What changed in this filing

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Item 1. Legal Proceedings

2026-04-29 compared with 2025-10-29 · 171 added, 182 removed, 470 unchanged (43% of the section changed)

11 unchanged sentences

• Endpoint ICs:

NXP, EM Microelectronic, Kiloway, Quanray, Shanghai Fudan Microelectronics Group, Alibaba and Alien.

NXP, Kiloway, Quanray, Shanghai Fudan Microelectronics Group, Alibaba and Alien.

• Reader ICs:

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

Phychips Inc and Shanghai Fudan Microelectronics Group.

• Readers and gateways:

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

• Test and measurement systems:

• Tag production systems:

These competitors include companies that have much greater financial, operating, research and development, marketing and other resources than us.

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They could also bundle other technologies, including those we do not have in our product portfolio, with their RAIN products.

Our partners, including our OEMs, ODMs, distributors, SIs, VARs and solution partners, may choose to compete with us rather than purchase our products, which would not only reduce our customer base but also increase competition in the market.

Our partners, including our OEMs, ODMs, distributors, SIs, VARs and solution partners, may compete with us rather than purchase our products, which could reduce our customer base and increase competition.

Companies in adjacent markets or newly formed companies may decide to enter our market, particularly as RAIN adoption grows.

Further, the Chinese government has made development of the Chinese semiconductor industry a priority, potentially increasing competition for us globally while possibly restricting our ability to participate in the Chinese market.

Further, the Chinese government has made developing the Chinese semiconductor industry a priority, potentially increasing competition for us globally while possibly restricting our ability to participate in the Chinese market.

RAIN adoption is concentrated in key markets and the extent and pace of RAIN market adoption beyond those markets is uncertain.

Our financial performance depends on the pace of end-user RAIN adoption in key markets, such as retail apparel (our largest market) retail general merchandise and SC&L.

Our financial performance depends on the pace of end-user RAIN adoption in key markets, such as retail apparel (our largest market), retail general merchandise, SC&L and food.

Although RAIN has been adopted to some degree by end users in those markets, those end users as well as the markets themselves are subject to business cycles and macroeconomic trends.

Continued RAIN adoption by those end users and in those markets may be at risk if and when negative business or economic conditions arise.

Continued RAIN adoption by those end users and in those markets may be at risk if and when negative business, geopolitical or economic conditions arise.

The RAIN opportunity is still developing.

RAIN adoption, as well as adoption of our platform and products, depends on many factors, including the extent to which end users understand and embrace the benefits that RAIN offers;

whether the benefits of RAIN adoption outweigh the cost and time to replace or modify end users’ existing systems and processes;

and whether RAIN products and applications meet end users’ current or anticipated needs.

RAIN adoption, as well as adoption of our platform and products, including our Gen2X features, depends on many factors, including the extent to which end users understand and embrace the benefits that RAIN and our platforms and products offer;

whether their benefits outweigh the cost and time to replace or modify end users’ existing systems and processes;

and whether they meet end users’ current or anticipated needs.

We have, at times, anticipated and forecasted a pace of end-user adoption that exceeded the actual pace of adoption.

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As a result, we may be unable to accurately forecast our future operating results including revenue, gross margins, cash flows and profitability, any or all of which could negatively impact our financial performance.

We must introduce new products, product enhancements and services to compete effectively.

We must introduce new products, services and solutions to compete effectively.

We introduce new products and services to advance our business, satisfy increasingly demanding end-user requirements and grow RAIN market adoption.

We commit significant resources developing and introducing these new products and services, and to improving the performance and reliability of, and reducing the costs of, our existing products and services.

Whether our new or enhanced products and services will succeed is uncertain.

Our success developing the technologies, processes or capabilities necessary or desired for new or enhanced products and services, or licensing or otherwise acquiring them from third parties, and our ability to introduce new or enhanced products and services before our competition, depends on many factors, including:

• our ability to identify new product capabilities or services that end users will widely adopt;

• our timely and efficient completion of the design process;

• our timely and efficient implementation of manufacturing, assembly and testing procedures;

• our attainment of appropriate product or service performance levels and product certifications;

We are also increasingly focused on providing enterprise solutions to partners and end users.

Whether our new or enhanced products, services and solutions will succeed is uncertain.

For example, our software and cloud services offerings have not yet grown into a material source of revenue, and whether or when our investment in these areas will be successful is uncertain.

Our success developing the technologies, processes or capabilities necessary or desired for new or enhanced products, services and solutions, or licensing or otherwise acquiring them from third parties, and our ability to introduce new or enhanced products, services and solutions before our competition, depends on many factors, including:

• our ability to identify new product capabilities, services or solutions that end users will widely adopt;

• timely and efficiently completing the design process;

• timely and efficiently implementing manufacturing, assembly and testing procedures;

• attaining appropriate performance levels and certifications;

• partnering successfully with others to deliver complementary products or services;

• the quality, reliability and selling price of our product or service;

• the effectiveness of our marketing, sales and support.

