UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission File Number:
DIGIMARC CORPORATION
(Exact name of registrant as specified in its charter)
| | | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
| | | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| | ☒ | Smaller reporting company | |
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes
As of August 7, 2026, there were
| Item 1. |
||
| Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 |
||
| Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 |
||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
| Item 3. |
28 | |
| Item 4. |
||
| Item 1. |
||
| Item 1A. |
||
| Item 2. |
||
| Item 5. | Other Information | 29 |
| Item 6. |
||
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(UNAUDITED)
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Marketable securities | ||||||||
| Trade accounts receivable, net | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangibles, net | ||||||||
| Goodwill | ||||||||
| Lease right of use assets | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and other accrued liabilities | $ | $ | ||||||
| Deferred revenue | ||||||||
| Total current liabilities | ||||||||
| Long-term lease liabilities | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 16) | ||||||||
| Shareholders’ equity: | ||||||||
| Preferred stock (par value $ per share, authorized, shares issued and outstanding at June 30, 2026 and December 31, 2025) | ||||||||
| Common stock (par value $ per share, authorized, and shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively) | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total shareholders’ equity - Digimarc Corporation | ||||||||
| Non-controlling interest | ||||||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share data)
(UNAUDITED)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue: | ||||||||||||||||
| Subscription | $ | $ | $ | $ | ||||||||||||
| Service | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Cost of revenue: | ||||||||||||||||
| Subscription (1) | ||||||||||||||||
| Service (1) | ||||||||||||||||
| Amortization expense on acquired intangible assets | ||||||||||||||||
| Total cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Research, development and engineering | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Amortization expense on acquired intangible assets | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income, net | ||||||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Benefit (provision) for income taxes | ( | ) | ( | ) | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to non-controlling interest | ( | ) | ( | ) | ||||||||||||
| Net loss attributable to Digimarc Corporation | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share: | ||||||||||||||||
| Net loss per share attributable to Digimarc Corporation common shareholders — basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share attributable to Digimarc Corporation common shareholders — diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding — basic | ||||||||||||||||
| Weighted average shares outstanding — diluted | ||||||||||||||||
| Comprehensive loss: | ||||||||||||||||
| Unrealized gain (loss) on marketable securities, net of tax of $ | $ | $ | $ | ( | ) | $ | ||||||||||
| Foreign currency translation adjustment, net of tax of $ | ( | ) | ( | ) | ||||||||||||
| Other comprehensive income (loss) | ( | ) | ( | ) | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss attributable to non-controlling interest | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss attributable to Digimarc Corporation | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
(1) Cost of revenue for Subscription and Service excludes amortization expense on acquired intangible assets.
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
(UNAUDITED)
| Accumulated | ||||||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | Comprehensive | Non-controlling | Total | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Interest | Equity | ||||||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Issuance of common stock | ||||||||||||||||||||||||||||||||||||
| Issuance of restricted common stock | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Partnership capital contributions | — | — | ||||||||||||||||||||||||||||||||||
| Exercise of partnership equity options | — | — | ||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Forfeiture of restricted common stock | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Purchase of common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Change in non-controlling interest ownership | — | — | ( | ) | ||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on marketable securities | — | — | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Issuance of restricted common stock | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Vesting of restricted stock units | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Purchase of common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on marketable securities | — | — | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | ||||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | Comprehensive | Non-controlling | Total | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Interest | Equity | ||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Issuance of common stock | ||||||||||||||||||||||||||||||||||||
| Issuance of restricted common stock | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Partnership capital contributions | — | — | ||||||||||||||||||||||||||||||||||
| Exercise of partnership equity options | — | — | ||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Vesting of performance restricted stock units | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Forfeiture of restricted common stock | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Purchase of common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Change in non-controlling interest ownership | — | — | ( | ) | ||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on marketable securities | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Issuance of restricted common stock | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Vesting of restricted stock units | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Vesting of performance restricted stock units | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Purchase of common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on marketable securities | — | — | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | ||||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(UNAUDITED)
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and write-off of property and equipment | ||||||||
| Amortization of acquired intangible assets | ||||||||
| Amortization and write-off of other intangible assets | ||||||||
| Amortization of lease right of use assets under operating leases | ||||||||
| Stock-based compensation | ||||||||
| Increase (decrease) in allowance for doubtful accounts | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade accounts receivable | ( | ) | ||||||
| Other current assets | ( | ) | ||||||
| Other assets | ( | ) | ( | ) | ||||
| Accounts payable and other accrued liabilities | ||||||||
| Deferred revenue | ( | ) | ||||||
| Lease liability and other long-term liabilities | ( | ) | ( | ) | ||||
| Net cash provided by (used in) operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Capitalized patent costs | ( | ) | ( | ) | ||||
| Proceeds from maturities of marketable securities | ||||||||
| Purchases of marketable securities | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Issuance of common stock, net of issuance costs | ||||||||
| Non-controlling interest capital contributions | ||||||||
| Purchase of common stock | ( | ) | ( | ) | ||||
| Repayment of loans | ( | ) | ( | ) | ||||
| Net cash provided by (used in) financing activities | ( | ) | ( | ) | ||||
| Effect of exchange rate on cash | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash received (paid) for income taxes, net | $ | ( | ) | $ | ( | ) | ||
| Supplemental schedule of non-cash investing activities: | ||||||||
| Property and equipment and patent costs in accounts payable | $ | $ | ||||||
| Stock-based compensation capitalized to software and patent costs | $ | $ | ||||||
| Supplemental schedule of non-cash financing activities: | ||||||||
| Issuance of shares pursuant to Employee Stock Purchase Plan | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(UNAUDITED)
1. Description of Business and Significant Accounting Policies
Description of Business
Digimarc Corporation ("Digimarc" or "the Company"), an Oregon corporation, is building the trust layer for the modern world. As artificial intelligence ("AI") accelerates how people produce, share, and interact with the world, the risks of fraud, counterfeiting, and misinformation are growing exponentially.
Digimarc's innovative, highly scalable, and ultra-secure solutions make it possible for consumers, businesses, and intelligent systems to instantly verify what's real, protect what matters, and transact with confidence. Digimarc's solutions for retail loss prevention, product authentication, and digital trust and integrity are built to counter the speed and sophistication of today's AI-enabled threats. Trusted by a consortium of the world's central banks (the "Central Banks") to deter the counterfeiting of global currency, Digimarc exists to protect the truth in every interaction, spanning both the physical and digital worlds.
| Physical Digimarc Solutions | Digital Digimarc Solutions |
| Anti-Counterfeiting: Restore trust with counterfeit resistant packaging and product verification. | Internal Compliance: Ensure policy compliance and prevent misuse of digital assets. |
| Counterfeiting Deterrence: Deter digital counterfeiting of global currencies. | Leak Detection: Identify leaked information and its source instantly. |
| Product Swap Prevention: Reduce weight-based shrink at grocery checkouts. | Piracy Prevention: Gain insight into - and control of - digital asset use. |
| Recycling: Boost product sustainability while revealing never-before-seen data. | Provenance & Authenticity: Restore trust and ensure fair use of digital assets. |
| Secure Gift Cards: Fight gift card fraud with automated tamper detection. | Royalty Monitoring: Ensure content creators and owners receive proper payment. |
Corporate Reorganization
On April 30, 2026, the shareholders of DMRC LLC (f/k/a Digimarc Corporation), the predecessor entity ("Predecessor"), approved, and, on May 15, 2026, the Predecessor completed, a corporate reorganization pursuant to an Agreement and Plan of Reorganization dated March 12, 2026 (the "corporate reorganization"). Under the corporate reorganization, Digimarc Corporation (f/k/a Deschutes Parent, Inc.) ("Holdings"), a newly formed Oregon corporation, became the parent holding company of the Predecessor. To effect the corporate reorganization, Deschutes Merger Sub, Inc. ("Merger Sub"), a wholly owned subsidiary of Holdings, merged with and into the Predecessor, with the Predecessor surviving the merger and becoming a wholly owned subsidiary of Holdings. As part of the corporate reorganization each outstanding share of common stock of the Predecessor was converted into the right to receive one share of Holdings common stock; each outstanding share of preferred stock of the Predecessor was converted into the right to receive one corresponding share of Holdings preferred stock; each outstanding option to purchase shares of common stock of the Predecessor was assumed by Holdings and became exercisable for an equivalent number of shares of Holdings common stock; and each outstanding restricted stock award, restricted stock unit award, and other equity-based award of the Predecessor was assumed by Holdings and remained subject to substantially the same terms and conditions that applied immediately prior to the corporate reorganization.
Following the merger, the Predecessor was converted into an Oregon limited liability company and renamed "DMRC LLC", and Holdings filed Articles of Amendment to its Amended Articles of Incorporation with the Secretary of State of the State of Oregon to change its name to "Digimarc Corporation." Digimarc Corporation succeeds as the U.S. Securities and Exchange Commission ("SEC") reporting entity and its common stock continues to trade on Nasdaq under the symbol "DMRC."
The corporate reorganization was accounted for as a transaction among entities under common control. Accordingly, the historical carrying values of the assets and liabilities and the historical consolidated financial statements were carried forward.
Interim Consolidated Financial Statements
Our significant accounting policies are detailed in "Note 1: Description of Business and Summary of Significant Accounting Policies" of our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 11, 2026 (the "2025 Annual Report").
The accompanying interim consolidated financial statements have been prepared from the Company’s records without audit and, in management’s opinion, include all adjustments (consisting of only normal recurring adjustments) necessary to fairly reflect the financial condition and the results of operations for the periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles in the United States ("U.S. GAAP") have been condensed or omitted in accordance with the rules and regulations of the SEC.
These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the 2025 Annual Report. The results of operations for the interim periods presented in these consolidated financial statements are not necessarily indicative of the results for the full year.
Principles of Consolidation
The consolidated financial statements include the accounts of Digimarc Corporation and DMRC LLC and its subsidiaries. Digimarc Corporation holds a controlling financial interest in DMRC LLC and its subsidiaries through its ownership and governance rights and has concluded that DMRC LLC and its subsidiaries constitute a variable interest entity ("VIE") for the purposes of consolidation under Accounting Standards Codification ("ASC") Topic 810 "Consolidation". Ownership interests in DMRC LLC and its subsidiaries held by other members are reflected as non-controlling interest ("NCI"), as applicable. All intercompany transactions and balances have been eliminated.
Non-controlling Interest
NCI reflects the portion of income or loss and the corresponding equity attributable to other members' equity interests in DMRC LLC and its subsidiaries, measured using the Hypothetical Liquidation at Book Value method. NCI is presented as a separate component of Shareholders' Equity on the Company's Consolidated Balance Sheets to clearly distinguish between the Company's equity interests and the economic interests of other members. Net loss and comprehensive loss attributable to Digimarc, as reported in the Consolidated Statements of Operations and Comprehensive Loss, is presented net of the portion of net loss and comprehensive loss attributable to other members.
Liquidity
Under the rules of ASC Subtopic 205-40 "Presentation of Financial Statements-Going Concern" ("ASC 205-40"), companies are required to evaluate whether conditions and/or events raise substantial doubt about their ability to meet their future financial obligations as they become due within one year after the date that the financial statements are issued. This evaluation takes into account a company’s current available cash and projected cash needs over the one year evaluation period but may not consider things beyond its control, such as increasing revenue or the future exercise of outstanding financial assets.
The Company has a history of incurring negative cash flows and depending on future results the Company may continue to incur negative cash flows in the future. The Company’s management believes current cash, cash equivalents, and marketable securities of $
The Company plans, as necessary, to secure additional capital in the future through increased revenue, partnerships, financing activities, and/or other sources to carry out the Company’s planned business activities. If additional capital is not available on acceptable terms, or at all, when required, the Company may need to take steps to contain costs until such funding is received, which could have a material adverse effect on the Company’s business.
Accounting Pronouncements Issued But Not Yet Adopted
In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2024-03, "Income Statement (Subtopic 220-40) - Reporting Comprehensive Income - Expense Disaggregation Disclosures." The ASU requires disaggregated disclosure of income statement expenses, primarily on disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This authoritative guidance will be effective for the Company starting in the fiscal year ending December 31, 2027 for annual periods and in the first quarter of the fiscal year ending December 31, 2028 for interim periods, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU on the Company’s disclosures.
In September 2025, the FASB issued ASU No. 2025-06, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software," which includes amendments intended to modernize the accounting for software costs by removing references to software development stages and clarifying the capitalization threshold. The amendments are effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The amendments may be applied prospectively, retrospectively, or through a modified transition approach. The Company is currently evaluating the effect of adopting this ASU on the Company’s consolidated financial statements and disclosures.
In December 2025, the FASB issued ASU No. 2025‑11, "Interim Reporting (Topic 270): Narrow‑Scope Improvements," which provides amendments intended to clarify interim disclosure requirements and improve the usability and consistency of interim financial reporting. The amendments are effective for public business entities for interim reporting periods within annual reporting periods beginning after December 15, 2027, and for all other entities for interim reporting periods within annual reporting periods beginning after December 15, 2028, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU on the Company’s disclosures.
In December 2025, the FASB issued ASU No. 2025‑12, "Codification Improvements," which includes amendments designed to clarify, correct, or enhance various areas of the FASB Accounting Standards Codification. These amendments do not introduce new accounting requirements but are intended to improve the clarity and consistency of the existing guidance. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU on the Company’s disclosures.
2. Fair Value of Financial Instruments
The estimated fair values of the Company’s financial instruments, which include cash equivalents, accounts receivable, accounts payable and other accrued liabilities, approximate their carrying values due to the short-term nature of these instruments. The Company’s marketable securities are classified as available-for-sale and are reported at fair value. Unrealized holding gains and losses are excluded from earnings and are reported net of tax in "accumulated other comprehensive loss" in the Consolidated Balance Sheets until realized. Realized gains and losses are included in "other income, net" in the Consolidated Statements of Operations and Comprehensive Loss and are derived using the specific identification method for determining the cost of marketable securities sold.
In accordance with ASC Topic 820 "Fair Value Measurements and Disclosures," the Company defines its fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, in the following:
| • | Level 1 Pricing inputs are quoted prices available in active markets for identical investments as of the reporting date. |
| • | Level 2 Pricing inputs are quoted for similar investments, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 2 includes investments valued at quoted prices adjusted for legal or contractual restrictions specific to these investments. |
| • | Level 3 Pricing inputs are unobservable for the investment; that is, the inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. |
The Company’s fair value hierarchy for its cash equivalents and marketable securities was as follows:
| June 30, 2026 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Money market securities | $ | $ | $ | $ | ||||||||||||
| Commercial paper | ||||||||||||||||
| Corporate notes | ||||||||||||||||
| Federal agency notes | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| December 31, 2025 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Money market securities | $ | $ | $ | $ | ||||||||||||
| Commercial paper | ||||||||||||||||
| Federal agency notes | ||||||||||||||||
| Corporate notes | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The fair value maturities of the Company’s cash equivalents and marketable securities as of June 30, 2026, were as follows:
| Maturities by Period | ||||||||||||||||||||
| Less than | 1-5 | 5-10 | More than | |||||||||||||||||
| Total | 1 year | years | years | 10 years | ||||||||||||||||
| Cash equivalents and marketable securities | $ | $ | $ | $ | $ | |||||||||||||||
The Company considers all highly liquid marketable securities with original maturities of 90 days or less at the date of acquisition to be cash equivalents. Cash equivalents include commercial paper, money market securities, corporate notes, and federal agency notes totaling $
3. Revenue Recognition
The Company derives its revenue primarily from software subscriptions and software development services. Applicable revenue recognition criteria are considered separately for each performance obligation as follows:
| • | Subscription revenue consists primarily of revenue earned from subscription fees for access to the Company’s SaaS platform and products and, to a lesser extent, licensing fees for software products and intellectual property. The majority of subscription contracts are recurring, paid in advance and recognized over the term of the subscription, which is typically to years. |
| • | Service revenue consists primarily of revenue earned from the performance of software development services and, to a lesser extent, professional services. The majority of software development contracts are structured as time and materials agreements. Revenue for services is generally recognized as the services are performed. Billing for services rendered generally occurs within month after the services are provided. |
Customer arrangements may contain multiple deliverables such as software platform subscriptions, software product subscriptions, and professional services. Subscriptions and services offered are usually distinct performance obligations. When they are not capable of being distinct, they are combined with other subscriptions or services until a distinct performance obligation is identified. To determine the transaction price, management considers the terms of the contract and the Company’s customary business practices. Some contracts may contain variable consideration. In those cases, management estimates the amount of variable consideration based on the sum of probability-weighted amounts in a range of possible consideration amounts. As part of this assessment, management evaluates whether any of the variable consideration is constrained and if it is, it is not included in the transaction price. The consideration is allocated between distinct performance obligations based on their stand-alone selling prices. When the standalone selling prices are not directly observable, management makes estimates based on reasonably available information, including market conditions, specific factors affecting the Company, and information about the customer. The Company recognizes the revenue associated with each performance obligation as the obligation is fulfilled, which for subscriptions is typically recognized ratably over time, and for services is typically recognized when they are performed.
