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Item 9A. Controls and Procedures

2025-08-22 compared with 2024-08-23 · 117 added, 125 removed, 830 unchanged (23% of the section changed)

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The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Disclosure controls and procedures include, without limitation, controls and

procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.

Based on the evaluation of our disclosure controls and procedures as of June 30, 2024, our Chief Executive Officer and Chief Accounting and Finance Officer concluded that, as of such date, our disclosure controls and procedures were effective.

Based on the evaluation of our disclosure controls and procedures as of June 30, 2025, our Chief Executive Officer and Chief Accounting and Finance Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Report on Internal Control over Financial Reporting

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Directors and Executive Officers and Corporate Governance

The information required by this Item 10 is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders (to be filed with the Securities and Exchange Commission within 120 days of our June 30, 2024 fiscal year end) under the headings "Executive Officers," "Proposal One Election of Directors – Information Regarding Nominees,” "Proposal One Election of Directors - Information Regarding Continuing Directors," and “Corporate Governance.”

The information required by this Item 10 is incorporated by reference to our Proxy Statement for the 2025 Annual Meeting of Stockholders (to be filed with the Securities and Exchange Commission within 120 days of our June 30, 2025 fiscal year end) under the headings "Executive Officers," "Proposal One Election of Directors – Information Regarding Nominees,” "Proposal One

Election of Directors - Information Regarding Continuing Directors," and “Corporate Governance.”

Executive Compensation

The information required by this Item 11 is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders (to be filed with the Securities and Exchange Commission within 120 days of our June 30, 2024 fiscal year end) under the headings “Executive Compensation”, “Proposal One Election of Directors – Directors’ Compensation” and “Corporate

Governance – Compensation Committee Interlocks and Insider Participation.”

The information required by this Item 11 is incorporated by reference to our Proxy Statement for the 2025 Annual Meeting of Stockholders (to be filed with the Securities and Exchange Commission within 120 days of our June 30, 2025 fiscal year end) under the headings “Executive Compensation”, “Proposal One Election of Directors – Directors’ Compensation” and “Corporate Governance – Compensation Committee Interlocks and Insider Participation.”

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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Insider Trading Policy

10-K 19 August 23, 2024

List of subsidiaries of Ubiquiti Inc.

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Incentive Compensation Clawback Policy

10-K 97 August 23, 2024

101.INS Inline XBRL Instance Document X

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Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than the terms of the agreements or other documents themselves, and you should not rely on them for that purpose.

In particular, any representations and warranties made by the Company in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

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Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Income

Consolidated Statements of Operations

Consolidated Statements of Stockholders’ Equity (Deficit)

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We have audited the accompanying consolidated balance sheets of Ubiquiti Inc.

and subsidiaries (the Company) as of June 30, 2024 and June 30, 2023, the related consolidated statements of operations and comprehensive income, stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended June 30, 2024, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of June 30, 2025 and June 30, 2024, the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended June 30, 2025, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of June 30, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

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Cash and cash equivalents $ 149,727 $ 126,342

Investments — short-term — 109

Accounts receivable, net of allowance for doubtful accounts of $ 11,956 and $ 498 at June 30, 2025 and 2024 respectively

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Total assets $ 1,466,451 $ 1,154,412

Liabilities and Stockholders’ Equity (Deficit)

Liabilities and Stockholders’ Equity

Current liabilities:

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Debt — long-term — 669,878

Deferred tax liability — long-term 492 226

Deferred tax liability 334 492

Other long-term liabilities 26,015 13,416

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Commitments and contingencies (Note 9)

Stockholders’ equity (deficit):

Stockholders’ equity:

Preferred stock—$ 0.001 par value;

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Additional paid–in capital 17,075 10,645

Retained earnings (deficit) 84,355 ( 120,514 )

Total stockholders’ equity (deficit) 95,060 ( 115,733 )

Total liabilities and stockholders’ equity (deficit) $ 1,154,412 $ 1,406,399

Retained earnings 651,124 84,355

Total stockholders’ equity 668,260 95,060

Total liabilities and stockholders’ equity $ 1,466,451 $ 1,154,412

See accompanying notes to consolidated financial statements.

