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What changed in Digimarc CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Digimarc CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+114 added−136 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-29)

Top changes in Digimarc CORP's 2024 10-K

114 paragraphs added · 136 removed · 94 edited across 2 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

1 edited+0 added−0 removed5 unchanged
Biggest changeForward-looking statements include but are not limited to statements relating to: • our expectations regarding the acquisition of EVRYTHNG and its impact on our business; • 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; • our belief regarding the global deployment of our products; • our belief in the utility of Digimarc Validate; • our beliefs regarding potential outcomes of participating in the HolyGrail 2.0 initiative and the utility of our products in the recycling industry; • our initiatives around sustainability, people and governance; • 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; • 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; • anticipated revenue to be generated from current contracts, renewals, and as a result of new programs; 26 Table of Contents • 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; • 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; • 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 and the effect of increasing diversity within our workforce; • our beliefs regarding cybersecurity incidents; • our beliefs related to certain provisions in our bylaws and articles of incorporation; • our beliefs related to legal proceedings and claims arising in the ordinary course of business; and • other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in Item 1A.
Biggest changeForward-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 2.0 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; • 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; 26 Table of Contents • 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; • 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; • 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 and the effect of increasing diversity within our workforce; • our beliefs regarding cybersecurity incidents; • our beliefs related to certain provisions in our bylaws and articles of incorporation; • our beliefs related to legal proceedings and claims arising in the ordinary course of business; and • other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in Item 1A.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

93 edited+20 added−42 removed99 unchanged
Biggest changeThe other information required by this item is incorporated herein by reference to the information 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 under the captions “Election of Directors,” “Management Team,” “Report of the Governance, Nominating, and Sustainability Committee of the Board of Directors—Audit Committee,” and “Other Matters—Delinquent Section 16(a) Reports.” ITEM 11: EXECUTIVE COMPENSATION The information required by this item is incorporated herein by reference to the information 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, under the captions “Director Compensation” and “Executive Compensation.” ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this item is incorporated herein by reference to the information 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, under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information.” ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item is incorporated herein by reference to the information 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 under the captions “Determinations of Board Member Independence” and “Related Party Transactions.” ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this item is incorporated herein by reference to the information 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, under the captions “Audit and Other Fees Paid to KPMG LLP” and “Approval of Audit Fees and Pre-Approval Policy.” 29 Table of Contents ITEM 15: 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, 2023 and 2022 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022 Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2023 and 2022 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 (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.
Biggest changeITEM 14: 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. 29 Table of Contents ITEM 15: 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, 2024 and 2023 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2024 and 2023 Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2024 and 2023 Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 (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.
Connecting engagements across the physical and digital worlds in a singular view results in powerful new insights for brands. • Digimarc Recycle increases the quality and quantity of recycled materials by digitizing products and packaging with digital watermarking technology. Coupled with consumer engagement capabilities, brands can leverage a direct, digital communications channel.
Connecting engagements across the physical and digital worlds in a singular view results in powerful new capabilities and insights for brands. • Digimarc Recycle increases the quality and quantity of recycled materials by digitizing products and packaging with digital watermarking technology. Coupled with consumer engagement capabilities, brands can leverage a direct, digital communications channel.
The ASU requires interim and annual disclosure of significant segment expenses that are regularly provided to the chief operating decision-maker ("CODM") and included within the reported measure of a segment’s profit or loss, requires interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually, requires disclosure of the position and title of the CODM, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss and contains other disclosure requirements.
The ASU requires interim and annual disclosure of significant segment expenses that are regularly provided to the chief operating decision-maker (“CODM”) and included within the reported measure of a segment’s profit or loss, requires interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually, requires disclosure of the position and title of the CODM, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss and contains other disclosure requirements.
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 including stock options, restricted stock awards, restricted stock units and performance stock units based on estimated fair values.
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 including restricted stock awards, restricted stock units and performance stock units based on estimated fair values.
ITEM 9C: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable 28 Table of Contents 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 2024 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 9C: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable 28 Table of Contents 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 2025 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.
These awards include stock options, restricted stock awards, restricted stock units, and performance restricted stock units. 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.
These awards include restricted stock awards, restricted stock units, and performance restricted stock units. 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.
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. ( 14 ) 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.
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. ( 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.
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 two largest customers.
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 three largest customers.
The effective tax rate for each of the years ended December 31, 2023 and 2022 was 0% . The Company continues to provide for a valuation allowance to offset its net deferred tax assets until such time it is more likely than not the tax assets or portions thereof will be realized.
The effective tax rate for each of the years ended December 31, 2024 and 2023 was 0% . The Company continues to provide for a valuation allowance to offset its net deferred tax assets until such time it is more likely than not the tax assets or portions thereof will be realized.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
(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)) 10.21 Registration Rights Agreement, dated September 29, 2020, by and 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)) 10.18 Registration Rights Agreement, dated September 29, 2020, between the Company and TCM Strategic Partners L.P.
ITEM 9B: OTHER INFORMATION During the three months ended December 31, 2023, 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 9B: OTHER INFORMATION During the three months ended December 31, 2024 , 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.
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 Simulation model to estimate the fair value: Stock Price.
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.
F- 13 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) ( 4 ) Segment Information Geographic Information 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.
F- 13 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (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.
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, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
The 2018 Plan provides for the grant of incentive and non-qualified stock options, stock appreciation rights, stock awards, restricted stock awards, restricted stock units, performance shares, performance 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.
The 2018 Plan provides for the grant of incentive and, stock appreciation rights, stock awards, restricted stock awards, restricted stock units, performance shares, performance 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.
( 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 “ Contingencies .” To date, there have been no claims made under such indemnification provisions.
( 16 ) Commitments and Contingencies Certain of the Company’s product and services agreements include an indemnification provision for claims from third parties relating to the Company’s intellectual property. Such indemnification provisions are accounted for in accordance with ASC 450. To date, there have been no claims made under such indemnification provisions.
Chamness, Meyer, Beck, and Rodriguez (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)) 10.7 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) 10.8 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) 10.9 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) 10.10 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)) 10.11 Second Amendment to Lease, dated July 31, 2015, by and 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)) 10.12 Patent License Agreement, effective as of 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 April 28,2016 (File No. 001-34108))(3) 10.13 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)) *10.14 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)) *10.15 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)) 10.16 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) 10.17 Equity Distribution Agreement, dated May 16, 2019 by and between the Company and Wells Fargo Securities, LLC (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed with the Commission on May 17, 2019 (File No. 001-34108)) 10.18 Amendment No. 1 to Equity Distribution Agreement, dated August 6, 2020, by and between the Company 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)) 31 Table of Contents *10.19 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)) 10.20 Subscription Agreement, dated September 29, 2020, by and between the Company and TCM Strategic Partners L.P.
