial statements included elsewhere in this report.

Our principal stockholders and management own a significant percentage of our stock and are able to exercise significant influence over matters subject to stockholder approval.

As of September 30, 2024, our executive officers, directors and principal stockholders, together with their respective affiliates, beneficially owned approximately 47.2% of our stock.

As of March 31, 2025, our executive officers, directors and principal stockholders, together with their respective affiliates, beneficially owned approximately 55.9% of our stock.

As a result, our executive officers, directors and principal stockholders may be able to significantly influence, in their capacity as stockholders, matters requiring approval by our stockholders, including electing directors and approving mergers, acquisitions or other transactions.

They may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests.

This ownership concentration could have the effect of delaying or preventing a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which in turn could have a material adverse effect on our stock price.

This ownership concentration could have the effect of

delaying or preventing a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which in turn could have a material adverse effect on our stock price.

This ownership concentration could also prevent attempts by our stockholders to replace or remove our board of directors or management.

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If we are unable to generate sufficient cash flow, then we may be required to pursue other alternatives, such as selling assets, restructuring indebtedness or obtaining additional equity capital on terms that may be onerous or highly dilutive.

Our ability to refinance any of our indebtedness, including the 2021 Notes, will depend on the

capital markets and our financial condition at that time.

Our ability to refinance any of our indebtedness, including the 2021 Notes, will depend on the capital markets and our financial condition at that time.

We may not be able to pursue these alternatives on favorable terms or at all, which could result in us defaulting on our debt obligations.

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any action asserting a breach of fiduciary duty;

asserting a claim against us arising pursuant to the Delaware General Corporation Law, our certificate of incorporation or our bylaws;

any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our certificate of incorporation or our bylaws;

or any action asserting a claim against us that is governed by the internal affairs doctrine.

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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-Q

Item 1. Legal Proceedings