UBIQUITI INC.

Consolidated Statements of Operations and Comprehensive Income

Consolidated Statements of Operations

(In thousands, except per share amounts)

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Diluted 60,534 60,458 60,451

Other comprehensive income:

Unrealized losses on available-for-sale securities — — ( 475 )

Other comprehensive loss — — ( 475 )

Comprehensive income $ 349,960 $ 407,641 $ 378,182

See accompanying notes to consolidated financial statements.

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Net Income — — — 407,641 — 407,641

Other comprehensive income (loss) — — — — ( 475 ) ( 475 )

Reclassification adjustment for loss on investments included in net income — — — — 474 474

Stock options exercised 2,112 — 23 — — 23

Restricted stock units issued, net of tax withholdings 19,259 — ( 686 ) — — ( 686 )

Repurchase of Common Stock ( 2,193,853 ) ( 3 ) ( 1,779 ) ( 616,349 ) — ( 618,131 )

Share-based compensation expense — — 4,734 — — 4,734

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Net Income — — — 349,960 — 349,960

Reclassification adjustment for loss on investments included in net income — — — — 474 474

Stock options exercised 2,112 — 23 — — 23

Restricted stock units issued, net of tax withholdings 20,643 — ( 434 ) — — ( 434 )

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Amortization of debt issuance costs 2,022 1,725 1,405

Non-cash lease expense 231 362 1,142

Premium amortization and (discount accretion), net — — 88

Provision for excess and obsolete inventory 6,657 23,905 13,391

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Share-based compensation 7,208 6,358 4,734

Deferred taxes ( 11,967 ) ( 16,857 ) ( 1,842 )

Change in unrealized loss on available-for-sale securities 109 792 —

Provision for sales returns ( 574 ) 553 1,004

Deferred taxes, net ( 72,192 ) ( 11,967 ) ( 16,857 )

Provision for bad debt 11,458 ( 574 ) 553

Other, net ( 685 ) 745 1,519

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Purchase of property and equipment and other long-term assets ( 12,586 ) ( 11,975 ) ( 20,934 )

Purchase of investments — — ( 1,479 )

Proceeds from sale of investments — — 2,457

Proceeds from maturities of investments — — 1,310

Net cash used in investing activities ( 12,586 ) ( 11,975 ) ( 20,934 )

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Debt issuance costs — — ( 1,205 )

Repurchases of common stock — — ( 618,131 )

Payment of common stock cash dividends ( 145,153 ) ( 145,091 ) ( 145,043 )

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Actual results could differ materially from those estimates.

Management has determined that it operates as one reportable and operating segment as the Company’s Chief Executive Officer, who is the Company’s chief operating decision maker ("CODM"), does not make decisions about resources to be allocated or assess performance on a disaggregated segment basis.

Further information regarding Segments can be found in Note 13, to the consolidated financial statements.

Recognition of Revenues

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The Company accounts for a contract with a customer when there is an approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of the consideration is probable.

The Company’s distinct performance obligations consist mainly of transferring control of its products identified in the

contracts, purchase orders or invoices and implied PCS services.

The Company’s distinct performance obligations consist mainly of transferring control of its products identified in the contracts, purchase orders or invoices and implied PCS services.

Our contracts with the majority of our distribution customers do not include provisions for cancellations, returns, inventory swaps, or refunds that materially impact recognized revenue.

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We record amounts billed for shipping and handling costs as revenues.

We act as principal as we are responsible for providing shipping services in exchange for a fee charged to the buyer and hence recognize revenue in the gross amount of consideration received from the customer.

We classify shipping and handling costs incurred by us as cost of revenue.