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)) 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) 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) 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) 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)) 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)) 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)) *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)) *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)) 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) 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)) *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)) 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 January 4, 2022 (File No. 001-34108)) 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) 10.2 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 10.2 to the Company’s amended Annual Report on Form 10-K/A, filed with the Commission on August 7, 2013 (File No. 001-34108))(4) 10.3 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 *10.4 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)) *10.5 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)) *10.6 Form of Change of Control Retention Agreement entered into by and between Digimarc Corporation and each of Messrs.
(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)) 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) 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)) *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)) *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)) *10.5 Form of Change of Control Retention Agreement entered into by and between Digimarc Corporation and Mr.
The Company assesses the probability of an adverse outcome and determines if it is remote, reasonably possible or probable as defined in accordance with 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.
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.
This authoritative guidance will be effective for the Company starting in the fiscal year ending December 31, 2024 for annual periods and in the first quarter of the fiscal year ending December 31, 2025 for interim periods, with early adoption permitted. The Company is currently evaluating the effect of this new standard on the Company’s disclosures.
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 this new standard on the Company’s disclosures.
See Note 7 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.” These contract acquisition costs are recognized in proportion to the revenue recognized from the contract they are associated with.
See Note 7 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 Sheet. These contract acquisition costs are recognized in proportion to the revenue recognized from the contract they are associated with.
Both customers have significant financial means and a history of paying their invoices timely. The Company does not have a history of significant bad debt write-offs. As a result, the Company’s credit risk associated with accounts receivable is believed to be low.
All three customers have significant financial means and a history of paying their invoices. The Company does not have a history of significant bad debt write-offs. As a result, the Company’s credit risk associated with accounts receivable is believed to be low.
DIGIMARC CORPORATION Date: February 29, 2024 By: /s/ Charles Beck Charles Beck 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 February 29, 2024 Riley McCormack (Principal Executive Officer) /s/ Charles Beck Chief Financial Officer and Treasurer February 29, 2024 Charles Beck (Principal Financial and Accounting Officer) /s/ Alicia Syrett Chair of the Board of Directors February 29, 2024 Alicia Syrett /s/ Milena Alberti-Perez Director February 29, 2024 Milena Alberti-Perez /s/ LaShonda Anderson-Williams Director February 29, 2024 LaShonda Anderson-Williams /s/ Sandeep Dadlani Director February 29, 2024 Sandeep Dadlani /s/ Katie Kool Director February 29, 2024 Katie Kool /s/ Michael Park Director February 29, 2024 Michael Park 33 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets F-4 Consolidated Statements of Operations and Comprehensive Loss F-5 Consolidated Statements of Shareholders’ Equity F-6 Consolidated Statements of Cash Flows F-7 Notes to Consolidated Financial Statements F-8 F-1 Table of Contents 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, 2023 and 2022, 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, 2023, and the related notes (collectively, the consolidated financial statements).
DIGIMARC CORPORATION Date: February 27, 2025 By: /s/ Charles Beck Charles Beck 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 February 27, 2025 Riley McCormack (Principal Executive Officer) /s/ Charles Beck Chief Financial Officer and Treasurer February 27, 2025 Charles Beck (Principal Financial and Accounting Officer) /s/ Katie Kool Chair of the Board of Directors February 27, 2025 Katie Kool /s/ Dana Mcilwain Director February 27, 2025 Dana Mcilwain /s/ LaShonda Anderson-Williams Director February 27, 2025 LaShonda Anderson-Williams /s/ Michael Park Director February 27, 2025 Michael Park /s/ Sandeep Dadlani Director February 27, 2025 Sandeep Dadlani /s/ Sheila Cheston Director February 27, 2025 Sheila Cheston 33 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets F-4 Consolidated Statements of Operations and Comprehensive Loss F-5 Consolidated Statements of Shareholders’ Equity F-6 Consolidated Statements of Cash Flows F-7 Notes to Consolidated Financial Statements F-8 F-1 Table of Contents 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, 2024 and 2023, 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, 2024, and the related notes (collectively, the consolidated financial statements).
In connection with the Company’s annual impairment test of goodwill as of June 30, 2023 and 2022 , 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.
In connection with the Company’s annual impairment tests of goodwill as of June 30, 2024 and 2023 , 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.
Cash equivalents include money market securities, commercial paper, federal agency notes and U.S. treasuries totaling $17,362 and $31,452 at December 31, 2023 and 2022 , respectively. Cash equivalents are carried at either cost or fair value depending on the type of security.
Cash equivalents include commercial paper, federal agency notes, U.S. treasuries and money market securities, totaling $8,889 and $17,362 at December 31, 2024 and 2023 , respectively. Cash equivalents are carried at either cost or fair value depending on the type of security.
(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)) 10.22 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)) + *10.23 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)) *10.24 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)) *10.25 Amendment No. 1 to Employment Agreement, dated as of February 27, 2023, between Digimarc Corporation and Riley McCormack *10.26 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)). 10.27 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)). 10.28 Lease Extension Agreement, dated February 4, 2022, by and 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)). *10.29 Form of Change of Control Retention Agreement entered into by and between Digimarc Corporation and each of Messrs.
(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)) 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)) + 31 Table of Contents *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)) *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)) *10.22 Amendment No. 1 to Employment Agreement, dated as of February 27, 2023, between Digimarc Corporation and Riley McCormack (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)) *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)) 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)) 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)) *10.26 Form of Change of Control Retention Agreement entered into between Digimarc Corporation and Mr.
The following table provides information about contract assets: December 31, December 31, 2023 2022 Contract acquisition costs, current $ 113 $ 197 Contract acquisition costs, long-term 9 104 Total $ 122 $ 301 The Company has contract liabilities from contracts with customers that are classified as “deferred revenue” in the Consolidated Balance Sheets.
The following table provides information about contract assets: December 31, December 31, 2024 2023 Contract acquisition costs, current $ 38 $ 113 Contract acquisition costs, long-term — 9 Total $ 38 $ 122 The Company has contract liabilities from contracts with customers that are classified as “deferred revenue” in the Consolidated Balance Sheets.
The Digimarc Illuminate platform is a distinctive SaaS cloud-based platform for digital connectivity that provides the tools for the application of advanced digital watermarks and dynamic QR codes, software (digital twins) that enables various systems and devices to interact with those data carriers, and a centralized platform for capturing insights about digital interactions and automating activities based on that information.
