# EDGAR Filing Document

**Accession Number:** 0001438231
**File Stem:** 0001437749-26-007793
**Filing Date:** 2026-3
**Character Count:** 349061
**Document Hash:** 654372d801c2edcc342a8e8407d40057
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-26-007793.hdr.sgml**: 20260311

**ACCESSION NUMBER**: 0001437749-26-007793

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 124

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260311

**DATE AS OF CHANGE**: 20260311

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Digimarc CORP
- **CENTRAL INDEX KEY:** 0001438231
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 262828185
- **STATE OF INCORPORATION:** OR
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-34108
- **FILM NUMBER:** 26744294

**BUSINESS ADDRESS:**
- **STREET 1:** 8500 SW CREEKSIDE PLACE
- **CITY:** BEAVERTON
- **STATE:** OR
- **ZIP:** 97008
- **BUSINESS PHONE:** 503-469-4800

**MAIL ADDRESS:**
- **STREET 1:** 8500 SW CREEKSIDE PLACE
- **CITY:** BEAVERTON
- **STATE:** OR
- **ZIP:** 97008

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** DMRC CORP
- **DATE OF NAME CHANGE:** 20080620

?xml version='1.0' encoding='ASCII'? dmrc20251231_10k.htm

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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

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**FORM 10-K**

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**(Mark One)**

**☒&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

**For the fiscal year ended December 31, 2025**

**OR**

**☐&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

**For the transition period from to** 

**Commission File Number 001-34108**

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## DIGIMARC CORPORATION
**(Exact name of registrant as specified in its charter)**

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| | |
|:---|:---|
| **Oregon** | **26-2828185** |
| **(State or other jurisdiction of**<br> **incorporation or organization)** | **(I.R.S. Employer**<br> **Identification No.)** |

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**8500 SW Creekside Place, Beaverton, Oregon 97008**

**(Address of principal executive offices) (Zip Code)**

**(503) 469-4800**

**(Registrant**'**s telephone number, including area code)**

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**Securities registered pursuant to Section 12(b) of the Act:**

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| | | |
|:---|:---|:---|
| **Title of Each Class** | **Trading Symbol** | **Name of Each Exchange on Which Registered** |
| **Common Stock, $0.001 Par Value Per Share** | **DMRC** | **The NASDAQ Stock Market LLC** |

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**Securities registered pursuant to Section 12(g) of the Act: NONE**

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.&nbsp;&nbsp;&nbsp;&nbsp;Yes ☐&nbsp;&nbsp;&nbsp;&nbsp;No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.&nbsp;&nbsp;&nbsp;&nbsp;Yes ☐&nbsp;&nbsp;&nbsp;&nbsp;No ☒

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.&nbsp;&nbsp;&nbsp;&nbsp;Yes ☒&nbsp;&nbsp;&nbsp;&nbsp;No ☐

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).&nbsp;&nbsp;&nbsp;&nbsp;Yes ☒&nbsp;&nbsp;&nbsp;&nbsp;No ☐

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 the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☐ |  |  |

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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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to <u>§</u> 240.10D-1(b). &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).&nbsp;&nbsp;&nbsp;&nbsp;Yes ☐&nbsp;&nbsp;&nbsp;&nbsp;No ☒

The aggregate market value of common stock, par value $0.001 per share, held by non-affiliates of the registrant, based on the closing price of our common stock on the Nasdaq Global Market on the last business day of the registrant's most recently completed fiscal second quarter (June 30, 2025), was approximately $249 million. Shares of common stock beneficially held by each officer and director have been excluded from this computation because these persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for any other purposes.

As of March 6, 2026, 22,093,287 shares of the registrant's common stock were outstanding.

**DOCUMENTS INCORPORATED BY REFERENCE**

Portions of the registrant's proxy statement/prospectus (the "Proxy Statement") for its 2026 annual meeting of shareholders are incorporated by reference into Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K. The registrant intends to file the Proxy Statement not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Auditor Name: KPMG LLP | Auditor Location: Portland, Oregon | Auditor Firm ID: 185 |

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[**Table of Contents**](#toc)

**Table of Contents**

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| | | |
|:---|:---|:---|
| [**PART I**](#parti) | [**PART I**](#parti) | [**PART I**](#parti) |
| Item 1. | [Business](#parti) | [1](#parti) |
| Item 1A. | [Risk Factors](#item1a) | [5](#item1a) |
| Item 1B. | [Unresolved Staff Comments](#item1b) | [13](#item1b) |
| Item 1C. | [Cybersecurity](#item1ccybersecurity) | [13](#item1ccybersecurity) |
| Item 2. | [Properties](#item2) | [13](#item2) |
| Item 3. | [Legal Proceedings](#item3) | [14](#item3) |
| Item 4. | [Mine Safety Disclosures](#item4) | [14](#item4) |
| [**PART II**](#partii) |  |  |
| Item 5. | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#item5) | [15](#item5) |
| Item 7. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#mda) | [16](#mda) |
| Item 7A. | [Quantitative and Qualitative Disclosures About Market Risk](#item7a) | [28](#item7a) |
| Item 8. | [Financial Statements and Supplementary Data](#item8) | [29](#item8) |
| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#item9) | [29](#item9) |
| Item 9A. | [Controls and Procedures](#item9a) | [29](#item9a) |
| Item 9B. | [Other Information](#item9b) | [29](#item9b) |
| Item 9C. | [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](#item9c) | [29](#item9c) |
| [**PART III**](#partiii) |  |  |
| Item 10. | [Directors, Executive Officers and Corporate Governance](#item10) | [30](#item10) |
| Item 11. | [Executive Compensation](#item11) | [30](#item11) |
| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#item12) | [30](#item12) |
| Item 13. | [Certain Relationships and Related Transactions, and Director Independence](#item13) | [30](#item13) |
| Item 14. | [Principal Accountant Fees and Services](#item14) | [30](#item14) |
| Item 15. | [Exhibits and Financial Statement Schedules](#item15) | [30](#item15) |
| [SIGNATURES](#sigs) | [SIGNATURES](#sigs) | [34](#sigs) |

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[**Table of Contents**](#toc)

**PART I**

*Unless the context otherwise requires, references in this Annual Report on Form 10-K to* "*Company,*" "*Digimarc,*" "*we,*" "*our*" *and* "*us*" *refer to Digimarc Corporation.* 

*All dollar amounts are in thousands except per share amounts or unless otherwise noted. 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, a wholly owned subsidiary of Digimarc.*

**ITEM 1:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **BUSINESS**

*The following discussion of Digimarc*'*s business contains forward-looking statements relating to future events or the future financial performance of Digimarc. Our actual results could differ materially from those anticipated in these forward-looking statements. Please see the discussion regarding forward-looking statements included in this Annual Report on Form 10-K in Item 7, Management*'*s Discussion and Analysis of Financial Condition and Results of Operations, under the caption* "*Forward-Looking Statements.*"

*The following discussion of our business should be read in conjunction with our consolidated financial statements and the related notes and other financial information appearing elsewhere in this Annual Report on Form 10-K.*

**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 IP 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.

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| | |
|:---|:---|
| **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 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.

In April 2025, Digimarc received industrial-scale validation of our recycling solution in the Holy Grail 2.0 trials in Swisttal, Germany. The trial confirmed that Digimarc's technology enables highly accurate, automated sorting of post-consumer plastic packaging under real-world conditions as well as our solution's readiness for full commercial deployment.

In April 2025, Digimarc also announced it is supporting one of the consumer packaged goods ("CPG") industry's largest global implementations of GS1 Digital Link-enabled 2D barcodes with Unilever. This rollout will place Unilever at the forefront of the retail industry's preparation for Sunrise 2027 and adoption of the Digital Product Passport ("DPP") regulation.

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In July 2025, Digimarc released its next-generation audio watermarking technology that helps ensure accurate compensation for creators, provides robust authorship verification, and enables best-in-class protection for sensitive content in the era of AI.

In September 2025, Digimarc announced the launch of digitally watermarked security labels for easily-verifiable product authentication. These labels are extremely difficult to re-originate, ultra-resistant to replication, and scannable with a mobile device—with or without an app.

In November 2025, Honeywell announced that by early 2026, it will integrate Digimarc's latest on-scanner software across its handheld retail scanners, enabling retailers to better protect customers and speed up checkout operations.

In December 2025, Digimarc announced the results of the first implementation of its new technology-based, end-to-end gift card security solution. Results included zero incidents of fraud, successful activation of 100% of Digimarc-secured gift cards, and faster activation at the point of sale.

In December 2025, Digimarc announced it is working with Zebra Technologies Corporation to help retailers and brands fight gift card fraud. By configuring their scanners to detect Digimarc's new digital security layer for gift cards, Zebra now plays a key role in helping retailers automate the detection of tampered cards in order to prevent their activation at the point of sale.

**Customers and Business Partners**

We generate revenue through two primary markets: commercial and government. Commercial includes businesses in a wide range of industries, including retail, CPG, media and technology, pharmaceutical, health and wellness, apparel, and automotive. Government includes the Central Banks and other government customers.

We derive our revenue primarily from software subscriptions and software development services. Subscriptions for our software platform and products are generally sold to our commercial customers. Software development services are generally provided to the Central Banks. During 2025, we generated 41% of our revenue under the long-term contract with the Central Banks, with whom we have been developing, deploying, supporting and enhancing a system to deter digital counterfeiting of currency for nearly 30 years. In December 2022, the 5-year extension option included in our contract with the Central Banks was exercised two years early. The contract now runs through December 31, 2029.

**Technology and Intellectual Property**

We seek patent protection for our inventions to differentiate our products and technologies, mitigate infringement risks, and develop opportunities for licensing. Our patent portfolio covers a wide range of methods, applications, system architectures and processes.

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 720 U.S. and foreign patents granted and applications pending as of December 31, 2025. The patents in our portfolio each have a life of approximately 20 years from the patent's effective filing date.

For a discussion of activities and costs related to our research and development in the last two years, see "Research, development and engineering" under Part II, Item 7, "[Management's Discussion and Analysis of Financial Condition and Results of Operations](#mda)."

**Markets**

Digimarc's digital authentication and identification solutions address market challenges in both physical and digital realms. Our scalable, secure solutions help retailers mitigate loss, enable brands to fight product counterfeiting and deliver secure customer experiences, allow businesses and governments to protect their digital footprint, and help the Central Banks protect their currencies. We also support global initiatives such as advanced plastic recycling, GS1 Digital Link, and DPP.

We sell access to our software platform and products through both direct and indirect sales channels. Our sales are generally focused in North America and Europe.

We believe that our existing solutions represent only a small portion of the potential market for our technology.

**Competition**

No single competitor or small number of competitors dominate our markets. Our competitors vary depending on the application of our products and services. With physical goods, we generally compete with companies utilizing non-digital technologies such as security inks, microglyphs, and optically variable devices. In the digital space, we generally compete with vendors of security technologies such as digital fingerprinting, pattern recognition, and digital watermarking.

Our competitive position is strong because of our proven, scalable and secure platform and technologies; our large, high-quality, sophisticated patent portfolio; our trade secrets and know-how; and our substantial amount of intellectual property in related innovations for the automatic identification of physical and digital media objects that span basic technologies, applications, system designs, and business processes. Our intellectual property portfolio allows us to use proprietary technologies that are well-regarded by our customers and partners and not available to our competitors without a license. We compete based on the variety of features we offer and a traditional cost/benefit analysis against alternative technologies and solutions. Our competitive position within some markets may be affected by factors such as reluctance to adopt new technologies and by changes in government regulations.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Backlog**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Based on projected commitments we have for the periods under contract with our respective customers, we anticipate our current contracts as of December 31, 2025, will generate a minimum of $36.2 million in future revenue, compared to $36.2 million as of December 31, 2024 . This reflects the impact of revenue recognized on our existing backlog, and the expiration or downsells of contracts in 2025, offset by new contracts entered into and upsells on existing contracts in 2025. We expect approximately $23.2 million of the $36.2 million to be recognized as revenue during 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Some factors that lead to increased backlog include:

• contracts with new customers;

• renewals with current customers;

• add-on orders with customers; and

• contracts with longer contractual periods replacing contracts with shorter contractual periods.

Some factors that lead to decreased backlog include:

• recognition of revenue associated with existing backlog;

• contracts with shorter contractual periods replacing contracts with longer contractual periods;

• modifications to existing contracts;

• contract minimum payments ending; and

• expiration of contracts with existing customers.

The mix of these factors, among others, dictates whether our backlog increases or decreases for any given period. Our backlog may not result in actual revenue in any particular period, because the orders, awards and contracts included in our backlog may be subject to modification, cancellation or suspension. We may not realize revenue on certain contracts, orders or awards included in our backlog, or the timing of any realization may change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Human Capital Resources and Management**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Employees and Labor Relations*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; At December 31, 2025, we had 110 full-time employees, including 57 in research, development and engineering; 28 in sales, marketing, product, operations and customer support; and 25 in finance, administration, information technology, intellectual property and legal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Our employees are not covered by any collective bargaining agreement, and we have never experienced a work stoppage. We believe that our relations with our employees are good. Voluntary employee turnover was 11 % for the year ended December 31, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Values*

Culture is critically important to Digimarc's success. We incorporate our core values in daily interactions with colleagues, customers, vendors and other stakeholders. Our core values are embodied in the words Collaborative, Curious and Courageous.

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| | | | |
|:---|:---|:---|:---|
| **Digimarc Values** | **Digimarc Values** | **Digimarc Values** | **Digimarc Values** |
|  | **Collaborative** | **Curious** | **Courageous** |
| **We**: | Ask for help<br> Prioritize mentoring<br> Build trust and transparency | Support innovative thinking<br> Continuously seek clarity<br> Listen to our stakeholders | Challenge our own biases<br> Cultivate collective experiences<br> Seek out and support ideas |
| **We Do Not:** | Avoid difficult conversations | Lose sight of our purpose | Assume we have all the answers |

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Digimarc follows a Purposeful Work approach which enables teams to determine the right balance of working between home and office locations, considering both the company and departmental needs, and those of our staff.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3

*Compensation and Benefits*

Our compensation program is designed to support, reinforce, and align our values, business strategy, and operational and financial goals of profitable growth and appreciation of our value in the public equity markets.

Digimarc's compensation program is designed to pay all our employees fairly for their performance and contributions. We do this by balancing a wide variety of important internal and external factors aligned to our Company culture and values. Compensation and benefits are reviewed against the market annually, at a minimum. To ensure we are offering competitive compensation packages, we have aligned our benchmarks with public SaaS companies.

We strive to provide a base salary and restricted stock units that are competitive with the market and compensate above market for outstanding performance. The Company uses restricted stock units to incentivize candidates and high performing employees that contribute to the strategic goals of the Company and drive Company value. Performance restricted stock units are used with our executive management team and are awarded based upon delivering established financial and strategic goals. Equity incentive compensation promotes a sense of ownership and reinforces our philosophy that all employees are valued shareholders in the long-term success of the business. In alignment with our Company culture, we strive to communicate openly about the objectives of the Company and the design of the compensation program. The compensation process is intended to be fair so that all employees and managers understand the goals and the outcomes of the process.

We are committed to administering the compensation program in a manner that is transparent, consistent, and free of discrimination. We post salary ranges for new positions and do not ask for the previous salary history of our candidates. We promote internal mobility and commit to transparency in how we level and promote our employees.

We also believe that employees require time to balance the many needs of their lives, both at work and outside of work. Our policies for Paid Time Off ("PTO") are designed to provide employees with time off for vacation, sick days, or other personal reasons. Full time employees at the exempt level in the U.S. are eligible for the Self-Managed PTO program. Non-exempt and part-time U.S. employees are eligible for the Granted PTO program. Under the Self-Managed PTO program, eligible employees may take as much paid time off from work as is consistent with their duties and ability to meet performance expectations.

*Learning and Development*

We invest resources to develop the talent needed to remain at the forefront of innovation. We have a performance management system to support continuous learning and development. Through the use of anonymous surveys, employees can voice their perceptions of the Company and their work experience, including learning and development opportunities. We have strong participation in our surveys and engage our managers to respond to areas that employees have identified as needing improvement or given lower scores.

We support training and development programs for our employees through online training programs such as Digimarc University, conferences, seminars, on-the-job training, and skill certifications. We also encourage and foster onsite training programs and mentoring.

*Health, Safety and Wellness*

We are committed to a safe and drug-free workplace. We continually invest in programs designed to improve physical, mental, and social well-being. We provide access to a variety of innovative, flexible, and convenient health and wellness programs, for our employees and their families.

*Governance and Oversight*

The executive management team is entrusted with developing and advancing our human capital strategy, which is reviewed by the Board of Directors. Our Chief Operating Officer is charged with developing and stewarding this strategy on a Company-wide basis. This incorporates a broad range of dimensions, including culture, values, labor and employee relations, leadership capabilities, performance management and total rewards. Key processes include ongoing performance and development feedback, and periodic engagement surveys reviewed by management and the Board of Directors. All employees have access to resources on topics regarding integrity, our code of conduct, diversity, compliance, and workplace harassment. Employees are encouraged to address any concerns through multiple channels, including anonymously whenever possible, without fear of retaliation or retribution.

**Available Information**

We make available free of charge through our website at *http://www.digimarc.com/about/investors* our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these and other reports filed or furnished by us pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we file these materials with the Securities and Exchange Commission (the "SEC"). The content on any website referred to in this annual report is not incorporated by reference in this annual report unless expressly noted.

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**ITEM 1A:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **RISK FACTORS**

Our business, financial condition, results of operations and cash flows may be affected by a number of factors. The following risk factors identify risks of which we are aware and that we consider to be material to our business. If any of the following risks and uncertainties develops 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.

**RISKS RELATED TO OUR BUSINESS**

&nbsp;&nbsp;&nbsp;&nbsp;***(1) Our strategic emphasis on retail loss prevention and gift card fraud solutions may not achieve market adoption and exposes us to integration and procurement risks.***

We have emphasized solutions intended to address retail loss prevention and fraud, including in areas such as gift cards. Achieving commercial success in this domain depends on adoption by retailers and other ecosystem participants, which often involves complex, multi-stakeholder integrations with point-of-sale systems, scanners, software platforms, and operational processes. Sales cycles in retail can be long, procurement requirements can be stringent, and deployment decisions may be delayed by competing priorities, budget constraints, or the need for internal change management.

Even after deployment, our solutions may not deliver perceived value at the scale or in the timeframes expected by customers, and customers may choose alternative approaches to fraud prevention and loss mitigation. If we are unable to achieve broad adoption, demonstrate sustained economic value, or manage integration demands, our business, results of operations, and financial condition could be materially adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;***(2) The impact of trade policy changes in the United States and corresponding actions by other countries in which the Company does business could adversely affect our financial performance.***

We operate in several European countries, and our domestic and international operations are strongly influenced by matters beyond our control, including changes in geopolitical, social, economic and labor conditions, tax laws, and U.S. and international trade regulations (including tariffs),as well as the impact these changes have on demand for our products. During 2025, we generated 41% of our revenue under the long-term contract with the Central Banks, a majority of which are located outside the United States.

International trade disputes and increased tariffs between the United States and other countries in which we do business could negatively impact our business, results of operations, and financial condition. If the relationship between the United States and other countries results in additional trade disputes, trade protection measures, retaliatory actions, tariffs and increased barriers, policies that favor domestic industries, or increased import or export licensing requirements or restrictions, then our operations may be adversely affected due to such changes in the economic and political ecosystems in which we do business. Although we have taken actions to diversify our product offerings, these efforts may not be sufficient to mitigate negative impacts on our financial performance resulting from certain changes to trade policies.

We are not able to predict the duration and severity of adverse economic, social, geopolitical or market conditions in the United States or other countries.

&nbsp;&nbsp;&nbsp;&nbsp;***(3) As a purveyor of disruptive technology, if our partners and potential customers defer or delay adopting and implementing our technology, or if competitors or other market participants successfully engage in campaigns to discredit our technology, our revenues will be negatively affected.***

Our primary source of revenue growth—the commercial market—is subject to the market forces and adoption curves common to other disruptive technologies. The commercial market is in its earlier stages of development. If widespread adoption of Digimarc technology in the commercial market takes longer than anticipated, we will continue to experience operating losses.

We expect companies marketing competing technologies to compete vigorously in the marketplace, and to seek to preserve their market share. To the extent these companies succeed in defending their market position, our ability to achieve profitable operations will be impeded.

With respect to anticipated sales growth and prospects for the commercial market, our two major avenues for revenue generation are direct sales to customers and indirect sales through partners. Our direct sales force is relatively new. Most of our partners are also relatively new to our products. Thus, the anticipated sources of revenue growth for the commercial market are unproven. We are executing strategies intended to make each of these means of revenue generation more effective, but we provide no assurance that we will execute these strategies successfully.

&nbsp;&nbsp;&nbsp;&nbsp;***(4) Our future growth will depend to a material extent on the successful advocacy of our technology by our partners to their customers, and implementation of our technology in solutions propagated by our partners and provided by third parties.***

Our business has long relied on the success of business partners. Continuing our success is largely dependent on a new generation of business partners supporting Digimarc technology in the commercial market. We have entered into agreements with numerous partners to propagate and support our technology, including brand deployment and pre-media service providers and consumer packaging solutions companies, all of which offer Digimarc digital watermarking services to consumer-packaged goods companies. We have also entered into agreements with numerous scanner manufacturers to enable their devices to read Digimarc watermarks. We provide no assurance that these collaborations will successfully generate revenue for our business.

If our partners are not successful in advocating and deploying our technology, we may not be able to achieve and sustain profitable operations. If other business partners who include our technology in their products cease to do so, or we fail to successfully collaborate with third parties or to obtain other partners who will do so, or these partners are unsuccessful in their efforts, expanding deployment of our technology will be adversely affected. Consequently, our ability to increase revenue could be adversely affected, and we may suffer other adverse effects to our business. In addition, if our technology does not perform according to market expectations, our future sales would suffer as customers employ alternative technologies.

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&nbsp;&nbsp;&nbsp;&nbsp;***(5) If leading companies in our target industries downplay, minimize or reject the use of our technology, our product deployment may be slowed, and we may be unable to achieve profitable operations.***

Our business endeavors in the commercial market may be impeded or frustrated by larger, more influential companies or industry trade groups downplaying, minimizing or rejecting the value or use of our technology. A negative position by such companies or groups could result in obstacles for us that we would be incapable of overcoming and may block or impede the adoption of our technology. Such a development would make the achievement of our business objectives in this market difficult or impossible.

&nbsp;&nbsp;&nbsp;&nbsp;***(6) We are subject to risks encountered by companies developing and relying upon new technologies, products, and services to achieve and sustain profitable operations.***

Our business and prospects must be considered in light of the risks and uncertainties to which companies with new and rapidly evolving technology, products, and services are exposed. These risks include the following:

• we may be unable to develop sources of new revenue or sustainable growth in revenue because our current and anticipated technologies, products, and services may be inadequate or may be unable to attract or retain customers;

• intense competition from existing and new technologies and providers and rapid technological change could adversely affect the market's acceptance of our products and services; and

• we may be unable to develop and maintain new technologies upon which our products and services are dependent, which may cause our products and services to be less sustainable and competitive or which could make it harder for us to expand our revenue and business.

&nbsp;&nbsp;&nbsp;&nbsp;***(7) A significant portion of our current and potential future revenue is subject to commercial and government contracts and the development of new markets that may involve unpredictable delays and other unexpected changes. Such volatility and uncertainty might limit our actual revenue in any given quarter or year.***

We derive a significant portion of our revenue from contracts tied to development schedules or development of new markets, which could shift for months, quarters, or years as the needs of our customers and the markets in which they participate change. Government agencies and commercial customers also face budget pressures that introduce added uncertainty. Any shift in development schedules, budgets, the markets in which we or our partners participate, or customer procurement processes, which are outside our control and may not be predictable, could result in delays in revenues forecasted for any particular period, could affect the predictability of our quarterly and annual results, and might limit our actual revenue recognized in any given quarter or year, resulting in reduced and less predictable revenue, adversely affecting profitability.

We are expanding into new markets, which involve inherent risk and unpredictability. With our acquisition of EVRYTHNG in 2022, we expanded into applications of the product cloud in conjunction with Digimarc watermarks and other data carriers. As we seek to expand outside our areas of historical expertise, we lack the history and insight that benefited us in fields conventionally using digital watermarking. Although we have extensive experience in the commercial application of digital watermarking, we are investing in but may not be as well-positioned for these other opportunities. Accordingly, it may be difficult for us to achieve success in other technologies we might pursue.