We concluded that we are principal in these transactions and hence recorded the shipping revenue transaction at gross.

Deposit payments received from distributors in advance of recognition of revenues are included in current liabilities of our balance sheet and are recognized as revenues when all the criteria for recognition of revenues are met.

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The determination of net realizable value involves certain judgments including estimating average selling prices based on recent sales.

Should actual market conditions differ from the Company’s estimates, future results of operations could be materially affected.

Should actual market conditions differ from the Company’s estimates, future results of

operations could be materially affected.

The Company reduces the value of its inventory for estimated obsolescence or lack of marketability by the difference between the cost of the affected inventory and the NRV.

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The Company offers warranties on certain products, generally for a period of one to two years , and records a liability for the estimated future costs associated with potential warranty claims.

The warranty costs are reflected in the Company’s consolidated statement of operations and comprehensive income within cost of revenues.

The warranty costs are reflected in the Company’s consolidated statement of operations within cost of revenues.

The warranties are typically in effect for 12 to 24 months from the distributor’s and webstore customer's purchase date of the product.

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We recognize an impairment loss when the undiscounted cash flows expected to be generated by an asset or group of assets, are less than the asset’s carrying value.

Any required impairment

loss would be measured as the amount by which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and charged to results of operations.

Any required impairment loss would be measured as the amount by which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and charged to results of operations.

The Company did not recognize any material impairment losses for fiscal years 2025, 2024 and 2023.

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Deferred tax assets and liabilities are determined based on the temporary difference between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The Company establishes valuation allowances when necessary to reduce deferred tax assets to the amount it expects to realize.

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Newly Adopted Accounting Standards

The Company did not adopt any new accounting standards in fiscal 2024 that were significant to the Company.

Recent Accounting Pronouncements Not Yet Effective

Segment Reporting

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Finally, ASU 2023-07 requires all segment disclosures for public entities, even those with a single reportable segment.

The amendments in ASU 2023-07 will become effective on a retrospective basis for annual disclosures in the Company's fiscal year beginning July 1, 2024, with interim period disclosures required effective with the Company's fiscal year beginning July 1, 2025.

Early adoption of ASU 2023-07 is permitted.

We do not expect this ASU to have a significant impact on our disclosures or results of operations, cash flows, and financial condition.

The amendments in ASU 2023-07 are effective for the Company's fiscal year beginning July 1, 2024.

As of July 1, 2024, the Company adopted the new standard, including identifying, evaluating and quantifying the impact on its consolidated financial statements.

The Company concluded that the adoption of this standard did not have a material impact on the Company's consolidated financial position, results of operations, or cash flows and related disclosures.

Recent Accounting Pronouncements Not Yet Effective

In December 2023, the FASB issued ASU No.

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The FASB indicated ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted.

This ASU will only impact our disclosures with no impact to our results of operations, cash flows, and financial condition.

Disaggregation of Expenses

In November 2024, the FASB issued ASU No.

2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses ("ASU 2024-03") which requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory;

employee compensation;

and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included.

The amendments in ASU 2024-03 will become effective for annual disclosures in the Company's fiscal year beginning July 1, 2027, with interim period disclosures required effective with the Company's fiscal year beginning July 1, 2028.

Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements.

We expect this ASU to only impact our disclosures with no impact to our results of operations, cash flows, and financial condition.

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Our contract liabilities consist of advance payments (customer deposits) as well as billing in excess of revenue recognized primarily related to deferred revenue.

We classify customer deposits as a current liability, and deferred revenue as a current or non-current liability based on the timing of when we expect to fulfill these remaining performance obligations.

We classify customer deposits as a current

liability, and deferred revenue as a current or non-current liability based on the timing of when we expect to fulfill these remaining performance obligations.

The current portion of deferred revenue is included in other current liabilities and the non-current portion is included in other long-term liabilities in our consolidated balance sheets.