The Digimarc Illuminate platform is a distinctive software as a service (“SaaS”) cloud-based platform for digital connectivity that provides the tools for the application of advanced digital watermarks and dynamic Quick Response (“QR”) codes, software (digital twins) that enables various systems and devices to interact with those data carriers, and a centralized platform for capturing insights about digital interactions and automating activities based on that information.
The following table provides additional details of leases presented in the Consolidated Balance Sheets: December 31, December 31, 2023 2022 Lease right of use assets $ 4,017 $ 4,720 Lease liabilities, current $ 582 $ 939 Lease liabilities, long-term $ 5,994 $ 5,977 Weighted-average remaining life (in years) 6.5 6.7 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 following table provides additional details of leases presented in the Consolidated Balance Sheets: December 31, December 31, 2024 2023 Lease right of use assets $ 3,659 $ 4,017 Lease liabilities, current $ 781 $ 582 Lease liabilities, long-term $ 5,213 $ 5,994 Weighted-average remaining life (in years) 5.7 6.5 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 term of the sublease and lease extension runs through September 2030. The remaining rent payments as of December 31, 2023 were $8,756 plus operating expenses, payable in monthly installments. The first 26 months of rent payments and operating expenses are abated to cover the remaining lease term on the Company’s former corporate headquarters.
The term of the sublease and lease extension runs through September 2030. The remaining rent payments as of December 31, 2024 were $7,796 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.
Amortization expense on intangible assets was as follows: Year Ended December 31, 2023 2022 Amortization expense $ 6,097 $ 6,078 F- 21 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) For intangible assets recorded at December 31, 2023 , the estimated future aggregate amortization expense for the years ending December 31, 2024 through December 31, 2028 is as follows: Amortization Year Ended December 31, Expense 2024 $ 6,194 2025 6,175 2026 6,142 2027 1,542 2028 1,531 ( 12 ) Leases The Company accounts for leases in accordance with ASC 842, “ Leases. ” The Company entered into a sublease agreement and lease extension agreement for office space in Beaverton, Oregon in February 2022 to move the Company’s corporate headquarters.
Amortization expense on intangible assets was as follows: Year Ended December 31, 2024 2023 Amortization expense $ 6,233 $ 6,097 F- 19 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) For intangible assets recorded at December 31, 2024 , the estimated future aggregate amortization expense for the years ending December 31, 2025 through December 31, 2029 is as follows: Amortization As of December 31, 2024 Expense 2025 $ 6,099 2026 6,068 2027 1,536 2028 1,525 2029 1,495 ( 11 ) Leases The Company accounts for leases in accordance with ASC 842, “ Leases. ” The Company entered into a sublease agreement and lease extension agreement for office space in Beaverton, Oregon in February 2022 to move the Company’s corporate headquarters.
F- 8 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) 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.
Actual results may differ from these estimates under different assumptions or conditions. F- 8 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) 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.
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 and U.S. treasuries.
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, U.S. treasuries and federal agency notes. The Company’s marketable securities are classified as available-for-sale.
The following table provides information about contract liabilities: December 31, December 31, 2023 2022 Deferred revenue, current $ 5,853 $ 4,145 Deferred revenue, long-term 7 15 Total $ 5,860 $ 4,160 The Company recognized $4,085 of revenue during the year ended December 31, 2023 that was included in the contract liability balance as of December 31, 2022 .
The following table provides information about contract liabilities: December 31, December 31, 2024 2023 Deferred revenue, current $ 4,020 $ 5,853 Deferred revenue, long-term 2 7 Total $ 4,022 $ 5,860 The Company recognized $5,725 of revenue during the year ended December 31, 2024 that was included in the contract liability balance as of December 31, 2023 .
Additional details of the Company’s operating leases are presented in the following table: Year Ended December 31, 2023 2022 Operating lease expense $ 1,556 $ 1,905 Cash paid for operating leases $ 1,151 $ 1,572 F- 22 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) The table below reconciles the cash payment obligations for the next five years and total of the remaining years for the operating lease liability recorded in the Consolidated Balance Sheet as of December 31, 2023 : Cash Payment Year Ended December 31, Obligations 2024 $ 1,186 2025 1,317 2026 1,356 2027 1,397 2028 1,296 Thereafter 2,455 Total lease payments 9,007 Imputed interest (2,431 ) Total minimum lease payments $ 6,576 ( 13 ) Shareholders ’ Equity Preferred Stock In June 2008, the Board of Directors authorized 2,500 shares of preferred stock, par value $0.001 per share.
Additional details of the Company’s operating leases are presented in the following table: Year Ended December 31, 2024 2023 Operating lease expense $ 1,482 $ 1,556 Cash paid for operating leases $ 1,663 $ 1,151 F- 20 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) The table below reconciles the aggregate cash payment obligations for the next five years and total of the remaining years for the operating lease liability recorded in the Consolidated Balance Sheet as of December 31, 2024 : Cash Payment As of December 31, 2024 Obligations 2025 $ 1,317 2026 1,356 2027 1,397 2028 1,296 2029 1,389 Thereafter 1,066 Total lease payments 7,821 Imputed interest (1,827 ) Total minimum lease payments $ 5,994 ( 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.
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 that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
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.
F- 23 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) Registered Direct Offering On April 5, 2022, the Company entered into purchase agreements with certain investors providing for the issuance and sale by the Company of 2,250 common shares in a registered direct offering.
F- 21 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) 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 Company made matching contributions in the aggregate amount as follows: Year Ended December 31, 2023 2022 Matching contributions $ 1,217 $ 1,365 ( 15 ) Other Income The following table provides information about other income, net: Year Ended December 31, 2023 2022 Interest income $ 1,680 $ 744 Refundable tax credit 684 1,260 Foreign currency gains (losses) 96 86 Other income (loss) (8 ) 18 Total other income, net $ 2,452 $ 2,108 ( 16 ) Income Taxes The provision for income taxes reflects current taxes and deferred taxes.
The Company made matching contributions in the aggregate amount as follows: Year Ended December 31, 2024 2023 Matching contributions $ 1,234 $ 1,217 ( 14 ) Other Income The following table provides information about other income, net: Year Ended December 31, 2024 2023 Interest income $ 1,818 $ 1,680 Refundable tax credit 550 684 Foreign currency gains (losses) (27 ) 96 Other income (loss) — (8 ) Total other income, net $ 2,341 $ 2,452 ( 15 ) Income Taxes The provision for income taxes reflects current taxes and deferred taxes.