&nbsp;&nbsp;&nbsp;&nbsp;***(8) A small number of customers account for a substantial portion of our revenue, and the loss of or reduction in any large contract could materially disrupt our business.***

Historically, we have derived a significant portion of our revenue from a limited number of customers. Five customers represented approximately 68% of our revenue for the year ended December 31, 2025.

Nearly half of our revenue came from our contract with the Central Banks in 2025 and 2024. The budget for this program is set annually, and the contract expires at the end of 2029. The customer contracts we enter into may contain termination for convenience provisions or may not include automatic renewal provisions. If we were to lose any such contract for any reason, or if our relationship with these customers or the Central Banks were materially modified, our financial results would be adversely affected. For example, recent U.S. and international trade regulations (including tariffs), among other economic and geopolitical uncertainties, could impact our relationship with the Central Banks and other international customers.

We expect to continue to depend upon a small number of customers for a significant portion of our revenue for the foreseeable future. The loss of, or decline in, orders or backlog from one or more major customers could reduce our revenue and have a material adverse effect on our financial results.

&nbsp;&nbsp;&nbsp;&nbsp;***(9) The market for our products is highly competitive, and alternative technologies or larger companies that compete with us may be more successful than us in gaining market share, which would decrease our revenue and profits.***

The markets in which we compete for business are intensely competitive and rapidly evolving. We expect competition to continue from both existing competitors and new market entrants. We face competition from other companies and from alternative technologies, including some of our customers, partners, and licensees. We also may face competition from unexpected sources.

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Alternative technologies that may directly or indirectly compete with our products include:

• artificial intelligence — the use of AI models to create digital watermarking technologies that embed and detect identifying information within digital content;

• traditional anti-counterfeiting technologies — solutions designed to deter counterfeiting including security inks, microglyphs, optically variable devices, and magnetic threads used by government agencies and brands (that compete for budgetary outlays);

• object and image recognition (e.g., trained classifiers employing machine learning) — technologies that recognize one or several pre-specified or learned objects or object classes, usually together with their two-dimensional positions in the image or three-dimensional poses in the scene;

• digital fingerprints and pattern recognition — a metric, or metrics, computed solely from a source image or audio or video track, that can be used to identify an image or track, or authenticate the image; and

• object sorting technologies — chemical tracers, taggants, Near Infrared sorters, dot or matrix codes, used to identify and sort objects, and that can be used in connection with systems using a combination of these methods and machine learning.

In the competitive environments in which we operate, product creation, development and marketing processes relating to technology are uncertain and complex and require accurate prediction of demand as well as successful management of various risks inherent in technology development. In light of these uncertainties, it is possible that our failure to successfully accommodate future changes in technologies related to our technology could have a long-term negative effect on our growth and results of operations.

As we work to achieve market acceptance of our products and services, new developments are expected to continue, and discoveries by others, including current and potential competitors, could render our products and services uncompetitive. Moreover, because of rapid technological changes, we may be required to expend greater amounts of time and money than anticipated to develop new products and services, which in turn may require greater revenue streams from those products and services to cover developmental costs. Many of the companies that compete with us for some of our business, as well as other companies with whom we may compete with in the future, are larger and may have stronger brand recognition and greater technical, financial, marketing, and/or political resources than we do. These attributes could enable these companies to have more success in the market than we have, either by providing better products or better pricing than we can provide. We may be unable to compete successfully against current or future participants in our markets or against alternative technologies, and the competitive pressures we face may have a materially adverse effect on our financial position, results of operations or cash flows.

&nbsp;&nbsp;&nbsp;&nbsp;***(10) An increase in our operations outside of the U.S. subjects us to risks additional to those to which we are exposed in our domestic operations.***

We believe that revenue from sales of products and services to commercial customers outside the U.S. could represent a growing percentage of our total revenue in the future. Digimarc technology is not bounded geographically, and we believe our technology will be deployed globally. As such, certain contracts may be made and performed, in whole or in part, outside of the United States.

&nbsp;&nbsp;&nbsp;&nbsp; International operations are subject to a number of risks that can adversely affect our sales of products and services to customers outside of the U.S., or expose us to additional expense or liabilities, including the following:

• difficulties and costs of staffing, developing and managing foreign operations as a result of distance, language, and cultural differences;

• the effect of laws governing our business, employee, and contractor relationships, and the existence of workers' councils and labor unions in some jurisdictions;

• changes in foreign government regulations and security requirements;

• export license requirements, tariffs, retaliatory trade measures;

• difficulty in protecting intellectual property;

• difficulty in collecting accounts receivable;

• currency fluctuations; and

• political and economic uncertainty or instability.

If we fail to comply with the many international laws and regulations that apply to our business, we may be subject to significant fines, penalties, or liabilities for noncompliance. These factors may result in greater risk of performance problems or of reduced profitability with respect to our international programs in these markets. In addition, if foreign customers, in particular foreign government authorities, terminate or delay the implementation of our products and services, it may be difficult for us, or we may not be able, to recover our potential losses.

Ongoing geopolitical tensions and the potential for isolationist policies implemented by governments around the world have, and may continue to, affect international relations, resulting in reduced market opportunities and diminished demand in foreign markets. In some cases, such tensions could lead to national security-related restrictions that directly impact our business operations.

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***(11) We depend on our key employees for our future success. If we are not able to retain, hire, or integrate these employees, we may not be able to meet our commitments.***

Due to the high level of technical expertise that our industry requires, our ability to successfully develop, market, sell, license and support our products, services, and intellectual property depends to a significant degree upon the continued contributions of our key personnel in engineering, sales, marketing, operations, and legal, many of whom would be difficult to replace. We believe our future success will depend in large part upon our ability to retain our current key employees and our ability to attract, integrate, and retain new personnel in the future. It may not be practical for us to match the compensation some of our employees could be offered by other employers. In addition, we may encounter difficulties in hiring and retaining employees because of concerns related to our financial performance. These circumstances may have a negative effect on the market price of our common stock, and employees and prospective employees may factor in any uncertainties relating to our stability and the value of any equity-based incentives in their decisions regarding employment opportunities and decide to leave our employ or decline employment offers.

Moreover, our business is based in large part on unique and sophisticated technology. New employees require substantial training, involving significant resources and management attention. Competition for experienced personnel in our business can be intense. If we do not succeed in attracting new, qualified personnel or in integrating, retaining, and motivating our current personnel, our growth and ability to deliver products and services that our customers require may be hampered.

On February 26, 2025, we announced a corporate reorganization, which impacted our workforce by 96 employees.

&nbsp;&nbsp;&nbsp;&nbsp;***(12) If our revenue models and pricing structures relating to products and services that are under development do not gain market acceptance, the products and services may fail to attract or retain customers and we may not be able to generate new revenue or sustain existing revenue.***

Our revenues result from a combination of software subscriptions and software development services. We have not fully developed our revenue models for some products in the commercial market. Because some of our products and services are not yet well-established in the marketplace, and because some of these products and services will not directly displace existing solutions, we cannot be certain that the pricing structure for these products and services will gain market acceptance or be sustainable over time, or that the marketing for these products and services will be effective.

&nbsp;&nbsp;&nbsp;&nbsp;***(13) The transition from HolyGrail 2.0 to HolyGrail 2030 and broader recycling ecosystem adoption may not produce expected commercial outcomes and could delay or reduce anticipated revenue opportunities.***

Digital watermarking for recycling depends on coordinated adoption across a complex ecosystem that includes consumer packaged goods companies, retailers, materials recovery facilities, recyclers, technology providers, and, in some jurisdictions, regulators. HolyGrail 2.0 concluded in 2025, and HolyGrail 2030, a multi-stakeholder initiative focused on evaluating and enabling industrial-scale deployment of digital watermarking to improve sorting and recycling outcomes, was launched to advance industrial implementation and economic validation. The shift from pilot and demonstration phases to scaled deployment involves significant uncertainty regarding technical integration, capital investment, operational change, and demonstrated economic returns for multiple stakeholders.

If ecosystem participants do not commit to scaled deployments, if program funding declines, if timelines extend, or if economic viability is not demonstrated to the satisfaction of key participants, the pace of adoption may slow or stall. Competing sorting or identification technologies, alternative standards decisions, or changes in regulatory frameworks could also reduce demand for digital watermarking solutions in recycling. These factors could limit our ability to convert program participation into sustained commercial revenue and could materially adversely affect our business, results of operations, and financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;***(14) The technological viability and economic attractiveness of competing technologies could cause the consumer-packaged goods industry and related industries to adopt a technology other than digital watermarking to support its waste sortation and recycling initiatives.***

We have identified two technologies that could be perceived by industry participants to out-perform or be available on more economically favorable terms than Digimarc's digital watermarking technology for waste sortation and recycling: chemical tracers and/or AI. Industry leaders in a position to influence the industry at large could determine that chemical tracers or AI represent a more technologically viable and/or economically attractive solution, including due to the greater number of potential suppliers, which in turn could increase pricing competition and lower barriers to entry. Such a determination could result in the devaluation of digital watermarking technology's ability to support the product packaging lifecycle and negatively affect our revenue growth prospects.

&nbsp;&nbsp;&nbsp;&nbsp;***(15) Our business may be adversely affected by the EU Data Act***'***s requirements regarding customer switching, including mandatory process and contractual changes.***

Regulation (EU) 2023/2854 (the "EU Data Act") entered into force on September 12, 2025, and imposes obligations on providers of data processing services intended to reduce obstacles to customers switching to competing services. The EU Data Act's switching regime may require us to modify contractual terms and customer-facing processes to align with mandated switching requirements, including any required transition assistance and information obligations. These changes could reduce differentiation based on platform integration and increase customer leverage in commercial negotiations.

To the extent the EU Data Act makes switching easier for customers or increases the value of termination rights and transition assistance, we may experience increased customer turnover, shorter contract durations, reduced renewal rates, and reduced revenue predictability. We may also face increased customer demands for concessions, including pricing, term, and termination in exchange for renewals. In addition, contractual changes made to address switching rights and transition assistance may affect the timing and amount of revenue recognized under our customer contracts, including if we are required to provide additional services, assume additional obligations upon termination or switching, or modify commercial terms in a manner that increases concessions or variability. Any of these developments could adversely affect our business, results of operations, and financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;***(16) Industry migration toward 2D barcodes and evolving standards initiatives, including Sunrise 2027, could develop in ways that disadvantage our technologies or require additional investment.***

Retailers and brand owners are pursuing initiatives to enhance product identification and data carriage, including migration toward 2D barcodes and related standards and interoperability efforts. These initiatives, including "Sunrise 2027," an industry initiative intended to promote broad point-of-sale readiness to scan 2D barcodes alongside traditional barcodes, may influence technology selection, implementation architectures, certification requirements, and the competitive landscape for identification and authentication solutions.

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The timing, scope, and technical choices associated with this migration are uncertain and may vary by retailer, geography, and product category. The market may adopt solutions that do not incorporate our technologies, may favor competing providers, or may implement approaches that reduce the value proposition of our offerings. We may be required to invest in product development, integrations, certifications, and partner enablement to address evolving requirements, and those investments may not result in commensurate revenue. If industry migration occurs more slowly than anticipated, or in a manner that reduces adoption of our technologies, our growth prospects, results of operations, and financial condition could be materially adversely affected.

**RISKS RELATED TO INFORMATION SECURITY**

&nbsp;&nbsp;&nbsp;&nbsp;***(17) The security systems used in our business and our product and service offerings may be circumvented or sabotaged by third parties, which could result in the disclosure of sensitive information or private personal information or cause other business interruptions that could damage our reputation and disrupt our business.***

Our business relies on computers and other information technologies, both internal and external. The protective measures that we use may not prevent all security breaches, and failure to prevent security breaches may disrupt our business, damage our reputation, or expose us to litigation and liability. A party who circumvents our security measures or the security measures of our third-party vendors could misappropriate sensitive or proprietary information or materials or cause interruptions or otherwise damage our products, services, and reputation, and the property of our customers. If unintended parties obtain sensitive data and information or create bugs or viruses or otherwise sabotage the functionality of our or our third-party vendor's systems, we may receive negative publicity, incur liability to our customers, or lose the confidence of our customers, any of which may cause the termination or modification of our contracts. Further, our insurance coverage may be insufficient to cover losses and liabilities that may result from these events.

In addition, we may be required to expend significant capital and other resources to protect ourselves against the threat of security breaches or to alleviate problems caused by these breaches. Any protection or remedial measures may not be available at a reasonable price or at all or may not be entirely effective if commenced.

&nbsp;&nbsp;&nbsp;&nbsp;***(18) We may experience outages and disruptions of our infrastructure that may harm our business, prospects, financial condition and results of operations.***

We may be subject to outages or disruptions of our infrastructure, including information technology system failures and network disruptions. We use third-party cloud service providers, which are also susceptible to outages and disruptions. System redundancy may be ineffective or inadequate, and our disaster recovery planning may not be sufficient for all eventualities.

&nbsp;&nbsp;&nbsp;&nbsp;***(19) Data breaches and cyber-attacks or cyber-fraud could compromise our intellectual property or other sensitive information or result in losses.***

We maintain sensitive data on our networks and the networks of our business partners and third-party providers, including proprietary and confidential information relating to our intellectual property, personnel, and business, and that of our customers and third-party providers. Companies have been increasingly subject to a wide variety of security incidents, cyber-attacks, hacking, phishing, and other attempts to gain unauthorized access or engage in fraudulent behavior, resulting in risks that could adversely impact our business, financial condition, and reputation. These risks include but are not limited to:

• our policies and security measures cannot guarantee security, and our information technology infrastructure, including our networks and systems, may be vulnerable to data breaches, cyber-attacks, or fraud, leading to the disclosure of sensitive customer information;

• third parties may attempt to penetrate or infect our network and systems with malicious software and phishing attacks in an effort to gain unauthorized access to our network and systems;

• we may be subject to the risk of third parties falsifying invoices and similar fraud, frequently by obtaining unauthorized access to our vendors' and business partners' networks;

• other disruption of our operations due to cyberattacks or other malicious activities; and

• failure to comply with cybersecurity regulations, resulting in legal and financial consequences.

In some circumstances, we may partner with third-party providers and provide them with sensitive data. If these third parties fail to adopt or adhere to adequate data security practices, or in the event of a breach of their networks, this sensitive data may be improperly accessed, used, or disclosed. These data breaches and any unauthorized access or disclosure of sensitive data could compromise our intellectual property, expose sensitive business information, and subject us to liability.

The increase in cyber-attacks has resulted in an increased focus on cybersecurity by various government agencies. Cyber-attacks or any investigation or enforcement action related to cybersecurity could cause us to incur significant remediation costs, disrupt key business operations, and divert attention of management and key information technology resources. We may incur losses as a result of cyber-fraud, such as making unauthorized payments, irrespective of robust internal controls. Our reputation and business could be harmed, and we could be subject to third-party claims in the event of such a security breach.

**RISKS RELATED TO FINANCIAL REPORTING**

&nbsp;&nbsp;&nbsp;&nbsp;***(20) Changes to financial accounting standards may affect our results of operations and could cause us to change our business practices.***

We prepare our consolidated financial statements to conform to generally accepted accounting principles in the United States ("U.S. GAAP"). These accounting principles are subject to interpretation by the Securities and Exchange Commission ("SEC") and various bodies formed to interpret and create accounting rules and regulations. Changes in these rules, or guidance relating to interpretation and adoption of these rules, could have a significant effect on our financial results and could affect portions of our business differently.

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&nbsp;&nbsp;&nbsp;&nbsp;***(21) We were not profitable in 2025 or 2024 and may not be able to become profitable in the future, particularly if we were to lose large contracts or fail in our new market development initiatives. Sustained lack of profitability could cause us to incur asset impairment charges for long-lived assets or record valuation allowances against our deferred tax assets.***

We incurred net losses in 2025 and 2024 largely due to investments in our business to support product development and sales growth initiatives.

Becoming profitable in the future will depend upon a variety of factors, including our ability to maintain our current customers and to acquire new commercial customers. Profitability will also depend on our efficiency in executing our business strategy and capitalizing on new opportunities. Various adverse developments, including the loss of large contracts or cost overruns on our existing contracts, could adversely affect our revenue, margins, and profitability. For example, recent U.S. and international trade regulations (including tariffs), among other economic and geopolitical uncertainties, could impact our relationship with the Central Banks and other international customers.

If we continue to incur operating losses, an impairment to the carrying value of our long-lived assets, including goodwill, acquired intangible assets, patent assets and property and equipment could result. We test our long-lived assets for impairment when a triggering event occurs that would indicate that the carrying value may not be recoverable. Our methodology for assessing impairment may require management to make judgments and assumptions regarding future cash flows. Our projections of future cash flows are largely based on historical experience, and these projections may not be achieved. Changes to these financial projections used in our impairment analysis could lead to an impairment of all or a portion of our long-lived assets. Any such impairment charge could adversely affect our results of operations and our stock price. We evaluated our long-lived assets for impairment as of December 31, 2025, and 2024 and concluded there was no impairment for either period. We do not guarantee, however, that our long-lived assets will not become impaired in the future.

We record valuation allowances on our deferred tax assets if, based on available evidence, it is more-likely-than-not that all or some portion of the value of the assets will not be realized. The determination of whether our deferred tax assets are realizable requires management to identify and weigh all available positive and negative evidence. Management considers recent financial performance, projected future taxable income, scheduled reversals of deferred tax liabilities, tax planning strategies and other evidence in assessing the realizability of our deferred tax assets. Adjustments to our deferred tax assets could adversely affect our results of operations and our stock price. We have maintained a full valuation allowance against our deferred tax assets largely due to the cumulative loss we have incurred over the previous three years, which is considered a significant piece of negative evidence in assessing the realizability of deferred tax assets. As of December 31, 2025, and 2024, we determined a valuation allowance was still appropriate given the cumulative loss. We will not record tax benefits on any future losses until it is determined that it is more likely than not those tax benefits will be realized.

&nbsp;&nbsp;&nbsp;&nbsp;***(22) We may be adversely affected by variability of contracted arrangements.***

We periodically agree to modify the terms of contractual arrangements with our customers, partners and licensees in response to changes in circumstances underlying the original contractual arrangements, and it is likely that we will do so in the future. As a result of this practice, the terms of our contractual arrangements with our customers, partners, and licensees may vary over time and, depending on the particular modification, could have a material adverse effect on our financial position, results of operations, or cash flows.

**RISKS RELATED TO INTELLECTUAL PROPERTY AND LEGAL**

&nbsp;&nbsp;&nbsp;&nbsp;***(23) (a) We may not be able to adequately secure patent or other protection for our technologies.***

Our business depends in part on securing protection for our proprietary technology. To protect our intellectual property portfolio, we rely on a combination of patent, copyright, trademark and trade secret rights, confidentiality procedures, and licensing arrangements. Although we regularly apply for patents to protect our intellectual property, there is no guarantee that we will secure patent protection for any particular technology we develop.

Changes in the U.S. and foreign patent laws, or in the interpretation of existing laws, may adversely affect our ability to secure or enforce patents. For example, the U.S. Supreme Court issued a decision in 2014 limiting patent eligibility of computer implemented inventions. The Leahy-Smith America Invents Act of 2011 (the "America Invents Act") also codifies several changes to the U.S. patent laws, including the creation of a post-grant *inter partes* review process to challenge patents after they have issued. The America Invents Act allows third parties to petition the U.S. Patent and Trademark Office to review and reconsider the patentability of any of our inventions claimed in our issued patents. Similar laws and legal processes exist to challenge the validity of patents in other jurisdictions. Any such proceeding may result in one or more of our patent claims becoming limited or being invalidated altogether. Additionally, certain foreign jurisdictions may not recognize or enforce our patents in those jurisdictions. A limitation or invalidation of our patent claims could adversely affect our financial position and our operating results.

Patents have finite lives, and our ability to continue to rely on our patents as a barrier to entry is limited to the term of the patents. Our earliest patents began expiring in 2012, and the patents in our portfolio expire at various times between 2026 and 2040. Further, as part of our ongoing efforts to manage operational costs and optimize our intellectual property portfolio, we have increasingly engaged in the strategic disposal or abandonment of certain non-core patents and patent applications, which may reduce the breadth of our overall intellectual property protection. The size and strength of our portfolio depends on the number of patents that have been granted, offset by the number of patents that expire, in any given year.

As part of our confidentiality procedures, we generally enter into non-disclosure agreements with our employees, directors, consultants, and corporate partners, and attempt to control access to and distribution of our technology, solutions, documentation, and other proprietary information. Despite these procedures, third parties could copy or otherwise obtain and make unauthorized use of our technology, solutions or other proprietary information or independently develop similar technologies, solutions, or information. The steps that we have taken to prevent misappropriation of our solutions, technology or other proprietary information may not succeed.

We do not assure you that the protection of our proprietary rights will be adequate or that our competitors will not independently develop similar technologies, duplicate our services, or design around any of our patents.

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***(b) We may be subject to infringement claims and other litigation, which could adversely affect our business.***

As more companies engage in business activities relating to digital watermarking services, and develop corresponding intellectual property rights, it is increasingly likely that claims may arise which assert that some of our products or services infringe other parties' intellectual property rights. These claims could subject us to costly litigation and divert management resources. These claims may require us to pay significant damages, cease production of infringing products, terminate our use of infringing technology, or develop non-infringing alternative technologies. In these circumstances, continued use of our technology may require that we acquire licenses to the intellectual property that is the subject of the alleged infringement, and we might not be able to obtain these licenses on commercially reasonable terms or at all. Our use of protected technology may result in liability that threatens our continuing operation.

Some of our contracts include indemnity and similar provisions regarding our non-infringement of third-party intellectual property rights. As deployment of our technology increases, and more companies enter our markets, the likelihood of a third-party lawsuit resulting from these provisions increases. If an infringement arose in a context governed by such a contract, we may have to expend significant sums to defend our customer, refund to our customer amounts already paid to us, pay significant damages, or cease distributing our allegedly infringing products entirely.

&nbsp;&nbsp;&nbsp;&nbsp;***(24) We are involved in securities class action and related stockholder derivative litigation, and we are also periodically involved in litigation in the ordinary course of business, and an adverse resolution of such litigation may adversely affect our business, financial condition, results of operations, and cash flows.***

We are involved in securities class action and related stockholder derivative litigation that alleges misstatements and omissions regarding the renewal status of a commercial contract. These proceedings may require significant management time and attention, impose substantial defense costs, and result in extensive discovery obligations, including the production of internal communications and other sensitive information. They may also cause reputational harm and investor uncertainty, complicate commercial negotiations, and contribute to stock price volatility. Adverse outcomes could include monetary damages, settlement payments, attorneys' fees, increased insurance costs or reduced availability of coverage, and changes to our governance, controls, or business practices.

From time to time, in our normal course of business, we are a party to various legal claims, actions and complaints. Given the uncertain nature of litigation, we are not able to estimate the amount or range of gain or loss that could result from an outcome of litigation. Litigation can be expensive, lengthy, and disruptive to normal business operations. The results of complex legal proceedings are often uncertain and difficult to predict. We could incur costs in excess of any established accruals and, to the extent available, excess liability insurance. An unfavorable outcome in any legal proceedings could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

&nbsp;&nbsp;&nbsp;&nbsp;***(25) The terms and conditions of our contracts could subject us to damages, losses and other expenses if we fail to meet delivery and performance requirements.***

Our service contracts typically include provisions imposing:

• development and delivery schedules;

• customer acceptance and testing requirements; and

• other performance requirements.

To the extent these provisions involve performance over extended periods of time, risks of noncompliance may increase. From time to time, we have experienced delays in system implementation, timely acceptance of deliverables, concerns regarding deliverable performance, and other contractual disputes. If we fail to meet contractual performance requirements as promised, or to successfully resolve customer disputes, we could incur liability for damages, as well as increased costs, lower margins, or compensatory obligations in addition to other losses, such as harm to our reputation. Any unexpected increases in costs to meet our contractual obligations or any other requirements necessary to address claims and damages with regard to our customer contracts could have a material adverse effect on our business and financial results.