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.

• the quality, reliability and selling price of our products, services or solutions;

• marketing, sales and support effectiveness.

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

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

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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 is nascent.

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

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.

Our ability to develop and sell enterprise solutions at scale is nascent.

We are still developing our ability to build and sell enterprise solutions.

If we do not succeed in identifying, developing, selling, deploying and maintaining enterprise solutions with top-tier partners and key end users across various 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 be, deployed by industry-leading enterprise end users.

We have also launched features in Gen2X that we believe will improve our ability to deliver cost-effective enterprise solutions.

If we do not make our offerings repeatable across multiple enterprises and in various market segments, we may fail to capitalize on our platform’s potential.

We may not gain access to and address challenging new use cases, such as health and beauty, cosmetics, pharmaceuticals and food if we do not succeed in developing relationships with top-tier solution partners who know about and believe in our solutions.

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.

Delivering enterprise solutions requires a partner products and services network that complements our own and that together addresses 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.

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

We derive, and expect to continue to derive, most of our revenue from our endpoint ICs.

We derive, and expect to continue to derive for some time, most of our revenue from our endpoint ICs.

If demand declines, or if we are unable to procure enough wafers to meet the demand we have, or if we are unable to raise prices to offset cost increases, then our business and operating results will suffer.

In addition, the continued adoption of, and demand for, our endpoint ICs, derives in part from us demonstrating the benefits of using our systems.

In addition, the continued adoption of, and demand for, our endpoint ICs derives in part from us demonstrating their benefits using our platform.

If we fail to establish those benefits then we may be unsuccessful in countering competitive endpoint IC price pressures and our business and operating results could be adversely affected.

The average selling prices of our products could fluctuate substantially.

We compete aggressively in the endpoint IC market, and we have grown our endpoint IC volumes as the market itself has grown.

Whereas we believe the endpoint IC market and our opportunity will continue growing, the fact that our historically largest market segment, retail apparel, is now in mainstream adoption means significant new growth will be increasingly reliant on new market segments or product categories such as SC&L, retail general merchandise and food.

Increasing our market share is also key to our endpoint IC volume growth.

Our ability to consistently grow our endpoint IC volumes, particularly on a year-over-year basis, is not assured, and any failure to do so could negatively affect our financial results and stock price.

Average selling prices of our products could fluctuate substantially.

The average selling price, or ASP, of our products has historically decreased with time or to meet end-user demands, encourage adoption, address macroeconomic conditions or respond to competitive pressure.

As demand for older products declines, or as competition from competitors with lower product costs or lower profitability expectations increases, or during times of oversupply, ASPs may decline quickly.

ASPs can decline quickly for a number of reasons such as demand for older products declining, competition increasing, or during times of oversupply or overcapacity.

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.

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

If we are unable to offset ASP reductions with increased sales volumes or reduced costs, or if we are unable to introduce new products that command higher prices and better margins, then our financial results could suffer.

Though less common, we have also increased prices from time to time, especially during times of increasing wafer and/or post-processing costs.

For example, we raised prices in 2021, 2022 and 2023 to accommodate higher costs.

We may be required to raise prices again if macroeconomic conditions, including inflation, create upward pressure on our product costs.

Increased prices could dampen adoption and market growth.

We may be required to raise prices again if macroeconomic conditions, including inflation, or other causes, such as geopolitical instability, create upward pressure on our product costs.

Higher prices could reduce our market share and/or dampen adoption and market growth.

Pricing commitments and other restrictive provisions in our customer agreements could adversely affect our operating results.

In the ordinary course of our business, we enter into agreements containing pricing terms that could, in some instances, adversely affect our operating results and gross margins.

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

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

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

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Our overall product gross margins are affected by product mix, which can fluctuate based on supply and demand, competitive pressures and end-user needs and demand.

Endpoint IC sales constitute and likely will continue to constitute the majority of our product revenue.

For the most part, our endpoint ICs have historically had lower gross margins than our systems products but that may change in the future as we diversify our endpoint IC and systems products.

A shift in sales mix away from our higher margin products to lower margin products, either within our endpoint IC product portfolio or between our systems business and our endpoint ICs, could negatively affect our gross margins.

Endpoint IC sales comprise and likely will continue to comprise the majority of our product revenue.

For the most part, our endpoint ICs have historically had lower gross margins than our systems products.

Poor product quality could result in significant costs to us and impair our ability to sell our products.

1 unchanged sentence

Our products are both highly technical and deployed in large, complex systems in which errors, defects or incompatibilities can be problematic for our partners and end users.