Monte Carlo Simulation Inputs: Year Ended December 31, 2023 2022 Stock price $ 22.37 $ 32.02 Expected volatility 74.7 % 82.8 % Risk-free interest rate 4.3 % 1.8 % Stock-based Compensation Year Ended December 31, 2023 2022 Stock-based compensation: Cost of revenue $ 1,126 $ 913 Sales and marketing 2,640 3,842 Research, development and engineering 2,962 2,646 General and administrative 4,430 3,888 Stock-based compensation expense 11,158 11,289 Capitalized to software and patent costs 63 128 Total stock-based compensation $ 11,221 $ 11,417 F- 15 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) The following table sets forth total unrecognized compensation cost related to non-vested stock-based awards granted under the Company’s equity compensation plans: December 31, December 31, 2023 2022 Total unrecognized compensation costs $ 15,370 $ 16,051 Total unrecognized compensation costs will be adjusted for any future forfeitures if and when they occur.
Monte Carlo Valuation Inputs: Year Ended December 31, 2024 2023 Stock price $ 36.64 $ 22.37 Expected volatility 66.3 % 74.7 % Risk-free interest rate 4.3 % 4.3 % F- 15 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) Stock-based Compensation Year Ended December 31, 2024 2023 Stock-based compensation: Cost of revenue $ 706 $ 1,126 Sales and marketing 2,788 2,640 Research, development and engineering 2,522 2,962 General and administrative 4,013 4,430 Stock-based compensation expense 10,029 11,158 Capitalized to software and patent costs 30 63 Total stock-based compensation $ 10,059 $ 11,221 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, 2024 2023 Total unrecognized compensation costs $ 16,226 $ 15,370 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, 2023 for all non-vested stock-based awards over weighted average periods through December 31, 2027 as follows: RSAs RSUs PRSUs Weighted average period (in years) 0.76 1.50 1.64 As of December 31, 2023 , under the Company’s stock-based compensation plan, an additional 1,447 shares r emained available for future grants.
The Company expects to recognize the total unrecognized compensation costs as of December 31, 2024 for all non-vested stock-based awards over weighted average periods through December 31, 2028 as follows: RSAs RSUs PRSUs Weighted average period (in years) 1.01 1.33 1.32 As of December 31, 2024 , under the Company’s stock incentive plan, an additional 1,274 shares r emained available for future grants.
Estimated Life December 31, December 31, (years) 2023 2022 Capitalized patent costs ~17 $ 9,231 $ 10,646 Intangible assets acquired: Purchased intellectual property 10 250 250 Developed technology 5 22,836 21,661 Customer relationships 10 10,913 10,351 Gross intangible assets 43,230 42,908 Accumulated amortization (14,772 ) (9,738 ) Intangibles, net $ 28,458 $ 33,170 The amortization of capitalized patent costs, purchased intellectual property, and developed technology is recorded in “cost of revenue” and the amortization of customer relationships is recorded in “operating expenses” in the Consolidated Statements of Operations.
Estimated Life December 31, December 31, (years) 2024 2023 Capitalized patent costs ~17 $ 9,174 $ 9,231 Intangible assets acquired: Purchased intellectual property 10 250 250 Developed technology 5 22,504 22,836 Customer relationships 10 10,754 10,913 Gross intangible assets 42,682 43,230 Accumulated amortization (20,491 ) (14,772 ) Intangibles, net $ 22,191 $ 28,458 The amortization of capitalized patent costs, purchased intellectual property, and developed technology is recorded in “cost of revenue” and the amortization of customer relationships is recorded in “operating expenses” in the Consolidated Statements of Operations.
F- 11 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) Accounting Pronouncements Issued But Not Yet Adopted In November 2023, the FASB issued ASU No. 2023 - 07 “ Segment Reporting (Topic 280 ) - Improvements to Reportable Segment Disclosures ” .
F- 11 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) Accounting Pronouncements Issued But Not Yet Adopted In December 2023, the FASB issued ASU No. 2023 - 09 “ Income Taxes (Topic 740 ) - Improvements to Income Tax Disclosures ”.
Digimarc delivers dynamic QR codes and hyperlinks that provide contextual redirection capabilities for multiple consumer experiences based on a variety of factors such as time and location or previous behavior.
Digimarc delivers dynamic, GS1 Digital Link-compliant QR codes and hyperlinks that provide contextual redirection capabilities for multiple consumer experiences (including personalized and automated loyalty and rewards programs) based on a variety of factors such as time and location or previous behavior.
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.
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 twelve months ended December 31, 2024 .
December 31, December 31, 2023 2022 Trade accounts receivable, current $ 5,947 $ 5,541 Trade accounts receivable, long-term 9 37 Allowance for doubtful accounts (134 ) (114 ) Trade accounts receivable, net $ 5,822 $ 5,464 Unpaid deferred revenue included in trade accounts receivable $ 2,073 $ 2,183 Allowance for Doubtful Accounts The Company ’ s accounts receivables are subject to concentrations of credit risk.
December 31, December 31, 2024 2023 Trade accounts receivable, current $ 6,563 $ 5,947 Trade accounts receivable, long-term 80 9 Allowance for doubtful accounts (151 ) (134 ) Trade accounts receivable, net $ 6,492 $ 5,822 Unpaid deferred revenue included in trade accounts receivable $ 2,590 $ 2,073 Allowance for Doubtful Accounts The Company ’ s accounts receivables are subject to concentrations of credit risk.
Employees may contribute up to 75% of their pay to the Plan, subject to the limitations of the Internal Revenue Service Code. Company matching contributions are mandatory under the Plan.
Employees may contribute up to 75% of their pay to the Plan, subject to the limitations of the Internal Revenue Service Code.
The following table provides information about disaggregated revenue by major target market in the Company’s single reporting segment: Year Ended December 31, 2023 2022 Commercial: Subscription $ 17,773 $ 13,832 Service 1,042 2,056 Total Commercial 18,815 15,888 Government: Subscription $ 1,200 $ 1,387 Service 14,836 12,922 Total Government 16,036 14,309 Total $ 34,851 $ 30,197 The Company has contract assets from contracts with customers that are classified as “trade accounts receivable” in the Consolidated Balance Sheets.
The following table provides information about disaggregated revenue by major target market in the Company’s single reporting segment: Year Ended December 31, 2024 2023 Commercial: Subscription $ 21,218 $ 17,773 Service 1,308 1,042 Total Commercial $ 22,526 $ 18,815 Government: Subscription $ 1,200 $ 1,200 Service 14,692 14,836 Total Government 15,892 16,036 Total $ 38,418 $ 34,851 The Company has contract assets from contracts with customers that are classified as “trade accounts receivable” in the Consolidated Balance Sheets.