As of June 30, 2025 and 2024, the Company’s customer deposits were $ 2.8 million and $ 1.3 million, respectively.

As of June 30, 2024, the Company’s deferred revenue, included in other current liabilities and other long-term liabilities, was $ 20.3

million and $ 13.4 million, respectively.

As of June 30, 2025, the Company’s deferred revenue, included in other current liabilities and other long-term liabilities, was $ 36.0 million and $ 26.0 million, respectively.

As of June 30, 2024, the Company’s deferred revenue, included in other current liabilities and other long-term liabilities, was $ 20.3 million and $ 13.4 million, respectively.

We expect the majority of our deferred revenue to convert to revenue in two years .

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Add—dilutive potential common shares:

Stock options — — 7

Restricted stock units 54 4 16

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Total $ 675,098 $ 462,032

Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following (in thousands):

Prepaid income taxes $ 7,339 $ 6,766

Prepaid expenses and other Assets 39,458 23,702

Other taxes 8,775 4,563

Total $ 55,572 $ 35,031

Property and Equipment, Net

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See Note 12 to the consolidated financial statements for additional details regarding this ongoing tax audit.

(2) Accumulated amortization was $ 7.5 million and $ 5.9 million for the periods ending June 30, 2024 and June 30, 2023, respectively.

(2) Accumulated amortization was $ 9.1 million and $ 7.5 million for the years ending June 30, 2025 and June 30, 2024, respectively.

(3) Amortization expense for intangible assets was $ 1.6 million, $ 1.6 million and $ 1.6 million for the years ended June 30, 2025, 2024 and 2023 respectively.

The following table presents expected future intangible asset amortization as of June 30, 2025:

Fiscal 2026 $ 900

Fiscal 2027 250

Fiscal 2028 250

Fiscal 2029 244

Fiscal 2030 241

Thereafter 743

Total future intangible asset amortization $ 2,628

Other Current Liabilities

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The obligations of the Company and certain domestic subsidiaries under the Amended Credit Agreement are required to be guaranteed by the Domestic Guarantors and are collateralized by substantially all assets (excluding intellectual property) of the Company and the Domestic Guarantors.

As of September 30, 2024 the Company had repaid all of the First Amendment Term Loan Facility and as a result there are no future payments due.

The Company's unamortized balance of debt issuance costs are $ 0.4 million as of June 30, 2025, which are amortized as interest expense over the life of the Facilities.

Our debt consisted of the following (in thousands):

Initial Term Loan - short term $ 25,000 $ 25,000

First Amendment Term Loan - short-term 12,500 12,500

Amortization of debt issuance costs included in interest expense for the year ended June 30, 2025 and 2024 were $ 2.0 million and $ 1.7 million respectively

The Company’s debt consisted of the following (in thousands):

Initial Term Loan Facility - short term $ 250,000 $ 25,000

First Amendment Term Loan Facility - short-term — 12,500

Debt issuance costs, net ( 443 ) ( 992 )

Total Debt - short term 249,557 36,508

Initial Term Loan - long term 393,750 418,750

First Amendment Term Loan - long-term 101,875 234,375

Revolver - long term 175,000 390,000

Initial Term Loan Facility - long term — 393,750

First Amendment Term Loan Facility - long-term — 101,875

Revolving Facility - long term — 175,000

Debt issuance costs, net — ( 747 )

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The Amended Credit Agreement includes customary events of default that include, among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain ERISA events.

The occurrence of an event of default could result in the

acceleration of the obligations under the Amended Credit Agreement.

The occurrence of an event of default could result in the acceleration of the obligations under the Amended Credit Agreement.

The Facilities

As of June 30, 2024, $ 418.8 million was outstanding on the Initial Term Loan Facility, $ 114.4 million was outstanding on the First Amendment Term Loan Facility, and $ 175.0 million was outstanding on the Revolving Facility, leaving $ 525.0 million available on the Revolving Facility.