All revenue recognized in the Consolidated Statements of Operations and Comprehensive Loss is considered to be revenue from contracts with customers.
The following table provides information about disaggregated revenue by major target market in the Company’s single reporting segment:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Commercial: | ||||||||||||||||
| Subscription | $ | $ | $ | $ | ||||||||||||
| Service | ||||||||||||||||
| Total Commercial | ||||||||||||||||
| Government: | ||||||||||||||||
| Subscription | $ | $ | $ | $ | ||||||||||||
| Service | ||||||||||||||||
| Total Government | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The Company has contract assets from contracts with customers that are classified as "trade accounts receivable" in the Consolidated Balance Sheets. See Note 8 for more information about trade accounts receivable.
The Company has contract assets from capitalized contract acquisition costs that are classified as "other current assets" and "other assets" in the Consolidated Balance Sheets. These contract acquisition costs are recognized in proportion to the revenue recognized from the contract they are associated with.
The following table provides information about contract assets:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Contract acquisition costs in other current assets | $ | $ | ||||||
| Contract acquisition costs in other assets | ||||||||
| Total | $ | $ | ||||||
The Company has contract liabilities from contracts with customers that are classified as "deferred revenue" and "other long-term liabilities" in the Consolidated Balance Sheets. Contract liabilities consist of billings in advance for subscriptions and services for which the performance obligation has not been satisfied.
The following table provides information about contract liabilities:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Contract liabilities in deferred revenue | $ | $ | ||||||
| Contract liabilities in other long-term liabilities | | | ||||||
| Total | $ | $ | ||||||
The Company recognized $
The aggregate amount of the transaction prices from contractual obligations that are unsatisfied or partially unsatisfied was $
4. Segment Information
Significant Segment Expenses
The Company derives its revenue from a single reporting segment: identification and authentication solutions. Revenue is generated in this segment primarily through software subscriptions and software development services. The Company manages its business activities on a consolidated basis. In addition, the Chief Executive Officer of the Company, as the chief operating decision-maker ("CODM"), reviews the Company’s operating results and makes decisions to allocate resources based on consolidated financial information. As such, the Company has single reportable segment. The CODM uses consolidated net income (loss) as a performance measure and total consolidated assets as an asset measure, to assess performance of the Company, to allocate working capital, and to monitor budget versus actual results.
The following table illustrates reported segment revenue, segment profit and loss, and significant segment expenses.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue: | ||||||||||||||||
| Subscription | $ | $ | $ | $ | ||||||||||||
| Service | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Cost of revenue: | ||||||||||||||||
| Subscription (1) | ||||||||||||||||
| Service (1) | ||||||||||||||||
| Amortization expense on acquired intangible assets | ||||||||||||||||
| Total cost of revenue | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Cash compensation | ||||||||||||||||
| Stock-based compensation | ||||||||||||||||
| Professional services and consultants | ||||||||||||||||
| Software and hardware | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Other segment items (2) | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income, net | ||||||||||||||||
| Benefit (provision) for income taxes | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (1) | Cost of revenue for Subscription and Service excludes amortization expense on acquired intangible assets. |
| (2) | Other segment items include training and travel expenses, recruiting expenses, rent and facility expenses, bad debt expenses and other miscellaneous costs. |
Geographic Information
The Company markets its products in the U.S. and in non-U.S. countries through its sales personnel and partners. Revenue by geographic area, based upon the "bill-to" location, was as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Domestic | $ | $ | $ | $ | ||||||||||||
| International (1) | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| (1) | Revenue from the Central Banks, consisting of a consortium of central banks around the world, is classified as international revenue. Reporting revenue by country for this customer is not practicable. |
Major Customers
The following customers accounted for 10% or more of revenue:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Customer A | % | % | % | % | ||||||||||||
| Customer B | % | % | % | % | ||||||||||||
| Customer C | * | % | * | * | ||||||||||||
| * | Less than 10% |
5. Stock-Based Compensation
Stock-based compensation includes expense charges for all stock-based awards to employees, members and directors. These awards include restricted stock awards ("RSA"), restricted stock units ("RSU"), performance restricted stock units ("PRSU"), time-vested long-term incentive plan units ("TVU"), performance-vested long-term incentive plan units ("PVU"), and shares offered for purchase under the Company's Employee Stock Purchase Plan ("ESPP").
Stock-based compensation expense related to internal labor is capitalized to software and patent costs based on direct labor hours charged to capitalized software and patent costs.
Determining Fair Value
Restricted Stock Awards
The fair value of RSAs that vest upon meeting a service condition is based on the fair market value of the Company’s common stock on the date of the grant (measurement date) and is recognized on a straight-line basis over the service period of the award, which is generally to years for employee grants and to years for director grants.
Restricted Stock Units
The fair value of RSU awards that vest upon meeting a service condition is based on the fair market value of the Company’s common stock on the date of the grant (measurement date) and is recognized on a straight-line basis over the service period of the award, which is generally to years for employee grants.
Performance Restricted Stock Units
The fair value of PRSU awards that vest upon meeting a service condition and a performance condition, such as the Company exceeding a future annual recurring revenue target, is determined based on the fair market value of the Company’s common stock on the date of the grant (measurement date), adjusted for probability of achievement of the performance criteria as of each reporting date, and is recognized on a straight-line basis over the service period of the award, which is generally to years for employee grants. The probability of achievement is subject to judgment, and could change from period to period, impacting the amount of expense to be recognized.
The fair value of PRSU awards that vest upon meeting a service condition and a market condition, such as the Company exceeding shareholder returns as compared to an index of peer companies or exceeding certain share price thresholds, is determined on the date of grant (measurement date) using the Monte Carlo valuation model. The Company recognizes the fair value of the award on a straight-line basis over the service period of the award, which is generally years for employee grants.
Long Term Incentive Plan Units ("LTIP")
The fair value of TVU awards that vest upon meeting a service condition is based on the fair market value of the Company's common stock on the date of the grant (measurement date) and is recognized on a straight-line basis over the service period of the award, which is generally to years.
The fair value of PVU awards that vest upon meeting a service condition and a market condition, such as the Company exceeding certain share price thresholds, is determined on the date of grant (measurement date) using the Monte Carlo valuation model. The Company recognizes the fair value of the award on a straight-line basis over the service period of the award, which is generally to years.
The following inputs are used in the Monte Carlo valuation models to estimate the fair value:
Stock Price. The stock price represents the fair market value of the Company’s common stock on the date of the grant.
Expected Volatility. The Company estimates the volatility of its common stock at the date of grant based on the historical volatility of its common stock based on historical prices over the most recent period commensurate with the term of the award.
Risk-Free Interest Rate. The Company determines the risk-free interest rate using current U.S. treasury yields for bonds with a maturity commensurate with the term of the award.
PRSU Monte Carlo Valuation Inputs:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Stock price | $ | $ | $ | $ | ||||||||||||
| Expected volatility | % | % | % | % | ||||||||||||
| Risk-free interest rate | % | % | % | % | ||||||||||||
PVU Monte Carlo Valuation Inputs:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Stock price | $ | $ | $ | $ | ||||||||||||
| Expected volatility | % | % | % | % | ||||||||||||
| Risk-free interest rate | % | % | % | % | ||||||||||||
Employee Stock Purchase Program
The fair value of shares offered for purchase under the Company's ESPP is determined at the beginning of each offering period (measurement date) using the Black-Scholes valuation model. The Company recognizes the fair value of the award on a straight-line basis over the service period of the award, which is months.
The following inputs are used in the Black-Scholes valuation model to estimate the fair value:
Stock Price. The stock price represents the fair market value of the Company's common stock on the measurement date.
Expected Volatility. The Company estimates the volatility of its common stock at the measurement date based on the historical volatility of its common stock based on historical prices over the most recent period commensurate with the term of the award.
Risk-Free Interest Rate. The Company determines the risk-free interest rate using current U.S. treasury yields for bonds with a maturity commensurate with each term of the offering period.
Term. The term represents the number of months between the start of the offering period and each purchase date in the offering period.
ESPP Black-Scholes Valuation Inputs:
| Six Months Ended June 30, | ||||
| 2026 | ||||
| Stock price | $ | |||
| Expected volatility | % | |||
| Risk-free interest rate | % | |||
| Expected term | ||||
Stock-Based Compensation
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Stock-based compensation: | ||||||||||||||||
| Cost of revenue | $ | $ | $ | $ | ||||||||||||
| Sales and marketing | ||||||||||||||||
| Research, development and engineering | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||
| Capitalized to software and patent costs | ||||||||||||||||
| Total stock-based compensation | $ | $ | $ | $ | ||||||||||||
The following table sets forth total unrecognized compensation costs related to non-vested stock-based awards granted under the Company’s stock incentive plans:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Total unrecognized compensation costs | $ | $ | ||||||
Total unrecognized compensation costs will be adjusted based on updates to the estimated future achievement of performance conditions on PRSU awards as well as for any future forfeitures if and when they occur.
The Company expects to recognize the total unrecognized compensation costs as of June 30, 2026, for all non-vested stock-based awards over weighted average periods through June 30, 2030, as follows:
| RSAs | RSUs | PRSUs | TVUs | PVUs | ESPP | |||||||||||||||||||
| Weighted average period (in years) | ||||||||||||||||||||||||
As of June 30, 2026, under the Company's stock incentive plan, an additional
Restricted Stock Awards Activity
The following table presents the unvested RSA activity:
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Three Months Ended June 30, 2026: | Shares | Fair Value | ||||||
| Unvested balance at March 31, 2026 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | $ | |||||||
| Unvested balance at June 30, 2026 | $ | |||||||
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Six Months Ended June 30, 2026: | Shares | Fair Value | ||||||
| Unvested balance at December 31, 2025 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | $ | |||||||
| Unvested balance at June 30, 2026 | $ | |||||||
The fair value of RSAs vested is as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Fair value of RSAs vested | $ | $ | $ | $ | ||||||||||||
Restricted Stock Units Activity
The following table presents the unvested RSU award activity:
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Three Months Ended June 30, 2026: | Units | Fair Value | ||||||
| Unvested balance at March 31, 2026 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | ( | ) | $ | |||||
| Unvested balance at June 30, 2026 | $ | |||||||
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Six Months Ended June 30, 2026: | Units | Fair Value | ||||||
| Unvested balance at December 31, 2025 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | ( | ) | $ | |||||
| Unvested balance at June 30, 2026 | $ | |||||||
The fair value of RSU awards vested is as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Fair value of RSU awards vested | $ | $ | $ | $ | ||||||||||||
Performance Restricted Stock Units Activity
The following table presents the unvested PRSU award activity:
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Three Months Ended June 30, 2026: | Units | Fair Value | ||||||
| Unvested balance at March 31, 2026 | $ | |||||||
| Change in units based on performance expectations | $ | |||||||
| Granted | $ | |||||||
| Vested | $ | |||||||
| Forfeited | ( | ) | $ | |||||
| Unvested balance at June 30, 2026 | $ | |||||||
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Six Months Ended June 30, 2026: | Units | Fair Value | ||||||
| Unvested balance at December 31, 2025 | $ | |||||||
| Change in units based on performance expectations | ( | ) | $ | |||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | ( | ) | $ | |||||
| Unvested balance at June 30, 2026 | $ | |||||||
The fair value of PRSU awards vested is as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Fair value of PRSU awards vested | $ | $ | $ | $ | ||||||||||||
TVU Award Activity
The following table presents the unvested TVU award activity:
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Three Months Ended June 30, 2026: | Units | Fair Value | ||||||
| Unvested balance at March 31, 2026 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | $ | |||||||
| Unvested balance at June 30, 2026 | $ | |||||||
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Six Months Ended June 30, 2026: | Units | Fair Value | ||||||
| Unvested balance at December 31, 2025 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | $ | |||||||
| Unvested balance at June 30, 2026 | $ | |||||||
The fair value of TVU awards vested is as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Fair value of TVU awards vested | $ | $ | $ | $ | ||||||||||||
PVU Award Activity
The following table presents the unvested PVU award activity:
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Three Months Ended June 30, 2026: | Units | Fair Value | ||||||
| Unvested balance at March 31, 2026 | $ | |||||||
| Granted | $ | |||||||
| Vested | $ | |||||||
| Forfeited | $ | |||||||
| Unvested balance at June 30, 2026 | $ | |||||||
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Six Months Ended June 30, 2026: | Units | Fair Value | ||||||
| Unvested balance at December 31, 2025 | $ | |||||||
| Granted | $ | |||||||
| Vested | $ | |||||||
| Forfeited | $ | |||||||
| Unvested balance at June 30, 2026 | $ | |||||||
Employee Stock Purchase Plan Activity
ESPP Activity is as follows:
| Six Months Ended June 30, | ||||
| 2026 | ||||
| Shares Issued | ||||
| Weighted Average Purchase Price | $ | |||
| Weighted Average Fair Value of Purchase Rights | $ | |||
6. Shareholders' Equity
Common Stock
In June 2026, the Company entered into a Sales Agreement, whereby the Company may sell from time to time through Needham & Company, LLC, as its sales agent, the Company's common stock having an aggregate offering price of up to $
For the three and six months ended June 30, 2026, the Company sold
As of June 30, 2026, there is $
Non-controlling Interest
On April 30, 2026, shareholders approved a corporate reorganization, which allows the Digimarc Compensation & Talent Management ("C&TM") Committee of the Board of Directors to issue LTIP units of DMRC LLC, in the form of TVUs and PVUs, to certain key employees who otherwise would be issued equity incentive awards under the Digimarc Corporation 2018 Incentive Plan (the "2018 Incentive Plan"). LTIP units represent equity interests in DMRC LLC and participate in profits and losses of DMRC LLC. Upon vesting of LTIP units, to the extent that DMRC LLC generates the requisite profit and/or value appreciation, such LTIP units may, at the election of the unit holder, be redeemed for a commensurate number of shares of common stock of Digimarc. LTIP unit equity interests represent additional equity interests in DMRC LLC not controlled by Digimarc. As such, the Company has classified these equity interests as "Non-controlling interest" in the Company's Consolidated Balance Sheets.
On May 19, 2026, the C&TM Committee approved the grant of
7. Earnings Per Share
The Company calculates basic and diluted earnings per share in accordance with ASC No. 260, "Earnings Per Share."
Basic earnings per share excludes dilution and is calculated by dividing earnings by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is calculated by dividing earnings by the weighted-average number of common shares, as adjusted for the potentially dilutive effect of unvested RSUs and PRSUs, outstanding ESPP purchase rights, and vested but not redeemed LTIP units. The dilutive effect of unvested RSUs and PRSUs, outstanding ESPP purchase rights, and vested but not redeemed LTIP units is determined using the treasury stock and if-converted method, as applicable. RSAs are included in shares outstanding on the date of grant.
The following table reconciles earnings (loss) per share:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Basic Earnings (Loss) per Share: | ||||||||||||||||
| Net loss — basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding — basic | ||||||||||||||||
| Net loss per share — basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted Earnings (Loss) per Share: | ||||||||||||||||
| Net loss — diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding — diluted | ||||||||||||||||
| Net loss per share — diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The following table indicates the stock equivalents related to unvested RSUs and PRSUs, and vested but unredeemed TVUs and PVUs that were anti-dilutive and excluded from diluted earnings (loss) per share calculations:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Anti-dilutive shares due to net loss | ||||||||||||||||
Trade Accounts Receivable
Trade accounts receivables are recorded at the contractual or invoiced amount.
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Trade accounts receivable, current | $ | $ | ||||||
| Trade accounts receivable, long-term | ||||||||
| Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Trade accounts receivable, net | $ | $ | ||||||
| Unpaid deferred revenue included in trade accounts receivable | $ | $ | ||||||
Allowance for Doubtful Accounts
The Company’s accounts receivables are subject to concentrations of credit risk. The Company maintains an allowance for its doubtful accounts receivable to reflect any estimated credit losses. The allowance is established in accordance with the current expected credit loss model, which requires the estimation of expected credit losses over the contractual life of financial assets. The allowance is calculated using a forward-looking probability-weighted approach based on historical loss experience, current economic conditions, and reasonable and supportable forecasts. The Company records the allowance in "general and administrative" expense in the Consolidated Statements of Operations and Comprehensive Loss, up to the amount of revenue recognized to date for each account. Any incremental allowance is recorded as an offset to "deferred revenue" in the Consolidated Balance Sheets. Accounts receivables are written off and charged against the recorded allowance when the Company has exhausted collection efforts without success.
Unpaid Deferred Revenue
The unpaid deferred revenue that is included in trade accounts receivable is billed in accordance with the provisions of the contracts with the Company’s customers.
Major Customers
The following customers accounted for 10% or more of trade accounts receivable, net:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Company A | % | % | ||||||
| Company B | % | % | ||||||
| Company C | % | * | ||||||
| * | Less than 10% |
9. Property and Equipment
Property and equipment are stated at cost. Repairs and maintenance are charged to expense when incurred.
Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, generally to years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life or the lease term.