**RISKS RELATED TO OUR CAPITAL STOCK**

&nbsp;&nbsp;&nbsp;&nbsp;***(26) Our corporate governance documents and Oregon law may delay or prevent an acquisition of us that shareholders may consider favorable, which could decrease the value of your shares.***

Our articles of incorporation, bylaws and Oregon law contain provisions that could make it more difficult for a third party to acquire us without the consent of our Board of Directors. These provisions include supermajority voting requirements for shareholders to amend our organizational documents and limitations on actions by our shareholders by written consent. In addition, our Board of Directors has the right to issue preferred stock without shareholder approval, which could be used to dilute the stock ownership of a potential hostile acquirer. Oregon law restricts the ability to vote shares of stock acquired in a transaction that causes the acquiring person to control at least one-fifth, one-third or one-half of the votes entitled to be cast in the election of directors (a "control share acquisition"). Shares acquired in a control share acquisition have no voting rights except as authorized by a vote of the shareholders. Although we believe these provisions protect our shareholders from coercive or otherwise unfair takeover tactics and thereby provide for an opportunity to receive a higher bid by requiring potential acquirers to negotiate with our Board of Directors, these provisions apply even if the offer may be considered beneficial by some shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;***(27) Shareholder activism and governance dynamics, including obligations under cooperation arrangements, may constrain strategic flexibility and increase costs.***

We have experienced recent shareholder activism, and in 2025 we entered into a cooperation agreement with certain stockholders that includes commitments and restrictions for a defined period. Shareholder activism and related governance dynamics may require significant attention from management and our Board of Directors, entail substantial advisory and legal costs, and create uncertainty regarding strategic direction and leadership continuity.

Cooperation arrangements, standstill provisions, voting commitments, and other governance-related terms may constrain our ability to pursue strategic alternatives, negotiate transactions, or implement operational initiatives on the timeline or terms we consider optimal. In addition, activism may encourage short-term decision-making, increase internal and external distraction, and create or exacerbate conflicts among stockholders, directors, and management. The termination of cooperation arrangements may also lead to renewed activism, proxy contests, or additional litigation. Any of these developments could adversely affect our ability to execute our business strategy and could materially adversely affect our business, results of operations, and financial condition.

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&nbsp;&nbsp;&nbsp;&nbsp;***(28) Our common stock price may be volatile, and you could lose all or part of your investment in shares of our common stock.***

The price of shares of our common stock may fluctuate as a result of changes in our operating performance or prospects and other factors. Some specific factors that may have a significant effect on the price of shares of our common stock include:

• the public's reaction to our public disclosures;

• actual or anticipated changes in our operating results or future prospects;

• strategic actions by us or our competitors, such as acquisitions or restructurings;

• impact of acquisitions on our liquidity and financial performance;

• new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

• changes in accounting standards, policies, guidance, interpretations or principles applicable to us;

• conditions of the industry as a result of changes in financial markets or general economic or political conditions;

• the failure of securities analysts to cover our common stock in the future, or changes in financial estimates by analysts;

• changes in analyst recommendations or revenue and earnings estimates regarding us, other comparable companies or the industry generally, and our ability to meet those estimates;

• changes in the amount of dividends paid, if any;

• changes in our financing strategy or capital structure;

• future issuances of our common stock or the perception that future sales could occur; and

• volatility in the equity securities market.

**GENERAL RISK FACTORS**

&nbsp;&nbsp;&nbsp;&nbsp;***(29) If we are unable to respond to regulatory or industry standards effectively, or if we are unable to develop and integrate new technologies effectively, our growth and the development of our products and services could be delayed or limited.***

Our future success will depend in part on our ability to enhance and improve the responsiveness, functionality, and features of our products and services, and those of our business partners, in accordance with regulatory or industry standards. Our ability to remain competitive will depend in part on our ability to comply with emerging industry and governmental standards in a timely and cost-effective manner. If we are unable to meet these standards effectively, our growth and the development of various products and services could be delayed or limited.

&nbsp;&nbsp;&nbsp;&nbsp;***(30) We may need to hire additional employees or contract labor in the future in order to take advantage of new business opportunities arising from increased demand, which could increase costs and impede our ability to achieve or sustain profitability in the short term.***

We have staffed our company with the intent of accelerating our product development and sales growth initiatives while also focusing on achieving and sustaining profitability. Our current staffing levels could affect our ability to respond to increased demand for our products and services. In addition, to meet any increased demand and take advantage of new business opportunities in the future, we may need to increase our workforce through additional employees or contract labor. Although we believe that increasing our workforce would potentially support anticipated growth and profitability, it would increase our costs. If we experience such an increase in costs, we may not succeed in achieving or sustaining profitability in the short term.

On February 26, 2025, we announced a corporate reorganization, which impacted our workforce by 96 employees. This reorganization was intended to streamline our team structure to better align with our long-term growth initiatives and profitability objectives. If we do not fully realize or maintain the anticipated benefits of the reorganization and related cost reduction initiatives, our business, financial condition, or results of operations could be adversely affected, and additional reorganization actions and cost reduction initiatives may be necessary. Our reorganization and cost cutting activities may also yield unintended consequences and costs, such as attrition beyond our intended reorganization, a reduction in morale among our remaining employees, and the risk we may not achieve the anticipated benefits of the reorganization, all of which may have an adverse effect on our results of operations or financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;***(31) Products deploying our technology could have unknown defects or errors, which may give rise to claims against us, divert application of our resources from other purposes or increase our project implementation and support costs.***

Products and services as complex as ours may contain undetected defects or errors. Furthermore, we often provide complex implementation, integration, customization, consulting, and other technical services in connection with the implementation and ongoing maintenance of our products. Despite testing, defects or errors in our products and services may occur, which could result in delays in the development and implementation of our products, inability to meet customer requirements or expectations in a timely manner, loss of revenue or market share, increased implementation and support costs, failure to achieve market acceptance, diversion of development resources, injury to our reputation, increased insurance costs, increased service and warranty costs, and warranty or breach of contract claims. Although we attempt to reduce the risk of losses resulting from warranty or breach of contract claims through warranty disclaimers and liability limitation clauses in our agreements when we can, these contractual provisions are sometimes rejected or limited and may not be enforceable in every instance. If a court refuses to enforce the liability limiting provisions of our contracts for any reason, or if liabilities arise that were not contractually limited or adequately covered by insurance, the expense associated with defending these actions or paying the resultant claims could be significant.

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**ITEM 1B:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **UNRESOLVED STAFF COMMENTS**

None.

**ITEM *1C:* CYBERSECURITY**

Cybersecurity risk management is a critical component of our overall risk management program. We have implemented robust information security processes for assessing, identifying, and managing material risks from cybersecurity breaches that could adversely affect our business, financial condition and reputation. Although we have implemented measures to safeguard against cybersecurity risks, there is no assurance that these measures will prevent all incidents or fully mitigate their impact. We continuously work to enhance our information security processes and risk management program. Our cybersecurity risk management program is led by our Senior Director of Information Security ("InfoSec") with direction and oversight from the Company's executive management team. The Senior Director of InfoSec and the Company's executive leaders directly involved have extensive experience in information security, risk management, and technology, and a track record of successful leadership in areas relevant to cybersecurity.

On a regular basis, we conduct thorough cybersecurity risk assessments that encompass both financial and non-financial risks, to identify vulnerabilities within our information systems. We also engage third-party experts and consultants to assist with cybersecurity risk assessments and to perform black box and white box penetration testing. We have implemented continuous enterprise-wide monitoring tools to detect and assess cybersecurity threats. In addition, we maintain and practice our incident response plans to facilitate timely identification and reporting of cybersecurity events. Aligned with our broader risk management framework, our materiality assessment criteria are determined based on a comprehensive review of potential cybersecurity impacts on our operations, financials and reputation. Our risk mitigation strategies include a broad variety of technical and operational measures, including, but *not* limited to, cross-functional collaboration among the information security, legal and risk management and operational teams, and Company-wide training on cybersecurity and privacy. We conduct regular and ongoing information security training and maintain a compliance program, which includes live and virtual training and periodic testing to ensure compliance with corporate standards and procedures. New employees must acknowledge that they have completed all the information security training and adhere to standards and procedures upon hire. All other employees acknowledge completion of this training annually.

Our Board of Directors plays a vital role in overseeing the Company's enterprise risk management program and has delegated cybersecurity risk management to the Audit Committee of the Board of Directors. The Audit Committee is responsible for ensuring that management has processes in place designed to identify and evaluate cybersecurity risks to which the Company is exposed, and to implement processes to manage cybersecurity risks and mitigate cybersecurity incidents. Our Senior Director of InfoSec provides annual updates to the Audit Committee on the current cybersecurity threat landscape, emerging risks, remediation plans, and the effectiveness of related internal controls, and our Chief Financial Officer provides quarterly updates to the Audit Committee regarding progress on the Company's cybersecurity program. When applicable, additional cybersecurity updates are provided to our Audit Committee in interim periods in the event of a significant cybersecurity threat. All members of the Board of Directors are invited to attend these meetings.

The Audit Committee regularly engages in risk assessments specifically focused on cybersecurity, considering potential impacts on operations, financial results, and reputation, and periodically reviews cybersecurity policies and procedures to ensure they align with best practices and evolving cyber threats. In addition, the Audit Committee participates in the allocation of resources for cybersecurity initiatives, ensuring that investments align with the Company's risk appetite and strategic objectives. The Audit Committee is also briefed on the Company's crisis management and incident response plans, ensuring preparedness for potential cybersecurity incidents. The full Board of Directors participates with management in security tabletop exercises to test our incident response plans.

In 2025, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced undetected cybersecurity incidents. For additional information about these risks, see Part I, Item 1A, "Risk Factors" in this Annual Report on Form 10-K.

**ITEM 2:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **PROPERTIES**

In February 2022, we entered into a sublease agreement and lease extension agreement on a new facility in Beaverton, Oregon, in order to move our corporate headquarters. The new facility is 65,500 square feet in size. The term of the sublease and lease extension runs through September 2030. The remaining rent payments as of December 31, 2025 were $6.5 million plus operating expenses, payable in monthly installments. The first 26 months of rent payments and operating expenses were abated to cover the remaining term of the lease on our former corporate headquarters.

In December 2025, we entered into a sub-sublease agreement for our corporate headquarters in Beaverton, Oregon, whereby we agreed to sub-sublease 38,400 of the 65,500 square feet of the building to another tenant. The term of the sub-sublease begins in March 2026 and runs through September 2030. The remaining rent payments owed to us under the sub-sublease are $2.9 million.

We believe that our existing office space, after the sub-sublease, is suitable and adequate for our current and foreseeable future needs.

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**ITEM 3:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **LEGAL PROCEEDINGS**

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 Chief Executive Officer and 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 "C*hadwick* 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 Chief Executive Officer, 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. These cases are at an early stage, and the Company believes it has defenses against the claims and is responding accordingly.

**ITEM 4:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **MINE SAFETY DISCLOSURES**

Not applicable.

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**PART II**

**ITEM 5:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **MARKET FOR REGISTRANT**'**S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES**

Our common stock began trading on the Nasdaq Stock Market LLC in October 2008 under the symbol "DMRC."

As of March 6, 2026, we had 101 shareholders of record of our common stock, as shown in the records of our transfer agent. Since many holders hold shares in "street name," we believe that there is a significantly larger number of beneficial owners of our common stock than the number of shareholders of record.

We withhold (purchase) shares of common stock in connection with the vesting of restricted shares, restricted stock units, and performance restricted stock units, to satisfy required tax withholding obligations.

The following table sets forth information regarding purchases of our equity securities during the three-month period ended December 31, 2025:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  |  | **(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 <sup>(1)</sup>** | **share <sup>(1)</sup>** | **or programs** | **or programs** |
| Month 1 |  |  |  |  |
| October 1, 2025 to October 31, 2025 |  | $— |  | $— |
| Month 2 |  |  |  |  |
| November 1, 2025 to November 30, 2025 | 52986 | $7.77 |  | $— |
| Month 3 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; December 1, 2025 to December 31, 2025 |  | $— |  | $— |
| Total | 52986 | $7.77 |  | $— |

---

------

<sup>(1)</sup> Fully vested shares of common stock withheld (purchased) by us in satisfaction of required withholding tax liability upon the vesting of restricted stock awards, restricted stock units, and performance restricted stock units.

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**ITEM 7:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **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, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements. Please see the discussion regarding forward-looking statements included at the end of this discussion, under the caption* "*Forward-Looking Statements,*" *and Item 1A,* "*Risk Factors*" *for a discussion of some of the uncertainties, risks and assumptions associated with these statements.*

*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 Annual Report on Form 10-K.*

*All dollar amounts in the following tables are in thousands except per share amounts or unless otherwise noted. The percentages within the tables included in this section may not sum to 100% due to rounding.*

**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 IP 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 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 SaaS cloud-based platform for digital connectivity. Tested and trusted by 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 QR codes, 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.

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**Critical Accounting Policies and Estimates**

The preparation of financial statements in accordance with U.S. 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. On an on-going basis, we evaluate our estimates, including those related to bad debts, contingencies, goodwill, income taxes, intangible assets, marketable securities, property and equipment and revenue recognition. We base our estimates on historical experience and on other assumptions we believe to be reasonable in the circumstances. Actual results may differ from these estimates under different assumptions and/or conditions.

Some of our accounting policies require higher degrees of judgment than others in their application. We believe the following critical accounting policy affects our more significant judgments and estimates used in the preparation of our consolidated financial statements.

**Revenue recognition:**

Revenue is recognized in accordance with Accounting Standards Codification ("ASC") 606 "*Revenue from Contracts with Customers*" by applying the following steps:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligation(s) in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligation(s) in the contract.

Step 5: Recognize when (or as) the entity satisfies the performance obligation(s).

We derive our 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 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.

• 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 consulting 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.

Customer arrangements may contain multiple deliverables such as software platform subscriptions, software product subscriptions, and professional services. The subscriptions and services we offer 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, we consider the terms of the contract and our customary business practices. Some contracts may contain variable consideration. In those cases, we estimate 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, we will evaluate whether any of the variable consideration is constrained and if it is, we will not include it 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, we make estimates based on reasonably available information, including market conditions, specific factors affecting us, and information about the customer. We recognize the revenue associated with each performance obligation as we fulfil the obligation, 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 is considered to be revenue from contracts with customers.

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**Results of Operations—the Years Ended December 31, 2025 and December 31, 2024**

The following tables present our consolidated statements of operations data for the periods indicated.

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Revenue: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subscription | $19844 | $22418 |
| Service | 14069 | 16000 |
| Total revenue | 33913 | 38418 |
| Cost of revenue: |  |  |
| Subscription <sup>(1)</sup> | 2633 | 2959 |
| Service <sup>(1)</sup> | 5648 | 6628 |
| Amortization expense on acquired intangible assets | 4736 | 4592 |
| Total cost of revenue | 13017 | 14179 |
| Gross profit | 20896 | 24239 |
| Operating expenses: |  |  |
| Sales and marketing | 13939 | 21167 |
| Research, development and engineering | 20482 | 26209 |
| General and administrative | 18505 | 17073 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization expense on acquired intangible assets | 1132 | 1097 |
| Total operating expenses | 54058 | 65546 |
| Operating loss | (33162) | (41307) |
| Other income, net | 884 | 2341 |
| Loss before income taxes | (32278) | (38966) |
| Provision for income taxes | (31) | (44) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss | $(32309) | $(39010) |

---

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| **Percentages are percent of total revenue** |  |  |
| Revenue: |  |  |
| Subscription | 59% | 58% |
| Service | 41% | 42% |
| Total revenue | 100% | 100% |
| Cost of revenue: |  |  |
| Subscription <sup>(1)</sup> | 8% | 8% |
| Service <sup>(1)</sup> | 17% | 17% |
| Amortization expense on acquired intangible assets | 14% | 12% |
| Total cost of revenue | 38% | 37% |
| Gross profit | 62% | 63% |
| Operating expenses: |  |  |
| Sales and marketing | 41% | 55% |
| Research, development and engineering | 60% | 68% |
| General and administrative | 55% | 44% |
| Amortization expense on acquired intangible assets | 3% | 3% |
| Total operating expenses | 159% | 171% |
| Operating loss | (98)% | (108)% |
| Other income, net | 3% | 6% |
| Loss before income taxes | (95)% | (101)% |
| Provision for income taxes | (—)% | (—)% |
| Net loss | (95)% | (102)% |

---

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<sup>(1)</sup> Cost of revenue for Subscription and Service excludes Amortization expense on acquired intangible assets

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***Summary***

Total revenue for the year ended December 31, 2025, decreased $4.5 million, or 12%, to $33.9 million, compared to $38.4 million for the year ended December 31, 2024. The decrease in revenue was primarily driven by $2.6 million of lower subscription revenue and $1.9 million of lower service revenue.

Subscription revenue decreased $2.6 million, or 11%, primarily reflecting a decrease of $4.8 million from the expiration of three commercial contracts, offset by higher subscription revenue from new and existing commercial contracts. The expired commercial contracts included a contract that expired at the end of June 2024 that contributed $2.1 million of subscription revenue in 2024 compared to $0 in 2025, a contract that expired in April 2025 that contributed $3.3 million of subscription revenue in 2024 compared to $1.1 million in 2025, and a contract that expired in October 2025 that contributed $3.1 million of subscription revenue in 2024 compared to $2.5 million in 2025.

Service revenue decreased $1.9 million, or 12%, primarily reflecting a $1.8 million lower budget from the Central Banks for program work in 2025 compared to 2024.

Total operating expenses for the year ended December 31, 2025, decreased $11.5 million, or 18%, to $54.1 million, compared to $65.5 million for the year ended December 31, 2024. The decrease primarily reflected decreases in cash compensation costs of $12.6 million, software and hardware costs of $0.9 million, and marketing spend of $0.8 million, partially offset by increases in stock compensation costs of $1.5 million, legal expenses of $1.0 million, and bad debt expenses of $0.5 million. The $12.6 million decrease in cash compensation costs included a $16.2 million decrease in cash compensation primarily as a result of a lower headcount, partially offset by $2.6 million of higher cash severance costs incurred as a result of corporate reorganizations, and a $1.0 million lower allocation out of operating expenses to cost of revenue primarily due to lower billable service hours. The $1.5 million increase in stock compensation costs primarily reflected a larger number of awards granted under our stock incentive plans.

***Revenue***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Dollar** | **Percent** |
|  | **2025** | **2024** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Revenue: |  |  |  |  |
| Subscription | $19844 | $22418 | $(2574) | (11)% |
| Service | 14069 | 16000 | (1931) | (12)% |
| Total | $33913 | $38418 | $(4505) | (12)% |
| Revenue (as % of total revenue): |  |  |  |  |
| Subscription | 59% | 58% |  |  |
| Service | 41% | 42% |  |  |
| Total | 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 patents. 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 $2.6 million decrease in subscription revenue for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily reflects a decrease of $4.8 million from the expiration of three commercial contracts, offset by higher subscription revenue from new and existing commercial contracts.

*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 to account for cost of living variables, and provides for the reimbursement of third party costs incurred to support the work plans.

The $1.9 million decrease in service revenue for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily reflects $1.8 million of lower service revenue from the Central Banks.

***Revenue by geography***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Dollar** | **Percent** |
|  | **2025** | **2024** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Revenue by geography: |  |  |  |  |
| Domestic | $8784 | $10195 | $(1411) | (14)% |
| International | 25129 | 28223 | (3094) | (11)% |
| Total | $33913 | $38418 | $(4505) | (12)% |
| Revenue (as % of total revenue): |  |  |  |  |
| Domestic | 26% | 27% |  |  |
| International | 74% | 73% |  |  |
| Total | 100% | 100% |  |  |

---

*Domestic*. The $1.4 million decrease in domestic revenue for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily reflects a decrease of $2.6 million from the expiration of two commercial contracts with a domestic customer, one at the end of June 2024 and the other in October 2025, partially offset by higher subscription revenue from new and existing commercial contracts with domestic customers.

*International*. The $3.1 million decrease in international revenue for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily reflects a decrease of $2.2 million from the expiration of a commercial contract in April 2025 with an international customer and $1.8 million of lower service revenue from the Central Banks, partially offset by higher subscription revenue from new and existing commercial contracts with international customers.

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***Revenue by market***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Dollar** | **Percent** |
|  | **2025** | **2024** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Commercial: |  |  |  |  |
| Subscription | $18644 | $21218 | $(2574) | (12)% |
| Service | 1122 | 1308 | (186) | (14)% |
| Total Commercial | $19766 | $22526 | $(2760) | (12)% |
| Government: |  |  |  |  |
| Subscription | $1200 | $1200 | $— | —% |
| Service | 12947 | 14692 | (1745) | (12)% |
| Total Government | $14147 | $15892 | $(1745) | (11)% |
| Total | $33913 | $38418 | $(4505) | (12)% |
| Revenue (as % of total revenue): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Commercial | 58% | 59% |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Government | 42% | 41% |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | 100% | 100% |  |  |

---

*Commercial*.* The $2.8 million decrease in commercial revenue for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily reflects $4.8 million of lower subscription revenue from the expiration of three commercial contracts, partially offset by higher subscription revenue from new and existing commercial customers.

*Government*. The $1.7 million decrease in government revenue for year ended December 31, 2025, compared to the year ended December 31, 2024, primarily reflects $1.8 million of lower service revenue from the Central Banks.

***Annual Recurring Revenue (*"*ARR*"*)***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of** | **As of** | **Dollar** | **Percent** |
|  | **December 31,** | **December 31,** | **Increase** | **Increase** |
|  | **2025** | **2024** | **(Decrease)** | **(Decrease)** |
| ARR | $13747 | $19964 | $(6217) | (31)% |

---

ARR decreased $6.2 million, or 31%, from December 31, 2024 to December 31, 2025, primarily reflecting a $3.5 million decrease in ARR due to the expiration of a commercial contract in April 2025 and a $3.1 million decrease in ARR due to the expiration of a commercial contract in October 2025, partially offset by a net increase in 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 because our mix of revenue generated from recurring sources has increased in recent years. 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 active 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 software subscriptions; 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; 

• depreciation for equipment and software directly used by customers; and

• travel costs that are billed to customers.

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*Amortization expense on acquired intangible assets*. Amortization expense includes:

• amortization expense recognized on the developed technology intangible asset acquired in the EVRYTHNG acquisition in 2022.

***Gross profit***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Dollar** | **Percent** |
|  | **2025** | **2024** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Gross Profit: |  |  |  |  |
| Subscription <sup>(1)</sup> | $17211 | $19459 | $(2248) | (12)% |
| Service <sup>(1)</sup> | 8421 | 9372 | (951) | (10)% |
| Amortization expense on acquired intangible assets | (4736) | (4592) | (144) | (3)% |
| Total | $20896 | $24239 | $(3343) | (14)% |
| Gross Profit Margin: |  |  |  |  |
| Subscription <sup>(1)</sup> | 87% | 87% |  |  |
| Service <sup>(1)</sup> | 60% | 59% |  |  |
| Total | 62% | 63% |  |  |

---

------

<sup>(1)</sup> Gross Profit and Gross Profit Margin for Subscription and Service excludes amortization expense on acquired intangible assets.<br>

Total gross profit for the year ended December 31, 2025, compared to the year ended December 31, 2024, decreased $3.3 million primarily due to $4.5 million of lower revenue offset by $1.2 million of lower related costs.

Subscription gross profit margin, excluding amortization expense on acquired intangible assets, for the year ended December 31, 2025, compared to the year ended December 31, 2024, was the same as lower subscription revenue was offset by lower related costs.

Service gross profit margin, excluding amortization expense on acquired intangible assets, for the year ended December 31, 2025, compared to the year ended December 31, 2024, was one percentage point higher primarily due to a favorable mix of service revenue and related costs.

***Operating expenses***

*Sales and marketing*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Dollar** | **Percent** |
|  | **2025** | **2024** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Sales and marketing | $13939 | $21167 | $(7228) | (34)% |
| Sales and marketing (as % of total revenue) | 41% | 55% |  |  |

---

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, operations 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;

• professional services, consulting and outside contractor costs for sales and marketing and product initiatives; and

• the allocation of facilities and information technology costs.

The $7.2 million decrease in sales and marketing expenses for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to:

• lower cash compensation costs of $6.4 million, primarily due to lower headcount;

• lower marketing spend of $0.8 million;

• lower stock compensation costs of $0.5 million; and

• lower allocation in for facilities and information technology costs of $0.5 million primarily due to lower allocable costs; partially offset by

• higher consulting costs of $0.4 million; and

• higher cash severance costs of $0.3 million incurred as a result of corporate reorganizations.