As of June 30, 2025, $ 250.0 million was outstanding on the Initial Term Loan Facility.

There was no outstanding balance on the Revolving Facility as of June 30, 2025, resulting in $ 700.0 million being available on the Revolving Facility.

The First Amendment Term Loan Facility was fully repaid during the three months ended September 30, 2024 and there is no balance outstanding as of June 30, 2025.

As of June 30, 2025 and 2024, the fair value of the Company's Facilities approximated the historical cost.

Term Facility:

During fiscal year 2025, the Company made aggregate payments of $ 309.1 million under the Term Loan Facilities, of which $ 283.1 million was a repayment of principal and $ 26.0 million was a payment of interest.

As of June 30, 2025, the interest rate of the Initial Term Loan facility was 5.93 %.

Revolving Facility:

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The operating lease costs in the table above include costs for long-term and short-term leases.

Total short-term costs for fiscal years June 30, 2024 and 2023 were $ 0.2 million and $ 0.6 million, respectively.

Total short-term costs for fiscal years June 30, 2025 were immaterial and 2024 were $ 0.2 million, respectively.

Variable lease costs primarily include maintenance, utilities and operating expenses that are incremental to the fixed base rent payments and are excluded from the calculation of operating lease liabilities and ROU assets.

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We have an obligation of $ 28.1 million as of June 30, 2025, related to the mandatory transition tax on accumulated foreign earnings from the 2017 Tax Cuts and Jobs Act.

We expect to make payments of $ 22.5 million and $ 28.1 million in the first quarter of fiscal 2025 and 2026, respectively, in relation to this obligation.

This obligation is included within Income tax payable and Long-term taxes payable on our consolidated balance sheets.

We expect to make a payment to fully settle this obligation in the first quarter of fiscal 2026.

This obligation is included within income tax payable on our consolidated balance sheets.

Other Obligations

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The Company may be involved, from time to time, in a variety of claims, lawsuits, investigations, and proceedings relating to contractual disputes, intellectual property rights, employment matters, regulatory compliance matters and other litigation matters relating to various claims that arise in the normal course of business.

The Company determines whether an estimated loss from a

contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated.

The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated.

The Company assesses its potential liability by analyzing specific litigation and regulatory matters using available information.

The Company develops its views on estimated losses in consultation with inside and outside counsel, which involves a subjective analysis of potential results and outcomes, assuming various combinations of appropriate litigation and settlement strategies.

develops its views on estimated losses in consultation with inside and outside counsel, which involves a subjective analysis of potential results and outcomes, assuming various combinations of appropriate litigation and settlement strategies.

Taking all of the above factors into account, the Company records an amount where it is probable that the Company will incur a loss and where that loss can be reasonably estimated.

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The Company is not currently aware of any pending or threatened litigation that would have a material adverse effect on the Company’s financial statements.

On April 19, 2017, XR Communications, LLC, d/b/a Vivato Technologies (“Vivato”), filed a complaint against the Company in the United States District Court for the Central District of California, alleging that at least one of the Company’s products infringes United States Patent Numbers 7,062,29 6 (the “'296 Patent”), 7,729,728 (the “'728 Patent”), and 6,611,231 (the “'231 Patent” and, collectively, the “Patents-in-Suit”).

(the “Original Action”).

On April 11, 2018, the Court stayed the Original Action pending completion of certain inter partes review (“IPR”) proce edings before the Patent Trial and Appeal Board (“PTO”).

The PTO invalidated asserted claims of two of the three Patents-in-Suit.

On June 16, 2021, Vivato filed a new suit against the Company in the Central District of California, alleging that various Company products infringe some of the non-invalidated claims of the ’728 Patent and U.S.

10,594,376 (the “New Action”).

On November 24, 2021, the Company and the remaining defendants in the Original Action filed a motion for judgment on the pleadings regarding the '231 Patent.