F- 24 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) Components of the provision for income taxes allocated to continuing operations include the following: Year Ended December 31, 2023 2022 Current: Federal $ (141 ) $ (60 ) State (9 ) (20 ) Foreign (37 ) (34 ) Sub-total $ (187 ) $ (114 ) Deferred: Federal $ (17 ) $ 17 State — — Foreign — — Sub-total $ (17 ) $ 17 Total $ (204 ) $ (97 ) The reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate is as follows: Year Ended Year Ended December 31, December 31, 2023 % 2022 % Income taxes computed at statutory rates $ 9,609 (21 )% $ 12,537 (21 )% (Increases) decreases resulting from: Change in valuation allowance (11,716 ) 26 % (13,463 ) 22 % NOL surrendered for refundable tax credit (1,607 ) 4 % (2,164 ) 4 % Foreign research deductions and credits 803 (2 )% 1,329 (2 )% Federal and state research and experimentation credits 1,412 (3 )% 1,037 (2 )% State income taxes, net of federal tax benefit 468 (1 )% 491 (1 )% Other 827 (3 )% 136 — % Total $ (204 ) — % $ (97 ) $ — 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.
F- 22 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) Components of loss before income taxes are as follows: Year Ended December 31, 2024 2023 Domestic $ (27,044 ) $ (35,039 ) International (11,922 ) (10,716 ) Loss before income taxes $ (38,966 ) $ (45,755 ) Components of the provision (benefit) for income taxes allocated to continuing operations include the following: Year Ended December 31, 2024 2023 Current: Federal $ 5 $ (141 ) State (13 ) (9 ) Foreign (36 ) (37 ) Sub-total $ (44 ) $ (187 ) Deferred: Federal $ — $ (17 ) State — — Foreign — — Sub-total $ — $ (17 ) Total $ (44 ) $ (204 ) The reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate is as follows: Year Ended Year Ended December 31, December 31, 2024 % 2023 % Income taxes computed at statutory rates $ 8,183 (21 )% $ 9,609 (21 )% (Increases) decreases resulting from: Change in valuation allowance (9,319 ) 24 % (11,716 ) 26 % NOL surrendered for refundable tax credit (1,355 ) 4 % (1,607 ) 4 % Foreign research deductions and credits 650 (2 )% 803 (2 )% Federal and state research and experimentation credits 1,288 (3 )% 1,412 (3 )% State income taxes, net of federal tax benefit (139 ) — % 468 (1 )% Other 648 (2 )% 827 (3 )% Total $ (44 ) — % $ (204 ) — % 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 following table reconciles earnings (loss) per common share: Year Ended December 31, 2023 2022 Basic Earnings (Loss) per Share: Net loss — basic $ (45,959 ) $ (59,798 ) Weighted average shares outstanding — basic 20,322 19,140 Basic loss per share $ (2.26 ) $ (3.12 ) Diluted Earnings (Loss) per Share: Net loss — diluted $ (45,959 ) $ (59,798 ) Weighted average shares outstanding — diluted 20,322 19,140 Diluted loss per share $ (2.26 ) $ (3.12 ) F- 18 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) The following table indicates the common stock equivalents related to stock options, and unvested RSAs, RSUs and PRSUs that were anti-dilutive and excluded from diluted earnings (loss) per common share calculations: Year Ended December 31, 2023 2022 Anti-dilutive shares due to: Exercise prices higher than the average market price — 50 Net loss 134 — ( 7 ) Trade Accounts Receivable Trade Accounts Receivable Trade accounts receivable are recorded at the contractual or invoiced amount.
F- 17 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) The following table reconciles earnings (loss) per share: Year Ended December 31, 2024 2023 Basic Earnings (Loss) per Share: Net loss — basic $ (39,010 ) $ (45,959 ) Weighted average shares outstanding — basic 21,261 20,322 Basic loss per share $ (1.83 ) $ (2.26 ) Diluted Earnings (Loss) per Share: Net loss — diluted $ (39,010 ) $ (45,959 ) Weighted average shares outstanding — diluted 21,261 20,322 Diluted loss per share $ (1.83 ) $ (2.26 ) The following table indicates the common stock equivalents related to unvested RSUs and PRSUs that were anti-dilutive and excluded from diluted earnings (loss) per share calculations: Year Ended December 31, 2024 2023 Anti-dilutive shares due to net loss 102 134 ( 7 ) Trade Accounts Receivable Trade Accounts Receivable Trade accounts receivables are recorded at the contractual or invoiced amount.
This authoritative guidance will be effective for the Company starting in the fiscal year ending December 31, 2025, with early adoption permitted. The Company is currently evaluating the effect of this new standard on the Company’s disclosures.
The ASU requires greater disaggregation of income tax disclosures primarily on the income tax rate reconciliation and income taxes paid. This authoritative guidance will be effective for the Company starting in the fiscal year ending December 31, 2025, with early adoption permitted. The Company is currently evaluating the effect of this new standard on the Company’s disclosures.
F-2 Table of Contents Revenue recognition for new contracts As discussed in Note 3 to the consolidated financial statements, the Company recorded $34,851 thousand of total revenue for the year ended December 31, 2023, of which $18,973 thousand was subscription revenue and $15,878 thousand was service revenue.
F-2 Table of Contents Revenue recognition for new contracts As discussed in Note 3 to the consolidated financial statements, the Company recorded $38,418 thousand of total revenue for the year ended December 31, 2024, of which $22,418 thousand was subscription revenue and $16,000 thousand was service revenue.
F- 12 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) Customer arrangements may contain multiple performance obligations such as software subscriptions, software products, and professional services. The Company accounts for individual products and services separately if they are distinct.
F- 12 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) 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.
The impairment charges were determined by comparing the carrying value of the assets to the net present value of estimated cash flows from the future sublease of the office spaces over their remaining lease terms.
The impairment charge was determined by comparing the carrying value of the assets to the net present value of estimated cash flows from the future sublease of the office space over the remaining lease term.