If we are unable to identify or correct errors, defects, incompatibilities or other problems in our products, we could experience:

• loss of customer orders or customers;

• lost or delayed market acceptance (either of our products and solutions or RAIN generally);

• lost or delayed sales;

• loss of market share;

• damage to our brand and reputation;

• impaired ability to attract new customers;

• diversion of development resources;

• increased service and warranty costs;

• replacement costs;

• legal actions by our partners or end users;

• increased insurance costs.

If we are unable to identify or correct errors, defects, incompatibilities or other problems in our products, we could experience a number of negative consequences, including lost or delayed sales or market acceptance (either of our products and solutions or RAIN generally), loss of market share and damage to our brand and reputation, increased service, warranty and replacement costs and legal actions by our partners or end users.

Moreover, if we encounter product quality issues, then we may be required to incur significant time and costs to diagnose, test and fix the issues.

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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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An inability or limited ability of end user systems to exploit RAIN information may adversely affect the market for our products.

A successful end-user deployment requires not only tags and readers or gateways, but RAIN integration with information systems and applications that create business value from the RAIN data.

Unless third parties continue developing and advancing business analytics tools, and end users enhance their information systems to use these tools, RAIN deployments could stall.

Our efforts to foster third-party development and deployment of these tools could fail.

A successful end-user deployment requires not only tags, readers or gateways and operating software, but RAIN integration with information systems and applications that create business value from the RAIN data.

Unless end users have access to effective analytical tools that extract business value, and enable their information systems to use these tools, RAIN deployments could stall.

Our efforts to foster development and deployment of these tools could fail.

In addition, our guidance to business-analytics providers for integrating our products with their tools could prove ineffective.

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Technology developments may affect our business negatively.

Breakthroughs in legacy RFID technologies or markets, including those using low frequency or high frequency RFID technology, or in other radio technologies, could adversely affect RAIN market growth and demand for our products.

Breakthroughs in legacy RFID or markets, including those using low- or high-frequency RFID, or in other radio technologies such as Bluetooth, UWB, LoRa or others, could adversely affect RAIN market growth and demand for our products.

Likewise, new technologies may enable lower-cost ICs than our products.

If we are unable to innovate using new or enhanced technologies or are slow to react to changes in existing technologies or in the market, or if we have difficulty competing with advances in new or legacy technologies, then our development of new or enhanced products could be impacted and result in product obsolescence, decreased revenue and reduced market share.

Significant changes in RAIN standards bodies, standards or qualification processes could impede our ability to sell our products and services.

Significant changes in RAIN standards bodies, standards or qualification processes, or their failure to meet or to keep up with RAIN market needs, could impede our ability to sell our products and services.

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.

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 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.

We could lose that leadership position or our influence in standards development, or we could choose not to participate in certain standards activities.

If industry standards were to diverge from, or fail to meet or keep up with, our or the RAIN market’s needs, then our products and services could fail in the market.

End users could delay their deployments and slow sales of our existing products or services, or 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 could be substantial, and we may not ultimately succeed.

Certain organizations develop requirements for RAIN tags and test tags against those requirements.

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Some participants in the RAIN market are ARC sponsors, but we are not among them.

If ARC or a similar organization fails to certify or delays certifying tags incorporating our endpoint ICs, adoption and sales of our products could suffer.

If ARC or a similar organization fails to certify or delays certifying tags incorporating our endpoint ICs, adoption and sales could suffer.

Changes in government spectrum regulations or in their enforcement could adversely affect our ability to sell our products.

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In April 2024, NextNav, Inc.

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

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 take material steps toward considering, or ultimately adopting NextNav’s proposal, our business could be significantly and negatively affected.

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

Some of our partners develop products that compete with our products.

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

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

Comments and reply comments were due in April and May 2025, respectively.

The FCC has not yet acted on NextNav’s petition or on the PNT Notice of Inquiry and the fate of NextNav’s petition is uncertain.

If NextNav’s petition is approved as proposed, the consequent ISM band reconfiguration could negatively impact us and our industry.

If the FCC were to take material steps toward considering, or ultimately adopting, NextNav’s proposal, our business could be negatively affected.

Some of our partners offer competitive products or services.

Some of our partners promote certain of our products and services while competing with our other products and services.

For example, some of our OEM partners use our reader ICs to build and sell readers and gateways that compete with our readers and gateways.

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If we fail to manage such conflicts successfully, then our business and operating results could be negatively affected.

Our licensing program is nascent.

Our licensing program is nascent and limited.

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 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.

They could also compete with our objectives in other areas of our business such as wanting to maintain close, strategic relationships with important partners or end users of our products.