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*Research, development and engineering*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Dollar** | **Percent** |
|  | **2025** | **2024** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Research, development and engineering | $20482 | $26209 | $(5727) | (22)% |
| Research, development and engineering (as % of total revenue) | 60% | 68% |  |  |

---

Research, development and engineering expenses arise primarily from three areas that support our business model: fundamental research, platform development and product development.

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 $5.7 million decrease in research, development and engineering expenses for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to:

• lower cash compensation costs of $7.8 million, primarily due to lower headcount;

• lower professional services and consulting costs of $0.8 million; and

• lower allocation in for facilities and information technology costs of $0.5 million, primarily due to lower allocable costs; partially offset by

• higher cash severance costs of $1.6 million incurred as a result of corporate reorganizations;

• higher stock compensation costs of $1.4 million; and 

• lower allocation out of operating expenses to cost of revenue of $0.7 million primarily due to lower billable service hours.

*General and administrative*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Dollar** | **Percent** |
|  | **2025** | **2024** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| General and administrative | $18505 | $17073 | $1432 | 8% |
| General and administrative (as % of total revenue) | 55% | 44% |  |  |

---

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 and are allocated to this area as well as each of the areas in sales and marketing and research, development and engineering, 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;

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• 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.

The $1.4 million increase in general and administrative expenses for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to:

• higher legal expenses of $1.0 million;

• lower allocation out of facilities and information technology costs of $0.9 million, primarily due to lower allocable costs; 

• higher stock compensation costs of $0.6 million; 

• higher bad debt expenses of $0.5 million; and

• higher cash severance costs of $0.7 million incurred as a result of corporate reorganizations; partially offset by

• lower cash compensation costs of $1.9 million, primarily due to lower headcount; and

• lower software and hardware costs of $0.5 million.

*Amortization expense on acquired intangible assets*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Dollar** | **Percent** |
|  | **2025** | **2024** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Amortization expense on acquired intangible assets | $1132 | $1097 | $35 | 3% |
| Amortization expense on acquired intangible assets (as % of total revenue) | 3% | 3% |  |  |

---

Amortization expense on acquired intangible assets relates to amortization expense recognized on the customer relationships intangible asset acquired in the EVRYTHNG acquisition in 2022.

The increase in amortization expense on acquired intangible assets was primarily due to the impact of changes in foreign currency exchange rates.

*Stock-based compensation*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Dollar** | **Percent** |
|  | **2025** | **2024** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Cost of revenue | $1112 | $706 | $406 | 58% |
| Sales and marketing | 2295 | 2788 | (493) | (18)% |
| Research, development and engineering | 3953 | 2522 | 1431 | 57% |
| General and administrative | 4606 | 4013 | 593 | 15% |
| Total stock-based compensation | $11966 | $10029 | $1937 | 19% |

---

The $1.9 million increase in stock-based compensation expense for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily reflects a larger number of awards granted due to new stock incentive plans.

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We anticipate incurring an additional $13.1 million in stock-based compensation expense through December 31, 2029 for awards outstanding as of December 31, 2025.

*Leases*

In February 2022, we entered into a sublease agreement and lease extension agreement for office space in Beaverton, Oregon, in order to move our corporate headquarters. The new facility is 65,500 square feet in size. The term of the sublease and lease extension runs through September 2030. The remaining rent payments as of December 31, 2025 were $6.5 million plus operating expenses, payable in monthly installments. The first 26 months of rent payments and operating expenses were abated to cover the remaining term of the lease on our former corporate headquarters.

In December 2025, we entered into a sub-sublease agreement for our corporate headquarters in Beaverton, Oregon, whereby we agreed to sub-sublease 38,400 of the 65,500 square feet of the building to another tenant. The term of the sub-sublease begins in March 2026 and runs through September 2030. The remaining rent payments owed to us under the sub-sublease are $2.9 million.

***Other income, net***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Dollar** | **Percent** |
|  | **2025** | **2024** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Other income, net | $884 | $2341 | $(1457) | (62)% |
| Other income, net (as % of total revenue) | 3% | 6% |  |  |

---

The $1.5 million decrease in other income, net for the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to $1.1 million of lower interest income driven by a combined lower average interest rate and lower average cash and investment balances, and a $0.4 million lower refundable research and development tax credit, largely due to lower headcount.

***Provision for income taxes***

The provision for income taxes reflects current taxes and deferred taxes.

For the year ended December 31, 2025, our effective tax rate was 0%, reflecting a valuation allowance recorded against our deferred tax assets. The valuation allowance against deferred tax assets as of December 31, 2025 was $112.7 million, an increase of $8.4 million from $104.4 million as of December 31, 2024. We continually assess the applicability of a valuation allowance against our deferred tax assets. Based upon the positive and negative evidence available as of December 31, 2025, and largely due to the cumulative loss incurred by us over the preceding three 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 it is more likely than not those tax benefits will be realized. All future reversals of the valuation allowance would result in a tax benefit in the period recognized.

For the year ended December 31, 2024, our effective tax rate was 0%, reflecting a valuation allowance recorded against our deferred tax assets. The valuation allowance against deferred tax assets as of December 31, 2024, was $104.4 million, an increase of $9.1 million from $95.3 million as of December 31, 2023.

***Non-GAAP Financial Measures***

The following discussion and analysis includes both financial measures in accordance with U.S. GAAP ("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 loss per share (diluted), 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 loss per share (diluted) 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 our financial measures calculated in accordance with GAAP to the most comparable non-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.

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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 loss per share (diluted) for the years ended December 31, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| <u>GAAP gross profit</u> | $20896 | $24239 |
| Amortization of acquired intangible assets | 4736 | 4592 |
| Amortization and write-off of other intangible assets | 873 | 849 |
| Stock-based compensation | 1112 | 706 |
| Non-GAAP gross profit | $27617 | $30386 |
| Non-GAAP gross profit margin | 81% | 79% |
| <u>GAAP operating expenses</u> | $54058 | $65546 |
| Depreciation and write-off of property and equipment | (597) | (728) |
| Amortization of acquired intangible assets | (1132) | (1097) |
| Amortization and write-off of other intangible assets | (531) | (276) |
| Amortization of lease right of use assets under operating leases | (421) | (358) |
| Stock-based compensation | (10854) | (9323) |
| Non-GAAP operating expenses | $40523 | $53764 |
| <u>GAAP net loss</u> | $(32309) | $(39010) |
| Total adjustments to gross profit | 6721 | 6147 |
| Total adjustments to operating expenses | 13535 | 11782 |
| Non-GAAP net loss | $(12053) | $(21081) |
| <u>GAAP loss per share (diluted)</u> | $(1.49) | $(1.83) |
| Non-GAAP net loss | $(12053) | $(21081) |
| Non-GAAP loss per share (diluted) | $(0.56) | $(0.99) |

---

Non-GAAP gross profit for the year ended December 31, 2025, compared to the year ended December 31, 2024, decreased by $2.8 million primarily due to $4.5 million of lower revenue offset by $1.7 million of lower related cash costs.

Non-GAAP gross profit margin for the year ended December 31, 2025, compared to the year ended December 31, 2024, was two percentage points higher primarily due to a favorable mix of service revenue and related costs.

Non-GAAP operating expenses for the year ended December 31, 2025, compared to the year ended December 31, 2024, decreased by $13.2 million primarily due to decreases in cash compensation costs of $12.6 million, software and hardware costs of $0.9 million, and marketing spend of $0.8 million, partially offset by increases in legal expenses of $1.0 million and bad debt expenses of $0.5 million. The $12.6 million decrease in cash compensation costs includes a $16.2 million decrease in cash compensation primarily as a result of a lower headcount, partially offset by $2.6 million of higher cash severance costs incurred as a result of corporate reorganizations and a $1.0 million lower allocation out of operating expenses to cost of revenue, primarily due to lower billable service hours.

**Liquidity and Capital Resources**

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Working capital | $12988 | $30193 |
| Current ratio (1) | 2.6:1 | 4.3:1 |
| Cash, cash equivalents and short-term marketable securities | $12866 | $28730 |

---

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(1) The current (liquidity) ratio is calculated by dividing total current assets by total current liabilities.

The $15.9 million decrease in cash, cash equivalents and marketable securities at December 31, 2025, from December 31, 2024, resulted primarily from:

• $11.8 million of cash used in operations;

• $2.9 million of purchases of common stock related to tax withholding in connection with the vesting of restricted stock, restricted stock units, and performance restricted stock units; and

• $1.2 million of purchases of property and equipment and capitalized patent costs.

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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, federal agency notes, and corporate notes. Our investment policy requires our portfolio to be invested to ensure that the greater of $3.0 million or 7% 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 40% of our cash and cash equivalents and marketable securities, or $15.0 million, whichever is less, 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 in the years ended December 31, 2025 and 2024.

***Cash flows from operating activities***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Dollar** | **Percent** |
|  | **2025** | **2024** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Net loss | $(32309) | $(39010) | $(6701) | (17)% |
| Non-cash items included in net loss | 20823 | 17641 | (3182) | (18)% |
| Changes in operating assets and liabilities | (293) | (5203) | (4910) | (94)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in operating activities | $(11779) | $(26572) | $(14793) | (56)% |

---

Cash flows used in operating activities for the year ended December 31, 2025, compared the year ended December 31, 2024, decreased by $14.8 million, primarily as a result of a $6.7 million lower net loss, $4.9 million from favorable timing of changes in operating assets and liabilities, and $3.1 million of higher non-cash items included in net loss. The favorable timing of changes in operating assets and liabilities are largely due to the timing and amount of customer billings and collections, vendor payments, including prepaid expenses, and refundable research and development tax credits. The increase in non-cash items included in net loss primarily reflects higher stock-based compensation, intangible asset amortization, and bad debt expense.

***Cash flows from investing activities***

Cash flows from investing activities for the year ended December 31, 2025, compared to the year ended December 31, 2024, increased by $23.4 million, primarily as a result of lower purchases of marketable securities and lower net proceeds from maturities of marketable securities.

***Cash flows from financing activities***

Cash flows from financing activities for the year ended December 31, 2025, compared to the year ended December 31, 2024, decreased by $31.7 million, primarily due to the $32.2 million of net cash proceeds raised from our registered direct stock offering in February 2024, partially offset by lower purchases of common stock.

***Future cash expectations***

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. We have incurred operating losses and negative cash flows from operating activities during the last several years, and depending on future results, may continue to incur such losses and negative cash flows in the future. We believe our currently available cash and marketable securities will satisfy our projected working capital and capital expenditure requirements for at least the next 12 months.

&nbsp;&nbsp;&nbsp;&nbsp; Our commercial subscription revenue in 2025 was negatively impacted by the expiration of two commercial contracts during the year, one in April 2025 and the other in October 2025, that contributed $3.6 million of revenue during the year ended December 31, 2025, that will not contribute revenue in the future.

Our expenses in 2025 declined significantly throughout the year due to lower headcount because of the corporate reorganization we announced on February 26, 2025. The annual cash compensation savings from the corporate reorganization were approximately $16.5 million on an annualized basis. We also identified approximately $5.5 million of other annualized cash cost savings that were implemented throughout 2025. As these cost saving initiatives were implemented throughout the fiscal year, the operating expenses for the year ended December 31, 2025 do not reflect the full impact of these initiatives.

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*Shelf Registration*

On June 23, 2023, we filed a new shelf registration statement on Form S-3 that included $34.6 million of unsold securities from our prior shelf registration statement filed on June 5, 2020. The new shelf registration statement became effective on July 19, 2023, and expires on July 19, 2026. Under the new shelf registration statement, we may sell securities in one or more offerings up to $100.0 million. As of December 31, 2025, $67.5 million remained available under the new shelf registration statement.

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.

**Forward-Looking Statements**

This Annual Report on Form 10-K includes "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. 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](#item1a)"), 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:

• the concentration of most of our revenue among few customers and the trends and sources of future revenue;

• anticipated successful advocacy of our technology by our partners;

• anticipated revenue to be generated from current contracts, renewals and expirations or terminations of contracts, and new programs; 

• our belief regarding the global deployment of our products;

• our beliefs regarding potential outcomes of participating in the HolyGrail 2030 initiative and the utility of our products in the recycling industry;

• our future level of investment in our business, including investment in research, development and engineering of products and technology, development of our intellectual property, sales growth initiatives and development of new market opportunities;

• anticipated expenses, costs, margins, provision for income taxes and investment activities in the foreseeable future;

• our assumptions and expectations related to stock awards;

• our belief that we have one of the world's most extensive patent portfolios in digital watermarking and related fields, and the impact of our strategic disposal or abandonment of certain non-core patents and patent applications;

• anticipated effects of our adoption of accounting pronouncements;

• our beliefs regarding our critical accounting policies;

• our expectations regarding the impact of accounting pronouncements issued but not yet adopted;

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• our estimates, judgments and assumptions related to impairment testing;

• variability of contracted arrangements in response to changes in circumstances underlying the original contractual arrangements;

• business opportunities that could require that we seek additional financing and our ability to do so;

• the size and growth of our markets and our assumptions and beliefs related to those markets;

• the existence of international growth opportunities and our future investment in such opportunities;

• the impact of the EU Data Act or similar regulations on our business, results of operations, and financial condition;

• the impact of U.S. and international trade regulations (including tariffs) on our business;

• 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;

• the effect of computerized trading on our stock price;

• capital market conditions, our expectations regarding credit risk exposure, interest rate volatility and other limitations on the availability of capital, which could have an impact on our cost of capital and our ability to access the capital markets;

• 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;

• the strength of our competitive position and our ability to innovate and enhance our competitive differentiation;

• the competitive strategies of companies marketing competing technologies in the marketplace;

• our beliefs related to our existing facilities;

• protection, development and monetization of our intellectual property portfolio;

• our beliefs related to our relationship with our employees;

• our beliefs regarding cybersecurity incidents;

• our beliefs related to certain provisions in our bylaws and articles of incorporation;

• the impact of shareholder activism on our business strategy, results of operation and financial condition;

• our beliefs related to legal proceedings and related claims, including shareholder derivative litigation; and

• other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in Item 1A. "[Risk Factors.](#item1a)"

We believe that the risk factors specified above and the risk factors contained in Item 1A, "[Risk Factors](#item1a)," 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 Annual Report on Form 10-K. 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 Annual Report on Form 10-K.

**ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

Not applicable.

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**ITEM 8:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

Our Consolidated Financial Statements and the accompanying Notes that are filed as part of this Annual Report are listed under Part III, Item 15, Exhibits and Financial Statement Schedules and are set forth beginning on page F-1 immediately following the signature page of this Form 10-K.

**ITEM 9:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE**

None.

**ITEM 9A:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **CONTROLS AND PROCEDURES**

**Evaluation of Disclosure Controls and Procedures**

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, have carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this Form 10-K. 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 Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and (ii) 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 our 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 Form 10-K, were effective.

**Management**'**s Report on Internal Control Over Financial Reporting**

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.

Because of inherent limitations, any control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Management is committed to continue monitoring our internal controls over financial reporting and will modify or implement additional controls and procedures that may be required to ensure the ongoing integrity of our consolidated financial statements.

With the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework established in *Internal Control*—*Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, ("COSO"). Based on this evaluation, management has concluded that internal control over financial reporting was effective as of the end of the period covered by this Form 10-K based on those criteria.

**Changes in Internal Control Over Financial Reporting**

There was no change in our internal control over financial reporting that occurred during the quarter ended December 31, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

**ITEM *9B:***&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **OTHER INFORMATION** 

During the *three* months ended *December 31, 2025*, no director or officer of the Company adopted or terminated a *"Rule10b5*-*1* trading arrangement" or "non-*Rule10b5*-*1* trading arrangement", as each term is defined in Item *408*(a) of Regulation S-K.

**ITEM 9C:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS**

Not applicable.

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**PART III** 

Certain information required by Part III of this Annual Report on Form 10-K is incorporated herein by reference to the Proxy Statement for our 2026 annual meeting of shareholders, which we intend to file no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

**ITEM *10:***&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**

**Code of Ethics**

We have adopted a Code of Business Conduct that applies to our principal executive officer, principal financial officer and controller, as well as a Code of Ethics for Financial Professionals that applies to our principal financial officer and controller. We have made these codes available in the Corporate Governance section of our website at *http://www.digimarc.com/about/company/corporate-governance*. If we waive, or implicitly waive, any material provision of the codes, or substantively amend the codes, we will disclose that fact on our website within *four* business days.

The other information required by this item will be included in the Proxy Statement, which we intend to file with the SEC *no* later than *120* days after the end of the fiscal year covered by this Annual Report on Form 10-K, and is incorporated herein by reference.

**ITEM *11:***&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **EXECUTIVE COMPENSATION**

The information required by this item will be included in the Proxy Statement, which we intend to file with the SEC *no* later than *120* days after the end of the fiscal year covered by this Annual Report on Form 10-K, and is incorporated herein by reference.

**ITEM 12:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

The information required by this item will be included in the Proxy Statement, which we intend to file with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, and is incorporated herein by reference.

**ITEM 13:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**

The information required by this item will be included in the Proxy Statement, which we intend to file with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, and is incorporated herein by reference.

**ITEM 14:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **PRINCIPAL ACCOUNTANT FEES AND SERVICES**

The information required by this item will be included in the Proxy Statement, which we intend to file with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, and is incorporated herein by reference.

**ITEM 15:**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**

**(a)(1) Financial Statements**

The following documents are filed as part of this Annual Report on Form 10-K:

(i) Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2025 and 2024

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 2024

Consolidated Statements of Shareholders' Equity for the years ended December 31, 2025 and 2024

Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024

(ii) Notes to Consolidated Financial Statements

**(a)(2) Financial Statement Schedules**

All schedules have been omitted since they are not required or are not applicable or the required information is shown in the consolidated financial statements or related notes.

**(a)(3) Exhibits**

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**EXHIBIT INDEX**

The agreements included or incorporated by reference as exhibits to this report may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other party or parties to the applicable agreement and:

• were not intended to be treated as categorical statements of fact, but rather as a means of allocating the risk to one of the parties if those statements prove to be inaccurate;

• were qualified by disclosures that were made to the other party or parties in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

• may apply standards of "materiality" that are different from "materiality" under the securities laws; and

• were made only as of the date of the applicable agreement or other date or dates that may be specified in the agreement.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about Digimarc may be found elsewhere in this Annual Report on Form 10-K and in Digimarc's other public filings, which are available without charge through the SEC's website at *http://www.sec.gov*.

---

| | |
|:---|:---|
| **Exhibit**<br> **<u>Number</u>** | **<u>Exhibit Description</u>** |
| 2.1 | [Separation Agreement among DMRC Corporation, DMRC LLC, Digimarc Corporation and, with respect to certain sections, L-1 Identity Solutions, Inc. (incorporated by reference to Exhibit 2.1 to Amendment No. 2 to the Company's Registration Statement on Form 10, filed with the Commission on August 13, 2008 (File No. 001-34108))†](http://www.sec.gov/Archives/edgar/data/1438231/000104746908009252/a2187220zex-2_1.htm) |
| 2.2 | [Agreement and Plan of Merger dated April 30, 2010 between Digimarc Corporation, a Delaware corporation, and Digimarc Oregon Corporation, an Oregon corporation (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K, filed with the Commission on May 4, 2010 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000119312510106763/dex21.htm) |
| 2.3 | [Share Purchase Agreement dated November 15, 2021 between Digimarc Corporation, an Oregon corporation, and EVRYTHNG Limited, a company incorporated and registered in England, the sellers party thereto, and Fortis Advisors LLC, a Delaware limited liability company (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K, filed with the Commission on January 4, 2022 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/0001438231/000119312522000800/d41501dex21.htm) |
| 3.1 | [Articles of Incorporation of Digimarc Corporation (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on October 30, 2020 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000156459020049359/dmrc-ex31_164.htm) |
| 3.2 | [Bylaws of Digimarc Corporation (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K, filed with the Commission on May 4, 2010 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000119312510106763/dex32.htm) |
| 4.1 | [Specimen common stock certificate of Digimarc Corporation (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on July 25, 2014 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000119312514280252/d738584dex41.htm) |
| 4.2 | [Description of Securities (incorporated by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K, filed with the Commission on February 27, 2020 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000156459020007343/dmrc-ex42_345.htm) |
| 4.3 | [Warrant Agency Agreement, dated January 3, 2022, between Digimarc Corporation and Broadridge Corporate Issuer Solutions, Inc. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Commission on January 4, 2022 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000119312522000800/d41501dex101.htm) |
| 10.1 | [License Agreement, dated as of August 1, 2008, between DMRC Corporation and L-1 Identity Solutions Operating Company (incorporated by reference to Exhibit 10.2 to Amendment No. 4 to the Company's Registration Statement on Form 10, filed with the Commission on October 2, 2008 (File No. 001-34108))(1)](http://www.sec.gov/Archives/edgar/data/1438231/000104746908010564/a2188016zex-10_2.htm) |
| 10.2 | [Counterfeit Deterrence System Development and License Agreement Amendment, dated December 1, 2022, and effective January 1, 2023, between Digimarc Corporation and Bank for International Settlements (incorporated by reference to Exhibit 10.3 to the Company's Annual Report on Form 10-K, filed with the Commission on March 2, 2023 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000143774923005216/ex_471946.htm) |
| \*10.3 | [Digimarc Corporation 2008 Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on April 25, 2014 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000119312514159677/d686959dex101.htm) |
| \*10.4 | [Form of Indemnification Agreement between Digimarc Corporation and each of its executive officers and directors (incorporated by reference to Exhibit 10.1 to Digimarc Corporation's Annual Report on Form 10-K, as filed by Digimarc Corporation with the Securities and Exchange Commission on March 13, 2006 (File No. 000-28317))](http://www.sec.gov/Archives/edgar/data/1089443/000110465906016196/a06-1854_1ex10d1.htm) |
| \*10.5 | [Form of Change of Control Retention Agreement entered into by and between Digimarc Corporation and Mr. Meyer (incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K, filed with the Commission on February 22, 2019 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000156459019003876/dmrc-ex106_658.htm) |
| 10.6 | [Patent License Agreement, dated as of June 11, 2009, between Digimarc Corporation and The Nielsen Company (US), LLC (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on July 31, 2009 (File No. 001-34108))(2)](http://www.sec.gov/Archives/edgar/data/1438231/000104746909007077/a2193828zex-10_1.htm) |
| 10.7 | [Limited Liability Company I Agreement, dated June 11, 2009, between Digimarc Corporation and The Nielsen Company (US), LLC (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on July 31, 2009 (File No. 001-34108))(2)](http://www.sec.gov/Archives/edgar/data/1438231/000104746909007077/a2193828zex-10_2.htm) |
| 10.8 | [Limited Liability Company II Agreement, dated June 11, 2009 between Digimarc Corporation and The Nielsen Company (US), LLC (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on July 31, 2009 (File No. 001-34108))(2)](http://www.sec.gov/Archives/edgar/data/1438231/000104746909007077/a2193828zex-10_3.htm) |
| 10.9 | [Lease Agreement, dated March 22, 2004, between Digimarc Corporation and PS Business Parks, L.P., as amended on May 13, 2010 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on July 30, 2010 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000119312510171832/dex101.htm) |
| 10.10 | [Second Amendment to Lease, dated July 31, 2015, between PD Office Owner 9, L.P. and Digimarc Corporation (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on October 30, 2015 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000119312515359238/d85317dex101.htm) |