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Software | $ | $ | ||||||
| Equipment | ||||||||
| Leasehold improvements | ||||||||
| Office furniture and fixtures | ||||||||
| Gross property and equipment | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
10. Goodwill
The Company performs its annual goodwill impairment test during the second quarter of each fiscal year or whenever events or changes in circumstances indicate that the carrying value may exceed the fair value. If the carrying value exceeds the estimated fair value, an impairment is recorded. The Company operates as a single reporting unit. The Company estimates the fair value of its single reporting unit using a market approach, which takes into account the Company’s market capitalization plus an estimated control premium.
| Balance at December 31, 2025 | $ | |||
| Currency translation adjustments | ( | ) | ||
| Balance at June 30, 2026 | $ |
11. Intangibles
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Patent costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized on a straight-line basis over the term of the patents as determined at the award date, which varies depending on the pendency period of the application, but generally approximates seventeen years.
Amortization of intangible assets acquired is calculated using the straight-line method over the estimated useful lives of the assets.
| Estimated Life | June 30, | December 31, | ||||||||||
| (years) | 2026 | 2025 | ||||||||||
| Capitalized patent costs | $ | $ | ||||||||||
| Intangible assets acquired: | ||||||||||||
| Developed technology | ||||||||||||
| Customer relationships | ||||||||||||
| Purchased intellectual property | ||||||||||||
| Gross intangible assets | | | ||||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||||||
| Intangibles, net | $ | $ | ||||||||||
The amortization of capitalized patent costs, purchased intellectual property, and developed technology is recorded in "cost of revenue" and the amortization of customer relationships is recorded in "operating expenses" in the Consolidated Statements of Operations and Comprehensive Loss.
Amortization expense on intangible assets was as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Amortization expense | $ | $ | $ | $ | ||||||||||||
For intangible assets recorded at June 30, 2026, the estimated future aggregate amortization expense for the years ending December 31, 2026 through December 31, 2030 is as follows:
| Amortization | ||||
| Expense | ||||
| Remainder of 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
12. Leases
The Company accounts for leases in accordance with ASC No. 842, "Leases."
In February 2022, the Company entered into a sublease agreement and lease extension agreement for office space in Beaverton, Oregon to move the Company’s corporate headquarters. The term of the sublease and lease extension runs through September 2030, with remaining rent payments as of June 30, 2026, totaling $
All of the Company’s leases are operating leases. The following table provides additional details of leases presented in the Consolidated Balance Sheets:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Lease right of use assets | $ | $ | ||||||
| Lease liabilities, | $ | $ | ||||||
| Lease liabilities, long-term | $ | $ | ||||||
| Weighted-average remaining life (in years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
The current lease liabilities are included in "accounts payable and other accrued liabilities" in the Consolidated Balance Sheets.
The carrying value of the lease right of use assets is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
Operating lease expense is included in "operating expenses" in the Consolidated Statements of Operations and Comprehensive Loss and in "cash flows from operating activities" in the Consolidated Statements of Cash Flows. The operating leases include variable lease payments, which are included in operating lease expense. Additional details of the Company’s operating leases are presented in the following table:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating lease expense | $ | $ | $ | $ | ||||||||||||
| Cash paid for operating leases | $ | $ | $ | $ | ||||||||||||
The table below reconciles the aggregate cash payment obligations for the next five years and total of the remaining years for the operating lease liability recorded in the Consolidated Balance Sheets as of June 30, 2026:
| Cash | ||||
| Payment | ||||
| Obligations | ||||
| Remainder of 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Imputed interest | ( | ) | ||
| Total minimum lease payments | $ | |||
In December 2025, the Company entered into a sub-sublease agreement for the Company's corporate headquarters in Beaverton, Oregon, whereby the Company agreed to sub-sublease
13. Accounts Payable and Accrued liabilities
The components of accounts payable and accrued liabilities are summarized below:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Accrued liabilities | $ | $ | ||||||
| Accounts payable | ||||||||
| Lease liabilities, current | ||||||||
| Accounts payable and other accrued liabilities | $ | $ | ||||||
14. Other Income
The following table provides activity in other income, net:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Interest income | $ | $ | $ | $ | ||||||||||||
| Refundable tax credit | ||||||||||||||||
| Foreign currency gains (losses) | ||||||||||||||||
| Other income (loss) | ||||||||||||||||
| Other income, net | $ | $ | $ | $ | ||||||||||||
15. Income Taxes
The benefit (provision) for income taxes reflects current taxes and deferred taxes. The effective tax rate for each of the three and six months ended June 30, 2026 and 2025 was
The valuation allowance against net deferred tax assets as of June 30, 2026, was $
Excess tax deficiencies of $
16. Commitments and Contingencies
Certain of the Company’s product and services agreements include an indemnification provision for claims from third parties relating to the Company’s intellectual property. Such indemnification provisions are accounted for in accordance with ASC No. 450 "Contingencies." To date, there have been no claims made under such indemnification provisions.
The Company is subject to certain legal proceedings, including ongoing securities and derivative matters, as previously disclosed in the Company's Annual Report on Form 10-K for the Year Ended December 31, 2025. On February 9, 2026, the Predecessor and the now former Chief Executive Officer and current Chief Financial Officer of the Company moved to dismiss the class action lawsuit captioned Ullom v. Digimarc Corp., et al., No. 3:25-cv-00779-JR (the "Ullom Action"). On February 11, 2026, the derivative lawsuits filed in the Circuit Court of the State of Oregon for the County of Multnomah, Johnson v. McCormack et al., No. 25-cv-56998 (the "Johnson Action") and Sperry v. McCormack et al., No. 26-cv-00621 (the "Sperry Action"), were consolidated and remain stayed pending resolution of the defendants' motion to dismiss in the Ullom Action. On June 23, 2026, the magistrate judge issued findings and a recommendation that the motion to dismiss filed by the Predecessor and the now former Chief Executive Officer and current Chief Financial Officer of the Company in the Ullom Action be granted and that judgment be entered dismissing the Ullom Action. The findings and recommendation are subject to review by the district judge and do not constitute a final order or judgment. The consolidated federal derivative actions, which were filed nominally on behalf of the Predecessor, remain stayed pending resolution of the Ullom Action. In addition, the derivative lawsuits filed in the Circuit Court of the State of Oregon for the County of Multnomah, the Johnson and the Sperry Actions, which were also filed nominally on behalf of the Predecessor, remain consolidated and stayed. The defendants, including the Company, believe they have defenses to the claims and are responding accordingly.
17. Subsequent Events
CEO Transition
The Board of Directors of the Company appointed Paul Carreiro as President and Chief Executive Officer ("CEO") of the Company, effective July 6, 2026. In connection therewith, the C&TM Committee approved an annualized base salary of $
In connection with the appointment of Mr. Carreiro, Riley McCormack's service as President and CEO concluded effective July 5, 2026. Pursuant to the terms of Mr. McCormack's existing employment and retention agreements, he received cash severance benefits of $
Shelf Registration
On July 7, 2026, the Company filed a new shelf registration statement on Form S-3. The new shelf registration statement became effective on July 13, 2026, and expires on July 13, 2029. Under the new shelf registration statement, the Company may sell securities in one or more offerings up to $
On July 13, 2026, upon the new shelf registration becoming effective, the Company's prior shelf registration statement expired with $
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements relating to future events or the future financial performance of Digimarc that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements. See the discussion regarding forward-looking statements included in this Quarterly Report on Form 10-Q under the caption "Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995."
The following discussion should be read in conjunction with our consolidated financial statements and the related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Readers are also urged to carefully review and consider the disclosures made in Part II, Item 1A ("Risk Factors") of this Quarterly Report on Form 10-Q and in the audited consolidated financial statements and related notes included in our 2025 Annual Report, and other reports and filings we have made with the SEC.
Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to "Company," "Digimarc," "we," "our," and "us" refer to Digimarc Corporation.
All dollar amounts within the tables below are in thousands. The percentages within the tables may not sum to 100% due to rounding.
Digimarc, Illuminate, and the circle-d logo are registered trademarks of Digimarc Corporation. EVRYTHNG and EVRYTHNG PRODUCT CLOUD are registered trademarks of EVRYTHNG Limited ("EVRYTHNG"), a subsidiary of Digimarc.
Overview
Digimarc, an Oregon corporation, is building the trust layer for the modern world. As artificial intelligence ("AI") accelerates how people produce, share, and interact with the world, the risks of fraud, counterfeiting, and misinformation are growing exponentially. The impacts of these threats are evidenced by:
| • |
Consumers demanding more transparency into how, where, and by whom products are made. |
| • |
Brands and creators facing rampant counterfeiting and intellectual property theft. |
| • |
Retailers losing hundreds of billions of dollars annually to shrink and theft. |
| • |
Enterprises experiencing an increase in information leaks and digital manipulation. |
| • |
AI-generated content blurring reality, sowing confusion and mistrust. |
| • |
Regulators increasing pressure on companies to prove product authenticity and data integrity. |
Our innovative, highly scalable, and ultra-secure solutions make it possible for consumers, businesses, and intelligent systems to instantly verify what's real, protect what matters, and transact with confidence. Our solutions for retail loss prevention, product authentication, and digital trust and integrity are built to counter the speed and sophistication of today's AI-enabled threats. Trusted by a consortium of the world's central banks (the "Central Banks") to deter the counterfeiting of global currency, we exist to protect the truth in every interaction, spanning both the physical and digital worlds.
| Physical Digimarc Solutions | Digital Digimarc Solutions |
| Anti-Counterfeiting: Restore trust with counterfeit resistant packaging and product verification. | Internal Compliance: Ensure policy compliance and prevent misuse of digital assets. |
| Counterfeiting Deterrence: Deter digital counterfeiting of global currencies. | Leak Detection: Identify leaked information and its source instantly. |
| Product Swap Prevention: Reduce weight-based shrink at grocery checkouts. | Piracy Prevention: Gain insight into - and control of - digital asset use. |
| Recycling: Boost product sustainability while revealing never-before-seen data. | Provenance & Authenticity: Restore trust and ensure fair use of digital assets. |
| Secure Gift Cards: Fight gift card fraud with automated tamper detection. | Royalty Monitoring: Ensure content creators and owners receive proper payment. |
Our commercial solutions run on the Illuminate® platform—a high-performance, hyper-scalable, and ultra-secure software as a service ("SaaS") cloud-based platform for digital connectivity. Tested and trusted by some of the most highly demanding and mission-critical ecosystems in the world, the Illuminate platform provides the tools for the application of advanced digital watermarks and dynamic Quick Response ("QR") codes, Application Programming Interfaces ("APIs") that allow for direct integration into other mission critical systems, AI-assisted authentication workflows, and a centralized repository for capturing insights about digital interactions as well as automating activities based on that information.
The foundational digital watermarking technology used in our commercial solutions is backed by decades of innovation and inventions. It is also the same technology we use to deter digital counterfeiting of global currencies as part of our almost 30-year relationship with the Central Banks. This relationship was the first commercially successful large-scale use of our technologies and today protects hundreds of billions of banknotes in circulation around the world.
Our intellectual property contains many innovations in digital watermarking, content and object recognition, product authentication, and related fields. To protect our inventions, we have implemented an extensive intellectual property protection program that relies on a combination of patent, copyright, trademark and trade secret laws, and nondisclosure agreements and other contracts. As a result, we believe we have one of the world’s most extensive patent portfolios in digital watermarking and related fields, with approximately 670 U.S. and foreign patents granted and applications pending as of June 30, 2026. The patents in our portfolio each have a life of approximately 20 years from the patent’s effective filing date.
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with Generally Accepted Accounting Principles in the United States ("GAAP") requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. There have been no significant changes in our significant accounting policies described in Part II, Item 7 of our 2025 Annual Report.
Results of Operations
The following table presents Consolidated Statements of Operations data for the periods indicated as a percentage of total revenue. Unless stated otherwise, all references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations relate to the three and six months ended June 30, 2026, and all changes discussed with respect to such period reflect changes compared to the three and six months ended June 30, 2025.
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2026 |
2025 |
2026 |
2025 |
|||||||||||||
| Percentages are percent of total revenue |
||||||||||||||||
| Revenue: |
||||||||||||||||
| Subscription |
51 | % | 58 | % | 54 | % | 57 | % | ||||||||
| Service |
49 | % | 42 | % | 46 | % | 43 | % | ||||||||
| Total revenue |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||
| Cost of revenue: |
||||||||||||||||
| Subscription (1) |
6 | % | 9 | % | 6 | % | 8 | % | ||||||||
| Service (1) |
20 | % | 17 | % | 19 | % | 16 | % | ||||||||
| Amortization expense on acquired intangible assets |
16 | % | 15 | % | 16 | % | 13 | % | ||||||||
| Total cost of revenue |
42 | % | 41 | % | 41 | % | 38 | % | ||||||||
| Gross profit |
58 | % | 59 | % | 59 | % | 62 | % | ||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
33 | % | 40 | % | 30 | % | 48 | % | ||||||||
| Research, development and engineering |
49 | % | 57 | % | 49 | % | 70 | % | ||||||||
| General and administrative |
140 | % | 63 | % | 106 | % | 59 | % | ||||||||
| Amortization expense on acquired intangible assets |
4 | % | 4 | % | 4 | % | 3 | % | ||||||||
| Total operating expenses |
226 | % | 164 | % | 189 | % | 180 | % | ||||||||
| Operating loss |
(167 | )% | (105 | )% | (130 | )% | (118 | )% | ||||||||
| Other income, net |
3 | % | 3 | % | 3 | % | 3 | % | ||||||||
| Loss before income taxes |
(164 | )% | (103 | )% | (128 | )% | (115 | )% | ||||||||
| Benefit (provision) for income taxes |
— | % | (— | )% | — | % | (— | )% | ||||||||
| Net loss |
(164 | )% | (103 | )% | (128 | )% | (115 | )% | ||||||||
| Net loss attributable to non-controlling interest | (— | )% | — | % | (— | )% | — | % | ||||||||
| Net loss attributable to Digimarc Corporation | (164 | )% | (103 | )% | (128 | )% | (115 | )% | ||||||||
| (1) |
Cost of revenue for Subscription and Service excludes amortization expense on acquired intangible assets. |
Summary
Total revenue for the three months ended June 30, 2026, decreased $0.6 million, or 8%, to $7.4 million, compared to $8.0 million for the three months ended June 30, 2025. Subscription revenue decreased $0.9 million, primarily reflecting a decrease of $0.8 million from the expiration of a commercial contract in October 2025. Service revenue increased $0.3 million, primarily reflecting higher service revenue from existing commercial and government customers.
Total revenue for the six months ended June 30, 2026, decreased $2.4 million, or 14%, to $15.0 million, compared to $17.4 million for the six months ended June 30, 2025. Subscription revenue decreased $1.8 million, primarily reflecting a decrease of $2.3 million from the expiration of two commercial contracts in 2025, partially offset by higher subscription revenue from new and existing commercial contracts. Service revenue decreased $0.6 million, primarily reflecting a $0.5 million decrease in commercial service revenue from HolyGrail 2.0 recycling projects, as that work was previously completed.
Total operating expenses for the three months ended June 30, 2026, increased $3.5 million, or 27%, to $16.7 million, compared to $13.1 million for the three months ended June 30, 2025. The increase primarily reflects increases in stock-based compensation expense of $4.0 million and professional services costs of $0.4 million, partially offset by decreases in cash compensation of $0.3 million, software and hardware costs of $0.2 million, and other costs of $0.4 million. The $4.0 million increase in stock-based compensation expense includes $5.4 million of one-time expense related to the acceleration of unvested equity awards held by our former Chief Executive Officer ("CEO"), partially offset by $1.4 million of lower stock-based compensation expense largely due to a lower number of employee stock grants. The $0.4 million increase in professional services costs includes $0.4 million of one-time costs associated with the recent corporate reorganization. The $0.3 million decrease in cash compensation costs includes $1.0 million of lower costs largely due to lower headcount, partially offset by one-time cash severance costs of $0.7 million paid to the former CEO.
Total operating expenses for the six months ended June 30, 2026, decreased $3.0 million, or 9%, to $28.3 million, compared to $31.3 million for the six months ended June 30, 2025. The decrease primarily reflects decreases in cash compensation costs of $7.7 million, software and hardware costs of $0.5 million, and other costs of $0.4 million, partially offset by increases in stock-based compensation expense of $4.5 million and professional services costs of $1.0 million. The $7.7 million decrease in cash compensation costs includes $5.1 million of lower costs largely due to lower headcount and $2.6 million of lower one-time cash severance costs. The $4.5 million increase in stock-based compensation expense includes $5.4 million of one-time expense related to the acceleration of unvested equity awards held by our former CEO, partially offset by $0.9 million of lower stock-based compensation expense largely due to a lower number of employee stock grants. The $1.0 million increase in professional services costs includes $1.7 million of one-time costs associated with the recent corporate reorganization.