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

These risks and uncertainties include our ability to maintain and grow our intellectual property portfolio and to research and develop RAIN innovations that will generate and maintain demand for licenses to our technology and features, and our 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.

Our licensing program is also not singly focused on generating licensing revenue.

Our desire to maintain close, strategic relationships with important partners or end users and to encourage them to use innovations such as Gen2X may cause us to license our intellectual property for reasons that go beyond simply deriving licensing revenue.

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

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Our ability to secure cost-effective, quality products in a timely manner could be adversely affected by many factors, including:

• Third-party manufacturing capacity may not be available when we need it, particularly from our foundry partners from whom we procure silicon wafers.

• Efforts to diversify our supplier base may be unsuccessful or may not result in us obtaining the anticipated benefits of such diversification.

• Some products have long lead times, and we place orders for them many months before our anticipated delivery dates to our customers.

If we inaccurately forecast customer demand, then we may be unable to meet our customers’ delivery requirements or we may accumulate excess inventory, increasing our costs.

• Supply disruptions may affect our ability to meet partner or end-user demand, whether in a cost-effective manner or at all, potentially causing those partners or end users to cancel orders, qualify alternative suppliers or purchase from our competitors.

Supply disruptions can also distort demand, making it even harder to meet true demand.

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 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.

• third-party supply or manufacturing-capacity constraints or availability, particularly for our foundry partners from whom we procure silicon wafers;

• not successfully diversifying our supplier base;

• inaccurately forecasting customer demand;

• demand distortions caused by partners or end users canceling orders, qualifying alternative suppliers or purchasing from our competitors.

If our suppliers fail to manufacture our products at a reasonable cost and within our quality specifications, then our ability to bring those products to market and our reputation could suffer.

Capacity could be diminished for any number of reasons including equipment failures, closures, bankruptcy, capacity allocation, geopolitical disruption, in response to macroeconomic conditions or public health events, catastrophic loss of facilities or otherwise.

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

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 materials or 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.

We expect wafer capacity in at least some of the semiconductor nodes we use to be tight for the foreseeable future.

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

Any transition would require a requalification by our customers or end users.

The semiconductor and semiconductor-products industry is experiencing significant product-supply shortfalls and cost increases from AI demand.

Prices for semiconductor memory, processors, components and peripherals as well as for related technologies are rising and lead times are lengthening.

AI demand could also affect our wafer pricing or availability.

Any or all of these shortfalls or price increases could reduce our product availability, sales, revenue or gross margins, adversely affecting our business.

The availability of silicon wafers and other key inputs to our business can fluctuate and shortages can adversely affect our revenue and/or gross margins.

Wafer availability is cyclical and shortfalls can limit sales and cause market-share losses.

Our wafer supply is not guaranteed, and we may not receive adequate supply from our foundry partners when industry demand for wafers is high, as it frequently is in the process nodes we use.

Our IC supply can also be limited by post-processing constraints, such as in testing, thinning, bumping, dicing and packaging.

We may also experience shortfalls and price increases for components we use in our readers and gateways.

Wafer shortfalls can 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.

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 or are unable to procure the material used in these steps, and our production capacity is constrained, we may be unable to satisfy demand for our products, and our financial results could suffer.

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.

Any product shortfalls or cost increases will negatively impact our product availability 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 product 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.

We typically order products from our suppliers based on partner forecasts before we receive purchase orders.

However, many of our partners have difficulty accurately forecasting their demand and the timing of that demand, and sometimes cancel orders or reschedule product shipments, in some cases with little or no advance notice to us.

We maintain inventory to meet customer demand forecasts, to guard against product shortages, and to allow for production and delivery risks given the relatively long lead times for many of our products.

When we introduce new products, we may initially carry higher inventory or allow for slower inventory turns.

We typically order products from our suppliers based on sales forecasts before we receive purchase orders.

Many of our partners have difficulty accurately forecasting the amount and timing of their sales, and sometimes cancel orders or reschedule product shipments with little or no advance notice to us.

Partners will also sometimes give us soft commitments for large orders that do not materialize.

We have additional uncertainty arising from competition and from unanticipated external events, such as macroeconomic trends or events and changes in regulatory standards, all of which can adversely affect demand and consequently our inventory levels, sales and operating results.

High inventory levels can increase expenses or reserves and expose us to a higher risk of product obsolescence, especially when we introduce new products and technologies.

If we are unable to sell the inventory we purchased, or if we must sell it at lower prices, then our business will be negatively impacted.

Competition and unanticipated external events, such as macroeconomic or regulatory changes, can also adversely affect demand and consequently our inventory levels, sales and operating results.

High inventory levels can increase expenses and expose us to a higher risk of product obsolescence especially when we introduce new products and technologies.

If we are unable to sell our inventory as and when we expect to, we may have to discount or expense the excess inventory and our business and financial results will be negatively impacted as a result.