See Notes to Consolidated Financial Statements F-5 Table of Contents DIGIMARC CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS ’ EQUITY (In thousands) Accumulated Additional Other Total Preferred Stock Common Stock Paid-in Accumulated Comprehensive Shareholders' Shares Amount Shares Amount Capital Deficit Loss Equity Year Ended December 31, 2023 Balance at December 31, 2022 10 $ 50 20,260 $ 20 $ 367,692 $ (265,809 ) $ (4,363 ) $ 97,590 Issuance of common stock — — 10 — — — — — Issuance of restricted common stock — — 45 — — — — — Vesting of restricted stock units — — 161 — — — — — Vesting of performance stock units — — 2 — — — — — Forfeiture of restricted common stock — — (6 ) — — — — — Purchase of common stock — — (93 ) — (2,724 ) — — (2,724 ) Stock-based compensation — — — — 11,221 — — 11,221 Unrealized gain on marketable securities — — — — — — 138 138 Foreign currency translation adjustments — — — — — — 1,661 1,661 Net loss — — — — — (45,959 ) — (45,959 ) Balance at December 31, 2023 10 $ 50 20,379 $ 20 $ 376,189 $ (311,768 ) $ (2,564 ) $ 61,927 Year Ended December 31, 2022 Balance at December 31, 2021 10 $ 50 16,940 $ 17 $ 261,324 $ (206,011 ) $ — $ 55,380 Issuance of common stock — — 3,266 3 95,706 — — 95,709 Issuance of warrants for acquisition — — — — 1,601 — — 1,601 Issuance of restricted common stock — — 54 — — — — — Vesting of restricted stock units — — 144 — — — — — Forfeiture of restricted common stock — — (31 ) — — — — — Purchase of common stock — — (113 ) — (2,356 ) — — (2,356 ) Stock-based compensation — — — — 11,417 — — 11,417 Unrealized loss on marketable securities — — — — — — (144 ) (144 ) Foreign currency translation adjustments — — — — — — (4,219 ) (4,219 ) Net loss — — — — — (59,798 ) — (59,798 ) Balance at December 31, 2022 10 $ 50 20,260 $ 20 $ 367,692 $ (265,809 ) $ (4,363 ) $ 97,590 See Notes to Consolidated Financial Statements F-6 Table of Contents DIGIMARC CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2023 2022 Cash flows from operating activities: Net loss $ (45,959 ) $ (59,798 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and write-off of property and equipment 1,121 1,372 Amortization of acquired intangible assets 5,524 5,503 Amortization and write-off of other intangible assets 966 739 Amortization of lease right of use assets under operating leases 517 965 Stock-based compensation 11,158 11,289 Impairment of lease right of use assets and leasehold improvements 250 915 Increase in allowance for doubtful accounts 20 89 Changes in operating assets and liabilities: Trade accounts receivable (335 ) 2,232 Other current assets 2,200 (1,933 ) Other assets 299 (520 ) Accounts payable and other accrued liabilities 660 (3,856 ) Deferred revenue 1,627 (371 ) Lease liability and other long-term liabilities (43 ) (1,034 ) Net cash used in operating activities (21,995 ) (44,408 ) Cash flows from investing activities: Net cash paid for acquisition — (3,512 ) Purchase of property and equipment (314 ) (934 ) Capitalized patent costs (426 ) (533 ) Proceeds from maturities of marketable securities 27,664 21,425 Purchases of marketable securities (14,363 ) (12,689 ) Net cash provided by investing activities 12,561 3,757 Cash flows from financing activities: Issuance of common stock, net of issuance costs — 62,890 Purchase of common stock (2,724 ) (2,356 ) Repayment of loans (36 ) (35 ) Net cash (used in) provided by financing activities (2,760 ) 60,499 Effect of exchange rate on cash 52 (39 ) Net (decrease) increase in cash and cash equivalents (12,142 ) 19,809 Cash and cash equivalents at beginning of period 33,598 13,789 Cash and cash equivalents at end of period $ 21,456 $ 33,598 Supplemental disclosure of cash flow information: Cash paid for income taxes, net $ (233 ) $ (61 ) Supplemental schedule of non-cash activities: Property and equipment and patent costs in accounts payable $ 6 $ (9 ) Stock-based compensation capitalized to software and patent costs $ 63 $ 128 Common stock issued for acquisition $ — $ 32,393 Warrants issued for acquisition $ — $ 1,601 Right of use assets obtained in exchange for lease obligations $ 31 $ 5,176 See Notes to Consolidated Financial Statements F-7 Table of Contents 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 a pioneer and global leader in digital watermarking technologies.
See Notes to Consolidated Financial Statements F-5 Table of Contents DIGIMARC CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS ’ EQUITY (In thousands) Accumulated Additional Other Total Preferred Stock Common Stock Paid-in Accumulated Comprehensive Shareholders' Shares Amount Shares Amount Capital Deficit Loss Equity Year Ended December 31, 2024 Balance at December 31, 2023 10 $ 50 20,379 $ 20 $ 376,189 $ (311,768 ) $ (2,564 ) $ 61,927 Issuance of common stock — — 929 1 32,217 — — 32,218 Issuance of restricted common stock — — 45 — — — — — Vesting of restricted stock units — — 197 — — — — — Vesting of performance restricted stock units — — 60 — — — — — Forfeiture of restricted common stock — — (7 ) — — — — — Purchase of common stock — — (108 ) — (3,416 ) — — (3,416 ) Stock-based compensation — — — — 10,059 — — 10,059 Unrealized gain (loss) on marketable securities — — — — — — (13 ) (13 ) Foreign currency translation adjustments — — — — — — (406 ) (406 ) Net loss — — — — — (39,010 ) — (39,010 ) Balance at December 31, 2024 10 $ 50 21,495 $ 21 $ 415,049 $ (350,778 ) $ (2,983 ) $ 61,359 Year Ended December 31, 2023 Balance at December 31, 2022 10 $ 50 20,260 $ 20 $ 367,692 $ (265,809 ) $ (4,363 ) $ 97,590 Issuance of common stock — — 10 — — — — — Issuance of restricted common stock — — 45 — — — — — Vesting of restricted stock units — — 161 — — — — — Vesting of performance restricted stock units — — 2 — — — — — Forfeiture of restricted common stock — — (6 ) — — — — — Purchase of common stock — — (93 ) — (2,724 ) — — (2,724 ) Stock-based compensation — — — — 11,221 — — 11,221 Unrealized gain (loss) on marketable securities — — — — — — 138 138 Foreign currency translation adjustments — — — — — — 1,661 1,661 Net loss — — — — — (45,959 ) — (45,959 ) Balance at December 31, 2023 10 $ 50 20,379 $ 20 $ 376,189 $ (311,768 ) $ (2,564 ) $ 61,927 See Notes to Consolidated Financial Statements F-6 Table of Contents DIGIMARC CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2024 2023 Cash flows from operating activities: Net loss $ (39,010 ) $ (45,959 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and write-off of property and equipment 728 1,121 Amortization of acquired intangible assets 5,689 5,524 Amortization and write-off of other intangible assets 820 966 Amortization of lease right of