Revenue
| Three Months Ended June 30, |
Dollar |
Percent |
Six Months Ended June 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||||||||||||||
| Revenue: |
||||||||||||||||||||||||||||||||
| Subscription |
$ | 3,742 | $ | 4,624 | $ | (882 | ) | (19 | )% | $ | 8,110 | $ | 9,938 | $ | (1,828 | ) | (18 | )% | ||||||||||||||
| Service |
3,646 | 3,386 | 260 | 8 | % | 6,856 | 7,440 | (584 | ) | (8 | )% | |||||||||||||||||||||
| Total |
$ | 7,388 | $ | 8,010 | $ | (622 | ) | (8 | )% | $ | 14,966 | $ | 17,378 | $ | (2,412 | ) | (14 | )% | ||||||||||||||
| Revenue (as % of total revenue): |
||||||||||||||||||||||||||||||||
| Subscription |
51 | % | 58 | % | 54 | % | 57 | % | ||||||||||||||||||||||||
| Service |
49 | % | 42 | % | 46 | % | 43 | % | ||||||||||||||||||||||||
| Total |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||||||||||
Subscription
Subscription revenue consists primarily of revenue earned from subscription fees for access to our SaaS platform and products and, to a lesser extent, licensing fees for our software products and intellectual property. The majority of subscription contracts are recurring, paid in advance and recognized over the term of the subscription, which is typically one to three years.
The $0.9 million decrease in subscription revenue for the three months ended June 30, 2026, compared to the corresponding three months ended June 30, 2025, primarily reflects a decrease of $0.8 million from the expiration of a commercial contract in October 2025.
The $1.8 million decrease in subscription revenue for the six months ended June 30, 2026, compared to the corresponding six months ended June 30, 2025, primarily reflects a decrease of $2.3 million from the expiration of two commercial contracts in 2025, partially offset by an increase from new and existing commercial customers.
Service
Service revenue consists primarily of revenue earned from the performance of software development services and, to a lesser extent, professional services. The majority of software development contracts are structured as time and materials agreements. Revenue for services is generally recognized as the services are performed. Billing for services rendered generally occurs within one month after the services are provided. Service contracts can range from days to several years in length. Our contract with the Central Banks, which accounts for the majority of our service revenue, has a contract term through December 31, 2029. The contract is subject to work plans that are reviewed and agreed upon quarterly. The contract provides for predetermined billing rates, which are adjusted annually to account for cost of living variables, and provides for the reimbursement of third party costs incurred to support the work plans.
The $0.3 million increase in service revenue for the three months ended June 30, 2026, compared to the corresponding three months ended June 30, 2025, primarily reflects higher service revenue from existing customers.
The $0.6 million decrease in service revenue for the six months ended June 30, 2026, compared to the corresponding six months ended June 30, 2025, primarily reflects $0.5 million of lower commercial service revenue from HolyGrail 2.0 recycling projects.
Revenue by geography
| Three Months Ended June 30, |
Dollar |
Percent |
Six Months Ended June 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||||||||||||||
| Revenue by geography: |
||||||||||||||||||||||||||||||||
| Domestic |
$ | 1,371 | $ | 2,327 | $ | (956 | ) | (41 | )% | $ | 3,238 | $ | 4,473 | $ | (1,235 | ) | (28 | )% | ||||||||||||||
| International |
6,017 | 5,683 | 334 | 6 | % | 11,728 | 12,905 | (1,177 | ) | (9 | )% | |||||||||||||||||||||
| Total |
$ | 7,388 | $ | 8,010 | $ | (622 | ) | (8 | )% | $ | 14,966 | $ | 17,378 | $ | (2,412 | ) | (14 | )% | ||||||||||||||
| Revenue (as % of total revenue): |
||||||||||||||||||||||||||||||||
| Domestic |
19 | % | 29 | % | 22 | % | 26 | % | ||||||||||||||||||||||||
| International |
81 | % | 71 | % | 78 | % | 74 | % | ||||||||||||||||||||||||
| Total |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||||||||||
Domestic
The $1.0 million decrease in domestic revenue for the three months ended June 30, 2026, compared to the corresponding three months ended June 30, 2025, primarily reflects a decrease of $0.8 million from the expiration of a commercial subscription contract with a domestic customer in October 2025.
The $1.2 million decrease in domestic revenue for the six months ended June 30, 2026, compared to the corresponding six months ended June 30, 2025, primarily reflects a decrease of $1.5 million from the expiration of a commercial subscription contract with a domestic customer in October 2025, partially offset by higher commercial subscription revenue from new and existing contracts with domestic customers.
International
The $0.3 million increase in international revenue for the three months ended June 30, 2026, compared to the corresponding three months ended June 30, 2025, primarily reflects higher commercial service and subscription revenue from existing contracts with international customers.
The $1.2 million decrease in international revenue for the six months ended June 30, 2026, compared to the corresponding six months ended June 30, 2025, primarily reflects a decrease of $0.7 million from the expiration of a commercial subscription and service contract with an international customer in April 2025 and $0.5 million of lower commercial service revenue from HolyGrail 2.0 recycling projects.
Revenue by market
| Three Months Ended June 30, |
Dollar |
Percent |
Six Months Ended June 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||||||||||||||
| Commercial: |
||||||||||||||||||||||||||||||||
| Subscription |
$ | 3,442 | $ | 4,324 | $ | (882 | ) | (20 | )% | $ | 7,510 | $ | 9,338 | $ | (1,828 | ) | (20 | )% | ||||||||||||||
| Service |
202 | 39 | 163 | 418 | % | 261 | 835 | (574 | ) | (69 | )% | |||||||||||||||||||||
| Total Commercial |
$ | 3,644 | $ | 4,363 | $ | (719 | ) | (16 | )% | $ | 7,771 | $ | 10,173 | $ | (2,402 | ) | (24 | )% | ||||||||||||||
| Government: |
||||||||||||||||||||||||||||||||
| Subscription |
$ | 300 | $ | 300 | $ | — | — | % | $ | 600 | $ | 600 | $ | — | — | % | ||||||||||||||||
| Service |
3,444 | 3,347 | 97 | 3 | % | 6,595 | 6,605 | (10 | ) | — | % | |||||||||||||||||||||
| Total Government |
$ | 3,744 | $ | 3,647 | $ | 97 | 3 | % | $ | 7,195 | $ | 7,205 | $ | (10 | ) | — | % | |||||||||||||||
| Total |
$ | 7,388 | $ | 8,010 | $ | (622 | ) | (8 | )% | $ | 14,966 | $ | 17,378 | $ | (2,412 | ) | (14 | )% | ||||||||||||||
| Revenue (as % of total revenue): |
||||||||||||||||||||||||||||||||
| Commercial |
49 | % | 54 | % | 52 | % | 59 | % | ||||||||||||||||||||||||
| Government |
51 | % | 46 | % | 48 | % | 41 | % | ||||||||||||||||||||||||
| Total |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||||||||||
Commercial
The $0.7 million decrease in commercial revenue for the three months ended June 30, 2026, compared to the corresponding three months ended June 30, 2025, primarily reflects a decrease of $0.8 million from the expiration of a commercial contract in October 2025.
The $2.4 million decrease in commercial revenue for the six months ended June 30, 2026, compared to the corresponding six months ended June 30, 2025, primarily reflects a decrease of $2.3 million from the expiration of two commercial contracts in 2025 and $0.5 million of lower commercial service revenue from HolyGrail 2.0 recycling projects, partially offset by higher commercial subscription revenue from new and existing customers.
Government
The $0.1 million increase in government revenue for the three months ended June 30, 2026, compared to the corresponding three months ended June 30, 2025, reflects $0.1 million of higher government service revenue from the Central Banks.
The insignificant change in government revenue for the six months ended June 30, 2026, compared to the corresponding six months ended June 30, 2025, reflects an insignificant change in government service revenue from the Central Banks.
Annual Recurring Revenue ("ARR")
| As of |
As of |
|||||||||||||||
| June 30, |
June 30, |
Dollar |
Percent |
|||||||||||||
| 2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||
| Ending ARR |
$ | 11,622 | $ | 15,881 | $ | (4,259 | ) | (27 | )% | |||||||
Ending ARR decreased $4.3 million from $15.9 million as of June 30, 2025, to $11.6 million as of June 30, 2026, reflecting the expiration of a commercial contract in October 2025 that accounted for $3.1 million of ARR and the step-down in another commercial contract in June 2026 that accounted for $2.6 million of ARR, partially offset by $1.5 million of net increases to ARR from new and existing commercial contracts.
We provide an ARR performance metric to help investors better understand and assess the performance of our business. ARR is calculated as the aggregation of annualized subscription fees from all of our commercial contracts as of the measurement date. ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with, or to replace, either of those items. ARR is not a forecast and the contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.
Cost of revenue
Subscription. Cost of subscription revenue primarily includes:
| • |
internet cloud hosting costs and image search data fees to support our subscription products; and |
| • |
amortization of capitalized patent costs and patent maintenance fees. |
Service. Cost of service revenue primarily includes:
| • |
compensation, benefits, incentive compensation in the form of cash and stock-based compensation and related costs of our software developers, quality assurance personnel, professional services team and other personnel where we bill our customers for time and materials costs; |
| • |
payments to outside contractors that are billed to customers; |
| • |
charges for equipment and software directly used by customers; and |
| • |
travel costs that are billed to customers. |
Amortization expense on acquired intangible assets includes:
| • |
amortization expense recognized on the developed technology intangible asset acquired in the EVRYTHNG acquisition. |
Gross profit
| Three Months Ended June 30, |
Dollar |
Percent |
Six Months Ended June 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||||||||||||||
| Gross Profit: |
||||||||||||||||||||||||||||||||
| Subscription (1) |
$ | 3,325 | $ | 3,909 | $ | (584 | ) | (15 | )% | $ | 7,238 | $ | 8,479 | $ | (1,241 | ) | (15 | )% | ||||||||||||||
| Service (1) |
2,176 | 2,003 | 173 | 9 | % | 4,008 | 4,650 | (642 | ) | (14 | )% | |||||||||||||||||||||
| Amortization expense on acquired intangible assets |
(1,201 | ) | (1,205 | ) | 4 | — | % | (2,409 | ) | (2,337 | ) | (72 | ) | (3 | )% | |||||||||||||||||
| Total |
$ | 4,300 | $ | 4,707 | $ | (407 | ) | (9 | )% | $ | 8,837 | $ | 10,792 | $ | (1,955 | ) | (18 | )% | ||||||||||||||
| Gross Profit Margin: |
||||||||||||||||||||||||||||||||
| Subscription (1) |
89 | % | 85 | % | 89 | % | 85 | % | ||||||||||||||||||||||||
| Service (1) |
60 | % | 59 | % | 58 | % | 63 | % | ||||||||||||||||||||||||
| Total |
58 | % | 59 | % | 59 | % | 62 | % | ||||||||||||||||||||||||
| (1) |
Gross Profit and Gross Profit Margin for Subscription and Service excludes amortization expense on acquired intangible assets. |
The $0.4 million decrease in total gross profit for the three months ended June 30, 2026, compared to the corresponding three months ended June 30, 2025, primarily reflects $0.6 million of lower revenue, partially offset by $0.2 million of lower cost of revenue.
The $2.0 million decrease in total gross profit for the six months ended June 30, 2026, compared to the corresponding six months ended June 30, 2025, primarily reflects $2.4 million of lower revenue, partially offset by $0.5 million of lower cost of revenue.
The increase in subscription gross profit margin, excluding amortization expense on acquired intangible assets, for the three months ended June 30, 2026, compared to the corresponding three months ended June 30, 2025, primarily reflects $0.3 million of lower cost of subscription revenue, partially offset by $0.9 million of lower subscription revenue.
The increase in subscription gross profit margin, excluding amortization expense on acquired intangible assets, for the six months ended June 30, 2026, compared to the corresponding six months ended June 30, 2025, primarily reflects $0.6 million of lower cost of subscription revenue, partially offset by $1.9 million of lower subscription revenue.
The increase in service gross profit margin, excluding amortization expense on acquired intangible assets, for the three months ended June 30, 2026, compared to the corresponding three months ended June 30, 2025, primarily reflects a more favorable mix of service revenue.
The decrease in service gross profit margin, excluding amortization expense on acquired intangible assets, for the six months ended June 30, 2026, compared to the corresponding six months ended June 30, 2025, primarily reflects a less favorable mix of service revenue.
Operating expenses
Sales and marketing
| Three Months Ended June 30, |
Dollar |
Percent |
Six Months Ended June 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||||||||||||||
| Sales and marketing |
$ | 2,414 | $ | 3,231 | $ | (817 | ) | (25 | )% | $ | 4,496 | $ | 8,309 | $ | (3,813 | ) | (46 | )% | ||||||||||||||
| Sales and marketing (as % of total revenue) |
33 | % | 40 | % | 30 | % | 48 | % | ||||||||||||||||||||||||
Sales and marketing expenses consist primarily of:
| • |
compensation, benefits, incentive compensation in the form of cash and stock-based compensation and related costs of our sales, marketing, product, professional services and customer support personnel; |
| • |
travel and market research costs, and costs associated with marketing programs, such as trade shows, public relations and new product launches; |
| • |
consulting costs for sales and marketing and product initiatives; and |
| • |
the allocation of facilities and information technology costs. |
The $0.8 million decrease in sales and marketing expenses for the three months ended June 30, 2026, compared to the corresponding three months ended June 30, 2025, primarily reflects:
| • |
lower cash compensation costs of $0.4 million largely due to lower headcount; and |
| • |
lower stock-based compensation expense of $0.4 million. |
The $3.8 million decrease in sales and marketing expenses for the six months ended June 30, 2026, compared to the corresponding six months ended June 30, 2025, primarily reflects:
| • |
lower cash compensation costs of $2.1 million largely due to lower headcount; |
| • |
lower one-time cash severance costs of $0.9 million resulting from the reduction in force in 2025; and |
| • |
lower stock-based compensation expense of $0.7 million. |
Research, development and engineering
| Three Months Ended June 30, |
Dollar |
Percent |
Six Months Ended June 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||||||||||||||
| Research, development and engineering |
$ | 3,652 | $ | 4,536 | $ | (884 | ) | (19 | )% | $ | 7,399 | $ | 12,170 | $ | (4,771 | ) | (39 | )% | ||||||||||||||
| Research, development and engineering (as % of total revenue) |
49 | % | 57 | % | 49 | % | 70 | % | ||||||||||||||||||||||||
Research, development and engineering expenses consist primarily of:
| • |
compensation, benefits, incentive compensation in the form of cash and stock-based compensation and related costs of our software and hardware developers and quality assurance personnel; |
| • |
payments to outside contractors for software development services; |
| • |
the purchase of materials and services for platform and product development; and |
| • |
the allocation of facilities and information technology costs. |
The $0.9 million decrease in research, development and engineering expenses for the three months ended June 30, 2026, compared to the corresponding three months ended June 30, 2025, primarily reflects:
| • |
lower stock-based compensation expense of $0.6 million; and |
| • |
lower cash compensation costs of $0.3 million largely due to lower headcount. |
The $4.8 million decrease in research, development and engineering expenses for the six months ended June 30, 2026, compared to the corresponding six months ended June 30, 2025, primarily reflects:
| • |
lower cash compensation costs of $2.0 million largely due to lower headcount; |
| • |
lower one-time cash severance costs of $1.6 million resulting from the reduction in force in 2025; |
| • |
lower software and hardware costs of $0.4 million; |
| • |
lower stock-based compensation expense of $0.4 million; and |
| • |
lower professional services costs of $0.3 million. |
General and administrative
| Three Months Ended June 30, |
Dollar |
Percent |
Six Months Ended June 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||||||||||||||
| General and administrative |
$ | 10,311 | $ | 5,078 | $ | 5,233 | 103 | % | $ | 15,866 | $ | 10,259 | $ | 5,607 | 55 | % | ||||||||||||||||
| General and administrative (as % of total revenue) |
140 | % | 63 | % | 106 | % | 59 | % | ||||||||||||||||||||||||
We incur general and administrative costs in the functional areas of finance, legal, human resources, intellectual property, executive and board of directors. Costs for facilities and information technology are also managed as part of the general and administrative processes. These costs are allocated to sales and marketing, research, development and engineering, and general and administrative based on relative headcount.
General and administrative expenses consist primarily of:
| • |
compensation, benefits and incentive compensation in the form of cash and stock-based compensation and related costs of our general and administrative personnel; |
| • |
third party and professional fees associated with legal, accounting and human resources functions; |
| • |
costs associated with being a public company; |
| • |
third party costs, including filing and governmental regulatory fees and outside legal fees and translation costs, related to the filing and maintenance of our intellectual property; and |
| • |
the allocation of facilities and information technology costs. |
| • |
higher one-time stock-based compensation expense of $5.4 million related to the acceleration of unvested equity awards held by the former CEO; |
| • |
higher one-time cash severance costs of $0.7 million paid to the former CEO; and |
| • |
higher one-time professional services costs of $0.4 million associated with the recent corporate reorganization; partially offset by |
| • |
lower cash compensation costs of $0.5 million; |
| • |
lower other stock-based compensation expense of $0.4 million; and |
| • |
lower other costs of $0.4 million. |
The $5.6 million increase in general and administrative expenses for the six months ended June 30, 2026, compared to the corresponding six months ended June 30, 2025, primarily reflects:
| • |
higher one-time stock-based compensation expense of $5.4 million related to the acceleration of unvested equity awards held by our former CEO; |
| • |
higher one-time professional services costs of $1.7 million associated with the recent corporate reorganization; |
| • |
higher other stock-based compensation expense of $0.2 million; and |
| • |
higher net severance costs reflecting higher one-time cash severance costs of $0.7 million paid to the former CEO, offset by $0.6 million of lower one-time cash severance costs resulting from the reduction in force in 2025; partially offset by |
| • |
lower cash compensation costs of $1.1 million; |
| • |
lower other professional services costs of $0.6 million; and |
| • |
lower other costs of $0.3 million. |
Amortization expense on acquired intangible assets
| Three Months Ended June 30, |
Dollar |
Percent |
Six Months Ended June 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||||||||||||||
| Amortization expense on acquired intangible assets |
$ | 287 | $ | 288 | $ | (1 | ) | (— | )% | $ | 576 | $ | 559 | $ | 17 | 3 | % | |||||||||||||||
| Amortization expense on acquired intangible assets (as % of total revenue) |
4 | % | 4 | % | 4 | % | 3 | % | ||||||||||||||||||||||||
Amortization expense on acquired intangible assets relates to amortization expense recognized on the customer relationships intangible asset acquired in the EVRYTHNG acquisition.