We must attract and retain employees with specialized knowledge and experience to compete effectively.

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We regularly evaluate potential strategic transactions, and we may pursue them if complementary to our business.

For example, in April 2023 we completed our acquisition of Voyantic Oy, a global provider of RFID (primarily RAIN and NFC) inlay and label design, manufacturing and test systems.

For example, in April 2023 we acquired Voyantic Oy, a global provider of RFID (primarily RAIN and NFC) inlay and label design, manufacturing and test systems.

Strategic transactions could be material to our financial condition and operating results.

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

Overall, a full understanding of whether and when tariffs and other trade restrictions 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 the date of this filing, a minimum 10% tariff applies to nearly all U.S.

imports from trade partners except Canada, Mexico and countries with which the United States does not have “normal trade relations.” Goods that include certain semiconductors, consumer electronics, computers and other similar items are currently excepted.

However, the United States has initiated Section 232 investigations on these types of products and may eventually impose specific tariffs on them or on products that incorporate them.

The United States has paused through August 7, 2025, higher reciprocal tariffs on goods imported from many other countries and jurisdictions including Taiwan, Malaysia, the European Union, Japan and South Korea.

However, following the pause, higher reciprocal tariffs generally went into effect.

Higher tariffs are also in effect on goods from China (currently 20%) and on goods from Canada and Mexico that do not qualify for duty free entry under the United States-Mexico-Canada Agreement (currently 25%, possibly rising to 30% for Mexico and 35% for Canada beginning August 1, 2025).

Legal challenges to some of these tariffs are currently being heard in U.S.

Significant trade partners such as Mexico, Canada and the European Union have imposed, or announced plans to impose, retaliatory tariffs.

A full understanding of the amount, scope, and nature of any tariffs and other trade restrictions that the U.S.

may implement as well as how other countries may respond is unclear.

In February 2026, the U.S.

Supreme Court invalidated the use of the International Emergency Economic Powers Act to impose significant tariffs the administration announced and implemented beginning in 2025.

Following that decision, the administration replaced those tariffs with a 10% import surcharge on nearly all U.S.

imports under a different legal authority, which is set to expire in July 2026 unless Congress extends it.

Under separate authority, the U.S.

also imposed tariffs on imports of steel, aluminum and copper;

on certain semiconductor products including still-higher tariffs on Chinese-origin semiconductors;

and on certain additional items.

Based on trade actions undertaken and/or threatened by the U.S.

since 2025, significant trade partners such as Mexico, Canada, China and the European Union have at times imposed, or announced plans to impose, retaliatory tariffs.

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

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• political, social and economic instability abroad;

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

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

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

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

or in key jurisdictions could harm our business.

Geopolitical disruptions could impact our product supply, ability to sell and/or customer or market demand.

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.

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, military conflicts, blockades or other developments—could slow or halt product shipments or disrupt our ability to procure, manufacture or post-process our products, as well as our ability to effectively and timely execute on end-user deployments.

Consequent shortages of energy, jet fuel, purified water, raw materials as diverse as polymers or helium and other items that underpin the global economy can likewise disrupt our ability to procure, manufacture or post-process, and ship our products.

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

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

We could be forced to transfer our manufacturing, testing and post-processing activities to more stable, and potentially more costly, regions or find alternative suppliers.

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

Disruptions could force us to transfer our manufacturing, testing and post-processing activities to more stable, and potentially more costly, regions or find alternative suppliers.

We source a significant portion of our wafers from suppliers in Taiwan, and our supply of wafers and other critical components may be materially and adversely affected by diplomatic, geopolitical and other developments between China and Taiwan.

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

Utilizing emerging technologies such as artificial intelligence, or AI, or machine learning, or ML, could expose us to business, financial, legal or reputational risks.

Emerging technologies such as AI or ML offer great potential for improving our operating efficiency and effectiveness, as well as the design and usefulness of our products and services;

however, employing them could increase our business, financial, legal and other risks.

These technologies are new, and our use of them has been very limited to date.

As we begin to introduce more AI and ML tools into our operations and products going forward, we will have to guard against risks associated with using them.

These risks include potential security breaches, confidential or sensitive data disclosure, inaccuracies or improper bias in our operations or in data derived from using our products or services, legal claims, noncompliance with industry standards, complications establishing or asserting intellectual property ownership, and reputational harm.

Using emerging technologies such as artificial intelligence, or AI, and machine learning, or ML, could expose us to business, financial, legal or reputational risks.

Rapid advancements in AI and ML offer great potential for improving our solutions performance, operating efficiency and engineering development, but employing them can also increase our business, financial, legal and other risks.

As we introduce more AI and ML tools into our products and operations, we must guard against risks in using them.