---

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| | |
|:---|:---|
| 10.11 | [Patent Rights Agreement, dated October 5, 2010, between Digimarc Corporation and IV Digital Multimedia Inventions, LLC (incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K, filed with the Commission on March 3, 2011 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000119312511054776/dex1014.htm) |
| \*10.12 | [Digimarc Corporation 2018 Incentive Plan, as amended (incorporated by reference to Appendix A of the Company's Definitive Proxy Statement on Schedule 14A, filed with the Commission on March 28, 2023 (file No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000143774923008239/dmrc20230321_def14a.htm) |
| \*10.13 | [Equity Compensation Program for Non-Employee Directors Under the Digimarc 2018 Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on August 8, 2023 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000143774923022530/ex_546490.htm) |
| 10.14 | [Grant-Back License Agreement, dated October 5, 2010, between Digimarc Corporation and IV Digital Multimedia Inventions, LLC (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on May 2, 2019 (File No. 001-34108)) (5)](http://www.sec.gov/Archives/edgar/data/1438231/000156459019015126/dmrc-ex101_88.htm) |
| 10.15 | [Amendment No. 1 to Equity Distribution Agreement, dated August 6, 2020, between Digimarc Corporation and Wells Fargo Securities, LLC (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on October 30, 2020 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000156459020049359/dmrc-ex101_165.htm) |
| \*10.16 | [Employment Agreement, effective as of August 10, 2020, between Digimarc Corporation and Bruce Davis (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Commission on August 14, 2020 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/0001438231/000156459020040297/dmrc-ex101_6.htm) |
| 10.17 | [Subscription Agreement, dated September 29, 2020, between the Company and TCM Strategic Partners L.P. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Commission on September 29, 2020 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000119312520257288/d935142dex101.htm) |
| 10.18 | [Registration Rights Agreement, dated September 29, 2020, between the Company and TCM Strategic Partners L.P. (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed with the Commission on September 29, 2020 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000119312520257288/d935142dex102.htm) |
| 10.19 | [Work Agreement, dated October 5, 2010, by and among Digimarc Corporation, Invention Law Group, P.C. and IV Digital Multimedia Inventions, LLC (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on April 29, 2021 (File No. 001-34108)) +](http://www.sec.gov/Archives/edgar/data/1438231/000156459021022060/dmrc-ex101_13.htm) |
| \*10.20 | [Separation Agreement and General Release, dated April 12, 2021, between Digimarc Corporation and Bruce Davis (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on April 29, 2021 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000156459021022060/dmrc-ex102_243.htm) |
| \*10.21 | [Employment Agreement, dated April 12, 2021, between Digimarc Corporation and Riley McCormack (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on April 29, 2021 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000156459021022060/dmrc-ex103_244.htm) |
| \*10.22 | [<u>Amendment No. 1 to Employment Agreement, dated as of February 27, 2023, between Digimarc Corporation and Riley McCormack</u> (incorporated by reference to Exhibit 10.25 to the Company's Annual Report on Form 10-K, filed with the Commission on February 29, 2024 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000143774923005216/ex_471965.htm) |
| \*10.23 | [Separation Agreement and General Release, dated December 28, 2021, between Digimarc Corporation and Robert Chamness (incorporated by reference to Exhibit 10.24 to the Company's Annual Report on Form 10-K, filed with the Commission on March 7, 2022 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000156459022008846/dmrc-ex1024_368.htm) |
| 10.24 | [Sublease Agreement, dated February 4, 2022, by and between Fiserv Solutions, LLC and Digimarc Corporation (incorporated by reference to Exhibit 10.25 to the Company's Annual Report on Form 10-K, filed with the Commission on March 7, 2022 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000156459022008846/dmrc-ex1025_102.htm) |
| 10.25 | [Lease Extension Agreement, dated February 4, 2022, between Portland 1 LLC and Digimarc Corporation (incorporated by reference to Exhibit 10.26 to the Company's Annual Report on Form 10-K, filed with the Commission on March 7, 2022 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000156459022008846/dmrc-ex1026_103.htm) |
| \*10.26 | [Form of Change of Control Retention Agreement entered into between Digimarc Corporation and Mr. Meyer incorporated by reference to Exhibit 10.27 to the Company's Annual Report on Form 10-K, filed with the Commission on March 7, 2022 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000156459022008846/dmrc-ex1027_637.htm) |
| \*10.27 | [Digimarc Corporation Short-Term Incentive Plan (incorporated by reference to Exhibit 10.30 to the Company's Annual Report on Form 10-K, filed with the Commission on February 29, 2024 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000143774924006115/ex_627963.htm) |
| \*10.28 | [Consulting Agreement, entered into as of January 9, 2024, by and between the Company and Andrew Walter (incorporated by reference to Exhibit 10.31 to the Company's Annual Report on Form 10-K, filed with the Commission on February 29, 2024 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000143774924006115/ex_627964.htm) |
| 10.29 | [Form of Common Stock Purchase Agreement, dated February 24, 2024 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Commission on February 26, 2024 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000119312524045489/d774117dex101.htm) |
| \*10.30 | [Form of Executive Retention Agreement entered into between Digimarc Corporation and each of Ms. Quinn and Messrs. Beck, Benton, Karamanos, Rodriguez, and Sickles (incorporated by reference to Exhibit 10.30 to the Company's Annual Report on Form 10-K, filed with the Commission on February 27, 2025 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000143774925005471/ex_778657.htm) |
| \*10.31 | [Executive Retention Agreement entered into between Digimarc Corporation and Mr. McCormack (incorporated by reference to Exhibit 10.31 to the Company's Annual Report on Form 10-K, filed with the Commission on February 27, 2025 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000143774925005471/ex_778658.htm) |
| 10.32 | [Counterfeit Deterrence System Development and License Agreement, dated as of December 6, 2012, between Digimarc Corporation and the Bank for International Settlements + (incorporated by reference to Exhibit 10.32 to the Company's annual Report on Form 10-K, filed with the Commission on February 27, 2025 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000143774925005471/ex_778388.htm) |
| \*10.33 | [Digimarc Corporation 2018 Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on August 14, 2025 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000143774925026996/ex_844788.htm) |
| \*10.34 | [Digimarc Corporation Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q, filed with the Commission on August 14, 2025 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000143774925026996/ex_844789.htm) |
| 10.35 | [Cooperation Agreement, dated July 28, 2025, by and among Digimarc Corporation and Rishi Bajaj and Altai Capital Management, L.P. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the commission on July 29, 2025 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000119312525168014/d59338dex101.htm) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 32

------

---

| | |
|:---|:---|
| 19.1 | [Insider Trading Policy](ex_925784.htm) |
| 21.1 | [List of Subsidiaries](ex_895323.htm) |
| 23.1 | [Consent of Independent Registered Public Accounting Firm](ex_895324.htm) |
| 31.1 | [Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer](ex_895325.htm) |
| 31.2 | [Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer](ex_895326.htm) |
| 32.1 | [Section 1350 Certification of Chief Executive Officer](ex_895327.htm) |
| 32.2 | [Section 1350 Certification of Chief Financial Officer](ex_895328.htm) |
| 97 | [Digimarc Corporation Incentive Compensation Recovery Policy](ex_895329.htm) |
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |

---

------

\* Management contract or compensatory plan or arrangement.

---

| | |
|:---|:---|
| † | Schedules and certain exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Digimarc hereby undertakes to furnish to the Securities and Exchange Commission (the "Commission") copies of the omitted schedules and exhibits upon request by the Commission. |

---

---

| | |
|:---|:---|
| + | Certain identified portions of this exhibit have been omitted in accordance with Item 601(b)(10)(iv) of Regulation S-K. |

---

(1) Confidential treatment has been granted for certain portions omitted from this exhibit pursuant to an order granted by the Commission on October 21, 2008, under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Confidential portions of this exhibit have been separately filed with the Securities and Exchange Commission.

(2) Confidential treatment has been granted for certain portions omitted from this exhibit pursuant to an order granted by the Commission on September 10, 2009, under Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Confidential portions of this exhibit have been separately filed with the Securities and Exchange Commission.

(3) Confidential treatment has been granted for certain portions omitted from this exhibit pursuant to an order granted by the Commission on May 6, 2016, under Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Confidential portions of this exhibit have been separately filed with the Securities and Exchange Commission.

(4) Confidential treatment has been granted for certain portions omitted from this exhibit pursuant to an order granted by the Commission on September 3, 2013, under Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Confidential portions of this exhibit have been separately filed with the Securities and Exchange Commission.

(5) Confidential treatment has been requested for certain portions omitted from this exhibit pursuant to Rule 24b-2 under the Exchange Act. Confidential portions of this exhibit have been separately filed with the SEC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 33

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[**Table of Contents**](#toc)

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) 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.

---

| | | |
|:---|:---|:---|
|  |  | DIGIMARC CORPORATION |
| Date: March 11, 2026 | By: | /s/ Charles Beck |
|  |  | **Charles Beck**<br> ***Title: Chief Financial Officer*** |

---

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date**  |
| /s/ Riley McCormack | President, Chief Executive Officer and Director | March 11, 2026 |
| **Riley McCormack** | (Principal Executive Officer) |  |
| /s/ Charles Beck | Executive Vice President, Chief Financial Officer, Treasurer and Secretary | March 11, 2026 |
| **Charles Beck** | (Principal Financial and Accounting Officer) |  |
| /s/ Katie Kool | Chair of the Board of Directors | March 11, 2026 |
| **Katie Kool** |  |  |
| /s/ LaShonda Anderson-Williams | Director | March 11, 2026 |
| **LaShonda Anderson-Williams** |  |  |
| /s/ Rishi Bajaj | Director | March 11, 2026 |
| **Rishi Bajaj** |  |  |
| /s/ Sheila Cheston | Director | March 11, 2026 |
| **Sheila Cheston** |  |  |
| /s/ Sandeep Dadlani | Director | March 11, 2026 |
| **Sandeep Dadlani** |  |  |
| /s/ Dana Mcilwain | Director | March 11, 2026 |
| **Dana Mcilwain** |  |  |
| /s/ Michael Park | Director | March 11, 2026 |
| **Michael Park** |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 34

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[**Table of Contents**](#toc)

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

---

| | |
|:---|:---|
|  | **Page**  |
| [Report of Independent Registered Public Accounting Firm](#report) | [F-2](#report) |
| [Consolidated Balance Sheets](#bs) | [F-3](#bs) |
| [Consolidated Statements of Operations and Comprehensive Loss](#incomesmt) | [F-4](#incomesmt) |
| [Consolidated Statements of Shareholders' Equity](#eqsmt) | [F-5](#eqsmt) |
| [Consolidated Statements of Cash Flows](#cfs) | [F-6](#cfs) |
| [Notes to Consolidated Financial Statements](#notes) | [F-7](#notes) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-1

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[**Table of Contents**](#toc)

**Report of Independent Registered Public Accounting Firm**

To the Shareholders and Board of Directors

Digimarc Corporation:

 *Opinion on the Consolidated Financial Statements*

We have audited the accompanying consolidated balance sheets of Digimarc Corporation and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, shareholders' equity, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.

*Basis for Opinion*

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

*Critical Audit Matter*

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

*Revenue recognition for new contracts*

As discussed in Note 3 to the consolidated financial statements, the Company recorded $33,913 thousand of total revenue for the year ended December 31, 2025, of which $19,844 thousand was subscription revenue and $14,069 thousand was service revenue. Customer arrangements may contain multiple performance obligations such as software subscriptions, software products, software development services, and/or maintenance and support fees. The Company accounts for individual products and services separately if they are distinct. The Company derives its revenue primarily from software subscriptions and software development services with a wide range of software and service offerings.

We identified the evaluation of the Company's revenue recognition related to new contracts entered during the year as a critical audit matter. Challenging auditor judgment was required to evaluate the potential impact of specific contract terms on revenue recognition due to the unique nature of new revenue contracts within each software and service offering.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design of certain internal controls related to the Company's revenue recognition process, including a control over the Company's assessment of the contract terms and applicable revenue recognition requirements for new contracts. For a selection of new contracts, we read the contract and evaluated the Company's assessment of the contract terms and revenue recognition. For certain contracts, we confirmed the relevant contract terms directly with the Company's customers and compared them to the terms utilized by the Company to record revenue. We assessed the recorded revenue by selecting a sample of transactions and comparing the revenue recognized for consistency with the terms of the underlying documentation, including contracts with customers. For a selection of revenue contracts entered during the year, we interviewed personnel outside of the accounting function to consider any other relevant facts and circumstances and their impact on revenue recognition.

/s/ KPMG LLP

We have served as the Company's auditor since 2010.

Portland, Oregon

March 11, 2026

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-2

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[**Table of Contents**](#toc)

**DIGIMARC CORPORATION**

**CONSOLIDATED BALANCE SHEETS**

**(In thousands, except per share data)**

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| **ASSETS** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | $9820 | $12365 |
| Marketable securities | 3046 | 16365 |
| Trade accounts receivable, net | 6513 | 6412 |
| Other current assets | 1961 | 4189 |
| Total current assets | 21340 | 39331 |
| Property and equipment, net | 1104 | 1040 |
| Intangibles, net | 17045 | 22191 |
| Goodwill | 9056 | 8532 |
| Lease right of use assets | 3238 | 3659 |
| Other assets | 1175 | 1013 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $52958 | $75766 |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable and other accrued liabilities | $4359 | $5118 |
| Deferred revenue | 3993 | 4020 |
| Total current liabilities | 8352 | 9138 |
| Long-term lease liabilities | 4314 | 5213 |
| Other long-term liabilities | 63 | 56 |
| Total liabilities | 12729 | 14407 |
| Commitments and contingencies (Note 17) |  |  |
| Shareholders' equity: |  |  |
| Preferred stock (par value $0.001 per share, 2,500 authorized, 10 shares issued and outstanding at December 31, 2025 and December 31, 2024) | 50 | 50 |
| Common stock (par value $0.001 per share, 50,000 authorized, 21,901 and 21,495 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively) | 22 | 21 |
| Additional paid-in capital | 424665 | 415049 |
| Accumulated deficit | (383087) | (350778) |
| Accumulated other comprehensive loss | (1421) | (2983) |
| Total shareholders' equity | 40229 | 61359 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and shareholders' equity | $52958 | $75766 |

---

See Notes to Consolidated Financial Statements

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-3

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[**Table of Contents**](#toc)

**DIGIMARC CORPORATION**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**

**(In thousands, except per share data)**

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| Revenue: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subscription | $19844 | $22418 |
| Service | 14069 | 16000 |
| Total revenue | 33913 | 38418 |
| Cost of revenue: |  |  |
| Subscription <sup>(1)</sup> | 2633 | 2959 |
| Service <sup>(1)</sup> | 5648 | 6628 |
| Amortization expense on acquired intangible assets | 4736 | 4592 |
| Total cost of revenue | 13017 | 14179 |
| Gross profit | 20896 | 24239 |
| Operating expenses: |  |  |
| Sales and marketing | 13939 | 21167 |
| Research, development and engineering | 20482 | 26209 |
| General and administrative | 18505 | 17073 |
| Amortization expense on acquired intangible assets | 1132 | 1097 |
| Total operating expenses | 54058 | 65546 |
| Operating loss | (33162) | (41307) |
| Other income, net | 884 | 2341 |
| Loss before income taxes | (32278) | (38966) |
| Provision for income taxes | (31) | (44) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss | $(32309) | $(39010) |
| Loss per share: |  |  |
| Loss per share — basic | $(1.49) | $(1.83) |
| Loss per share — diluted | $(1.49) | $(1.83) |
| Weighted average shares outstanding — basic | 21663 | 21261 |
| Weighted average shares outstanding — diluted | 21663 | 21261 |
| Comprehensive loss: |  |  |
| Unrealized gain (loss) on marketable securities, net of tax of $0 | $17 | $(13) |
| Foreign currency translation adjustment, net of tax of $0 | 1545 | (406) |
| Other comprehensive income (loss) | $1562 | $(419) |
| Net loss | (32309) | (39010) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Comprehensive loss | $(30747) | $(39429) |

---

------

<sup>(1)</sup> Cost of revenue for Subscription and Service excludes amortization expense on acquired intangible assets.

See Notes to Consolidated Financial Statements

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-4

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[**Table of Contents**](#toc)

**DIGIMARC CORPORATION**

**CONSOLIDATED STATEMENTS OF SHAREHOLDERS**' **EQUITY**

**(In thousands)**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  | ***Accumulated*** |  |
|  |  |  |  |  | ***Additional*** |  | ***Other*** | ***Total*** |
|  | ***Preferred Stock*** | ***Preferred Stock*** | ***Common Stock*** | ***Common Stock*** | ***Paid-in*** | ***Accumulated*** | ***Comprehensive*** | ***Shareholders'*** |
|  | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Capital*** | ***Deficit*** | ***Loss*** | ***Equity*** |
| **Year Ended December 31, 2025** |  |  |  |  |  |  |  |  |
| Balance at December 31, 2024 | 10 | $50 | 21495 | $21 | $415049 | $(350778) | $(2983) | $61359 |
| &nbsp;&nbsp;&nbsp; Issuance of common stock |  |  | 61 |  | 415 |  |  | 415 |
| Issuance of restricted common stock |  |  | 69 |  |  |  |  |  |
| Vesting of restricted stock units |  |  | 409 |  |  |  |  |  |
| Vesting of performance restricted stock units |  |  | 49 |  |  |  |  |  |
| Purchase of common stock |  |  | (182) | 1 | (2880) |  |  | (2879) |
| Stock-based compensation | *—* |  | *—* |  | 12081 |  |  | 12081 |
| Unrealized gain (loss) on marketable securities | *—* |  | *—* |  |  |  | 17 | 17 |
| Foreign currency translation adjustments | *—* |  | *—* |  |  |  | 1545 | 1545 |
| Net loss | *—* |  | *—* |  |  | (32309) |  | (32309) |
| Balance at December 31, 2025 | 10 | $50 | 21901 | $22 | $424665 | $(383087) | $(1421) | $40229 |
| **Year Ended December 31, 2024** |  |  |  |  |  |  |  |  |
| Balance at December 31, 2023 | 10 | $50 | 20379 | $20 | $376189 | $(311768) | $(2564) | $61927 |
| Issuance of common stock |  |  | 929 | 1 | 32217 |  |  | 32218 |
| Issuance of restricted common stock |  |  | 45 |  |  |  |  |  |
| Vesting of restricted stock units |  |  | 197 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Vesting of performance restricted stock units |  |  | 60 |  |  |  |  |  |
| Forfeiture of restricted common stock |  |  | (7) |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Purchase of common stock |  |  | (108) |  | (3416) |  |  | (3416) |
| Stock-based compensation | *—* |  | *—* |  | 10059 |  |  | 10059 |
| Unrealized gain (loss) on marketable securities | *—* |  | *—* |  |  |  | (13) | (13) |
| Foreign currency translation adjustments | *—* |  | *—* |  |  |  | (406) | (406) |
| Net loss | *—* |  | *—* |  |  | (39010) |  | (39010) |
| Balance at December 31, 2024 | 10 | $50 | 21495 | $21 | $415049 | $(350778) | $(2983) | $61359 |

---

See Notes to Consolidated Financial Statements

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-5

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[**Table of Contents**](#toc)

**DIGIMARC CORPORATION**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(In thousands)**

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| Cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss | $(32309) | $(39010) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| Depreciation and write-off of property and equipment | 597 | 728 |
| Amortization of acquired intangible assets | 5868 | 5689 |
| Amortization and write-off of other intangible assets | 1404 | 820 |
| Amortization of lease right of use assets under operating leases | 421 | 358 |
| Stock-based compensation | 11966 | 10029 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in allowance for doubtful accounts | 567 | 17 |
| Changes in operating assets and liabilities: |  |  |
| Trade accounts receivable | (718) | (687) |
| Other current assets | 1951 | (128) |
| Other assets | (257) | (156) |
| Accounts payable and other accrued liabilities | (434) | (1608) |
| Deferred revenue | 28 | (1838) |
| Lease liability and other long-term liabilities | (863) | (786) |
| Net cash provided by (used in) operating activities | (11779) | (26572) |
| Cash flows from investing activities: |  |  |
| Purchase of property and equipment | (570) | (212) |
| Capitalized patent costs | (654) | (431) |
| Proceeds from maturities of marketable securities | 20197 | 22555 |
| Purchases of marketable securities | (6878) | (33194) |
| Net cash provided by (used in) investing activities | 12095 | (11282) |
| Cash flows from financing activities: |  |  |
| Issuance of common stock, net of issuance costs |  | 32218 |
| Purchase of common stock | (2879) | (3416) |
| Repayment of loans | (32) | (37) |
| Net cash provided by (used in) financing activities | (2911) | 28765 |
| Effect of exchange rate on cash | 50 | (2) |
| Net increase (decrease) in cash and cash equivalents | (2545) | (9091) |
| Cash and cash equivalents at beginning of period | 12365 | 21456 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents at end of period | $9820 | $12365 |
| Supplemental disclosure of cash flow information: |  |  |
| Cash received (paid) for income taxes, net | $(45) | $(63) |
| Supplemental schedule of non-cash investing activities: |  |  |
| Property and equipment and patent costs in accounts payable | $25 | $19 |
| Stock-based compensation capitalized to software and patent costs | $115 | $30 |
| Supplemental schedule of non-cash financing activities: |  |  |
| Issuance of shares pursuant to Employee Stock Purchase Plan | $415 | $— |

---

See Notes to Consolidated Financial Statements

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-6

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[**Table of Contents**](#toc)

**DIGIMARC CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(In thousands, except per share data)**

**(*1*) Description of Business and Summary of Significant Accounting Policies**

***Description of Business***

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.

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. |

---

***Principles of Consolidation***

The consolidated financial statements include the accounts of Digimarc and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.

***Use of Estimates***

The preparation of the consolidated financial statements in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. The most significant estimates and judgments made by the Company relate to its revenue accounting policy. Management bases its estimates on historical experience and on other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities, and the measurement and recognition of revenue that are *not* readily apparent from other sources. Actual results *may* differ from these estimates under different assumptions or conditions.

***Cash Equivalents***

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, federal agency notes, money market securities, corporate notes, and U.S. treasuries, totaling $8,403 and $8,889 at *December 31, 2025* and *2024*, respectively. Cash equivalents are carried at either cost or fair value depending on the type of security.

***Marketable Securities***

The Company considers all investments with original maturities over *90* days that mature in less than *one*-year from the balance sheet date to be short-term marketable securities. Short-term marketable securities primarily include commercial paper, federal agency notes, corporate notes, and U.S. treasuries.

The Company's marketable securities are classified as available-for-sale. 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 are derived using the specific identification method for determining the cost of marketable securities sold.

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, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether 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 the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *7*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

***Concentrations of Business and Credit Risk***

A significant portion of the Company's business depends on a limited number of large contracts. The loss of any large contract *may* result in loss of revenue and margin on a prospective basis. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, and accounts receivable.

The Company places its cash and cash equivalents with major banks and financial institutions, and at times deposits *may* exceed insured limits. Other than cash used for operating needs, which *may* include short-term marketable securities with the Company's principal banks, the Company's investment policy limits its credit exposure to any *one* financial institution or type of financial instrument by limiting the maximum of 5% of its cash equivalents and marketable securities or $1,000, 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. The Company's investment policy also limits its credit exposure by limiting the maximum of 40% of its cash equivalents and marketable securities, or $15,000, whichever is less, to be invested in any *one* industry category, (e.g., financial, energy, etc.), at the time of purchase. As a result, the Company's credit risk associated with cash and cash equivalents and marketable securities is believed to be minimal.

The Company manages credit risk on accounts receivable by evaluating a customer's credit worthiness before extending any significant amount of credit. There is a significant concentration of accounts receivable at various times from our largest customers. These customers have significant financial means and a history of paying their invoices. The Company maintains an allowance for its doubtful accounts receivable to reflect any estimated credit losses. See [Note *7*](#Trade_Receivable_FN) for detailed disclosures of the Company's allowance for doubtful accounts.

***Contingencies***

The Company evaluates all pending or threatened contingencies or commitments, if any, that are reasonably likely to have a material adverse effect on the Company's operations or financial position. The Company assesses the probability of an adverse outcome and determines if it is remote, reasonably possible or probable as defined in accordance with Accounting Standards Codification ("ASC") *450* "*Contingencies*." If information available prior to the issuance of the financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the date of the financial statements, and the amount of the loss, or the range of probable loss can be reasonably estimated, then the loss is accrued and charged to operations. If *no* accrual is made for a loss contingency because *one* or both of the conditions pursuant to ASC *450* are *not* met, but the probability of an adverse outcome is at least reasonably possible, the Company will disclose the nature of the contingency and provide an estimate of the possible loss or range of loss, or state that such an estimate cannot be made.

***Goodwill***

The Company tests goodwill for impairment annually and whenever events or changes in circumstances indicate that the carrying value *may* exceed the fair value, in accordance with ASC *350* "*Intangibles* – *Goodwill and Other.*" 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. In connection with the Company's annual impairment tests of goodwill as of *June 30, 2025* and *2024*, it was concluded that there was *no* impairment to goodwill as the estimated fair value of the Company's reporting unit significantly exceeded the carrying value.

***Impairment of Long-Lived Assets***

The Company assesses long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset *may not* be recoverable, in accordance with ASC *360* "*Property, Plant and Equipment*."

Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of the assets to future net undiscounted cash flows expected to be generated by the assets over their remaining useful life. If such assets are considered to be impaired, the impairment would be recognized in operating results at the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value is determined based on discounted cash flows, observable market values or appraised values, depending on the nature of the assets.

Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

***Research and Development***

Research and development costs are expensed as incurred in accordance with ASC *730* "*Research and Development*."

***Software Development Costs***

Under ASC *985* "*Software*," software development costs are to be capitalized beginning when a product's technological feasibility has been established and ending when a product is made available for general release to customers. To date, the establishment of technological feasibility of the Company's products has occurred shortly before general release and, therefore, software development costs qualifying for capitalization have been immaterial. Accordingly, the Company has *not* capitalized any software development costs and has charged all such costs to research and development expense.

***Patent Costs***

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 award date, which varies depending on the pendency period of the application. Capitalized patent costs, also referred to as patent prosecution costs, include internal legal labor, professional legal fees, government filing fees and translation fees related to expanding the Company's patent portfolio.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *8*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

Costs associated with the maintenance and annuity fees of patents are accounted for as prepaid assets at the time of payment and amortized over the shorter of the maintenance period or remaining life of the related patent.

***Revenue Recognition***

See [Note *3*](#Revenue_Recognition_Footnote) for detailed disclosures of the Company's revenue recognition policy.

***Stock-Based Compensation***

The Company accounts for stock-based compensation in accordance with ASC *718* "*Compensation*—*Stock Compensation*," which requires the measurement and recognition of compensation for all stock-based awards made to employees and directors. These awards include restricted stock awards, restricted stock units, performance restricted stock units, and shares offered for purchase under the Company's Employee Stock Purchase Plan ("ESPP"). The measurement of these awards is based on estimated fair values. The estimated fair value of stock-based awards is recognized over the vesting period of the award using the straight-line method.

***Income Taxes***

The Company accounts for income taxes in accordance with ASC *740* "*Income Taxes*" utilizing the asset and liability method. Under the asset and liability method, deferred income taxes reflect the future tax consequences of differences between the tax basis of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period of enactment.

The Company records valuation allowances on deferred tax assets if, based on available evidence, it is more-likely-than-*not* that all or some portion of the assets will *not* be realized.

The Company is subject to income taxes within the U.S. and other countries, and, in the ordinary course of business, there are transactions and calculations where the ultimate tax determination is uncertain. The Company reports a liability (or contra asset) for unrecognized tax benefits resulting from uncertain tax positions taken (or expected to be taken) on a tax return. The Company recognizes interest and penalties, if any, related to the unrecognized tax benefits in the provision for income taxes.

***Liquidity***

Under ASC *205*-*40* "*Presentation of Financial Statements-Going Concern*"*,* 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. The Company has incurred operating losses and negative cash flows from operating activities the last several years and depending on future results *may* continue to incur such losses and negative cash flows in the future. The Company believes its currently available cash and marketable securities will satisfy the Company's projected working capital and capital expenditure requirements for at least the next *12* months.

&nbsp;&nbsp;&nbsp;&nbsp;***Foreign Currency***

The Company prepares consolidated financial statements in its reporting currency, the U.S. dollar. The functional currency of the Company's foreign subsidiaries generally is the applicable local currency. Monetary assets and liabilities denominated in a foreign currency are remeasured at the end of each reporting period, with respective gain or loss recorded in "other income, net" on the Consolidated Statements of Operations. Financial statements of each foreign subsidiary are translated from their respective functional currencies to U.S. dollar, with translation adjustments recorded in "other comprehensive income (loss)" on the Consolidated Statements of Operations and Comprehensive Loss, and foreign currency translation adjustments on the Consolidated Statements of Shareholders' Equity. Assets and liabilities are translated at the exchange rates as of the balance sheet date. Revenue and expenses are translated using the average exchange rates during the period. Equity transactions are translated at the historical exchange rates. The Company's foreign exchange exposure is *not* material to the Company's consolidated financial condition.

 ****

***Accounting Pronouncements Issued But *Not* Yet Adopted***

In *November 2024,* the FASB issued 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *9*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

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**

In accordance with ASC *820* "*Fair Value Measurements and Disclosures*", the Company defines its's 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 as of *December 31, 2025* and *2024*, respectively, was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2025** | ***Level 1*** | ***Level 2*** | ***Level 3*** | ***Total*** |
| Money market securities | $1210 | $— | $– $| 1210 |
| Commercial paper |  | 7093 | – | 7093 |
| Federal agency notes |  | 2223 | – | 2223 |
| Corporate notes |  | 923 | – | 923 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total | $1210 | $10239 | $– $| 11449 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2024** | ***Level 1*** | ***Level 2*** | ***Level 3*** | ***Total*** |
| Money market securities | $112 | $— | $– $| 112 |
| Commercial paper |  | 10633 | – | 10633 |
| U.S. treasuries |  | 9192 | – | 9192 |
| Federal agency notes |  | 5317 | – | 5317 |
| Total | $112 | $25142 | $– $| 25254 |

---

The fair value maturities of the Company's cash equivalents and marketable securities as of *December 31, 2025* are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | ***Maturities by Period*** | ***Maturities by Period*** | ***Maturities by Period*** |
|  |  | ***Less than*** | ***More than*** |
|  | ***Total*** | ***1 year*** | ***10 years*** |
| Cash equivalents and marketable securities | $11449 | $11449 | $— |

---

**(*3*) Revenue Recognition**

The Company recognizes revenue in accordance with ASC *606* "*Revenue from Contracts with Customers*" by applying the following steps:

Step *1:* Identify the contract(s) with a customer.

Step *2:* Identify the performance obligation(s) in the contract.

Step *3:* Determine the transaction price.

Step *4:* Allocate the transaction price to the performance obligation(s) in the contract.

Step *5:* Recognize when (or as) the entity satisfies the performance obligation(s).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *10*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

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 one to three 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 one 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 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:

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| Commercial: |  |  |
| Subscription | $18644 | $21218 |
| Service | 1122 | 1308 |
| Total Commercial | $19766 | $22526 |
| Government: |  |  |
| Subscription | $1200 | $1200 |
| Service | 12947 | 14692 |
| Total Government | $14147 | $15892 |
| Total | $33913 | $38418 |

---

The Company has contract assets from contracts with customers that are classified as "trade accounts receivable" in the Consolidated Balance Sheets. See [Note *7*](#Trade_Receivable_FN) 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:

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Contract acquisition costs, current | $193 | $38 |
| Contract acquisition costs, long-term | 176 |  |
| Total | $369 | $38 |

---

The Company has contract liabilities from contracts with customers that are classified as "deferred revenue" in the Consolidated Balance Sheets. Deferred revenue consists 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:

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Deferred revenue, current | $3993 | $4020 |
| Deferred revenue, long-term | 17 | 2 |
| Total | $4010 | $4022 |

---

The Company recognized $4,011 of revenue during the year ended *December 31, 2025* that was included in the contract liability balance as of *December 31, 2024*.

The aggregate amount of the transaction prices from contractual obligations that are unsatisfied or partially unsatisfied was $27,989 and $25,215, as of *December 31, 2025* and *2024*, respectively. As of *December 31, 2025*, the Company expects $23,163 of the $27,989 to be recognized as revenue during the year ending *December 31,* 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *11*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

**(*4*) Segment Information**

*Significant Segment Expenses*

The Company derives its revenue from a single reporting segment: product digitization 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 CODM, reviews the Company's operating results and makes decisions to allocate resources based on consolidated financial information. As such, the Company has one 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.

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| Revenue: |  |  |
| Subscription | $19844 | $22418 |
| Service | 14069 | 16000 |
| Total revenue | 33913 | 38418 |
| Cost of revenue: |  |  |
| Subscription <sup>(1)</sup> | 2633 | 2959 |
| Service <sup>(1)</sup> | 5648 | 6628 |
| Amortization expense on acquired intangible assets | 4736 | 4592 |
| Total cost of revenue | 13017 | 14179 |
| Operating expenses: |  |  |
| Cash compensation | 26445 | 38997 |
| Stock-based compensation | 10854 | 9323 |
| Professional services and consultants | 8110 | 7757 |
| Software and hardware | 2679 | 3538 |
| Depreciation and amortization | 2260 | 2104 |
| Other segment items <sup>(2)</sup> | 3710 | 3827 |
| Total operating expenses | 54058 | 65546 |
| Operating loss | (33162) | (41307) |
| Other income, net | 884 | 2341 |
| Provision for income taxes | (31) | (44) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss | $(32309) | $(39010) |

---

------

<sup>(*1*)</sup> Cost of revenue for Subscription and Service excludes amortization expense on acquired intangible assets.

<sup>(*2*)</sup> 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:

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| Domestic | $8784 | $10195 |
| International <sup>(1)</sup> | 25129 | 28223 |
| Total | $33913 | $38418 |

---

------

<sup>(*1*)</sup> Revenue from the Central Banks 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:

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| Customer A | 41% | 41% |
| Customer B | 12% | 15% |
| Customer C | *\** | 14% |

---

------

\* Less than *10%*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *12*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

*Long-lived tangible assets by geographical area*

Long-lived tangible assets by geographic area were as follows:

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| United States | $1102 | $1026 |
| Europe | 2 | 14 |
| Total | $1104 | $1040 |

---

**(*5*) Stock-Based Compensation**

Stock-based compensation includes expense charges for all stock-based awards to employees and directors. These awards include restricted stock awards, restricted stock units, performance restricted stock units, and shares offered for purchase under the Company's 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 restricted stock awards ("RSA") 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 three to four years for employee grants and one to three years for director grants.

*Restricted Stock Units*

The fair value of restricted stock unit ("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 three to four years for employee grants.

*Performance Restricted Stock Units*

The fair value of performance restricted stock unit ("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 one to three 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 performance restricted stock unit 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, 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 three years for employee grants.

The following inputs are used in the Monte Carlo 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 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.

***Monte Carlo Valuation Inputs:***

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Stock price | $13.14 - $13.73 | $25.39 - $39.49 |
| Expected volatility | 70.9% | 66.3% |
| Risk-free interest rate | 3.8% | 4.3% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *13*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

*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 eighteen 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.

***Black-Scholes Valuation Inputs:***

---

| | |
|:---|:---|
|  | ***Year Ended December 31,*** |
|  | ***2025*** |
| Stock price | $8.00 - $12.52 |
| Risk-free interest rate | 3.5% - 4.3% |
| Expected volatility | 69.5% - 105.8% |
| Expected term | 0.5 - 1.5 |

---

***Stock-based Compensation***

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| Stock-based compensation: |  |  |
| Cost of revenue | $1112 | $706 |
| Sales and marketing | 2295 | 2788 |
| Research, development and engineering | 3953 | 2522 |
| General and administrative | 4606 | 4013 |
| Stock-based compensation expense | 11966 | 10029 |
| Capitalized to software and patent costs | 115 | 30 |
| Total stock-based compensation | $12081 | $10059 |

---

The following table sets forth total unrecognized compensation costs related to non-vested stock-based awards granted under the Company's stock incentive plans:

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Total unrecognized compensation costs | $13110 | $16226 |

---

Total unrecognized compensation costs will be adjusted for any future forfeitures if and when they occur.

The Company expects to recognize the total unrecognized compensation costs as of *December 31, 2025* for all non-vested stock-based awards over weighted average periods through *December 31, 2029* as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | ***RSAs*** | ***RSAs*** | ***RSUs*** | ***RSUs*** | ***PRSUs*** | ***PRSUs*** | ***ESPP*** | ***ESPP*** |
| Weighted average period (in years) |  | 0.87 |  | 1.38 |  | 1.14 |  | 0.95 |

---

As of *December 31, 2025*, under the Company's stock incentive plan, an additional 2,282 shares remained available for future grants, and under the Company's ESPP, an additional 189 shares remained available for future offering periods. The Company issues new shares upon grants of RSAs, upon vesting of RSU and PRSU awards, and upon purchase of ESPP shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *14*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

*Restricted Stock Awards Activity*

The following table presents the unvested balance of RSA activity:

---

| | | |
|:---|:---|:---|
|  |  | ***Weighted*** |
|  |  | ***Average*** |
|  | ***Number of*** | ***Grant Date*** |
|  | ***Shares*** | ***Fair Value*** |
| Unvested balance, December 31, 2023 | 105 | $29.89 |
| Granted | 45 | $28.37 |
| Vested | (84) | $29.20 |
| Forfeited | (7) | $27.57 |
| Unvested balance, December 31, 2024 | 59 | $29.98 |
| Granted | 69 | $12.69 |
| Vested | (43) | $30.50 |
| Forfeited |  | $— |
| Unvested balance at December 31, 2025 | 85 | $15.77 |

---

The fair value of RSAs vested is as follows:

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Fair value of RSAs vested | $724 | $2234 |

---

*Restricted Stock Units Activity*

The following table presents the unvested balance of RSU awards activity:

---

| | | |
|:---|:---|:---|
|  |  | ***Weighted*** |
|  |  | ***Average*** |
|  | ***Number of*** | ***Grant Date*** |
|  | ***Units*** | ***Fair Value*** |
| Unvested balance, December 31, 2023 | 442 | $23.77 |
| Granted | 228 | $35.29 |
| Vested | (197) | $26.86 |
| Forfeited | (67) | $26.58 |
| Unvested balance, December 31, 2024 | 406 | $28.27 |
| Granted | 792 | $12.30 |
| Vested | (409) | $16.80 |
| Forfeited | (205) | $26.32 |
| Unvested balance, December 31, 2025 | 584 | $15.32 |

---

The fair value of RSU awards vested is as follows:

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Fair value of RSU awards vested | $5237 | $5747 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *15*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

*Performance Restricted Stock Units Activity*

The following table presents the unvested balance of PRSU awards activity:

---

| | | |
|:---|:---|:---|
|  |  | ***Weighted*** |
|  |  | ***Average*** |
|  | ***Number of*** | ***Grant Date*** |
|  | ***Units*** | ***Fair Value*** |
| Unvested balance, December 31, 2022 | 67 | $31.92 |
| Change in units based on performance expectations | (6) | $32.02 |
| Granted | 134 | $27.75 |
| Vested | (2) | $32.02 |
| Forfeited | (1) | $32.02 |
| Unvested balance, December 31, 2023 | 192 | $29.01 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in units based on performance expectations | 30 | $22.37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Granted | 73 | $36.77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Vested | (60) | $22.37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forfeited | (20) | $34.17 |
| Unvested balance, December 31, 2024 | 215 | $32.08 |
| Change in units based on performance expectations | (5) | $24.71 |
| Granted | 429 | $15.06 |
| Vested | (49) | $44.17 |
| Forfeited | (57) | $25.47 |
| Unvested balance, December 31, 2025 | 533 | $20.70 |

---

The fair value of PRSU awards vested is as follows:

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Fair value of PRSU awards vested | $1707 | $2370 |

---

*Employee Stock Purchase Plan Activity*

On *February 25, 2025,* the Board of Directors approved the adoption of the Digimarc Corporation ESPP allowing eligible employees to voluntarily purchase shares of the Company's common stock at 85% of the lower of the market price at the start of the offering period or on the purchase date of each six-month purchase period within an eighteen-month offering window. If the market price of the Company's common stock on the purchase date is lower than the market price at the start of the offering period, participants are rolled over into a subsequent offering period, resulting in a reset of the offering price and the eighteen-month offering window. Employees can authorize anywhere between 1% to 15% of their base salary to purchase shares under the ESPP, subject to the U.S. Internal Revenue Code ("IRC") annual limitations.

ESPP activity is as follows:

---

| | |
|:---|:---|
|  | **Year Ended December 31,** |
|  | **2025** |
| Shares Issued | 61 |
| Weighted Average Purchase Price | $8.00 |
| Weighted Average Fair Value of Purchase Rights | $5.59 |

---

**(*6*) Earnings Per Share**

The Company calculates basic and diluted earnings per share in accordance with ASC *260* "*Earnings Per Share*," using the treasury stock method.

Basic earnings per share excludes dilution and is calculated by dividing earnings by the weighted-average number of shares outstanding for the period. Diluted earnings per share is calculated by dividing earnings by the weighted-average number of shares, as adjusted for the potentially dilutive effect of unvested RSUs and PRSUs, and outstanding ESPP purchase rights. The dilutive effect of unvested RSUs and PRSUs and outstanding ESPP purchase rights is determined using the treasury stock method. RSAs are included in shares outstanding on the date of grant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *16*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

The following table reconciles earnings (loss) per share:

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| **Basic Earnings (Loss) per Share:** |  |  |
| Net loss — basic | $(32309) | $(39010) |
| Weighted average shares outstanding — basic | 21663 | 21261 |
| Basic loss per share | $(1.49) | $(1.83) |
| **Diluted Earnings (Loss) per Share:** |  |  |
| Net loss — diluted | $(32309) | $(39010) |
| Weighted average shares outstanding — diluted | 21663 | 21261 |
| Diluted loss per share | $(1.49) | $(1.83) |

---

The following table indicates the common stock equivalents related to unvested RSUs and PRSUs and outstanding ESPP purchase rights that were anti-dilutive and excluded from diluted earnings (loss) per share calculations:

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** | ***2024*** |
| Anti-dilutive shares due to net loss |  |  | 102 |

---

**(*7*) Trade Accounts Receivable** 

*Trade Accounts Receivable*

Trade accounts receivables are recorded at the contractual or invoiced amount.

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Trade accounts receivable, current | $7271 | $6563 |
| Trade accounts receivable, long-term | 90 | 80 |
| Allowance for doubtful accounts | (758) | (151) |
| Trade accounts receivable, net | $6603 | $6492 |
| Unpaid deferred revenue included in trade accounts receivable | $2597 | $2590 |

---

*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, 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. Account 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:

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Company A | 47% | 47% |
| Company B | 19% | *\** |

---

------

\* Less than *10%*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *17*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

**(*8*) 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 two to ten years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life or the lease term.

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Software | $6061 | $5476 |
| Equipment | 2621 | 2566 |
| Leasehold improvements | 227 | 203 |
| Office furniture and fixtures | 63 | 63 |
| Gross property and equipment | 8972 | 8308 |
| Accumulated depreciation | (7868) | (7268) |
| Property and equipment, net | $1104 | $1040 |

---

**(*9*) Goodwill**

---

| | |
|:---|:---|
| Balance at December 31, 2023 | $8641 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Currency translation adjustments | (109) |
| Balance at December 31, 2024 | $8532 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Currency translation adjustments | 524 |
| Balance at December 31, 2025 | $9056 |

---

**(*10*) Intangibles**

Amortization of intangible assets acquired is calculated using the straight-line method over the estimated useful lives of the assets.

---

| | | | |
|:---|:---|:---|:---|
|  | ***Estimated Life*** | ***December 31,*** | ***December 31,*** |
|  | ***(years)*** | ***2025*** | ***2024*** |
| Capitalized patent costs | ~17 | $8795 | $9174 |
| Intangible assets acquired: |  |  |  |
| Developed technology | 5 | 24095 | 22504 |
| Customer relationships | 10 | 11514 | 10754 |
| Purchased intellectual property | 10 | 250 | 250 |
| Gross intangible assets |  | 44654 | 42682 |
| Accumulated amortization |  | (27609) | (20491) |
| Intangibles, net |  | $17045 | $22191 |

---

The amortization of capitalized patent costs, developed technology, and purchased intellectual property is recorded in "cost of revenue" and the amortization of customer relationships is recorded in "operating expenses" in the Consolidated Statements of Operations.

Amortization expense on intangible assets was as follows:

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Amortization expense | $6385 | $6233 |

---

For intangible assets recorded at *December 31, 2025*, the estimated future aggregate amortization expense for the years ending *December 31, 2026* through *December 31, 2030* is as follows:

---

| | |
|:---|:---|
|  | **Amortization** |
| **As of December 31, 2025** | **Expense** |
| 2026 | $6509 |
| 2027 | 1690 |
| 2028 | 1689 |
| 2029 | 1684 |
| 2030 | 1682 |

---

**(*11*) Leases**

The Company accounts for leases in accordance with ASC *842,* "*Leases.*"

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *18*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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.* The remaining rent payments as of *December 31, 2025* were $6,487 plus operating expenses, payable in monthly installments. The *first* 26 months of rent payments and operating expenses were abated to cover the remaining lease term on the Company's former corporate headquarters.

All of the Company's leases are operating leases. The following table provides additional details of leases presented in the Consolidated Balance Sheets:

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Lease right of use assets | $3238 | $3659 |
| Lease liabilities, current | $899 | $781 |
| Lease liabilities, long-term | $4314 | $5213 |
| Weighted-average remaining life (in years) | 4.7 | 5.7 |
| Weighted-average discount rate | 9% | 9% |

---

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. No impairment was recorded for the years ended *December 31, 2025* and *December 31, 2024*.

Operating lease expense is included in "operating expenses" in the Consolidated Statements of Operations 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:

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| Operating lease expense | $1441 | $1482 |
| Cash paid for operating leases | $1800 | $1663 |

---

The table below reconciles the aggregate cash payment obligations for the next *five* years and total of the remaining years for the operating lease liabilities recorded in the Consolidated Balance Sheet as of *December 31, 2025*:

---

| | |
|:---|:---|
|  | **Cash** |
|  | **Payment** |
| **As of December 31, 2025** | **Obligations** |
| 2026 | $1356 |
| 2027 | 1397 |
| 2028 | 1296 |
| 2029 | 1389 |
| 2030 | 1066 |
| Thereafter |  |
| Total lease payments | 6504 |
| Imputed interest | (1291) |
| Total minimum lease payments | $5213 |

---

**(*12*) Shareholders**' **Equity**

*Preferred Stock*

In *June 2008,* the Board of Directors authorized 2,500 shares of preferred stock, par value $0.001 per share. The Board of Directors has the authority to issue the undesignated preferred stock in *one* or more series and to determine the powers, preferences and rights and the qualifications, limitations or restrictions granted to or imposed upon any wholly unissued series of undesignated preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by the shareholders. The issuance of preferred stock *may* have the effect of delaying, deferring or preventing a change of control of the Company without further action by shareholders and *may* adversely affect the voting and other rights of the holders of common stock.

The Board of Directors authorized 10 shares of Series A Redeemable Nonvoting Preferred stock ("Series A Preferred") that were issued to certain executive officers at the time of formation. The Series A Preferred has *no* voting rights, except as required by law, and *may* be redeemed at the option of the Company's Board of Directors at any time.

The Series A Preferred is redeemable based on the stated fair value of $5.00 per share. The Series A Preferred has no dividend rights and no rights to the undistributed earnings of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *19*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

*Common Stock*

In *June 2008,* the Board of Directors authorized 50,000 shares of common stock, par value $0.001 per share. The holders of Digimarc common stock are entitled to *one* vote for each share held of record on all matters submitted to a vote of its shareholders, including the election of directors. Subject to preferences that *may* be granted to any then outstanding preferred stock, holders of common stock are entitled to receive ratably those dividends as *may* be declared by the Board of Directors out of funds legally available for such purpose, as well as any distributions to the Company's shareholders. In the event of the Company's liquidation, dissolution or winding up, holders of common stock are entitled to share ratably in all of the Company's assets remaining after payment of liabilities and the liquidation preference of any then outstanding preferred stock. Holders of common stock have *no* preemptive or other subscription or conversion rights. There are *no* redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and non-assessable.