The insignificant change in amortization expense on acquired intangible assets for both the three and six-month periods reflects the impact of changes in foreign currency exchange rates.
Stock-based compensation
| Three Months Ended June 30, |
Dollar |
Percent |
Six Months Ended June 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||||||||||||||
| Cost of revenue |
$ | 401 | $ | 253 | $ | 148 | 58 | % | $ | 747 | $ | 390 | $ | 357 | 92 | % | ||||||||||||||||
| Sales and marketing |
362 | 795 | (433 | ) | (54 | )% | 418 | 1,150 | (732 | ) | (64 | )% | ||||||||||||||||||||
| Research, development and engineering |
700 | 1,221 | (521 | ) | (43 | )% | 1,320 | 1,628 | (308 | ) | (19 | )% | ||||||||||||||||||||
| General and administrative |
6,462 | 1,502 | 4,960 | 330 | % | 7,449 | 1,863 | 5,586 | 300 | % | ||||||||||||||||||||||
| Total |
$ | 7,925 | $ | 3,771 | $ | 4,154 | 110 | % | $ | 9,934 | $ | 5,031 | $ | 4,903 | 97 | % | ||||||||||||||||
The $4.2 million increase in stock-based compensation expense for the three months ended June 30, 2026, compared to the corresponding three months ended June 30, 2025, primarily reflects $5.4 million of higher one-time costs due to the acceleration of unvested equity awards held by our former CEO, partially offset by a lower number of employee stock grants.
The $4.9 million increase in stock-based compensation expense for the six months ended June 30, 2026, compared to the corresponding six months ended June 30, 2025, primarily reflects $5.4 million of higher one-time costs due to the acceleration of unvested equity awards held by our former CEO, partially offset by a lower number of employee stock grants.
We anticipate incurring an additional $16.0 million in stock-based compensation expense through June 30, 2030, for stock awards outstanding as of June 30, 2026 including an additional $0.5 million of expense due to the acceleration of unvested equity awards held by our former CEO that will be recognized in the three months ending September 30, 2026.
Other income, net
| Three Months Ended June 30, |
Dollar |
Percent |
Six Months Ended June 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||||||||||||||
| Other income, net |
$ | 229 | $ | 210 | 19 | 9 | % | $ | 400 | $ | 579 | $ | (179 | ) | (31 | )% | ||||||||||||||||
| Other income, net (as % of total revenue) |
3 | % | 3 | % | 3 | % | 3 | % | ||||||||||||||||||||||||
The insignificant change in other income, net for the three months ended June 30, 2026, compared to the corresponding three months ended June 30, 2025, primarily reflects higher foreign currency gains partially offset by lower interest income due to lower marketable securities balances and interest rates.
The $0.2 million decrease in other income, net for the six months ended June 30, 2026, compared to the corresponding six months ended June 30, 2025, primarily reflects lower interest income due to lower marketable securities balances and interest rates.
Income Taxes
The benefit (provision) for income taxes reflects current taxes and deferred taxes. The effective tax rate for each of the six months ended June 30, 2026 and 2025 was 0%. Our effective tax rate is significantly lower than our statutory tax rate because we have a valuation allowance recorded against our deferred tax assets.
The valuation allowance against deferred tax assets as of June 30, 2026, was $114.9 million, an increase of $2.2 million from $112.7 million as of December 31, 2025.
We continually assess the applicability of a valuation allowance against our deferred tax assets. Based upon the positive and negative evidence available as of June 30, 2026, and largely due to the cumulative loss incurred by us over the last several years, which is considered a significant piece of negative evidence when assessing the realizability of deferred tax assets, a valuation allowance is recorded against our deferred tax assets. We will not record tax benefits on any future losses until it is determined that those tax benefits will be realized. Future reversals of the valuation allowance would result in a tax benefit in the period recognized.
Non-GAAP Financial Measures
The following discussion and analysis includes both financial measures in accordance with GAAP as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that excludes amounts that are not normally excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to, GAAP financial measures. Non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP. Our management uses and relies on Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses, Non-GAAP net loss, and Non-GAAP net loss per diluted share, which are all non-GAAP financial measures. We believe that both management and shareholders benefit from referring to the following non-GAAP financial measures in planning, forecasting and analyzing future periods.
Our management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the described excluded items.
We define Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses, Non-GAAP net loss, and Non-GAAP net loss per diluted share excluding the adjustments in the table below. These non-GAAP financial measures are an important measure of our operating performance because they allow management, investors and analysts to evaluate and assess our core operating results from period-to-period after removing non-cash and non-recurring activities that can affect comparability.
We have included a reconciliation of the non-GAAP financial measures we use to their most directly comparable GAAP financial measures. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between us and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definitions being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules.
The following table presents a reconciliation of Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses, Non-GAAP net loss, and Non-GAAP net loss per diluted share for the three months ended June 30, 2026 and 2025:
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2026 |
2025 |
2026 |
2025 |
|||||||||||||
| GAAP gross profit |
$ | 4,300 | $ | 4,707 | $ | 8,837 | $ | 10,792 | ||||||||
| Amortization of acquired intangible assets |
1,201 | 1,205 | 2,409 | 2,337 | ||||||||||||
| Amortization and write-off of other intangible assets |
206 | 219 | 414 | 438 | ||||||||||||
| Stock-based compensation |
401 | 253 | 747 | 390 | ||||||||||||
| Non-GAAP gross profit |
$ | 6,108 | $ | 6,384 | $ | 12,407 | $ | 13,957 | ||||||||
| Non-GAAP gross profit margin |
83 | % | 80 | % | 83 | % | 80 | % | ||||||||
| GAAP operating expenses |
$ | 16,664 | $ | 13,133 | $ | 28,337 | $ | 31,297 | ||||||||
| Depreciation and write-off of property and equipment |
(146 | ) | (138 | ) | (300 | ) | (284 | ) | ||||||||
| Amortization of acquired intangible assets |
(287 | ) | (288 | ) | (576 | ) | (559 | ) | ||||||||
| Amortization and write-off of other intangible assets |
(99 | ) | (227 | ) | (221 | ) | (201 | ) | ||||||||
| Amortization of lease right of use assets under operating leases |
(122 | ) | (103 | ) | (240 | ) | (201 | ) | ||||||||
| Stock-based compensation |
(7,524 | ) | (3,518 | ) | (9,187 | ) | (4,641 | ) | ||||||||
| Corporate reorganization expenses |
(433 | ) | — | (1,656 | ) | — | ||||||||||
| Non-GAAP operating expenses |
$ | 8,053 | $ | 8,859 | $ | 16,157 | $ | 25,411 | ||||||||
| GAAP net loss |
$ | (12,131 | ) | $ | (8,220 | ) | $ | (19,097 | ) | $ | (19,950 | ) | ||||
| Total adjustments to gross profit |
1,808 | 1,677 | 3,570 | 3,165 | ||||||||||||
| Total adjustments to operating expenses |
8,611 | 4,274 | 12,180 | 5,886 | ||||||||||||
| Non-GAAP net loss |
$ | (1,712 | ) | $ | (2,269 | ) | $ | (3,347 | ) | $ | (10,899 | ) | ||||
| Non-GAAP net loss attributable to non-controlling interest |
(2 | ) | — | (2 | ) | — | ||||||||||
| Non-GAAP net loss attributable to Digimarc Corporation |
$ | (1,710 | ) | $ | (2,269 | ) | $ | (3,345 | ) | $ | (10,899 | ) | ||||
| GAAP net loss per diluted share |
$ | (0.54 | ) | $ | (0.38 | ) | $ | (0.86 | ) | $ | (0.93 | ) | ||||
| Non-GAAP net loss attributable to Digimarc Corporation |
$ | (1,710 | ) | $ | (2,269 | ) | $ | (3,345 | ) | $ | (10,899 | ) | ||||
| Non-GAAP net loss per diluted share attributable to Digimarc Corporation common shareholders |
$ | (0.08 | ) | $ | (0.11 | ) | $ | (0.15 | ) | $ | (0.51 | ) | ||||
Non-GAAP gross profit for the three months ended June 30, 2026, decreased by $0.3 million compared to the three months ended June 30, 2025. The decrease primarily reflects $0.6 million of lower revenue, partially offset by $0.3 million of lower cost of revenue.
Non-GAAP gross profit for the six months ended June 30, 2026, decreased by $1.6 million compared to the six months ended June 30, 2025. The decrease primarily reflects $2.4 million of lower revenue, partially offset by $0.9 million of lower cost of revenue.
Non-GAAP gross profit margin for the three months ended June 30, 2026, increased to 83% compared to 80% for the three months ended June 30, 2025. The increase primarily reflects $0.3 million of lower cost of subscription revenue and a more favorable mix of service revenue, partially offset by $0.9 million of lower subscription revenue.
Non-GAAP gross profit margin for the six months ended June 30, 2026, increased to 83% compared to 80% for the six months ended June 30, 2025. The increase primarily reflects $0.6 million of lower cost of subscription revenue, partially offset by $1.9 million of lower subscription revenue.
Non-GAAP operating expenses for the three months ended June 30, 2026, decreased by $0.8 million compared to the three months ended June 30, 2025. The decrease primarily reflects decreases of $1.0 million of cash compensation costs largely due to lower headcount, $0.2 million of software and hardware costs, and $0.4 million of other costs, partially offset by $0.7 million of one-time cash severance costs paid to the former CEO.
Non-GAAP operating expenses for the six months ended June 30, 2026, decreased by $9.3 million compared to the six months ended June 30, 2025. The decrease primarily reflects decreases of $5.1 million of cash compensation costs largely due to lower headcount, $2.6 million of one-time cash severance costs, $0.7 million of professional services costs, $0.5 million of software and hardware costs, and $0.4 million of other costs.
Liquidity and Capital Resources
| June 30, |
December 31, |
|||||||
| 2026 |
2025 |
|||||||
| Working capital |
$ | 5,378 | $ | 12,988 | ||||
| Current ratio (1) |
1.4:1 | 2.6:1 | ||||||
| Cash, cash equivalents and short-term marketable securities |
$ | 8,755 | $ | 12,866 | ||||
| (1) |
The current ratio is calculated by dividing total current assets by total current liabilities. |
The $4.1 million decrease in cash, cash equivalents and marketable securities at June 30, 2026, from December 31, 2025, resulted primarily from:
| • |
$2.6 million of cash used in operations; and |
| • |
$1.5 million of cash used for purchases of common stock related to tax withholding in connection with the vesting of restricted stock, restricted stock units, and performance restricted stock units. |
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, and trade accounts receivable. We place our cash and cash equivalents with major banks and financial institutions and at times deposits may exceed insured limits. Marketable securities include commercial paper, corporate notes, and federal agency notes. Our investment policy requires our portfolio to be invested to ensure that the greater of $2.0 million or 20% of the invested funds will be available within 30 days’ notice.
Other than cash used for operating needs, which may include short-term marketable securities, our investment policy limits our credit exposure to any one financial institution or type of financial instrument by limiting the maximum of 5% of our cash and cash equivalents and marketable securities or $1.0 million, whichever is greater, to be invested in any one issuer except for the U.S. government, U.S. federal agencies and U.S.-backed securities, which have no limits, at the time of purchase. Our investment policy also limits our credit exposure by limiting to a maximum of 25% of our cash and cash equivalents and marketable securities, or $1.5 million, whichever is lesser, to be invested in any one industry category (e.g., financial, energy, etc.) at the time of purchase. As a result, we believe our credit risk associated with cash and investments to be minimal.
A decline in the market value of any security that is deemed to be other-than-temporary is charged to earnings. To determine whether an impairment is other-than-temporary, we consider whether we have the ability and intent to hold the investment until a market price recovery and evidence indicating that the cost of the investment is recoverable outweighs evidence to the contrary. There have been no other-than-temporary impairments identified or recorded by us for the three and six months ended June 30, 2026 and 2025.
Cash flows from operating activities
The components of cash flows used in operating activities were:
| Six Months Ended June 30, |
Dollar |
Percent |
||||||||||||||
| 2026 |
2025 |
Increase (Decrease) |
Increase (Decrease) |
|||||||||||||
| Net loss |
$ | (19,097 | ) | $ | (19,950 | ) | $ | (853 | ) | (4 | )% | |||||
| Non-cash items included in net loss |
14,109 | 9,362 | (4,747 | ) | (51 | )% | ||||||||||
| Changes in operating assets and liabilities |
2,351 | 414 | (1,937 | ) | (468 | )% | ||||||||||
| Net cash used in operating activities |
$ | (2,637 | ) | $ | (10,174 | ) | $ | (7,537 | ) | (74 | )% | |||||
Cash used in operating activities for the six months ended June 30, 2026, decreased by $7.5 million, compared to the corresponding six months ended June 30, 2025. The decrease reflects $4.7 million of higher non-cash items included in net loss, a $1.9 million favorable change in operating assets and liabilities, and a $0.9 million lower net loss. The increase in non-cash items included in net loss primarily reflects $4.9 million of higher stock-based compensation expense, largely due to the one-time expense related to the acceleration of unvested equity awards held by our former CEO. The favorable change in operating assets and liabilities primarily reflects the timing and amount of vendor payments, customer receipts, and refundable tax credits.
Cash flows from investing activities
Cash flows provided by investing activities for the six months ended June 30, 2026, decreased by $9.0 million, compared to the corresponding six months ended June 30, 2025. The decrease reflects $11.4 million of lower proceeds from maturities of marketable securities, partially offset by $2.2 million of lower purchases of marketable securities.
Cash flows from financing activities
Cash flows used in financing activities for the six months ended June 30, 2026, decreased by $0.9 million, compared to the corresponding six months ended June 30, 2025. The decrease primarily reflects $0.6 million of lower purchases of common stock and $0.3 million of higher issuances of common stock, net of issuance costs.
Future Cash Expectations
Under the rules of ASC Subtopic 205-40 "Presentation of Financial Statements-Going Concern" ("ASC205-40"), companies are required to evaluate whether conditions and/or events raise substantial doubt about their ability to meet their future financial obligations as they become due within one year after the date that the financial statements are issued. This evaluation takes into account a company’s current available cash and projected cash needs over the one year evaluation period but may not consider things beyond its control, such as increasing revenue or the future exercise of outstanding financial assets.
We have a history of incurring negative cash flows, and depending on future results, we may continue to incur negative cash flows in the future. We believe our current cash, cash equivalents, and marketable securities of $8.8 million as of June 30, 2026, will not be sufficient to fund our operations, as currently planned, for at least 12 months from this Form 10-Q filing, unless we are able to grow revenues, raise additional capital, and/or reduce planned operating costs. Under ASC 205-40, substantial doubt exists about our ability to continue as a going concern.
We plan, as necessary, to secure additional capital in the future through increased revenue, partnerships, financing activities, and/or other sources to carry out our planned business activities. If additional capital is not available on acceptable terms, or at all, when required, we may need to take steps to contain costs until such funding is received, which could have a material adverse effect on our business.
Future Revenue Trends
Our commercial subscription revenue for the remainder of fiscal 2026 as compared to fiscal 2025 may be negatively impacted by the expiration of two commercial contracts, one in October 2025 that accounted for $3.1 million of ARR and one in June 2026 that accounted for $2.6 million of ARR.
Shelf Registration
On July 7, 2026, we filed a new shelf registration statement on Form S-3. The new shelf registration statement became effective on July 13, 2026, and expires on July 13, 2029. Under the new shelf registration statement, we may sell securities in one or more offerings up to $50.0 million.
On July 13, 2026, upon our new shelf registration becoming effective, our prior shelf registration statement expired with $67.2 million unused.
Equity Sales Agreement
On June 8, 2026, we entered into a Sales Agreement, whereby we may sell from time to time through Needham & Company, LLC, as our sales agent, our common stock having an aggregate offering price of up to $17.5 million. Needham & Company, LLC, will receive a commission of 3.0% of the gross sales price per share of common stock sold. For the three and six months ended June 30, 2026, we sold 24 thousand shares at an average price of $12.59 per share under this Sales Agreement totaling $0.3 million of net cash proceeds. As of June 30, 2026, there is $17.2 million available for future issuance under this Sales Agreement.