These risks include improper product operation, potential security breaches or incidents, inadvertently disclosing confidential or sensitive data, inaccuracies or improper bias in our operations or in data derived from using our products or services, legal claims, noncompliance with industry standards, complications establishing or asserting intellectual property ownership and reputational harm.

In addition, increased adoption of AI by us and third-party partners may also increase the risks of cybersecurity incidents.

Risks Relating to Our Relationships with Partners and End Users

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We engage directly with some end users.

Their projects, often involving large purchases of our readers and gateways, are often discrete deployments that can result in significant sales for periods of time.

They also increase the volatility of our revenue and operating results.

If we are unable to replace project-based revenue with new revenue streams, or if end users with large projects change or delay those projects without providing us with adequate notice, then our sales could decline from period to period and harm our stock price.

Their projects, often involving large purchases of our readers and gateways and use of our software and cloud services, may be discrete deployments that result in significant sales for periods of time, increasing the volatility of our revenue and operating results.

Our ability to affect or determine end-user demand is limited in part because we sell and fulfill primarily through partners and rarely directly to end users.

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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 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.

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 we expect to be sold to end users which could ultimately have a negative impact on our operating results.

If our partners overestimate demand, they may overinvest in production capacity, which could reduce market prices and negatively affect our selling prices.

In the short term, our partners might purchase more of our products than they need, increasing their inventory and reducing our future sales to them, and distributors may, subject to time and quality limitations, seek to return products in exchange for other products.

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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 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, 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 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.

Investors, governmental and nongovernmental organizations, partners and end users monitor our environmental, social and governance, or ESG, practices.

Our failure, or perceived failure, to adequately respond to concerns raised about our ESG practices could harm our business and reputation, and increased costs related to our ongoing or enhanced ESG practices and to reporting and disclosure requirements could negatively affect our operating results and stock price.

We are also 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 even if these products are manufactured by third parties.

These requirements could affect the sourcing and availability of minerals used in manufacturing our products, and we could face reputational challenges if we are unable to sufficiently verify the origins of all minerals we use in our products.

We may also face challenges with government regulators and our customers and suppliers if we are unable to sufficiently verify that the metals used in our products are conflict free.

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We also receive assertions against us, our partners and end users claiming we or they infringe patent or other intellectual property rights.

If we decline to accept an invitation to license or to refute an asserted claim, then the offering or claiming party may pursue litigation against us.

If we decline to accept an invitation to license or if we refute an asserted claim, then the offering or claiming party may pursue litigation against us.

Intellectual property disputes have adversely affected RAIN adoption in the past and could disrupt growth prospects in the future.

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Despite the subsequent availability of an industry-wide license, we believe those lawsuits adversely affected demand for our products from 2011 to 2019.

Subsequent litigation, including our patent litigation against NXP between 2019 and early 2024, may not have had as pronounced effects on demand as the Round Rock litigation, but could have dampened RAIN growth particularly in categories beyond those where RAIN is already established such as retail apparel.

We, our partners, suppliers or end users could continue to be involved in intellectual property disputes in the future which could adversely affect our operating results and growth prospects.

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Intellectual property policies of industry standards organizations in whose working groups we participate could require us to provide royalty-free licenses of some to our intellectual property.

When participating in GS1, ISO, RAIN and other industry-standards organizations, it is a general policy that those who participate in developing a protocol or standard must license, either royalty-free or under reasonable and nondiscriminatory, or RAND, terms, intellectual property that is necessary to implement all or part of the protocol or standard.

The standards body may require that the license be granted to members, as in the case of GS1, or to all parties, as in the case of ISO, that implement the protocol or standard.

When participating in GS1, ISO, RAIN and other industry-standards organizations, it has been a general policy that those who participate in developing a protocol or standard must license, either royalty-free or under reasonable and nondiscriminatory, or RAND, terms, intellectual property that is necessary to implement all or part of the protocol or standard.

The standards body could require that the license be granted to members, as in the case of GS1, or to all parties, as in the case of ISO, that implement the protocol or standard.

As a participant in developing GS1 EPCglobal UHF Gen2, UHF Gen2 V2, UHF Gen2 V3, tag data standards, low-level reader protocol and other GS1 EPCglobal protocols, we agreed to license to other GS1 EPCglobal members, on a royalty-free basis, those of our patents necessary to practice those protocols, subject to us receiving reciprocal royalty-free rights from the other GS1 EPCglobal member practicing the protocol.

As a participant in developing ISO standards, we agreed to license on a RAND basis those of our patents necessary to practice those standards, subject to us receiving a reciprocal RAND license from the other entity practicing the standard.

Although the policies themselves seek to advance protocol or standards development, disputes can arise because it may not be clear whether certain intellectual property is necessary to practice a protocol or standard.