use assets under operating leases 358 517 Stock-based compensation 10,029 11,158 Impairment of lease right of use assets and leasehold improvements — 250 Increase (decrease) in allowance for doubtful accounts 17 20 Changes in operating assets and liabilities: Trade accounts receivable (687 ) (335 ) Other current assets (128 ) 2,200 Other assets (156 ) 299 Accounts payable and other accrued liabilities (1,608 ) 660 Deferred revenue (1,838 ) 1,627 Lease liability and other long-term liabilities (786 ) (43 ) Net cash provided by (used in) operating activities (26,572 ) (21,995 ) Cash flows from investing activities: Purchase of property and equipment (212 ) (314 ) Capitalized patent costs (431 ) (426 ) Proceeds from maturities of marketable securities 22,555 27,664 Purchases of marketable securities (33,194 ) (14,363 ) Net cash provided by (used in) investing activities (11,282 ) 12,561 Cash flows from financing activities: Issuance of common stock, net of issuance costs 32,218 — Purchase of common stock (3,416 ) (2,724 ) Repayment of loans (37 ) (36 ) Net cash provided by (used in) financing activities 28,765 (2,760 ) Effect of exchange rate on cash (2 ) 52 Net increase (decrease) in cash and cash equivalents (9,091 ) (12,142 ) Cash and cash equivalents at beginning of period 21,456 33,598 Cash and cash equivalents at end of period $ 12,365 $ 21,456 Supplemental disclosure of cash flow information: Cash received (paid) for income taxes, net $ (63 ) $ (233 ) Supplemental schedule of non-cash activities: Property and equipment and patent costs in accounts payable $ 19 $ 6 Stock-based compensation capitalized to software and patent costs $ 30 $ 63 Right of use assets obtained in exchange for lease obligations $ — $ 31 See Notes to Consolidated Financial Statements F-7 Table of Contents 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 a pioneer and global leader in digital watermarking technologies.
F- 14 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) 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.
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.
The tax effects of significant items comprising the Company’s deferred tax assets and deferred tax liabilities are as follows: December 31, December 31, 2023 2022 Deferred tax assets: Federal and state net operating losses $ 77,201 $ 74,270 Federal and state research and experimentation credits 12,406 10,869 Research and experimental costs 9,458 4,837 ASC 842 - lease liabilities 1,468 1,508 Stock based compensation 1,474 482 Fixed asset differences 185 87 Goodwill — 36 Accrued compensation 610 69 Other 59 43 Total gross deferred tax assets 102,861 92,201 Less valuation allowance (95,256 ) (83,000 ) Net deferred tax assets $ 7,605 $ 9,201 Deferred tax liabilities: Patent expenditures $ (1,096 ) $ (1,464 ) ASC 842 - right of use assets (897 ) (1,049 ) Fixed asset differences (9 ) (28 ) Intangible asset differences (5,603 ) (6,644 ) Total gross deferred tax liabilities $ (7,605 ) $ (9,185 ) Total net deferred tax assets and liabilities $ — $ 16 F- 25 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) The Company had a valuation allowance of $95,256 and $83,000 on deferred tax assets as of December 31, 2023 and 2022 , respectively, an increase of $12,256 during the year ended December 31, 2023 .
The tax effects of significant items comprising the Company’s deferred tax assets and deferred tax liabilities are as follows: December 31, December 31, 2024 2023 Deferred tax assets: Federal and state net operating losses $ 79,856 $ 77,201 Federal and state research and experimentation credits 13,610 12,406 Research and experimental costs 12,806 9,458 Stock based compensation 1,822 1,474 ASC 842 - lease liabilities 1,303 1,468 Accrued compensation 324 610 Fixed asset differences 191 185 Intangible asset differences 4 — Other 264 59 Total gross deferred tax assets 110,180 102,861 Less valuation allowance (104,361 ) (95,256 ) Net deferred tax assets $ 5,819 $ 7,605 Deferred tax liabilities: Patent expenditures $ (888 ) $ (1,096 ) ASC 842 - right of use assets (795 ) (897 ) Fixed asset differences (4 ) (9 ) Intangible asset differences (4,132 ) (5,603 ) Total gross deferred tax liabilities $ (5,819 ) $ (7,605 ) Total net deferred tax assets and liabilities $ — $ — F- 23 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) The Company had a valuation allowance of $104,361 and $95,256 on deferred tax assets as of December 31, 2024 and 2023 , respectively, an increase of $9,105 during the year ended December 31, 2024 .
McCormack, Beck, Meyer, Rodriguez and Sickles 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)). 10.30 Digimarc Corporation Short-Term Incentive Plan 10.31 Consulting Agreement, entered into as of January 9, 2024, by and between the Company and Andrew Walter 21.1 List of Subsidiaries 23.1 Consent of Independent Registered Public Accounting Firm 31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer 31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer 32.1 Section 1350 Certification of Chief Executive Officer 32.2 Section 1350 Certification of Chief Financial Officer 97 Digimarc Corporation Incentive Compensation Recovery Policy 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.
McCormack 10.32 Counterfeit Deterrence System Development and License Agreement, dated as of December 6, 2012, between Digimarc Corporation and the Bank for International Settlements + 21.1 List of Subsidiaries 23.1 Consent of Independent Registered Public Accounting Firm 31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer 31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer 32.1 Section 1350 Certification of Chief Executive Officer 32.2 Section 1350 Certification of Chief Financial Officer 97 Digimarc Corporation Incentive Compensation Recovery Policy 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.
Treasuries — 5,953 — 5,953 Federal agency notes — 998 — 998 Total $ 1,515 $ 21,573 $ — $ 23,088 December 31, 2022 Level 1 Level 2 Level 3 Total Money market securities $ 2,073 $ — $ — $ 2,073 Commercial paper — 35,468 — 35,468 Corporate notes — 4,423 — 4,423 Federal agency notes — 8,432 — 8,432 Total $ 2,073 $ 48,323 $ — $ 50,396 The fair value maturities of the Company’s cash equivalents and marketable securities as of December 31, 2023 are as follows: Maturities by Period Less than 1 - 5 5 - 10 More than Total 1 year years years 10 years Cash equivalents and marketable securities $ 23,088 $ 23,088 $ — $ — $ — ( 3 ) Revenue Recognition The Company recognizes revenue in accordance with ASC 606 by applying the following steps: Step 1: Identify the contract(s) with a customer.