*Registered Direct Offering*

On *February 24, 2024,* the Company entered into purchase agreements with certain investors providing for the issuance and sale by the Company of 929 common shares in a registered direct stock offering. The common shares were offered at a price of $35.00 per share, and the gross cash proceeds to the Company were $32,500. The Company incurred $282 of legal costs related to the offering. The closing of the registered direct offering occurred on *February 27, 2024.*

 *Stock Incentive Plan*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In *March 2018,* the Company's Board of Directors approved the *2018* Incentive Plan (*"2018* Plan"), which was later approved by the Company's shareholders at the Company's *2018* Annual Meeting of Shareholders in *April 2018.* The *2018* Plan replaced the *2008* Incentive Plan (*"2008* Plan"). The *2018* Plan provides for the grant of stock options, stock appreciation rights ("SARs"), restricted stock awards, restricted stock units, performance restricted stock units, and other stock or cash-based awards, which *may* be granted to officers, directors, employees, consultants, agents, advisors and independent contractors who provide services to the Company and its affiliated companies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The *2018* Plan originally authorized the issuance of 1,000 shares of common stock. In addition, up to 770 shares of common stock subject to awards outstanding under the *2008* Plan became available for issuance under the *2018* Plan to the extent that those shares cease to be subject to the awards (as a result of, for example, expiration, cancellation or forfeiture of the award). The shares authorized under the *2018* Plan are subject to adjustment in the event of a stock split, stock dividend, recapitalization or similar event. Shares issued under the *2018* Plan will consist of authorized and unissued shares or shares held by the Company as treasury shares. If an award granted under the *2018* Plan lapses, expires, terminates or is forfeited or surrendered without having been fully exercised or without the issuance of all the shares subject to the award, the shares covered by that award will again be available for issuance under the *2018* Plan. Shares that are (i) tendered by a participant or retained by the Company as payment for the purchase price of an award or to satisfy tax withholding obligations or (ii) covered by an award that is settled in cash, or in some manner that some or all of the shares covered by the award are **not* issued, will again be available for issuance under the *2018* Plan. In addition, awards granted as substitute awards in connection with acquisition transactions will *not* reduce the number of shares authorized for issuance under the *2018* Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In *May 2023,* the *2018* Plan was modified as approved by the Company's shareholders at the Company's *2023* Annual Meeting of Shareholders. The amendment added 1,200 additional shares to the pool of shares authorized for issuance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In *May 2025,* the *2018* Plan was modified as approved by the Company's shareholders at the Company's *2025* Annual Meeting of Shareholders. The amendment added 950 additional shares to the pool of shares authorized for issuance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Employee Stock Purchase Plan*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In *February 2025,* the Company's Board of Directors approved the Digimarc Corporation ESPP, which was later approved by the Company's shareholders at the Company's *2025* Annual Meeting of Shareholders in *May 2025.* The approval of the ESPP authorized the issuance of up to 250 shares of common stock. The plan allows eligible employees to purchase Digimarc common stock at 85% of the lower of the market price at the start of the offering period or on the purchase date of each six-month purchase period within an eighteen-month offering window. If the market price of the Company's common stock on the purchase date is lower than the market price at the start of the offering period, participants are rolled over into a subsequent offering period, resulting in a reset of the offering price and the eighteen-month offering window. Employees can authorize anywhere between 1% to 15% of their base salary to purchase shares under the ESPP, subject to the IRC annual limitations.

**(*13*) Defined Contribution Plan**

The Company sponsors an employee retirement savings plan (the "Plan") which qualifies as a deferred salary arrangement under Section *401*(k) of the Internal Revenue Code. The Plan combines both an employee savings plan and a company matching plan into *one* plan under Section *401*(k), including a *401*(k) Roth option. Company matching contributions were paused effective *July 1, 2025.* Employees become eligible to participate in the Plan at the beginning of the month following the employee's hire date. Employees *may* contribute up to 75% of their pay to the Plan, subject to the annual limitations of the IRC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *20*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

The Company made matching contributions in the aggregate amount as follows:

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| Matching contributions | $457 | $1234 |

---

**(*14*) Other Income**

The following table provides information about other income, net:

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| Interest income | $681 | $1818 |
| Refundable tax credit | 182 | 550 |
| Foreign currency gains (losses) | 21 | (27) |
| Total other income, net | $884 | $2341 |

---

**(*15*) Income Taxes**

The provision for income taxes reflects current taxes and deferred taxes. The effective tax rate for each of the years ended *December 31, 2025* and *2024* was 0%. The Company continues to provide for a valuation allowance to offset its net deferred tax assets, primarily net operating losses ("NOLs") and tax credits, until such time it is more likely than not the tax assets or portions thereof will be realized.

Components of loss before income taxes are as follows:

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| Domestic | $(22248) | $(27044) |
| International | (10030) | (11922) |
| Loss before income taxes | $(32278) | $(38966) |

---

Components of the (provision) benefit for income taxes allocated to continuing operations include the following:

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| **Current:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal | $— | $5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State | (8) | (13) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign | (23) | (36) |
| Sub-total | $(31) | $(44) |
| **Deferred:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign |  |  |
| Sub-total | $— | $— |
| Total | $(31) | $(44) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *21*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to (income) loss before income taxes after the adoption of ASU *2023*-*09* is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Year Ended*** |  | ***Year Ended*** |  |
|  | ***December 31,*** |  | ***December 31,*** |  |
|  | ***2025*** | *%*** | ***2024*** | *%*** |
| Income taxes computed at U.S. statutory rates | $6778 | 21% | $8183 | 21% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State income taxes, net of federal tax benefit | (7) | —% | (10) | —% |
| (Increases) decreases resulting from: |  |  |  |  |
| Foreign tax effects: |  |  |  |  |
| United Kingdom: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change in valuation allowance | (2513) | (8)% | (2443) | (6)% |
| Statutory rate differential | 407 | 1% | 615 | 2% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Research and development tax deductions and credits | 25 | —% | 650 | 2% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOLs surrendered for refundable tax credit |  | —% | (1355) | (3)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | (54) | —% | 3 | —% |
| Other foreign jurisdictions | 6 | —% | (9) | —% |
| Tax credits: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Research and development tax credits | 832 | 3% | 1373 | 4% |
| Nontaxable or nondeductible items: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock compensation expense windfall (shortfall) | (542) | (2)% | 171 | 1% |
| Other | (270) | (1)% | (56) | —% |
| Change in valuation allowance | (4860) | (15)% | (7001) | (18)% |
| Change in unrecognized tax benefits | (96) | —% | (74) | —% |
| Other | 263 | 1% | (91) | —% |
| Total | $(31) | —% | $(44) | —% |

---

------

(*1*) During the Year Ended *December 31, 2025*, state taxes in California, Massachusetts, and New Jersey comprised the majority of the tax effect in this category. During Year Ended *December 31, 2024*, South Carolina and New York comprised the majority.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of significant items comprising the Company's deferred tax assets and deferred tax liabilities are as follows:

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| **Deferred tax assets:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal and state net operating losses | $88985 | $79856 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Federal and state research and experimentation credits | 14626 | 13610 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Research and experimental costs | 9464 | 12806 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock based compensation | 2289 | 1822 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ASC 842 - lease liabilities | 1125 | 1303 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued compensation | 270 | 324 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fixed asset differences | 220 | 191 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible asset differences | 3 | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other | 182 | 264 |
| Total gross deferred tax assets | 117164 | 110180 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less valuation allowance | (112746) | (104361) |
| Net deferred tax assets | $4418 | $5819 |
| **Deferred tax liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Patent expenditures | $(808) | $(888) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ASC 842 - right of use assets | (699) | (795) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fixed asset differences | (1) | (4) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible asset differences | (2910) | (4132) |
| Total gross deferred tax liabilities | $(4418) | $(5819) |
| Total net deferred tax assets and liabilities | $— | $— |

---

The Company had a valuation allowance of $112,746 and $104,361 on deferred tax assets as of *December 31, 2025* and *2024*, respectively, an increase of $8,385 during the year ended *December 31, 2025*.

As of *December 31, 2025*, the Company has federal, state, and foreign NOL carryforwards of $289,499, $177,072, and $80,051 respectively, which have a carryforward of 5 years to indefinite depending on the jurisdiction.

As of *December 31, 2025*, the Company has federal research and experimental tax credits of $15,832, which have a carryforward of 20 years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *22*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

A summary reconciliation of the Company's uncertain tax positions is as follows:

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Beginning balance | $1137 | $1063 |
| Addition for current year tax positions | 66 | 85 |
| Addition (reduction) for prior year positions | 30 | (11) |
| Ending balance | $1233 | $1137 |

---

As of *December 31, 2025*, the total unrecognized tax benefits, if recognized, would *not* materially affect the Company's effective tax rate.

The Company records accrued interest and penalties associated with uncertain tax positions in the "provision for income taxes" in the Consolidated Statements of Operations. For the years ended *December 31, 2025* and *2024*, the Company recognized accrued interest and penalties associated with uncertain tax positions of $0 and $0, respectively.

The Company's open tax years subject to examination in the U.S. federal jurisdiction are 2022 through *2024*, in applicable state jurisdictions for the tax years 2022 through *2024*, and in applicable foreign jurisdictions for tax year 2024. To the extent allowed by law, the taxing authorities *may* have the right to examine prior periods where NOLs or tax credits were generated and carried forward, and make adjustments up to the amount of the NOL or tax credit carryforward.

On *July 4, 2025,* the One Big Beautiful Bill Act ("OBBBA"), which includes a broad range of tax reform provisions, was signed into law in the United States, which includes a new IRC Section *174A.* Under Section *174A,* commencing with tax years beginning after *December 31, 2024,* domestic research or experimental expenditures *may* be deducted in the current period rather than capitalized and amortized over multiple years, as previously required under IRC Section *174.* As a result of this legislation, the Company is deducting its domestic Section *174A* expenditures beginning in the *2025* taxable year. OBBBA did *not* have a material impact on our effective tax rate, financial condition, or results of operations for the year ended *December 31, 2025*.

**(*16*) Accounts Payable and Other Accrued Liabilities**

The components of accounts payable and other accrued liabilities are summarized below:

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Accrued liabilities | $2959 | $3072 |
| Accounts payable | 501 | 1265 |
| Lease liabilities, current | 899 | 781 |
| Total | $4359 | $5118 |

---

**(*17*) 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 *450.* To date, there have been *no* claims made under such indemnification provisions.

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 Chief Executive Officer and 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 "C*hadwick* 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 Chief Executive Officer, 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.

These cases are at an early stage. The Company believes it has defenses to the claims and is responding accordingly.

The Company is subject from time to time to other legal proceedings and claims arising in the ordinary course of business. At this time, the Company does *not* believe that the resolution of any such matters will have a material adverse effect on its financial position, results of operations or cash flows.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *23*

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

**(*18*) Corporate Reorganization**

On *February 26, 2025,* the Company announced a reduction of its global workforce to streamline the Company's team structure to better align with its long-term growth initiatives and profitability objectives. All associated costs with the corporate reorganization are recorded as "operating expenses" in the Consolidated Statements of Operations. During the *twelve* months ended *December 31, 2025,* the Company incurred cash severance costs totaling $3,230, reported as "cash compensation" in [Note *4*](#Segment_fn) Segment Information, including $1,622 related to research, development and engineering, $980 related to sales and marketing, and $628 related to general and administration.

The following table provides the details of costs and liabilities associated with the corporate reorganization announced on *February 26, 2025:*

---

| | |
|:---|:---|
| Balance at December 31, 2024 | $— |
| Costs incurred | 3230 |
| Cash paid | (3230) |
| Balance at December 31, 2025 | $— |

---

**(*19*) Subsequent Events**

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 38.4 of the 65.5 thousand square feet of the building to another tenant. The term of the sub-sublease begins *March 2026* and runs through *September 2030.* The remaining rent payments owed to the Company under the sub-sublease are $2,885.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-24

## Exhibit 19.1

**Exhibit 19.1**

**INSIDER TRADING POLICY AND GUIDELINES**

**FOR DISCLOSURE OF MATERIAL NON-PUBLIC INFORMATION**

**Introduction**

This Insider Trading Policy provides guidelines to employees, directors and officers of Digimarc Corporation (the "Company") with respect to transactions in the Company's securities and the handling by insiders of confidential information about the Company and the companies with which it does business. In the discretion of the Corporate Compliance Officer, the Insider Trading Policy may also apply to consultants and contractors to the Company.

For purposes of this Insider Trading Policy, "the Company's securities" include common stock, options for common stock and any other securities the Company may issue from time to time, such as preferred stock, warrants and convertible debentures. The Company's securities also include derivative securities relating to the Company's stock, even if not issued by the Company, such as exchange-traded options.

**Policy**

It is the policy of the Company to comply with all insider trading laws and regulations.

**Responsibility**

Employees, officers and directors of the Company may create, use or have access to confidential or material information which is not generally available to the investing public (such information is referred to in this Insider Trading Policy as "material non-public information," as explained in more detail below). Each individual has an important ethical and legal obligation to maintain the confidentiality of such information and not to engage in any transactions in the Company's securities while in possession of material non-public information. Each individual and the Company may be subject to severe civil and criminal penalties as a result of unauthorized disclosure of or trading in the Company's securities while in possession of material non-public information.

The Chief Financial Officer (who is the "Corporate Compliance Officer"), is responsible for the administration of this Insider Trading Policy.

**Guidelines**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. Prohibition.** Every employee, officer and director of the Company is prohibited from: (a) buying or selling the Company's securities while in possession of material non-public information; (b) communicating material non-public information to others except those who "need to know" based on their doing business with or for the Company; (c) recommending the purchase or sale of the Company's securities while in the possession of material information that has not been publicly disclosed by the Company; or (d) assisting anyone engaged in any of the above activities. This prohibition also applies to material non-public information about, and the securities of, other companies with which the Company has a relationship through which an employee, officer or director may acquire the material non-public information of that company.

There are no exceptions to this Insider Trading Policy other than those described in paragraph 10 below. Engaging in transactions in the Company's securities that are otherwise necessary for personal reasons, such as personal financial commitments, are still prohibited if you possess material non-public information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. Penalties.** If you engage in any of the above activities, you may subject yourself, the Company and its officers and directors to civil and criminal liability. Civil penalties of $1,000,000 or three times the profit gained or losses avoided may be imposed. Criminal penalties of up to $5,000,000 may be imposed, and you may also be subject to a jail term of up to 20 years. Violation of this Insider Trading Policy may subject you to immediate discipline by the Company, including discharge from the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. Transactions By Family Members; Entities Controlled by You.** These prohibitions also apply to your family members, including your spouse, minor children or others living in your home, any family members who do not live in your household but whose transactions in Company securities you direct or are subject to your influence or control (such as parents or children who consult with you before they trade in Company securities) and any entities under your control. The Company will hold you responsible for the conduct of these parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4. Tipping Information to Others.** You may not disclose any material non-public information to others, including your family members, friends or social acquaintances. This prohibition applies whether or not you receive any benefit from the other person's use of that information. The Securities and Exchange Commission (the "SEC") has imposed large penalties even when the disclosing person did not profit from the trading. The SEC, the stock exchanges and the Financial Industry Regulatory Authority, Inc. use sophisticated electronic surveillance techniques to uncover insider trading. Do not underestimate their ability to discover your actions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5. Material Non-Public Information.** "Material" information is any information which could affect the market for the Company's securities or that a reasonable investor would consider important in making a decision to purchase, hold or sell the Company's securities. Any information that could be expected to affect the Company's stock price, whether it is positive or negative, should be considered material.

"Non-public" information is any information that has not been disclosed generally to the investing public. Disclosure by press release or in the Company's periodic reports filed with the SEC is necessary to make the information public. Even after the Company has released information to the press and the information has been reported, at least one full trading day (that is, a day on which national stock exchanges are open for trading) should be allowed for the investing public to absorb and evaluate the information before you trade in the Company's securities. If, for example, the Company were to make an announcement on a Monday, you should not trade in the Company's securities until Wednesday.

------

Although it is not possible to list all types of material information, the following are a few examples of information that is particularly sensitive and should be treated as material:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● changes in estimates of earnings or sales

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● increases or decreases in dividend payments

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● stock splits or securities offerings

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● possible mergers, acquisitions and dispositions

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● significant contracts and technology licenses

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● changes in management

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● the introduction of important products

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● major marketing changes

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● unusual gains or losses in major operations

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● financial liquidity problems

If you have any question as to whether particular information is material or non-public, you should not trade or communicate the information to anyone without prior approval by the Corporate Compliance Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6. Inadvertent Disclosure.** If material non-public information is inadvertently disclosed by any employee, officer or director, you should **immediately** report all the facts to the Corporate Compliance Officer so that the Company may take appropriate remedial action. As noted in the Company's Fair Disclosure Policy attached hereto as <u>Attachment 1</u>, under SEC rules, the Company generally has only 24 hours after learning of an inadvertent disclosure of material non-public information to publicly disclose such information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7. Short-term, Speculative Transactions.** The Company has determined that there is a substantial likelihood for the appearance of improper conduct by Company personnel when they engage in short-term or speculative securities transactions. Therefore, Company officers, directors and employees are prohibited from engaging in any of the following activities involving the Company's shares:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)** purchasing the Company's securities on margin;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)** short sales;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)** buying or selling puts or calls;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)** trading in options (other than those granted by the Company);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)** pledging Company securities as collateral for a loan; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)** any hedging or monetization transaction, such as zero-cost collars and forward sale contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8. Further Prohibition.** From time to time, effective immediately upon notice or as otherwise provided by the Company, the Company may determine that other types of transactions, or all transactions, by Company personnel in the Company's securities shall be prohibited. Such determinations shall be made by the Corporate Compliance Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9. Special Procedures for Directors, Officers and Certain Employees.** The following guidelines are applicable to (i) all members of the Company's Board of Directors, (ii) all officers of the Company, (iii) certain members of the financial staff designated on <u>Exhibit</u><u> </u><u>A</u> hereto and (iv) any other employee that the Company believes has access to financial information or other material non-public information relating to the Company's **financial results or other corporate developments**, and who is notified by the Company's Corporate Compliance Officer of such determination (individuals subject to this Section 9, collectively, "Restricted Persons"). The persons who qualify as Restricted Persons may be changed by the Company from time to time as circumstances require. If you are a Restricted Person and have any questions about the application of these provisions when considering the possible purchase or sale of the Company's securities, you should contact the Corporate Compliance Officer before undertaking the transaction and follow his or her instructions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Trading Prohibition.** Restricted Persons may not conduct any transactions involving the purchase or sale of the Company's securities during any of the periods described in this subparagraph (a) as "Blackout Periods."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(1)** **Earnings Release Blackout.** The release of earnings is a particularly sensitive period of time for transactions in the Company's stock, given Restricted Persons may possess material non-public information about the expected financial results for the quarter. Accordingly, no Restricted Persons may conduct transactions involving the purchase or sale of the Company's securities during a Blackout Period for the quarter. The Blackout Period with respect to each fiscal quarter of the Company begins on the close of business on the **fifteenth day** of the third month of the quarter and ends on the opening of the **second full trading day** following the earlier of the Company's filing with the SEC of the Company's quarterly or annual financial reports or public release of quarterly or annual financial information (the "Earnings Release Date"). For directors and officers of the Company, all transactions involving the Company's securities outside the Blackout Period may be made only after preclearing the transaction with the Company's Corporate Compliance Officer. The Company will inform you of the anticipated date of public disclosure of each quarter's financial results upon request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(2)** **Event-Specific Blackouts.** From time to time, the Company may also determine that directors, officers, selected employees and others should suspend trading because of developments known to the Company and not yet disclosed to the public. In such event, such persons may not engage in any transaction involving the purchase or sale of the Company's securities during such Blackout Period and should not disclose to others the fact of such suspension of trading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b) Trading Outside Blackout Periods.** It should be noted that, even outside of the trading prohibitions outlined above, any person possessing material non-public information concerning the Company should not engage in any transactions in the Company's securities until the second full trading day after such information has been known publicly, whether or not the Company has recommended a suspension of trading to that person. **Trading in the Company**'**s securities during the trading window should not be considered a** "**safe harbor,**" **and all directors, officers and other persons should use good judgment at all times to make sure that their trades are not effected while they are in possession of material non-public information about the Company.**

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c) Preclearance of Transactions for Officers and Directors.** For transactions involving the Company's securities outside of a Blackout Period, all members of the Board of Directors and officers of the Company (including principal executive officers of the Company's wholly-owned subsidiaries) must receive approval from the Corporate Compliance Officer prior to any such transaction, except the simple exercise of an individual's stock options (other than a broker-assisted cashless exercise). The Corporate Compliance Officer will make every effort to respond to requests for approval as quickly and expeditiously as possible. Any preapproved transaction must be completed within the time period specified by the Corporate Compliance Officer when approval is granted, provided that this time period may not exceed ten days. If for any reason a transaction is not completed within the applicable time period, new approval must be obtained from the Corporate Compliance Officer before the transaction may take place.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10. Section 16 Compliance, Approved Pre-Planned Trading Programs.** The Company's Directors and certain of its officers are subject to additional restrictions under Section 16 of the Securities Exchange Act of 1934 and have additional disclosure obligations and trading restrictions (including the Short-Swing restrictions discussed in Section 11 below). These individuals also have the ability to adopt a Company approved pre-planned trading program, which is described in <u>Attachment 2</u> hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11. Directors and Executive Officers** — **Short-Swing Transactions.** Directors and executive officers of the Company must also comply with the reporting obligations and limitations on short-swing transactions set forth in Section 16 of the Securities Exchange Act of 1934, as amended. The practical effect of these provisions is that executive officers and directors who purchase and sell the Company's securities within a six-month period must disgorge all profits to the Company whether or not they had knowledge of any material non-public information. Under these provisions, and so long as certain other criteria are met, neither the receipt of an option under the Company's option plans, nor the exercise of that option, is deemed a purchase under Section 16; however, the sale of any such shares (including a sale pursuant to a broker's cashless option exercise) generally is a sale under Section 16. Moreover, no executive officer or director may ever make a short sale of the Company's stock. The Company has already provided separate memoranda and other appropriate materials to its executive officers and directors regarding compliance with Section 16 and its related rules.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12. Confidentiality Guidelines.** To provide more effective protection against the inadvertent disclosure of material non-public information about the Company or the companies with which it does business, the Company has adopted the following guidelines with which you should familiarize yourself. These guidelines are not intended to be exhaustive. Additional measures to secure the confidentiality of information should be undertaken as deemed necessary under the circumstances. If you have any doubt as to your responsibilities with respect to confidential information, please seek clarification and guidance from the Corporate Compliance Officer before you act. Do not try to resolve any uncertainties on your own.

The following guidelines establish procedures with which every employee, officer and director should comply in order to maximize the security of confidential inside information:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)** Use passwords to restrict access to the information on computers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)** Limit access to particular physical areas where material non-public information is likely to be documented or discussed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)** Shred obsolete or temporary confidential documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)** Do not discuss **any** Company matter in (i) public places, such as elevators, hallways, restrooms or eating facilities, where conversations might be overheard or (ii) in an internet "chat room," blog or similar internet-based forum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13. Authorized Disclosure of Material Non-Public Information.** Under certain circumstances, the Corporate Compliance Officer may authorize immediate release of material non-public information. If disclosure is authorized, the form and content of all public disclosures shall be approved by the Corporate Compliance Officer and Company legal counsel pursuant to the terms of the Company's Fair Disclosure Policy attached hereto as <u>Attachment 1</u>. If disclosure is not authorized, such material non-public information must not be disclosed or discussed except on a strict "need-to-know" basis. All requests for information, comments, or interviews (other than routine product inquiries) made to any officer, director or employee of the Company should be directed to the Corporate Compliance Officer, who will clear all proposed responses, which must be in compliance with the Company's Fair Disclosure Policy. It is anticipated that most questions raised can be answered by the Corporate Compliance Officer or another Company representative to whom the Corporate Compliance Officer refers the request. All officers, directors and employees must comply with the Company's Fair Disclosure Policy and should not respond to such requests directly, unless expressly instructed otherwise by the Corporate Compliance Officer. In particular, great care should be taken not to comment on the Company's expected future financial results. If the Company wishes to give some direction to investors or securities professionals, it must do so only in compliance with the Company's Fair Disclosure Policy. All communications with representatives of the media and securities analysts shall be directed to the Corporate Compliance Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**14. Company Assistance.** If you have any questions about specific information or proposed transactions, or as to the applicability or interpretation of this Insider Trading Policy or the propriety of any desired action, you are encouraged to contact the Corporate Compliance Officer.

**<u>Adoption of Digimarc Compliance Policies and Procedures</u>**

It is the policy of the Company that the Company and its directors, officers, employees and agents (collectively "Covered Personnel") shall observe all applicable statutes, regulations, orders and interpretations (collectively the "Laws") governing the operation of its business, both domestic and internationally. In order to carry out this policy, the Board of Directors has directed the Company to establish and enforce commercially reasonable compliance standards, policies and procedures to be followed by Covered Personnel that are reasonably capable of ensuring compliance with, and reducing the prospect of improper or illegal conduct under, the Laws material to the operation of its business (the "Compliance Program"). Moreover, to properly manage the risk to the Company and its stockholders, the executive officers of the Company are charged to make commercially reasonable efforts to assure that the Company's Compliance Program is comprehensive and will be effective. Under the Compliance Program, each of the Laws material to the operation of the Company shall be identified and addressed in a commercially reasonable manner.