Such uncertainty could complicate us asserting our not-necessary patents against others, or to use those patents in our own defense, thereby devaluing our intellectual property.

Although the policies themselves seek to advance protocol or standards development, disputes can arise because it may not be clear whether certain intellectual property is covered.

Such uncertainty could complicate us asserting our patents against others, or to use those patents in our own defense, thereby devaluing our intellectual property.

Further, some GS1 EPCglobal members declined to license their intellectual property on royalty-free terms, instead retaining the right to license their technology on RAND terms.

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For example, we license tools from design-automation software vendors to design our silicon ICs.

Third-party licenses for patents,

software and other technology important to our business may not continue to be available on commercially reasonable terms or may not be available at all.

Third-party licenses for patents, software and other technology important to our business may not continue to be available on commercially reasonable terms or may not be available at all.

Loss of any such licenses could cause manufacturing interruptions or delays or reductions in product shipments until we can develop, license, integrate and deploy alternative technologies which, if even possible, could harm our business and operating results.

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Privacy advocates and others have raised, and may continue raising, concerns about RAIN compromising consumer privacy or facilitating theft.

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.

These concerns include concerns about the risks of incidents involving 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 any of us to regulatory investigations or proceedings and claims, demands 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 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.

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.

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 relating to privacy, data protection or security 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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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.

We face risks of security breaches and incidents from a variety of sources including viruses, ransomware, hacking, malicious code, supply-chain attacks as well as social engineering or other employee or contractor negligence, malfeasance or unintentional acts.

We face risks of security breaches and other security incidents from a variety of sources including viruses, ransomware, hacking, malicious code, technological errors, supply-chain attacks as well as social engineering or other employee or contractor negligence, malfeasance or unintentional acts.

Accidental or willful security breaches or incidents, or unauthorized access to our facilities or information systems, or to others used in our business, could compromise the security of those facilities or information systems and the confidentiality, integrity and availability of confidential, personal or proprietary information.

These risks may be heightened in connection with geopolitical tensions and events.

The consequences of loss, unavailability, misuse, corruption or other unauthorized processing of confidential, personal or proprietary information could include, among other things, unfavorable publicity, reputational damage, difficulty marketing or selling our products, customer allegations of breach of contract, loss or theft of intellectual property, claims and litigation, governmental and regulatory investigations and other proceedings and fines, penalties and other damages and liabilities.

The consequences of actual or perceived loss, unavailability, misuse, corruption or other unauthorized processing of confidential, personal or proprietary information could include, among other things, unfavorable publicity, reputational damage, difficulty marketing or selling our products, customer allegations of breach of contract, loss or theft of intellectual property, claims and litigation, governmental and regulatory investigations and other proceedings and fines, penalties and other damages and liabilities.

Any of these consequences could have a material adverse effect on our business, financial condition, reputation and business relationships.

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The cybersecurity threat environment continues evolving, especially with heightened activity by state-sponsored actors.

If we, our platform, or any of the third parties on which we rely suffers or is believed to have suffered a security breach or incident, vulnerability, error, ransomware or malicious event, then we could face increased costs, claims, liability, reduced revenue and harm to our reputation.

platform, or any of the third parties on which we rely suffers or is believed to have suffered a security breach or other security incident, vulnerability, error, outage, ransomware or malicious event, then we could face increased costs, claims, liability, reduced revenue and harm to our reputation.

We devote resources to detect and prevent security breaches and other security-related incidents.

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We cannot be certain that we will attain or 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.

Our costs to support operations, product development and business and personnel expansion in sales, engineering and marketing are significant and are likely to increase as we invest to grow the market and our share of it, reduce our costs and improve our operations.

If we fail to increase our revenue or manage our expenses, or if our investments in growing the market or our share of it fail, then we may not attain or sustain profitability.

We incurred losses each year from our inception in 2000 to 2024.

Our ability to achieve or sustain profitability depends on numerous factors, many of which are not entirely in our control, including continued RAIN industry adoption and us maintaining or growing our market share.

Our costs of operations, product development and business and personnel expansion in sales, engineering and marketing are significant and are likely to increase as we invest in growing the market and our market share, reducing our costs and improving operations.

If we fail to increase our revenue or manage our expenses, or if our investment in growing the market or our market share fail, we may not remain profitable.

We have a history of significant fluctuations in our quarterly and annual operating results.

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

• 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;

• macroeconomic conditions, including tariffs and trade wars, inflation, military conflicts, blockades, 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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We have established a valuation allowance against the carrying value of these deferred tax assets.

federal NOLs and U.S.

federal research and development credit carryforwards began expiring in 2020.

federal NOLs arising in taxable years beginning before January 1, 2018 and our U.S.

federal research and development credit carryforwards expire following the 20th taxable year after the taxable year such carryforward arose, while our U.S.

federal NOLs arising in taxable years beginning after December 31, 2017 do not expire.