We may sell shares under the shelf registration and/or use similar or other financing means to raise working capital in the future, if necessary, to support continued investment in our growth initiatives. We may also raise capital in the future to fund acquisitions and/or investments in complementary businesses, technologies or product lines. If it becomes necessary to obtain additional financing, we may not be able to do so, or if these funds are available, they may not be available on satisfactory terms. These factors may inhibit our near-term ability to obtain financing.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 27A of the Securities Act of 1933, as amended. Words such as "may," "might," "plan," "should," "could," "expect," "anticipate," "intend," "believe," "project," "forecast," "estimate," "continue," and variations of such terms or similar expressions are intended to identify such forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us, and are subject to uncertainties and factors (including those specified below), which are difficult to predict and, in many instances, are beyond our control. As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements, and investors are cautioned not to place undue reliance on such statements. We believe that the following factors, among others (including those described in Item 1A. "Risk Factors" of our 2025 Annual Report), could affect our future performance and the liquidity and value of our securities and cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us. Forward-looking statements include but are not limited to statements relating to:
| • |
trends and sources of future revenue; |
| • |
anticipated revenue to be generated from current contracts; |
| • |
anticipated expenses, costs, margins, provision for income taxes and investment activities; |
| • |
our assumptions and expectations related to stock awards, including future stock-based compensation expense; |
| • |
our belief that we have one of the world’s most extensive patent portfolios in digital watermarking and related fields; |
| • |
our beliefs regarding our critical accounting policies; |
| • |
business opportunities that could require that we seek additional financing and our ability to do so; |
| • |
our expected short-term and long-term liquidity positions; |
| • |
our capital expenditure and working capital requirements and our ability to fund our capital expenditure and working capital needs through cash flow from operations or financing; |
| • |
our expectations regarding our ability to meet future financial obligations as they become due within the coming fiscal year; |
| • |
our use of cash, cash equivalents and marketable securities in upcoming quarters and the possibility that our deposits of cash and cash equivalents with major banks and financial institutions may exceed insured limits; |
| • |
protection, development and monetization of our intellectual property portfolio; and |
| • |
our beliefs related to legal proceedings and claims arising in the ordinary course of business. |
We believe that the risk factors specified above and the risk factors contained in Part I, Item 1A. "Risk Factors" of our 2025 Annual Report, among others, could affect our future performance and the liquidity and value of our securities and cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us or on our behalf. Investors should understand that it is not possible to predict or identify all risk factors and that there may be other factors that may cause our actual results to differ materially from the forward-looking statements. All forward-looking statements made by us or by persons acting on our behalf apply only as of the date of this Quarterly Report on Form 10-Q. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of the filing of this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We conducted an evaluation (pursuant to Rule 13a-15(b) of the Exchange Act), under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. These disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q, were effective.
Changes in Controls
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the three months ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
On May 8, 2025, a class action lawsuit captioned Ullom v. Digimarc Corp., et al., No. 3:25-cv-00779-JR (the "Ullom Action") was filed against the Company in the United States District Court for the District of Oregon. An amended complaint was filed on November 26, 2025. The amended complaint purports to assert claims against the Company and its now former Chief Executive Officer and current Chief Financial Officer pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 10b-5 promulgated thereunder, on behalf of a putative class of investors who purchased or otherwise acquired the Company’s shares between August 14, 2024 and February 26, 2025 (the "class period"). The Ullom Action seeks to recover damages allegedly caused by purported misstatements and omissions regarding the renewal status of a commercial contract, claiming that these alleged misstatements and omissions artificially inflated the price paid for our common stock during the class period.
Subsequently, five derivative lawsuits were filed nominally on the Company’s behalf, including three in the United States District Court for the District of Oregon: (i) Franchi v. McCormack et al., No. 3:25-cv-01543-AN, filed August 29, 2025 (as amended September 2, 2025) (the "Franchi Action"); (ii) Chadwick v. McCormack et al., No. 3:25-cv-01838-JR, filed October 7, 2025 (the "Chadwick action"); and (iii) Jensen v. McCormack et al., No. 3:25-cv-01891-SB, filed October 14, 2025 (the "Jensen action"); and two in the Circuit Court of the State of Oregon for the County of Multnomah: (i) Johnson v. McCormack et al., No. 25-cv-56998, filed October 23, 2025 (the "Johnson action"); and (ii) Sperry v. McCormack et al., No. 26-cv-00621, filed January 6, 2026. These derivative actions are based on the same alleged facts and circumstances as the Ullom Action and are against the Company’s now former Chief Executive Officer and current Chief Financial Officer and directors. The derivative actions collectively assert claims pursuant to Sections 10(b), 14(a), and 20(a) of the Exchange Act, as well as for breaches of fiduciary duties, aiding and abetting breaches of fiduciary duties, unjust enrichment, and waste of corporate assets. Each of the five derivative lawsuits seeks to recover damages on the Company’s behalf and alleges that a legally required pre-suit demand on the Board of Directors would be futile and should be excused.
On November 4, 2025, the Chadwick, Jensen and Franchi Actions were consolidated and stayed pending resolution of the Company’s anticipated motion to dismiss in the Ullom Action. On January 5, 2026, the Johnson Action was stayed pending the same event. On February 9, 2026, the Company and its now former Chief Executive Officer and current Chief Financial Officer moved to dismiss the Ullom Action. On February 11, 2026, the Johnson and the Sperry Actions were consolidated and remain stayed pending resolution of the defendants' motion to dismiss in the Ullom Action.
On June 23, 2026, the magistrate judge issued findings and a recommendation that the motion to dismiss filed by Digimarc Corporation, the Company's predecessor registrant ("predecessor registrant") and now known as DMRC LLC, and its now former Chief Executive Officer and current Chief Financial Officer in the Ulom Action be granted and that judgment be entered dismissing the Ullom Action. The findings and recommendation are subject to review by the district judge and do not constitute a final order or judgment. The consolidated federal derivative actions, which were filed nominally on behalf of the predecessor registrant, remain stayed pending resolution of the Ullom Action. In addition, the derivative lawsuits filed in the Circuit Court of the State of Oregon for the County of Multnomah, the Johnson and the Sperry Actions, which were also filed nominally on behalf of the predecessor registrant, remain consolidated and stayed. The defendants, including the Company, believe they have defenses to the claims and are responding accordingly.
Our business, financial condition, results of operations and cash flows may be affected by a number of factors. Detailed information about risk factors that may affect Digimarc’s actual results are set forth in Part I, Item 1A: "Risk Factors" of our 2025 Annual Report. The risks and uncertainties described in our 2025 Annual Report are those risks of which we are aware and that we consider to be material to our business, and, except as disclosed below, such risk factors have not changed materially. If any of these risks and uncertainties develop into actual events, our business, financial condition, results of operations or cash flows could be materially adversely affected. In that case, the trading price of our common stock could decline.
Our financial condition raises substantial doubt about our ability to continue as a going concern.
As of June 30, 2026, we had $8.8 million in cash, cash equivalents, and marketable securities. For the six months ended June 30, 2026, we used cash in operations of $2.6 million. Our financial statements for the six months ended June 30, 2026 have been prepared assuming that we will continue to operate as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have a history of incurring negative cash flows and depending on future results we may continue to incur negative cash flows in the future.
These conditions raise substantial doubt about our ability to continue as a going concern. While it is difficult to estimate our future liquidity requirements, we believe our $8.8 million in cash, cash equivalents, and marketable securities at June 30, 2026, will not be sufficient to fund our operations, as currently planned, for at least 12 months from the filing of this Form 10-Q, unless we are able to grow revenues, raise additional capital, and/or reduce planned operating costs. We plan, as necessary, to secure additional capital in the future through increased revenue, partnerships, financing activities, and/or other sources to carry out our planned business activities. If additional capital is not available on acceptable terms, or at all, when required, we may need to take steps to contain costs until such funding is received, which could have a material adverse effect on our business.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers
We repurchase shares of common stock in satisfaction of required withholding of income tax liability in connection with the vesting of restricted stock, restricted stock units and performance restricted stock units.
The following table sets forth information regarding purchases of our equity securities during the three months ended June 30, 2026:
| (d) |
||||||||||||||||
| (c) |
Approximate |
|||||||||||||||
| Total number |
dollar value |
|||||||||||||||
| of shares |
of shares that |
|||||||||||||||
| (a) |
(b) |
purchased as |
may yet be |
|||||||||||||
| Total number |
Average price |
part of publicly |
purchased |
|||||||||||||
| of shares |
paid per |
announced plans |
under the plans |
|||||||||||||
| Period |
purchased (1) |
share (1) |
or programs |
or programs |
||||||||||||
| Month 1 |
||||||||||||||||
| April 1, 2026 to April 30, 2026 |
— | $ | — | — | $ | — | ||||||||||
| Month 2 |
||||||||||||||||
| May 1, 2026 to May 31, 2026 |
58,829 | $ | 9.80 | — | $ | — | ||||||||||
| Month 3 |
||||||||||||||||
| June 1, 2026 to June 30, 2026 |
— | $ | — | — | $ | — | ||||||||||
| Total |
58,829 | $ | 9.80 | — | $ | — | ||||||||||
| (1) |
Shares of common stock withheld (purchased) by us in satisfaction of required withholding of income tax liability upon vesting of restricted stock, restricted stock units and performance restricted stock units. |
of our officers or directors adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as defined in Item 408 of Regulation S-K, during the three months ended June 30, 2026.
| * | Certain exhibits and appendices have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish to the SEC a copy of any omitted exhibit or appendix upon request. |
| + | Certain identified portions of this exhibit have been omitted in accordance with Item 601(b)(10)(iv) of Regulation S-K. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: August 14, 2026 |
DIGIMARC CORPORATION |
||
| By: |
/s/ Charles Beck |
||
| CHARLES BECK |
|||
| Chief Financial Officer |
|||
| (Duly Authorized Officer and Principal Financial and Accounting Officer) |
|||
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
DESCHUTES PARENT, INC.
DIGIMARC CORPORATION
ARTICLE I
NAME
The name of this Corporation (which is hereinafter referred to as the “Corporation”) is Deschutes Parent, Inc. Digimarc Corporation.
ARTICLE II
PURPOSE
The Corporation shall have the power to engage in any lawful activity for which corporations may be organized under the Oregon Business Corporation Act as amended from time to time (the “Act”).
ARTICLE III
STOCK
Section 1. Authorization. The aggregate number of shares which the Corporation shall have authority to issue is 52,500,000 shares, consisting of (i) 50,000,000 shares of common stock, $0.001 par value per share (the “Common Stock”); and (ii) 2,500,000 shares of preferred stock (“Preferred Stock”), $0.001 par value per share.
Section 2. Common Stock. Holders of Common Stock are entitled to one vote per share on any matter submitted to the shareholders. Subject to the rights of the holders of any series of Preferred Stock, holders of Common Stock shall be entitled to receive such dividends and distributions (whether payable in cash or otherwise) as may be declared by the Board of Directors of the Corporation from time to time out of assets or funds of the Corporation legally available therefor. On dissolution of the Corporation, after any preferential amount with respect to Preferred Stock has been paid or set aside, the holders of Common Stock and the holders of any series of Preferred Stock entitled to participate in the distribution of assets are entitled to receive the net assets of the Corporation. Holders of the Common Stock shall not have preemptive rights.
Section 3. Series of Preferred Stock. The Board of Directors is authorized, subject to limitations prescribed by the Act, and by the provisions of this Article III, to provide for the issuance of the shares of Preferred Stock in series, to establish from time to time the number of shares to be included in each series and to determine the designation, relative rights, preferences and limitations of the shares of each series. The authority of the Board of Directors with respect to each series shall include determination of the following:
(a) The number of shares in and the distinguishing designation of that series;
(b) Whether shares of that series shall have full, special, conditional, limited or no voting rights, except to the extent otherwise provided by the Act;
(c) Whether shares of that series shall be convertible and the terms and conditions of the conversion, including provision for adjustment of the conversion rate in circumstances determined by the Board of Directors;
(d) Whether shares of that series shall be redeemable and the terms and conditions of redemption, including the date or dates upon or after which they shall be redeemable and the amount per share payable in case of redemption, which amount may vary under different conditions or at different redemption dates;
(e) The dividend rate, if any, on shares of that series, the manner of calculating any dividends and the preferences of any dividends;
(f) The rights of shares of that series in the event of voluntary or involuntary dissolution of the Corporation and the rights of priority of that series relative to the Common Stock and any other series of Preferred Stock on the distribution of assets on dissolution; and
(g) Any other relative rights, preferences and limitations of the series that are permitted by law to vary.
Section 4. Series A Redeemable Nonvoting Preferred Stock. Ten Thousand (10,000) shares of Preferred Stock of the Corporation are hereby designated as Series A Redeemable Nonvoting Preferred Stock (the “Series A Redeemable Nonvoting Preferred”) with the following powers, designations, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof:
(a) Certain Definitions. Unless the context otherwise requires, the terms defined in this paragraph shall have, for the purposes of this Section 4, the meanings herein specified.
(i) Issue Date. The term “Issue Date” shall mean the date that shares of Series A Redeemable Nonvoting Preferred are first issued by the Corporation.
(ii) Junior Stock. The term “Junior Stock” shall mean the Common Stock and any class or series of shares of the Corporation issued after the Issue Date not entitled to receive any assets upon the liquidation, dissolution or winding up of the affairs of the Corporation until the shares of Series A Redeemable Nonvoting Preferred shall have received the Stated Value of all outstanding shares of Series A Redeemable Nonvoting Preferred as of the date of such liquidation, dissolution or winding up, plus any accrued and unpaid dividends to such date.
(iii) Parity Stock. The term “Parity Stock” shall mean, for purposes of this Section 4, any class or series of shares of the Corporation issued after the Issue Date entitled to receive assets upon the liquidation, dissolution or winding up of the affairs of the Corporation on a parity with the Series A Redeemable Nonvoting Preferred.
(iv) Senior Stock. The term “Senior Stock” shall mean any class or series of shares of the Corporation issued after the Issue Date ranking senior to the Series A Redeemable Nonvoting Preferred in respect of the right to receive dividends, or assets upon the liquidation, dissolution or winding up of the affairs of the Corporation.
(v) Stated Value. The term “Stated Value” when used in reference to the Series A Redeemable Nonvoting Preferred shall mean $5.00 per share of Series A Redeemable Nonvoting Preferred.
(b) Dividend Rate; Payment. No dividends shall be declared or paid on the Series A Redeemable Nonvoting Preferred.
(c) Liquidation, Dissolution or Other Winding Up of the Corporation. In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or other winding up of the Corporation, subject to the prior preferences and other rights of any shares of Senior Stock, but before any distribution or payment shall be made to the holders of Junior Stock, the holders of the shares of Series A Redeemable Nonvoting Preferred shall be entitled to be paid the Stated Value of all outstanding shares of Series A Redeemable Nonvoting Preferred as of the date of such liquidation or dissolution or such other winding up, in cash or in property taken at its fair value as determined by the Board of Directors, or both, at the election of the Board of Directors. If such payment shall have been made in full to the holders of the Series A Redeemable Nonvoting Preferred, and if payment shall have been made in full to the holders of any Senior Stock and Parity Stock of all amounts to which such holders shall have a preference, then the remaining assets and funds of the Corporation shall be distributed pro rata, on a share-for-share basis, among the holders of shares of Junior Stock. If, upon any such liquidation, dissolution or other winding up of the affairs of the Corporation, the net assets of the Corporation distributable among the holders of all outstanding shares of Series A Redeemable Nonvoting Preferred and of any shares of Parity Stock shall be insufficient to permit the payment in full to such holders of the preferential amounts to which they are entitled, then the entire net assets of the Corporation remaining after the distributions to holders of any shares of Senior Stock of the full amounts to which they may be entitled shall be distributed among the holders of the shares of Series A Redeemable Nonvoting Preferred and of any Parity Stock ratably in proportion to the full amounts to which they would otherwise be respectively entitled. For purposes of this Section 4(c), neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all the property or assets of the Corporation nor the consolidation or merger of the Corporation with or into one or more other corporations shall be deemed to be a liquidation, dissolution, distribution of assets or winding-up of the Corporation, voluntary or involuntary, unless such voluntary sale, conveyance, exchange or transfer shall be in connection with a dissolution or winding-up of the business of the Corporation.
(d) Voting Rights. The Series A Redeemable Nonvoting Preferred shall have no voting rights other than such rights as may be required by law.
(e) Redemption. The Corporation at its sole option shall have the right to redeem out of funds lawfully available therefor the Series A Redeemable Nonvoting Preferred, in whole or in part, at any time or from time to time, upon the terms and conditions which shall have been fixed and determined by the Board with respect thereto. The Corporation shall effect redemption by paying cash in an amount per share equal to the Stated Value.
Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of record of the Series A Redeemable Nonvoting Preferred to be redeemed at the address shown in the records of the Corporation; provided that, if the Series A Redeemable Nonvoting Preferred is held in book-entry form through DTC, the Corporation may give notice in any manner permitted by DTC. Each notice will state, as appropriate: (i) the redemption date; (ii) the number of shares of Series A Redeemable Nonvoting Preferred to be redeemed; (iii) the redemption price; (iv) the place or places where certificates for such shares of Series A Redeemable Nonvoting Preferred are to be surrendered for payment of the redemption price if any such certificates are outstanding; and (v) the CUSIP, ISIN or similar identification number or numbers of the Series A Redeemable Nonvoting Preferred to be redeemed. If fewer than all shares of Series A Redeemable Nonvoting Preferred are to be redeemed, the Board of Directors shall select, in such manner as in its sole discretion it deems appropriate, the Series A Redeemable Nonvoting Preferred to be redeemed, and the notice provided to each such holder thereof will specify the number of shares of Series A Redeemable Nonvoting Preferred to be redeemed from such holder. If notice of redemption of any Series A Redeemable Nonvoting Preferred has been given and if the funds necessary for such redemption have been set apart by the Corporation in trust for the benefit of holders of the Series A Redeemable Nonvoting Preferred so called for redemption, then from and after the redemption date, the Series A Redeemable Nonvoting Preferred will no longer be deemed to be outstanding and all rights of holders of such shares will terminate, except the right to receive the redemption price.
(f) Other Terms. Except as may otherwise be provided in this Section 4 or as required by law, the terms of the Series A Redeemable Nonvoting Preferred shall be identical to those of the Common Stock.
Section 5. Series R Participating Cumulative Preferred Stock. An initial Five Hundred Thousand (500,000) shares of Preferred Stock of the Corporation are hereby designated as Series R Participating Cumulative Preferred Stock (the “Series R Preferred Stock”). Such number of shares may be decreased by resolution of the Board of Directors; provided, however, that no decrease shall reduce the number of shares of Series R Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series R Preferred Stock. The Series R Preferred Stock shall have the following powers, designations, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof:
(a) Dividends and Distributions. Subject to the prior and superior rights of the holders of shares of any other series of Preferred Stock or other class of capital stock of the Corporation ranking prior and superior to the shares of Series R Preferred Stock with respect to dividends, the holders of shares of Series R Preferred Stock shall be entitled to receive, when, as, and if declared by the Board of Directors, out of the assets of the Corporation legally available therefor, quarterly dividends payable in cash on the last day of each fiscal quarter in each year, or such other dates as the Corporation’s Board of Directors shall approve (each such date being referred to in this Section 5 as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or a fraction of a share of Series R Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (i) $0.001 and (ii) the Formula Number (as hereinafter defined) then in effect times the cash dividends then to be paid on each share of Common Stock. In addition, if the Corporation shall pay any dividend or make any distribution on the Common Stock payable in assets, securities or other forms of noncash consideration (other than dividends or distributions solely in shares of Common Stock), then, in each such case, the Corporation shall simultaneously pay or make on each outstanding whole share of Series R Preferred Stock a dividend or distribution in like kind equal to the Formula Number then in effect times such dividend or distribution on each share of Common Stock. As used in this Section 5, the “Formula Number” shall be 100; provided, however, that if the Corporation shall (i) declare or pay any dividend on the Common Stock payable in shares of Common Stock or make any distribution on the Common Stock in shares of Common Stock, (ii) subdivide (by a stock split or otherwise) the outstanding shares of Common Stock into a larger number of shares of Common Stock, or (iii) combine (by a reverse stock split or otherwise) the outstanding shares of Common Stock into a smaller number of shares of Common Stock, then in each such event the Formula Number shall be adjusted to a number determined by multiplying the Formula Number in effect immediately prior to such event by a fraction, the numerator of which is the number of shares of Common Stock that are outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that are outstanding immediately prior to such event (and rounding the result to the nearest whole number); and provided further, that if the Corporation shall issue any shares of its capital stock in a merger, reclassification or change of the outstanding shares of Common Stock, then in each such event the Formula Number shall be appropriately adjusted to reflect such merger, reclassification or change so that each share of Preferred Stock continues to be the economic equivalent of a Formula Number of shares of Common Stock prior to such merger, reclassification or change.
The Corporation shall declare a dividend or distribution on the Series R Preferred Stock as provided in Section 5(a) immediately prior to or at the same time it declares a dividend or distribution on the Common Stock (other than a dividend or distribution solely in shares of Common Stock); provided, however, that in the event no dividend or distribution (other than a dividend or distribution in shares of Common Stock) shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $0.001 per share on the Series R Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. The Corporation’s Board of Directors may fix a record date for the determination of holders of shares of Series R Preferred Stock entitled to receive a dividend or distribution declared thereon, which record date shall be the same as the record date for any corresponding dividend or distribution on the Common Stock and which shall not be more than 60 days prior to the date fixed for payment thereof.
Dividends shall begin to accrue and be cumulative on outstanding shares of Series R Preferred Stock from and after the Quarterly Dividend Payment Date next preceding the date of original issue of such shares of Series R Preferred Stock; provided, however, that dividends on such shares that are originally issued after the record date for the determination of holders of shares of Series R Preferred Stock entitled to receive a quarterly dividend on or prior to the next succeeding Quarterly Dividend Payment Date shall begin to accrue and be cumulative from and after such Quarterly Dividend Payment Date. Notwithstanding the foregoing, dividends on shares of Series R Preferred Stock that are originally issued prior to the record date for the determination of holders of shares of Series R Preferred Stock entitled to receive a quarterly dividend on or prior to the first Quarterly Dividend Payment Date shall be calculated as if cumulative from and after the last day of the fiscal quarter (or such other Quarterly Dividend Payment Date as the Corporation’s Board of Directors shall approve) next preceding the date of original issuance of such shares. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series R Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding.
So long as any shares of Series R Preferred Stock are outstanding, no dividends or other distributions shall be declared, paid or distributed, or set aside for payment or distribution, on the Common Stock unless, in each case, the dividend required by this Section 5(a) to be declared on the Series R Preferred Stock shall have been declared.
The holders of shares of Series R Preferred Stock shall not be entitled to receive any dividends or other distributions except as provided in this Section 5.
(b) Voting Rights. The holders of shares of Series R Preferred Stock shall have the following voting rights:
(i) Each holder of Series R Preferred Stock shall be entitled to a number of votes equal to the Formula Number then in effect for each share of Series R Preferred Stock held of record on each matter on which holders of the Common Stock or shareholders generally are entitled to vote, multiplied by the maximum number of votes per share that any holders of the Common Stock or shareholders generally then have with respect to such matter (assuming any holding period or other requirement to vote a greater number of shares is satisfied).
(ii) Except as otherwise provided in this Section 5 or by applicable law, the holders of shares of Series R Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class for the election of directors of the Corporation and on all other matters submitted to a vote of shareholders of the Corporation.
(iii) Except as provided in this Section 5 or by applicable law, holders of Series R Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth in these Articles) for authorizing or taking any corporate action.
(c) Certain Restrictions.
(i) Whenever quarterly dividends or other dividends or distributions payable on the Series R Preferred Stock as provided in Section 5(a) are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series R Preferred Stock outstanding shall have been paid in full, the Corporation shall not:
(1) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series R Preferred Stock;
(2) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series R Preferred Stock, except dividends paid ratably on the Series R Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
(3) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) with the Series R Preferred Stock; provided, however, that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series R Preferred Stock; or
(4) redeem or purchase or otherwise acquire for consideration any shares of Series R Preferred Stock, or any shares of stock ranking on a parity with the Series R Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Corporation’s Board of Directors) to all holders of such shares upon such terms as the Corporation’s Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective Preferred Stock classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.
(ii) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (i) of this Section 5(c), purchase or otherwise acquire such shares at such time and in such manner.
(d) Liquidation Rights. Upon the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, no distribution shall be made to (a) the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series R Preferred Stock unless, prior thereto, the holders of shares of Series R Preferred Stock shall have received an amount equal to the greater of (i) $0.001 per share and (ii) the accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, plus an aggregate amount per share equal to the Formula Number then in effect times the aggregate amount to be distributed per share to holders of Common Stock or (b) the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series R Preferred Stock, except distributions made ratably on the Series R Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up.
(e) Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the then outstanding shares of Series R Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share equal to the Formula Number then in effect times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is exchanged or changed. In the event both this Section 5(e) and Section 5(a) appear to apply to a transaction, this Section 5(e) will control.
(f) No Redemption; No Sinking Fund.
(i) The shares of Series R Preferred Stock shall not be subject to redemption by the Corporation or at the option of any holder of Series R Preferred Stock; provided, however, that the Corporation may purchase or otherwise acquire outstanding shares of Series R Preferred Stock in the open market or by offer to any holder or holders of shares of Series R Preferred Stock.
(ii) The shares of Series R Preferred Stock shall not be subject to or entitled to the operation of a retirement or sinking fund.
(g) Ranking. The Series R Preferred Stock shall rank junior to all other series of Preferred Stock of the Corporation, unless the Corporation’s Board of Directors shall specifically determine otherwise in fixing the powers, preferences and relative, participating, optional and other special rights of the shares of such Preferred Stock and the qualifications, limitations and restrictions thereof.
(h) Fractional Shares. The Series R Preferred Stock shall be issuable in whole shares or in any fractional share that is one one-hundredth (1/100th) of a share or any integral multiple of such fraction, and shall entitle the holder, in proportion to such holder’s fractional shares, to receive dividends, exercise voting rights, participate in distributions and have the benefit of all other rights of holders of Series R Preferred Stock. In lieu of fractional shares, the Corporation, prior to the first issuance of a share or a fractional share of Series R Preferred Stock, may elect to (a) make a cash payment for a fractional share other than one one-hundredth (1/100th) of a share or any integral multiple thereof or (b) issue depository receipts evidencing such authorized fractional share of Series R Preferred Stock pursuant to an appropriate agreement between the Corporation and a depository selected by the Corporation; provided, however, that such agreement shall provide that the holders of such depository receipts shall have all the rights, privileges and preferences to which they are entitled as holders of the Series R Preferred Stock.
(i) Reacquired Shares. Any shares of Series R Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock, without designation as to series until such shares are once more designated as part of a particular Series by the Corporation’s Board of Directors pursuant to the provisions of this Article III.
(j) Amendment. None of the powers, preferences and relative, participating, optional and other special rights of the Series R Preferred Stock as provided in this Section 5 shall be amended in any manner that would alter or change the powers, preferences, rights or privileges of the holders of Series R Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series R Preferred Stock, voting as a separate class.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Number of Directors. Except as otherwise provided by the resolution or resolutions adopted by the Board of Directors designating the rights, powers and preferences of any series of Preferred Stock, the number of directors of the Corporation shall be fixed, and may be increased or decreased from time to time, exclusively by resolution of the Board of Directors.
Section 2. Quorum and Manner of Acting. Unless otherwise provided by applicable law, the presence of a majority of the total number of directors constituting the whole Board (including vacancies and unfilled newly-created directorships) shall be necessary to constitute a quorum for the transaction of business. At all meetings of the Board at which a quorum is present, all matters shall be decided by the affirmative vote of the majority of the directors present, except as otherwise required by law.
Section 3. Removal. Except as otherwise provided by the resolution or resolutions adopted by the Board of Directors designating the rights, powers and preferences of any series of Preferred Stock, any director, or the entire Board of Directors, may be removed from office at any time, with or without cause but only by the affirmative vote of the holders of a majority of the voting power of the outstanding shares of the Corporation entitled to vote for the election of directors.
Section 4. Vacancies and Newly Created Directorships. Except as otherwise provided by law or by the resolution or resolutions adopted by the Board of Directors designating the rights, powers and preferences of any series of Preferred Stock or unless the Board of Directors determines by resolution that any vacancy or newly created directorship shall be filled by the shareholders, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled solely by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors, or by the sole remaining director. Any director so chosen shall hold office until the next annual meeting of shareholders and until such director’s successor shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director.
ARTICLE V
AMENDING THE BYLAWS
In furtherance and not in limitation of the powers conferred by law, the Board of Directors is expressly authorized and empowered to adopt, amend and repeal the Bylaws of the Corporation at any regular or special meeting of the Board of Directors or by written consent, subject to the power of the shareholders of the Corporation to adopt, amend or repeal any Bylaws. The foregoing notwithstanding, the shareholders of the Corporation shall have no power to adopt, amend or repeal any Bylaws unless such adoption, amendment or repeal is approved by the affirmative vote of the holders of not less than sixty-six and two-thirds percent (66 2/3%) of the voting power of all of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, considered for purposes of this Article V as a single class.
ARTICLE VI
AMENDING THE ARTICLES OF INCORPORATION
The Corporation reserves the right at any time from time to time to amend, alter, change or repeal any provision contained in these Articles of Incorporation, and any other provisions authorized by the laws of the State of Oregon at the time in force may be added or inserted, in the manner now or hereafter prescribed by law. All rights, preferences and privileges of whatsoever nature conferred upon shareholders, directors or any other persons whomsoever by and pursuant to these Articles of Incorporation in their present form or as hereafter amended are granted subject to the right reserved in this Article. Notwithstanding any other provisions of these Articles of Incorporation or the Bylaws (and notwithstanding that a lesser percentage may be specified by law), the provisions of Article IV, Article V, Article VII, and this Article VI hereof may not be altered, amended or repealed unless such alteration, amendment or repeal is approved by the affirmative vote of the holders of not less than sixty-six and two-thirds percent (66 2/3%) of the voting power of all of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, considered for purposes of this Article VI as a single class.
ARTICLE VII
SHAREHOLDER MEETINGS
Section 1. Written Action. Any action required or permitted to be taken at any annual or special meeting of the shareholders of the Corporation may be taken without a meeting if the action is taken by all the shareholders entitled to vote on the action. The action must be evidenced by one or more written consents describing the action taken, signed by all the shareholders entitled to vote on the action and delivered to the Corporation for inclusion in the minutes for filing with the corporate records.
Section 2. Special Meetings. Except as otherwise required by law or provided by the resolution or resolutions adopted by the Board of Directors designating the rights, powers and preferences of any series of Preferred Stock, special meetings of shareholders of the Corporation may be called only by (a) the Chairman of the Board of Directors, or (b) the Board of Directors pursuant to a resolution approved by a majority of the total number of directors that the Corporation would have if there were no vacancies or unfilled newly created directorships, and any power of shareholders to call a special meeting is specifically denied.
ARTICLE VIII
INDEMNIFICATION
The Corporation shall indemnify to the fullest extent not prohibited by law any current or former officer or director who is made, or threatened to be made, a party to an action, suit or proceeding, whether civil, criminal, administrative, investigative or otherwise (including an action, suit or proceeding by or in the right of the Corporation) by reason of the fact that the person is or was acting as a director, officer or agent of the Corporation or as a fiduciary within the meaning of the Employee Retirement Income Security Act of 1974 with respect to any employee benefit plan of the Corporation, or serves or served at the request of the Corporation as a director or officer, or as a fiduciary of an employee benefit plan, of another corporation, partnership, joint venture, trust or other enterprise. The Corporation shall pay for or reimburse the reasonable expenses incurred by any such current or former director, officer or employee in any such proceeding in advance of the final disposition of the proceeding if the officer or director sets forth in writing (i) the person’s good faith belief that the person is entitled to indemnification under this Article VIII and (ii) the person’s agreement to repay all advances if it is ultimately determined that the person is not entitled to indemnification under this Article VIII. The indemnification and advancement of expenses specifically provided hereby shall not be deemed exclusive of any other rights to which such person may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in the official capacity of the person indemnified and as to action in another capacity while holding office.
The rights to indemnification and advancement of expenses conferred upon any current or former director or officer of the Corporation pursuant to this Article VIII (whether by reason of the fact that such person is or was acting as a director, officer or agent of the Corporation or as a fiduciary within the meaning of the Employee Retirement Income Security Act of 1974 with respect to any employee benefit plan of the Corporation, or serves or served at the request of the Corporation as a director or officer, or as a fiduciary of an employee benefit plan, of another corporation, partnership, joint venture, trust or other enterprise) shall be contract rights, shall vest when such person becomes a director or officer of the Corporation, and shall continue as vested contract rights even if such person ceases to be a director or officer of the Corporation. Any amendment, repeal, or modification of, or adoption of any provision inconsistent with, this Article VIII (or any provision hereof) shall not adversely affect any right to indemnification or advancement of expenses granted to any person pursuant hereto with respect to any act or omission of such person occurring prior to the time of such amendment, repeal, modification, or adoption (regardless of whether the proceeding relating to such acts or omissions, or any proceeding relating to such person’s rights to indemnification or to advancement of expenses, is commenced before or after the time of such amendment, repeal, modification, or adoption), and any such amendment, repeal, modification, or adoption that would adversely affect such person’s rights to indemnification or advancement of expenses hereunder shall be ineffective as to such person, except with respect to any threatened, pending, or completed proceeding that relates to or arises from (and only to the extent such proceeding relates to or arises from) any act or omission of such person occurring after the effective time of such amendment, repeal, modification, or adoption.