These policies and procedures are adopted pursuant to resolutions of the Board of Directors as part of the Compliance Program for the Company.

Effective Date: <u>August 2, 2021; amended March 10, 2026</u>

------

**<u>ATTACHMENT 1</u>**

**FAIR DISCLOSURE POLICY**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Introduction</u>

The Company has adopted a written Insider Trading Policy and Guidelines for Disclosure of Material Non-Public Information (the "Insider Trading Policy") to which this Attachment 1 is an attachment containing certain basic principles and policies concerning the determination, use and disclosure of material non-public information. This sets forth the Company's policy concerning the disclosure of material non-public information by the Company to ensure compliance with the SEC's Regulation FD (Fair Disclosure).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Nature of Liability for Selective Disclosure</u>

The SEC adopted Regulation FD in response to the perceived problem of selective disclosure of material non-public information to analysts, institutional investors and others. Under the Regulation, whenever the Company, or certain persons acting on its behalf, discloses material non-public information to certain enumerated persons, the Company must make public disclosure of that same information simultaneously (for intentional disclosures), or promptly (for non-intentional disclosures).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Application</u>

The Regulation applies to communications by an executive officer, director, investor relations officer, public relations officer or any employee possessing equivalent functions, or any other officer, employee or agent who regularly communicates on behalf of the Company with the persons listed below.

The Company cannot make selective disclosures to any of the following four categories of persons, unless the disclosure is specifically excluded by the Regulation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. broker-dealers and their associated persons;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. investment advisors, certain institutional investment managers and their associated persons;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. investment companies, hedge funds, and affiliated persons; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. any holder of the Company's securities under circumstances in which it is reasonably foreseeable that such person would purchase or sell such securities on the basis of the information.

Categories a, b, and c include sell-side analysts, buy-side analysts, large institutional investment managers, and other market professionals who may be likely to trade on the basis of selectively disclosed information.

Only the Chief Executive Officer and the Corporate Compliance Officer, and those employees designated by them, are authorized to speak publicly on behalf of the Company. No other directors, officers or employees should have any communication with any of the persons specified in categories a through d above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Exclusions</u>

Certain disclosures by the Company or persons acting on its behalf are excluded from coverage of the Regulation. The exclusions are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. communications made to a person who owes a duty of trust or confidence, i.e., a "temporary insider", such as the Company's attorneys, investment bankers, or accountants;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. communications made to any person who expressly agrees to maintain the information in confidence;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. communications to an entity whose primary business is the issuance of credit ratings, provided the information is disclosed solely for the purpose of developing a credit rating and the entity's ratings are publicly available;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. communications made in connection with most offerings of securities registered under the Securities Act of 1933; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. communications with the public media.

The Regulation applies to any unregistered offerings (e.g., private placements) made by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Avoiding Liability</u>

Where the Company makes an intentional disclosure of material non-public information to securities professionals or Company securityholders, the Regulation requires the simultaneous disclosure of the same information to the general public. A selective disclosure is intentional when the Company or a person acting on its behalf either knows, or is reckless in not knowing, prior to making the disclosure, that the information is both material and non-public.

Where the Company or individuals acting on its behalf inadvertently disclose material non-public information (i.e., it later determines that the information was not public or was material), it is required to make public disclosure promptly. This means that the Company must make a public disclosure as soon as reasonably practicable (but generally no later than 24 hours) after a senior official of the Company learns of the disclosure and knows (or is reckless in not knowing) that the information disclosed was both material and non-public.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Regulation FD Disclosure Procedures</u> 

The Company intends to be fully compliant with Regulation FD. The following policies and procedures have been adopted by the Company to ensure compliance with Regulation FD:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. The Company's Corporate Compliance Officer is responsible for administering and directing compliance with Regulation FD and the policies and procedures set forth in this Fair Disclosure Policy. Any questions relating to compliance with Regulation FD should be directed to the Corporate Compliance Officer. All public disclosures must be approved by the Corporate Compliance Officer or someone designated by the Corporate Compliance Officer. Company employees shall promptly report to the Corporate Compliance Officer any violations (whether or not they were intentional) of the Company's Fair Disclosure Policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. As in the case of insider trading, the Company's Corporate Compliance Officer, in consultation with legal counsel, as necessary, will make a determination of whether non-public information is material. Material non-public information must not be selectively disclosed. All public disclosures must be made in one of the following manners ("Public Disclosure Procedures"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. In a Form 8-K, 10-K, 10-Q or similar filing with the SEC; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. Through the issuance of a press release, widely distributed through regular channels, containing the material information; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. Through a conference call held in an open manner, permitting all interested members of the public to listen in either by telephonic means or through Internet webcasting. Adequate notice, by press release and/or website posting of the scheduled conference call and webcast must set forth the time and date of the conference call and webcast, and instructions on how to access the call and webcast. As to quarterly earnings calls, the required notice should be given at least 72 hours before the call. A replay of the call or the webcast will be available to the public for at least 72 hours. The Company will archive the webcast and the calls; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. Other methods deemed adequate by the Corporate Compliance Officer, after consultation with legal counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Earnings guidance will not be provided to securities analysts unless done through a Public Disclosure Procedure set forth above. Generally, the Company should not review analyst reports, and any review actually undertaken by the Company or individuals acting on its behalf should be limited to historical items and similar factual matters. Any updates to the Company's previously disclosed material non-public information shall be done only through a Public Disclosure Procedure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. In the case of intentional disclosures, the Company must make a simultaneous public disclosure of the same information to the general public through a Public Disclosure Procedure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. In the case of unintentional disclosures, the Company must make a public disclosure through a Public Disclosure Procedure as soon as reasonably practicable (but no later than 24 hours) after a senior official of the Company learns of the disclosure and determines that the information disclosed was both material and non-public.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Prior to agreeing to make a presentation at any analyst, investor or industry conference, executives must receive the approval of the Corporate Compliance Officer. The content to be presented at such conferences is subject to the approval of the Corporate Compliance Officer. In no event may material non-public information be disclosed at such conferences unless such information is simultaneously disclosed through a Public Disclosure Procedure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. The Company considers violation of its Fair Disclosure Policy and Regulation FD to be grounds for discipline, including termination for cause.

**<u>ATTACHMENT 2</u>**

**APPROVED PRE-PLANNED TRADING PROGRAMS**

1. <u>Introduction</u>

The Company has adopted a written Insider Trading Policy and Guidelines for Disclosure of Material Non-Public Information (the "Insider Trading Policy") to which this Attachment 2 is an attachment, containing certain basic principles and policies concerning the trading by officers, directors and employees of the Company in the securities of the Company. This sets forth the Company's policy concerning approved pre-planned trading programs by the Company's Executive Officers and Directors.

Notwithstanding any other guidelines contained in the Insider Trading Policy to the contrary, it shall not be a violation of this Insider Trading Policy for the Company's Directors and Executive Officers to sell (or purchase) securities of the Company under certain pre-planned trading programs adopted to purchase or sell securities in the future which are in compliance with SEC Rule 10b5-1 and have been approved in advance, in writing, by the Corporate Compliance Officer. To initiate any transactions under this exception, a Director or Executive Officer (a "person" for purposes of this Attachment 2 only) must comply with each of the following elements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a) Before becoming aware of any material non-public information**, the person must (1) enter into a binding contract to purchase or sell securities, (2) instruct another person to purchase or sell securities for the person's account, or (3) adopt a written plan for purchasing or selling the securities (each, a "Trading Program").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)** The Trading Program must contain one of the following: (1) specify the amount, price, and date of the transaction(s); (2) include a written formula, algorithm, or computer program for determining amounts, prices, and dates for the transaction(s); or (3) not permit the person to exercise any subsequent influence over how, when, or whether to make purchases or sales (and any other person exercising such influence under the Trading Program must not be aware of material non-public information when doing so).

------

For the purposes of a Trading Program, the following definitions apply:

&nbsp;&nbsp;&nbsp;&nbsp;● "Amount" means a specified number of securities or a specified dollar value of securities.

&nbsp;&nbsp;&nbsp;&nbsp;● "Price" means a market price on a particular date or a limit price, or a particular dollar price.

&nbsp;&nbsp;&nbsp;&nbsp;● "Date" means, in the case of a market order, the day of the year when the order is to be executed, or as soon thereafter as is practicable under ordinary principles of best execution. In case of a limit order, "date" means the day of the year when the order is in force.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)** Purchases or sales must occur pursuant to the Trading Program.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)** The Trading Program must be entered into in good faith and cannot be entered into as part of a plan or scheme to evade the prohibitions of Rule 10b5-1. Therefore, although modifications to an existing Trading Program are not absolutely prohibited, a Trading Program should be adopted with the intention that it will be amended or modified infrequently, if at all, since changes to the Trading Program will raise issues as to the individual's good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)** No person purchasing or selling securities under a Trading Program may take (or modify existing) hedging positions to account for his or her planned purchases or sales.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)** Any person wishing to proceed with a Trading Program **(or to modify or terminate a previously adopted Trading Program)** must first obtain written approval from the Corporate Compliance Officer. This pre-clearance requirement will permit the Company to review the proposed Trading Program as to compliance with applicable securities laws (including Rule 10b5-1), this Insider Trading Policy and the best interests of the Company, with a view toward avoiding unnecessary litigation and other consequences detrimental to the Company and the person seeking to avail him or herself of this exception. The Company therefore reserves the right to approve or disapprove any proposed Trading Program (or the modification or termination of any existing Trading Program) in its sole and absolute discretion based on, among other factors, policies and criteria adopted by the Company from time to time, market conditions, legal and regulatory considerations, and the potential impact of any such Trading Program on any actual or prospective transactions (including the distribution of securities) to which the Company is or may be a party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)** The Company will not approve any proposed Trading Program (or the modification or termination of any existing Trading Program) unless it includes the following elements, as well as such additional terms and conditions as the Company may require from time to time:

&nbsp;&nbsp;&nbsp;&nbsp;● To reduce potential exposure, the Company will need to ensure that there is no material information which has not been publicly disclosed at the time a person wishes to enter into a Trading Program (or to modify or terminate a previously adopted Trading Program). If there is any such undisclosed information, the Company may delay its approval of the Trading Program until the information has been disclosed. The Company may also require an interval between the adoption of the Trading Program and the first trade under such Trading Program.

&nbsp;&nbsp;&nbsp;&nbsp;● Under appropriate circumstances, the Company may wish to make a public announcement of the Trading Program at the time of adoption.

&nbsp;&nbsp;&nbsp;&nbsp;● The Company will need to confirm that the proposed Trading Program contains procedures to ensure prompt compliance with (i) any reporting requirements under Section 16 of the Securities Exchange Act of 1934, as amended, (ii) SEC Rule 144 or Rule 145 relating to any sales under the Trading Program, and (iii) any suspension of trading or other trading restrictions that the Company determines to impose on sales under an approved Trading Program, under applicable law or in connection with a distribution by the Company of securities, including without limitation lock up or affiliate letters required in connection with a proposed merger, acquisition or distribution of Company securities or any restrictions on or suspensions of trading imposed by applicable authorities (including the SEC or other governmental authority, or any stock exchange, automated quotation system or other self regulated organization that promulgates rules to which the Company is subject from time to time).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(h)** Each person understands that the approval or adoption of a Trading Program in no way reduces or eliminates such person's obligations under Section 16 of the Securities Exchange Act of 1934, including such person's disclosure obligations and short-swing trading liabilities thereunder. If any questions arise, such person should consult with their own counsel prior to entering into a Trading Program.

------

**<u>Exhibit A</u>**

<u>Restrictions on Employees</u>

**1. <u>Employees, Officers and Directors Prohibited From Trading During A Blackout Period</u>**

All Officers

All Directors

All Supervisory Employees on the finance staff

Other employees specifically designated from time to time

**2. <u>Employees, Officers and Directors Required to Pre-Clear All Trades</u>**

All Officers

All Directors

Any principal executive officers of the Company's wholly-owned subsidiaries

## Exhibit 21.1

**Exhibit 21.1** 

**List of Subsidiaries** 

Year Ended December 31, 2025

---

| | |
|:---|:---|
| Name of Affiliate or Entity | Place of<br> Incorporation |
| Attributor Corporation (100% ownership) | Oregon |
| TVaura LLC (51% ownership) | Delaware |
| TVaura Mobile LLC (49% ownership) | Delaware |
| Digimarc GmbH (100% ownership) | Germany |
| EVRYTHNG Limited (100% ownership) | United Kingdom |
| EVRYTHNG Sarl (100% ownership) | Switzerland |

---

## Exhibit 23.1

**Exhibit 23.1** 

**Consent of Independent Registered Public Accounting Firm** 

We consent to the incorporation by reference in the registration statements (No. 333-271870, 333-262230, 333-196035, 333-224876, 333-154524, 333-287700, and 333-287697) on Form S-8 and registration statements (No. 333-272903, 333-262229, 333-258584, and 333-238995) on Form S-3 of our report dated March 11, 2026, with respect to the consolidated financial statements of Digimarc Corporation.

/s/ KPMG LLP

Portland, Oregon

March 11, 2026

## Exhibit 31.1

**Exhibit 31.1**

**DIGIMARC CORPORATION**

**CERTIFICATION**

I, Riley McCormack, certify that:

1. I have reviewed this annual report on Form 10-K 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 controls over financial reporting (as defined in Exchange Act Rule 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: March 11, 2026 | By: | /s/ Riley McCormack |
|  |  | RILEY MCCORMACK |
|  |  | *Chief Executive Officer* |

---

## Exhibit 31.2

**Exhibit 31.2**

**DIGIMARC CORPORATION**

**CERTIFICATION**

I, Charles Beck, certify that:

1. I have reviewed this annual report on Form 10-K 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 controls over financial reporting (as defined in Exchange Act Rule 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.

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| | | |
|:---|:---|:---|
| Date: March 11, 2026 | By: | /s/ Charles Beck |
|  |  | CHARLES BECK |
|  |  | *Chief Financial Officer* |

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## Exhibit 32.1

**Exhibit 32.1**

**DIGIMARC CORPORATION**

**CERTIFICATION**

In connection with the Annual Report of Digimarc Corporation (the "Company") on Form 10-K for the year ended December 31, 2025 as filed with the Securities and Exchange Commission (the "Report"), I, Riley McCormack, 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: March 11, 2026

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| | |
|:---|:---|
| By: | /s/ Riley McCormack |
|  | RILEY MCCORMACK |
|  | *Chief Executive Officer* |

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## Exhibit 32.2

**Exhibit 32.2**

**DIGIMARC CORPORATION**

**CERTIFICATION**

In connection with the Annual Report of Digimarc Corporation (the "Company") on Form 10-K for the year ended December 31, 2025 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: March 11, 2026

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| | |
|:---|:---|
| By: | /s/ Charles Beck |
|  | Charles Beck |
|  | *Chief Financial Officer* |

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## Ex-97

**Exhibit 97**

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| | |
|:---|:---|
| Approved, September 15, 2023<br>**Incentive Compensation Recovery Policy** | ![img01logo.jpg](img01logo.jpg) |

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**DIGIMARC CORPORATION**

&nbsp;&nbsp;&nbsp;&nbsp;**1.**  **<u>Purpose</u>** 

The purpose of the Digimarc Corporation Incentive Compensation Recovery Policy (this "**Policy**") is to provide for the recovery of certain Incentive-Based Compensation in the event of an Accounting Restatement. This Policy is intended to comply with, and to be administered and interpreted consistent with, Section 10D of the Securities Exchange Act of 1934, as amended (the "**Exchange Act**"), Rule 10D-1 promulgated under the Exchange Act ("**Rule 10D-1**") and Listing Rule 5608 adopted by the Nasdaq Stock Market LLC **(**"**Nasdaq**"*)* (the "**Listing Standards**"). Unless otherwise defined in this Policy, capitalized terms shall have the meanings set forth in Section 10 below.

&nbsp;&nbsp;&nbsp;&nbsp;**2.**  **<u>Policy for</u> <u> </u> <u>Recovery of Erroneously Awarded Compensation</u>** 

In the event of an Accounting Restatement, the Company will recover reasonably promptly the amount of any Erroneously Awarded Compensation Received by an Executive Officer during the Recovery Period.

&nbsp;&nbsp;&nbsp;&nbsp;**3.**  **<u>Administration</u>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1.** This Policy shall be administered by the Compensation Committee, except that the Board may determine to act as the administrator or designate another committee of the Board to act as the administrator with respect to any portion of this Policy other than Section 3.3 (the "**Administrator** "). The Administrator is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2.** The Administrator is authorized to take appropriate steps to implement this Policy and may effect recovery hereunder by: (i) requiring payment to the Company, (ii) set-off, (iii) reducing compensation, or (iv) such other means or combination of means as the Administrator determines to be appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.3.** The Company need not recover Erroneously Awarded Compensation if and to the extent that the Compensation Committee determines that such recovery is impracticable and not required under Rule 10D-1 and the Listing Standards because: (i) the direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered after making a reasonable attempt to recover, (ii) recovery would violate home country law adopted prior to November 28, 2022, after obtaining the opinion of home country counsel acceptable to Nasdaq, or (iii) recovery would likely cause an otherwise tax-qualified broad-based retirement plan to fail to meet the requirements of Section 401(a)(13) or Section 411(a) of the Internal Revenue Code of 1986, as amended, and regulations thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.4.** Any determinations made by the Administrator under this Policy shall be final and binding on all affected individuals and need not be uniform with respect to each individual covered by this Policy.

&nbsp;&nbsp;&nbsp;&nbsp;**4.**  **<u>Other Recovery Rights; Company Claims</u>** 

Any right of recovery pursuant to this Policy is in addition to, and not in lieu of, any other remedies or rights of recovery that may be available to the Company under applicable law or pursuant to the terms of any other compensation recovery policy of the Company that may be in effect from time to time, including in any employment agreement, plan or award agreement, or similar agreement and any other legal remedies available to the Company. Nothing contained in this Policy and no recovery hereunder shall limit any claims, damages, or other legal remedies the Company may have against an individual arising out of or resulting from any actions or omissions by such individual.

&nbsp;&nbsp;&nbsp;&nbsp;**5.**  **<u>Reporting and Disclosure</u>** 

The Company shall file all disclosures with respect to this Policy in accordance with the requirements of federal securities laws.

&nbsp;&nbsp;&nbsp;&nbsp;**6.**  **<u>Indemnification Prohibition</u>** 

Notwithstanding the terms of any indemnification or insurance policy or any contractual arrangement that may be interpreted to the contrary, the Company shall not indemnify any individual with respect to amount(s) recovered under this Policy or claims relating to the enforcement of this Policy, including any payment or reimbursement for the cost of third-party insurance purchased by such individual to fund potential clawback obligations hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;**7.**  **<u>Amendment; Termination</u>** 

The Board or the Compensation Committee may amend or terminate this Policy from time to time in its discretion as it deems appropriate and shall amend this policy as it deems necessary to comply with applicable law or any rules or standards adopted by a national securities exchange or association on which the Company's securities are listed; provided, however, that no amendment or termination of this Policy shall be effective to the extent it would cause the Company to violate any federal securities laws, Securities and Exchange Commission rule or the rules or standards of any national securities exchange or association on which the Company's securities are listed.

8500 SW Creekside Place, Beaverton, OR 97008 USA

1+ 503 469 4800 +1 800 344 4627

digimarc.com

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&nbsp;&nbsp;&nbsp;&nbsp;**8.**  **<u>Successors</u>** 

This Policy shall be binding and enforceable against all individuals who are or were Executive Officers and their beneficiaries, heirs, executors, administrators, or other legal representatives.

&nbsp;&nbsp;&nbsp;&nbsp;**9.**  **<u>Effective Date</u>** 

This Policy is effective only for Incentive-Based Compensation Received by an Executive Officer on or after the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;**10.**  **<u>Definitions.</u>** For purposes of this Policy, the following terms shall have the meanings set forth below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.1.** **"Accounting Restatement**" means an accounting restatement of the Company's financial statements due to the Company's material noncompliance with any financial reporting requirement under the securities laws, including any accounting restatement required to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.2.** **"Administrator**" has the meaning set forth in Section 3.1 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.3.** **"Board**" means the Company's Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.4.** **"Company**" means Digimarc Corporation, an Oregon corporation, and its affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.5.** **"Committee**" means the Compensation and Talent Management Committee of the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.6.** **"Effective Date**" means October 2, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.7.** **"Erroneously Awarded Compensation**" means the amount, as determined by the Administrator, of Incentive-Based Compensation received by an Executive Officer that exceeds the amount of Incentive-Based Compensation that would have been received by the Executive Officer had it been determined based on the restated amounts. For Incentive-Based Compensation based on stock price or total shareholder return ()"**TSR**") the Administrator will determine the amount based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or TSR upon which the Incentive-Based Compensation was received, and the Company will maintain documentation of the determination of that reasonable estimate and provide the documentation to Nasdaq. In all cases, the amount to be recovered will be calculated without regard to any taxes paid by the Executive Officer with respect to the Erroneously Awarded Compensation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.8.** **"Executive Officers**" means the Company's current and former executive officers as determined by the Administrator in accordance with Rule 10D-1 and the Listing Standards. Generally, Executive Officers include any executive officer designated by the Board as an "officer" under Rule 16a-1(f) under the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.9.** **"Financial Reporting Measure**" means (i) any measure that is determined and presented in accordance with the accounting principles used in preparing the Company's financial statements and any measure derived wholly or in part from such a measure, and (ii) any measure based wholly or in part on the Company's stock price or total shareholder return. A Financial Reporting Measure need not be presented within the Company's financial statements or included in a filing with the Securities and Exchange Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.10.** **"Incentive-Based Compensation**" means any compensation granted, earned, or vested based in whole or in part on the Company's attainment of a Financial Reporting Measure that was Received by an individual (i) on or after the Effective Date and after such individual began service as an Executive Officer, (ii) who served as an Executive Officer at any time during the performance period for the Incentive-Based Compensation and (iii) while the Company has a class of securities listed on a national securities exchange or association.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.11.** "**Received** ": Incentive-Based Compensation is deemed to be "**Received**" in the Company's fiscal period during which the Financial Reporting Measure specified in the Incentive-Based Compensation award is attained, even if the payment or grant of such Incentive-Based Compensation occurs after the end of that period.

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8500 SW Creekside Place,

Beaverton, OR 97008 US

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.12.** **"Recovery Period**" means the three completed fiscal years immediately preceding the date that the Company is required to prepare the applicable Accounting Restatement and any "transition period" as described under Rule 10D-1 and the Listing Standards. For purposes of this Policy, the "**date that the Company is required to prepare the applicable Accounting Restatement**" is the earlier to occur of (i) the date the Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement, or (ii) the date a court, regulator, or other legally authorized body directs the Company to prepare an Accounting Restatement.

&nbsp;&nbsp;&nbsp;&nbsp;**11.**  **<u>Acknowledgment by Executive Officer</u>** 

Each Executive Officer shall sign and return to the Company an Acknowledgment Form substantially the form attached to this Policy as Exhibit A or in such other form determined by the Administrator, pursuant to which the Executive Officer agrees to be bound by, and comply with, the terms of this Policy.

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8500 SW Creekside Place,

Beaverton, OR 97008 US

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**<u>Exhibit A</u>**

**DIGIMARC CORPORATION**<br> **Incentive Compensation Recovery Policy**

**ACKNOWLEDGMENT FORM**

I, the undersigned, acknowledge and affirm that I have received and reviewed a copy of the Digimarc Corporation Incentive Compensation Recovery Policy, and agree that: (i) I am and will continue to be subject to the Digimarc Corporation Incentive Compensation Recovery Policy, as amended from time to time (the "**Policy**"), (ii) the Policy will apply to me both during and after my employment with the Company, and (iii) I will abide by the terms of the Policy, including, without limitation, by promptly returning any Erroneously Awarded Compensation to the Company to the extent required by, and in a manner determined by the Administrator and permitted by, the Policy. In the event of any inconsistency between the Policy and the terms of any employment agreement or offer letter to which I am a party, or the terms of any compensation plan, program, or agreement under which any compensation has been granted, awarded, earned or paid, the terms of the Policy shall govern.

Capitalized terms used but not otherwise defined in this Acknowledgement Form shall have the meanings ascribed to such terms in the Policy.

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| Signature |
| Print Name |
| Date |

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8500 SW Creekside Place,

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