On January 4, 2022, the Court granted defendants’ motion and dismissed Vivato’s claims based on the '231 Patent.

The Federal Circuit Court of Appeals affirmed the invalidity of the '231 Patent on May 18, 2023.

All claims asserted against the Company in the Original Action have been dismissed.

On July 28, 2022, Vivato voluntarily dismissed, with prejudice, its remaining claims related to the '728 patent, as well as claims 22-31 of the '376 Patent.

On October 20, 2022, an IPR was instituted with respect to the asserted claims of the '376 Patent.

On October 26, 2022, the court stayed the case pending completion of the IPR.

On October 3, 2023, the IPR with respect to the '376 Patent was terminated after the petitioners entered into a settlement agreement with Vivato.

On December 4, 2023, the court lifted the stay.

On May 16, 2024, the court entered a stipulated 30 -day stay pending settlement discussions.

On June 18, 2024 and July 19, 2024, the court issued further stipulated 30 -day stays pending settlement discussions.

Those discussions are ongoing.

The Company plans to vigorously defend itself against these claims;

however, there can be no assurance that the Company will prevail in the lawsuit.

The Company cannot currently estimate the possible loss or range of losses, if any, that it may experience in connection with this litigation.

Network-1 Technologies, Inc.

On October 5, 2022, Network-1 Technologies, Inc.

("Network-1") filed a patent infringement lawsuit against the Company in the District of Delaware, alleging that various Company products infringe United States Patent Number 6,218,930, which relates to 802.3af and 802.3at “ Power over Ethernet ” standards.

Network-1 seeks compensatory and enhanced damages, attorneys' fees and costs, and pre- and post-judgment interest.

The Company plans to vigorously defend itself against these claims;

however, there can be no assurance that the Company will prevail in the lawsuit.

The Company cannot currently estimate the possible loss or range of losses, if any, that it may experience in connection with this litigation.

Intellectual Ventures I LLC v.

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The Company cannot currently estimate the possible loss or range of losses, if any, that it may experience in connection with this litigation.

NOTE 10— COMMON STOCK AND TREASURY STOCK

Common Stock Repurchases

On May 3, 2022, the Board of Directors of the Company approved a $ 200 million stock repurchase program (the “2022 May Program”).

Under the 2022 May Program, the Company was authorized to repurchase up to $ 200 million of common stock.

The 2022 May Program expired on September 30, 2023, and the Company did not make any repurchases under the 2022 May Program.

The following table summarizes total activity related to our stock repurchase programs for the fiscal year end as indicated (in millions, except average price per share):

2024 2023 2022

Number of shares repurchased and retired — — 2.2

Average price per share N/A N/A $ 281.75

Aggregate purchase price N/A N/A $ 618.1

NOTE 10— RELATED PARTY TRANSACTIONS AND CERTAIN OTHER TRANSACTIONS

Pera, our Chairman and Chief Executive Officer, is the controlling owner of the Memphis Grizzlies, a team in the National Basketball Association (the “Grizzlies”).

From time to time, the Grizzlies purchase our products through our webstore, on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances.

During fiscal 2025, we received approximately $ 270,000 from sales to the Grizzlies, inclusive of sales tax and shipping charges.

Additionally, from time to time, the Grizzlies may participate in our product testing and marketing activities.

NOTE 11— SHARE-BASED COMPENSATION

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Provision for income taxes $ 93,730 $ 73,868 $ 78,701

For tax years beginning after December 31, 2021, the Tax Cuts and Jobs Act of 2017 ("TCJA") eliminates the right to deduct research and development expenditures for tax purposes in the period the expenses were incurred and instead requires all U.S.

and foreign research and development expenditures to be amortized over five and fifteen tax years, respectively.

Congress has considered legislation that would defer the amortization requirement to later years, but as of June 30, 2024, the requirement has not been modified.

Accordingly, the Company has capitalized research and development expenses for tax purposes, resulting in higher cash paid for taxes as compared to prior years.