ARTICLE IX
DIRECTOR LIABILITY
No director of the Corporation shall be personally liable to the Corporation or its shareholders for monetary damages for conduct as a director; provided that this Article IX shall not eliminate the liability of a director for any act or omission for which such elimination of liability is not permitted under the Act. Any repeal or modification of this Article IX by the shareholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification. If the Act is hereafter amended to authorize corporate action further limiting or eliminating the personal liability of directors, then the personal liability of the directors to the Corporation or its shareholders shall be limited to the full extent permitted by the Act, as so amended from time to time. No amendment, modification or repeal of this Article, adoption of any provision in these Articles of Incorporation, or change in the law or interpretation of the law shall adversely affect any right or protection of a director or officer of the Corporation under this Article IX with respect to any act or omission that occurred prior to the time of such amendment, modification, repeal, adoption or change.
ARTICLE X
REGISTERED OFFICE AND AGENT
The name of the initial registered agent of the corporation and the address of its registered office are as follows:
Corporation Service Company
1127 Broadway Street NE, Suite 310
Salem, OR 97301
ARTICLE XI
INCORPORATOR
The name and address of the incorporator are:
Charles Beck
8500 SW Creekside Place
Beaverton, Oregon 97008
ARTICLE XII
NOTICES
The address where the State of Oregon Corporation Division may mail notices to the corporation is:
8500 SW Creekside Place
Beaverton, Oregon 97008
ARTICLE XIII
STREET ADDRESS OF PRINCIPAL OFFICE
The initial physical street address of the corporation is:
8500 SW Creekside Place
Beaverton, Oregon 97008
ARTICLE XIV
INDIVIDUAL WITH DIRECT KNOWLEDGE
The name and address of an authorized representative of the corporation are:
Riley McCormack
8500 SW Creekside Place
Beaverton, Oregon 97008
[Signature Page Follows]
I declare as an authorized signer, under penalty of perjury, that this document does not fraudulently conceal, fraudulently obscure, fraudulently alter or otherwise misrepresent the identity of the person or any officers, directors, employees or agents of the Corporation. This filing has been examined by me and is, to the best of my knowledge and belief, true, correct, and complete. Making false statements in this document is against the law and may be penalized by fines, imprisonment or both.
/s/ Charles Beck
Charles Beck, Incorporator
Exhibit 10.2
CERTAIN INFORMATION CONTAINED IN THIS DOCUMENT HAS BEEN EXCLUDED AND REPLACED BY [**] BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
AMENDMENT 2 TO
COUNTERFEIT DETERRENCE SYSTEM
DEVELOPMENT AND LICENSE AGREEMENT
This AMENDMENT 2 TO COUNTERFEIT DETERRENCE SYSTEM DEVELOPMENT AND LICENSE AGREEMENT (the “Amendment”), effective as of the date of the last signature below (the “Effective Date”), is between DMRC LLC, an Oregon limited liability company, d/b/a Digimarc, having its principal place of business at 8500 SW Creekside Place, Beaverton, Oregon 97008, USA, and the Bank for International Settlements, created pursuant to The Hague Agreements of January 1930, having its head office at Centralbahnplatz 2, CH-4051 Basel, Switzerland.
The parties entered a Counterfeit Deterrence System Development and License Agreement on January 1, 2013 (as amended on January 1, 2023, the “Agreement”); and
The parties desire to amend the Agreement.
The parties therefore agree as follows:
|
1. |
Add the following to clause 1 of the Agreement: |
“Research Background Technology” means any software, libraries, tools, frameworks, models, templates, methodologies, know how, or other technology that is owned or controlled by Digimarc that: (i) has been or is developed independently of the research activities expressly described in a Statement of Work; (ii) does not constitute any technology or other aspect of the CDS licensed to the BIS pursuant to clause 8.2; and (iii) is incorporated into, combined with, practiced by, or is otherwise necessary to exercise any licensed rights in the Research Results granted hereunder;
|
2. |
Add the following limb to the definition of “Digimarc Watermark” in clause 1 of the Agreement: |
(f) [**] specifically to [**];
|
3. |
Replace the definition of Project Technology in clause 1 of the Agreement with the following: |
“Project Technology” means the technology described in Schedule C developed by or on behalf of Digimarc under this Agreement after 1 January 1999, all Improvements to that technology or to the BIS Technology and all Watermarking-Related Research Results, and all Intellectual Property Rights in that technology and those Improvements and Watermarking-Related Research Results;
|
4. |
Add the following definitions to clause 1 of the Agreement: |
“Research Results” means: (a) an end-of-year research report, including any research ideas, outcomes, and concepts described therein; and (b) any final or substantially final deliverables expressly stated to constitute “Research Results” in a Statement of Work, which may include research materials and other deliverables, in any form, such as reports, papers, presentations, analyses, specifications, documentation, software, and research data and findings; provided that, with respect to each of clauses (a) and (b), Research Results include only items that are authored, created, conceived, developed, or generated by Digimarc in performing research activities expressly described in the applicable Statement of Work, together with all Intellectual Property Rights in those items, but excluding any Research Background Technology;
“Other Research Results” means Research Results that are not Watermarking-Related Research Results;
“Watermarking-Related Research Results” means Research Results that relate solely to [**];
|
5. |
Add the following to the Agreement as clause 1.2.9: |
for clarity, references to “termination” of this Agreement shall be construed as including expiry of this Agreement, unless the context otherwise requires, provided that, with respect to clause 2.14, such references shall also be construed to apply where circumstances require implementation reasonably prior to expiry of this Agreement.
|
6. |
Replace the second paragraph of clause 2.11 of the Agreement with the following: |
[**]
|
7. |
Add the following to the Agreement as clause 2.16: |
Digimarc shall provide the CBCDG Contract Authority written notice of any updates to (i) the System Description described in Schedule A within thirty (30) days after the end of each calendar year of the Term, (ii) the Digimarc Technology described in Schedule B within thirty (30) days after the end of each calendar quarter of the Term, and (iii) the Project Technology described in Schedule C within thirty (30) days after the end of each calendar year of the Term, in each case as necessary to ensure the applicable schedule accurately reflects information current as of the end of the applicable period.
|
8. |
Add the following sentence at the end of clause 3.12 of the Agreement: |
The [**] shall be [**] as part of the planning cycle set out above.
|
9. |
Add the following sentence at the end of clause 6.10 of the Agreement: |
The foregoing terms of this clause 6.10 do not apply to [**].
|
10. |
Add the following sentence at the end of clause 8.2 of the Agreement: |
Notwithstanding anything to the contrary in this Agreement, any technology that satisfies the definition of Research Background Technology shall constitute Research Background Technology and is licensed to the BIS on a non-exclusive basis only, in accordance with the license granted under clause 8.11.
|
11. |
Add the following to the Agreement as clause 8.11: |
Digimarc hereby grants to the BIS an exclusive, irrevocable, perpetual, royalty-free, worldwide license (i) to use (including the right to amend, modify, adapt, reproduce and translate) Other Research Results, and (ii) to sublicense the use of Other Research Results to other Persons[**].
Digimarc hereby grants to the BIS a non-exclusive, irrevocable, perpetual, royalty-free, worldwide license under any Intellectual Property Rights owned or controlled by Digimarc in and to Research Background Technology, solely to the extent necessary to exercise, and to permit those Persons authorized above to exercise, the rights granted above with respect to Other Research Results and the rights granted in clause 8.2 with respect Watermarking-Related Research Results, including the right to amend, modify, adapt, reproduce and translate Research Background Technology, and to sublicense the foregoing rights in Research Background Technology to those Persons authorized above with respect to Other Research Results and in clause 8.2 with respect Watermarking-Related Research Results, solely to the extent necessary to exercise the rights granted above with respect to Other Research Results and the rights granted in clause 8.2 with respect Watermarking-Related Research Results.
Except for the limited licenses granted with respect to Research Results in this Agreement and subject to clause 8.12, Digimarc retains all right, title, and interest in and to Research Results and Research Background Technology and all Intellectual Property Rights therein. To the extent any Research Results or Research Background Technology disclosed to the BIS or any permitted sublicensee under this Agreement constitutes Confidential Information, know-how, or a trade secret of Digimarc under this Agreement, the BIS and each such permitted sublicensee may use and disclose such Research Results and Research Background Technology solely as permitted by this Agreement and subject to the confidentiality obligations set out herein.
Solely for purposes of clauses 9.1(a), 9.3, 10.1(f), 10.1(g), and 10.1(h), references to Project Technology in those clauses shall, mutatis mutandis, be deemed to include Other Research Results and Research Background Technology, in each case solely as provided by Digimarc and solely to the extent licensed under this clause 8.11. The foregoing indemnity obligations and representations and warranties with respect to Other Research Results and Research Background Technology, and the indemnity obligations and representations and warranties stated in clauses 9.1(a), 9.3, 10.1(f), 10.1(g) and 10.1(h) with respect to Watermarking-Related Research Results, shall not apply to the extent any claim or matter is caused by (i) modifications to Research Results or Research Background Technology not made by or for Digimarc; (ii) combinations of Research Results or Research Background Technology with items not supplied or approved by Digimarc, where that combination causes the claim; (iii) use of Research Results or Research Background Technology outside the scope of the licenses granted under this Agreement; or (iv) BIS Technology or BIS-provided materials.
In respect of any Research Results, the relevant Statement of Work shall set out the target parameters for such Research Results, including any mutually agreed upon work product and the target timeframes associated with delivery of such Research Results. Additionally, prior to finalizing each Statement of Work, the parties shall discuss, in good faith and based on Digimarc’s then-current reasonable understanding of the contemplated research activities, whether any known material categories of Research Background Technology are expected to be incorporated into, combined with, practiced by, or otherwise necessary to exercise any licensed rights in the Research Results expressly granted above and, if that technology ultimately satisfies the definition of Research Background Technology, would be subject to the license to Research Background Technology expressly granted above. Any such discussion or identification is for planning purposes only and does not constitute a representation or warranty or obligation on Digimarc to ensure that all relevant Research Background Technology has been identified. Digimarc has no obligation to disclose any Research Background Technology to the BIS except as expressly set forth in this Agreement or the applicable Statement of Work. No failure by Digimarc to identify any Research Background Technology will limit its status as Research Background Technology, and no identification of Research Background Technology will expand the scope of any license granted under this Agreement.
The requirements of the above paragraph shall apply only in respect of Statements of Work agreed to on or after the Effective Date of this Amendment.
|
12. |
Add the following to the Agreement as clause 8.12: |
Clause 8.11 shall only apply to Watermarking-Related Research Results to the extent they are first developed or prepared on or after the Effective Date of this Amendment. Any Watermarking-Related Research Results developed prior to the Effective Date of this Amendment : (i) are hereby deemed to form part of the Project Technology licensed to the BIS pursuant to clause 8.2, as though licensed from the date of their original provision by Digimarc, and an additional license to any Research Background Technology in order for BIS to fully exercise its rights to those Watermarking-Related Research Results, is hereby granted on the same terms as the license granted to Research Background Technology under clause 8.11; and (ii) are, together with any Research Background Technology referred to in this clause 8.12, hereby deemed to be within the scope of Digimarc’s indemnity obligations and representations and warranties as applicable to Project Technology as set out in clauses 9 and 10 respectively, from the date of their original provision, without further limitation or exclusion.
|
13. |
Replace clause 12.8 of the Agreement with the following: |
The BIS shall not reverse-engineer, disassemble, or decompile any [**] forming part of the CDS nor forming part of any Research Results or Research Background Technology, including the [**] (except to the extent that (i) any such activity is reasonably necessary to permit the BIS to exercise its license rights under either clause 8.2 or clause 8.11 of this Agreement or (ii) the BIS’ right to do so may not be contractually restricted under applicable law), and shall contractually assure that any other Person to whom the BIS provides [**] shall be similarly obliged.
|
14. |
Replace clause 15.5 of the Agreement with the following: |
The BIS, acting reasonably, may terminate the Agreement upon the occurrence of:
[**]
[**]
Such termination shall be deemed a termination for convenience under this clause 15 and effective no earlier than six months from the date on which the BIS gives written notice of such termination to Digimarc.
|
15. |
Replace clause 15.7 of the Agreement with the following: |
Actual and reasonable Termination Costs shall be capped [**].
|
16. |
Add the following sentence at the end of clause 15.9 of the Agreement: |
The foregoing terms of this clause 15.9 do not apply to [**]
|
17. |
Replace clause 15.13 of the Agreement with the following: |
Intentionally Left Blank
|
18. |
Replace clause 17.2 of the Agreement with the following: |
Any notice to Digimarc shall be sent to, and any notice from Digimarc shall be sent by:
Mr. Charles Beck
Executive Vice President, Chief Financial Officer & Treasurer
Digimarc Contract Authority
DMRC LLC
8500 SW Creekside Place
Beaverton, Oregon 97008 USA
With a copy to: Mr. John Moldenhauer
Vice President, Government Programs & Engineering
Digimarc Project Director
DMRC LLC
8500 SW Creekside Place
Beaverton, Oregon 97008 USA
|
19. |
Add the following to the list of clauses surviving termination of the Agreement in clause 18.13 of the Agreement: |
2.16
|
20. |
Replace Schedule A to the Agreement with the Schedule A attached to this Amendment as Exhibit A. |
|
21. |
Add the following to the list of patents in Schedule B of the Agreement: |
[**][**][**][**]
|
22. |
Replace Schedule C to the Agreement with the Schedule C attached to this Amendment as Exhibit B. |
|
23. |
Replace Schedule F, clause 5 of the Agreement with the following: |
[**]
|
[**] |
[**] |
|
[**] |
[**] |
|
[**] |
[**] |
|
[**] |
[**] |
|
[**] |
[**] |
|
[**] |
[**] |
|
[**] |
[**] |
|
[**] |
[**] |
|
[**] |
[**] |
|
[**] |
[**] |
|
[**] |
[**] |
|
[**] |
[**] |
|
[**] |
[**] |
|
[**] |
[**] |
[**]
|
24. |
Replace Schedule F, clause 6(b)(ii) of the Agreement with the following: |
[**]
|
25. |
Replace Schedule F, clause 6(b)(iii) of the Agreement with the following: |
[**]
The parties are entering this Amendment as of the Effective Date.
|
DMRC LLC |
Bank for International Settlements |
|
By: _____________________________ |
By: _____________________________ |
|
Name: ___________________________ |
Name: ___________________________ |
|
Title: ____________________________ |
Title: ____________________________ |
|
Date: ____________________________ |
Date: ____________________________ |
EXHIBIT A
Schedule A System Description
1.0 GENERAL DESCRIPTION OF THE COUNTERFEIT DETERRENCE SYSTEM (“CDS”)
The CDS is a system for the deterrence of the unauthorized digital [**] by the use of personal computer-based equipment. [**]
[**]
2.0 FUNCTIONAL DESCRIPTION OF THE CDS
The CDS is comprised of the following three subsystems:
1. [**]
2. [**]
3. [**]
The functions of the various subsystems and components described below may be changed by the [**].
2.1 [**]
2.1.1 [**]
1. [**]
2. [**]
3. [**]
2.1.2 [**]
1. [**]
2. [**]
3. [**]
2.1.3 [**]
1. [**]
2. [**]
3. [**]
2.1.4 [**]
1. [**]
2. [**]
3. [**]
2.2 [**]
1. [**]
2. [**]
3. [**]
4. [**]
5. [**]
(a) [**] (b) [**] (c) [**]
6. [**]
EXHIBIT B
Schedule C Project Technology
The Project Technology includes:
1. The modification of techniques for using the Digimarc Technology and the BIS Technology in the [**]
2. The effects and behaviors of [**] when used in [**].
3. The effects of various types [**]
4. Improvements to Digimarc’s testing and certification processes used in testing and certifying [**]
5. The improvement of [**].
6. The use of [**].
7. Examples of Project Technology include:
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
Exhibit 31.1
DIGIMARC CORPORATION
CERTIFICATION
I, Paul Carreiro, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q of Digimarc Corporation; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 14, 2026
|
By: |
/s/ Paul Carreiro |
|
|
PAUL CARREIRO Chief Executive Officer |
Exhibit 31.2
DIGIMARC CORPORATION
CERTIFICATION
I, Charles Beck, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q of Digimarc Corporation; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 14, 2026
|
By: |
/s/ Charles Beck |
|
|
CHARLES BECK Chief Financial Officer |
Exhibit 32.1
DIGIMARC CORPORATION
CERTIFICATION
In connection with the periodic report of Digimarc Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2026 as filed with the Securities and Exchange Commission (the “Report”), I, Paul Carreiro, Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the U.S. Code, that to the best of my knowledge:
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and |
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated. |
This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.
Date: August 14, 2026
|
By: |
/s/ Paul Carreiro |
|
|
PAUL CARREIRO Chief Executive Officer |
Exhibit 32.2
DIGIMARC CORPORATION
CERTIFICATION
In connection with the periodic report of Digimarc Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2026 as filed with the Securities and Exchange Commission (the “Report”), I, Charles Beck, Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the U.S. Code, that to the best of my knowledge:
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and |
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated. |
This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.
Date: August 14, 2026
|
By: |
/s/ Charles Beck |
|
|
CHARLES BECK Chief Financial Officer |