Under Sections 382 and 383 of the U.S.

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Changes in tax laws, as well as other factors, could cause us to experience fluctuations in our tax obligations and effective tax rates and otherwise adversely affect our tax positions and results of our operations.

For example, in August 2022, as part of the Inflation Reduction Act of 2022, the United States enacted a 1% excise tax on stock buybacks and a 15% alternative minimum tax on adjusted financial statement income.

Additionally, beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the right to deduct research and development expenditures and instead required taxpayers to capitalize and amortize U.S.

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

However, more recent legislation commonly known as the “One Big Beautiful Bill Act”, or the OBBB Act, among other changes, added Section 174A to the Code, permitting the deduction of certain U.S.

research and development expenditures incurred in tax years beginning on or after January 1, 2025, but expenditures attributable to research and development conducted outside the U.S.

continue to be required to be capitalized and amortized over a 15-year period.

We are currently evaluating the full impact of the OBBB Act on us.

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.

Recent examples include the 1% excise tax imposed on stock buybacks and a 15% alternative minimum tax imposed on adjusted financial statement income enacted in 2022, and rules governing the treatment of U.S.

and foreign research and development expenditures enacted in 2017 and amended in 2025.

We have accounted for these changes in accordance with our understanding of the guidance available as of the date of this filing.

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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We continue to monitor these developments, including the impact of the joint statement issued by the G7 in June 2025 related to the interplay between the U.S.

international tax system and global rules.

international tax system and global rules and a January 2026 agreement to a “side-by-side” safe harbor that would generally exempt U.S.

parented multinational groups from certain of the global minimum tax rules.

Any of these developments or changes in U.S.

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We do not collect sales and use, value-added or similar taxes in all jurisdictions in which we have sales, based on our belief that such taxes are either not applicable or an exemption from such taxes applies.

Certain jurisdictions may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, and we may be required to collect such taxes in the future,

including as a result of a change in law.

Certain jurisdictions may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, and we may be required to collect such taxes in the future, including as a result of a change in law.

Such tax assessments, penalties and interest or future requirements may negatively affect our operating results.

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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 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;

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

• the trading volume of our stock;

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Transactions relating to the 2021 or the 2025 Notes may affect our stock’s value.

If the 2021 Notes or the 2025 Notes are converted by holders, then we are entitled to deliver cash, stock or any combination of cash or stock, at our election.

If the 2021 Notes or the 2025 Notes are converted by holders, then we are required to deliver cash, stock or any combination of cash or stock, at our election.

If we elect to deliver stock, the ownership interests of our existing stockholders will be diluted, and public market sales of stock issued upon a conversion could decrease our stock price.

Anticipated future conversions of the 2021 Notes or the 2025 Notes into stock could also decrease our stock price, as could short selling by holders of the 2021 Notes or the 2025 Notes to hedge their positions.

In December 2019, we issued the 2019 Notes, and in September 2025, we issued the 2025 Notes.

In December 2019 and in September 2025, we issued the 2019 and 2025 Notes, respectively.

At the time of each issuance, we entered into privately negotiated capped call transactions with financial counterparties to mitigate the dilutive impact above a given stock price.

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This activity could cause a decrease in our stock price.

For more information on the 2019 Notes, the 2021 Notes, the 2025 Notes and the capped call transactions, see Note 7 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, 2025, our executive officers, directors and principal stockholders, together with their respective affiliates, beneficially owned approximately 51.0% of our stock.

For more information on the 2019 Notes, the 2021 Notes, the 2025 Notes and the capped call transactions, see Note 7 to our Condensed Consolidated Financial Statements included elsewhere in this report.

We are subject to counterparty risk with respect to the capped call transactions.

The financial counterparties to the capped call transactions are financial institutions, and we will be subject to the risk that one or more of the financial counterparties may default under the capped call transactions.

Our exposure to the credit risk of the financial counterparties to the capped call transactions is not secured by any collateral.

Global economic conditions have in the past resulted in the actual or perceived failure and/or financial difficulties of many financial institutions.

If a financial counterparty to the capped call transactions becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at the time under the capped call transactions with such financial counterparty.

Our exposure will depend on many factors but, generally, our exposure will increase if the market

price or the volatility of our common stock increases.

In addition, upon a default by a financial counterparty to the capped call transactions, we may suffer adverse tax consequences and experience more dilution than we currently anticipate with respect to our common stock.

We can provide no assurances as to the financial stability or viability of the financial counterparties to the capped call transactions.

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

As of March 31, 2026, our executive officers, directors and principal stockholders, together with their respective affiliates, beneficially owned approximately 37.3% 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.

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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