The reconciliation of federal statutory income tax to the Company’s provision for income taxes is as follows:

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Subpart F income 0.2 0.4 1.1

Intangibles realignment ( 6.6 ) — —

Other permanent items ( 0.1 ) 0.1 ( 0.5 )

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Net deferred tax assets $ 107,634 $ 35,442

During the fourth quarter of fiscal 2025, the Company transferred certain intangible properties held by our foreign subsidiaries to the U.S.

The change in effective tax rates for fiscal 2025 as compared to fiscal 2024 was primarily driven by a one-time deferred tax benefit of $ 53.7 million relating to capitalized research expenditure as a result of this transaction.

A reconciliation of the beginning and ending balances of the unrecognized tax benefits during the years ended June 30, 2025, and 2024 consists of the following (in thousands):

Year ended June 30,

2024 2023 2022

Unrecognized benefit—beginning of year $ 33,049 $ 32,382

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As of June 30, 2025, the Company had approximately $ 34.7 million of unrecognized tax benefits, substantially all of which would, if recognized, affect its tax expense.

The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Statements of Operations and Comprehensive Income.

The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Statements of Operations.

Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheets.

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The majority of the Company's foreign jurisdictions have been concluded through 2015, with the exception of Hong Kong which has been reviewed through 2009 and is currently under audit for the 2010-2019 statutory tax years.

In July 2018, the Company received a draft Notice of Proposed Adjustment (“Draft NOPA”) from the IRS proposing an adjustment to income for the fiscal 2015 and fiscal 2016 tax years based on its interpretation of certain obligations of the non-US entities under the credit facility.

entities under the credit facility.

This Draft NOPA was superseded by an Acknowledgement of Facts (“AOF”) issued to the Company by the IRS on January 17, 2020.

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The Company formally protested the adjustment and the case was moved from the Examination Division to the IRS Appeals Division where a formal review of the facts and the applicable law took place on May 9, 2022.

The Appeals Officer issued a Notice of

Deficiency on August 3, 2022, which upheld the position of the Examination Division.

The Appeals Officer issued a Notice of Deficiency on August 3, 2022, which upheld the position of the Examination Division.

The Company filed a petition with the United States Tax Court seeking to have the Notice of Deficiency reversed.

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On January 22, 2024, the judge assigned to this case rejected both Motions for Summary Judgement.

As such, the Company is awaiting a trial date to be set which it currently expects to receive by the end of December 2024.

As such, the Company is awaiting a trial date to be set.

The Company continues to believe that its tax position filed with the IRS with regard to this matter is more likely than not to be sustained based on technical merits.

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Regardless of whether the matter is resolved in the Company’s favor, the final resolution of this matter could be expensive and time-consuming to defend and/or settle.

The Company estimates the incremental tax liability associated with the income adjustment proposed in the AOF would be approximately $ 50.0 million, excluding potential interest and penalties, after adjusting for the impact of an adjustment on the amount of transition tax payable in future years by the Company.

As the Company believes that the tax originally paid in fiscal 2015 and fiscal 2016 is correct, it has not provided a reserve for this tax uncertainty.

However, an adverse outcome may have a material and adverse effect on the Company’s results of operations and financial condition.

Between fiscal years 2018 and 2023, the Company made payments totaling a combined amount of $ 60.4 million as deposits, with the Hong Kong IRD in connection with extending the statute of limitation for income tax examinations currently under audit for 2010-2017 statutory tax years.

On March 27, 2024, the Company received notification that the Hong Kong IRD is seeking an additional $ 0.8 million deposit covering the 2018 statutory tax year.

The Company filed a formal protest in response to this notice and the Assessor's office agreed to a reduced deposit of under $ 0.1 million covering the 2018 statutory tax year.

The refundable deposits are included within other long-term assets on the Consolidated Balance Sheets.

The IRD is examining the Company’s claims that its revenue is generated through activities performed wholly outside of the Hong Kong tax jurisdiction and are therefore exempt from Hong Kong tax.

The Hong Kong Inland Revenue Department (the “IRD”) is examining the Company’s claims that its revenue is generated through activities performed wholly outside of the Hong Kong tax jurisdiction and are therefore exempt from Hong Kong tax.

The Company is fully cooperating with the examination including submitting documentation in support of its position.

The Company continues to believe that its tax positions filed with IRD are more likely than not to be sustained based on their technical merits and therefore no reserve has been provided for this tax uncertainty and the Company expects the $ 60.4 million (net of foreign currency impact) of deposits made with IRD to be refunded upon completion of the audit.

The Company continues to believe that its tax positions filed with the IRD are more likely than not to be sustained based on their technical merits and therefore no reserve has been provided for this tax uncertainty.

Between fiscal years 2018 and 2024, the Company made payments totaling a combined amount of $ 60.4 million as deposits, with the IRD in connection with extending the statute of limitation for income tax examinations currently under audit for 2010-2018 income tax audits.

On March 28, 2025, the Company received notification that the IRD is seeking an additional $ 2.0 million deposit covering the 2019 statutory tax year.

The Company filed a formal protest in response to this notice and the Assessor's office agreed to a reduced deposit of $ 0.2 million covering the 2019 statutory tax year.

The refundable deposits are included within other long-term assets on our consolidated balance sheets.

The Company expects the $ 60.3 million (net of foreign currency impact) of deposits made with the IRD to be refunded upon completion of the audit.

However, there can be no assurance that this matter will be resolved in the Company’s favor and therefore it's possible that an adverse outcome of the matter could have a material effect on the Company’s results of operations and financial condition.

On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act (“OBBBA”).

Included in this legislation are provisions that allow for the immediate expensing of domestic United States research and development expenses, immediate expensing of certain capital expenditures, and changes to the U.S.

taxation of profits derived from foreign operations.

ASC 740, "Income Taxes", requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted.

The legislation has multiple effective dates, with certain provisions effective in 2025 (our Fiscal year 2026) and others implemented through 2027 (our Fiscal year 2028).

Although there is no effect on the Company’s current year financial statements, the Company will monitor and record, as necessary, the impact of these new provisions in the future consolidated financial statements.

NOTE 13— SEGMENT INFORMATION, REVENUES BY GEOGRAPHY AND SIGNIFICANT CUSTOMERS

Management has determined that the Company operates as one reportable and operating segment as the Company’s Chief Executive Officer, who is the Company’s CODM, does not make decisions about resources to be allocated or assess performance on a segment basis.

Furthermore, the Company does not organize or report its costs on a segment basis.

We have one reportable segment, which reflects how the chief operating decision maker (“CODM”), Chief Executive Officer, reviews and assesses performance of the business.

The CODM assesses the performance of the Company and decides how to allocate resources based on consolidated net income reported in the consolidated statement of operations.

The CODM uses consolidated net income in deciding whether to reinvest profits into certain parts of the business or return a portion of such profits to shareholders through dividends and stock repurchases.

Significant expense categories regularly provided to and reviewed by the CODM are those presented in the consolidated statement of operations.

The Company presents its revenue by product type in two primary categories:

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NOTE 14 — SUBSEQUENT EVENTS

Stock Repurchases

On August 21, 2025, the Company’s Board of Directors approved a new $ 500 million stock repurchase program (the “2025 August Program”).

Under the 2025 August Program, the Company is authorized to repurchase up to $ 500 million of common stock.

2025 August Program expires on September 30, 2026.

On August 22, 2025, the Company announced that its Board of Directors had approved a quarterly cash dividend of $ 0.80 per share payable on September 8, 2025 to shareholders of record at the close of business on September 2, 2025.

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

What changed 10-K

Item 9A. Controls and Procedures