The Company’s fair value hierarchy for its cash equivalents and marketable securities as of December 31, 2024 and 2023 , respectively, was as follows: December 31, 2024 Level 1 Level 2 Level 3 Total Money market securities $ 112 $ — $ — $ 112 Commercial paper — 10,633 — 10,633 U.S. treasuries — 9,192 — 9,192 Federal agency notes — 5,317 — 5,317 Total $ 112 $ 25,142 $ — $ 25,254 December 31, 2023 Level 1 Level 2 Level 3 Total Money market securities $ 1,515 $ — $ — $ 1,515 Commercial paper — 14,622 — 14,622 U.S. treasuries — 5,953 — 5,953 Federal agency notes — 998 — 998 Total $ 1,515 $ 21,573 $ — $ 23,088 The fair value maturities of the Company’s cash equivalents and marketable securities as of December 31, 2024 are as follows: Maturities by Period Less than 1 - 5 5 - 10 More than Total 1 year years years 10 years Cash equivalents and marketable securities $ 25,254 $ 25,254 $ — $ — $ — ( 3 ) Revenue Recognition The Company recognizes revenue in accordance with ASC 606 “ Revenue Recognition ” by applying the following steps: Step 1: Identify the contract(s) with a customer.
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 probability of achievement of the performance criteria as of each reporting date (measurement date).
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 three years for employee grants.
As of December 31, 2023 , the Company has federal, state, and foreign net operating loss carryfo rwards of $247,472, $178,519, and $68,925 respectively, which have a carryforward of 5 years to indefinite depending on the jurisdiction.
As of December 31, 2024 , the Company has federal, state, and foreign net operating loss carryfo rwards of $257,535, $173,657, and $70,922 respectively, which have a carryforward of 5 years to indefinite depending on the jurisdiction.
Portland, Oregon February 29, 2024 F-3 Table of Contents DIGIMARC CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) December 31, December 31, 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 21,456 $ 33,598 Marketable securities 5,726 18,944 Trade accounts receivable, net 5,813 5,427 Other current assets 4,085 6,172 Total current assets 37,080 64,141 Property and equipment, net 1,570 2,390 Intangibles, net 28,458 33,170 Goodwill 8,641 8,229 Lease right of use assets 4,017 4,720 Other assets 786 1,127 Total assets $ 80,552 $ 113,777 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable and other accrued liabilities $ 6,672 $ 5,989 Deferred revenue 5,853 4,145 Total current liabilities 12,525 10,134 Long-term lease liabilities 5,994 5,977 Other long-term liabilities 106 76 Total liabilities 18,625 16,187 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, 2023 and December 31, 2022) 50 50 Common stock (par value $ 0.001 per share, 50,000 authorized, 20,379 and 20,260 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively) 20 20 Additional paid-in capital 376,189 367,692 Accumulated deficit (311,768 ) (265,809 ) Accumulated other comprehensive loss (2,564 ) (4,363 ) Total shareholders’ equity 61,927 97,590 Total liabilities and shareholders’ equity $ 80,552 $ 113,777 See Notes to Consolidated Financial Statements F-4 Table of Contents DIGIMARC CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except per share data) Year Ended December 31, 2023 2022 Revenue: Subscription $ 18,973 $ 15,219 Service 15,878 14,978 Total revenue 34,851 30,197 Cost of revenue: Subscription (1) 2,975 3,878 Service (1) 7,252 6,557 Amortization expense on acquired intangible assets 4,459 4,439 Total cost of revenue 14,686 14,874 Gross profit 20,165 15,323 Operating expenses: Sales and marketing 22,409 29,718 Research, development and engineering 26,577 26,490 General and administrative 18,071 18,945 Amortization expense on acquired intangible assets 1,065 1,064 Impairment of lease right of use assets and leasehold improvements 250 915 Total operating expenses 68,372 77,132 Operating loss (48,207 ) (61,809 ) Other income, net 2,452 2,108 Loss before income taxes (45,755 ) (59,701 ) Provision for income taxes (204 ) (97 ) Net loss $ (45,959 ) $ (59,798 ) Loss per share: Loss per share — basic $ (2.26 ) $ (3.12 ) Loss per share — diluted $ (2.26 ) $ (3.12 ) Weighted average shares outstanding — basic 20,322 19,140 Weighted average shares outstanding — diluted 20,322 19,140 Comprehensive loss: Unrealized gain (loss) on marketable securities, net of tax of $ 0 $ 138 $ (144 ) Foreign currency translation adjustment, net of tax of $ 0 1,661 (4,219 ) Other comprehensive income (loss) $ 1,799 $ (4,363 ) Net loss (45,959 ) (59,798 ) Comprehensive loss $ (44,160 ) $ (64,161 ) (1) Cost of revenue for Subscription and Service excludes amortization expense on acquired intangible assets.
Portland, Oregon February 27, 2025 F-3 Table of Contents DIGIMARC CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) December 31, December 31, 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 12,365 $ 21,456 Marketable securities 16,365 5,726 Trade accounts receivable, net 6,412 5,813 Other current assets 4,189 4,085 Total current assets 39,331 37,080 Property and equipment, net 1,040 1,570 Intangibles, net 22,191 28,458 Goodwill 8,532 8,641 Lease right of use assets 3,659 4,017 Other assets 1,013 786 Total assets $ 75,766 $ 80,552 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable and other accrued liabilities $ 5,118 $ 6,672 Deferred revenue 4,020 5,853 Total current liabilities 9,138 12,525 Long-term lease liabilities 5,213 5,994 Other long-term liabilities 56 106 Total liabilities 14,407 18,625 Commitments and contingencies (Note 16) Shareholders’ equity: Preferred stock (par value $ 0.001 per share, 2,500 authorized, 10 shares issued and outstanding at December 31, 2024 and December 31, 2023) 50 50 Common stock (par value $ 0.001 per share, 50,000 authorized, 21,495 and 20,379 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively) 21 20 Additional paid-in capital 415,049 376,189 Accumulated deficit (350,778 ) (311,768 ) Accumulated other comprehensive loss (2,983 ) (2,564 ) Total shareholders’ equity 61,359 61,927 Total liabilities and shareholders’ equity $ 75,766 $ 80,552 See Notes to Consolidated Financial Statements F-4 Table of Contents DIGIMARC CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except per share data) Year Ended December 31, 2024 2023 Revenue: Subscription $ 22,418 $ 18,973 Service 16,000 15,878 Total revenue 38,418 34,851 Cost of revenue: Subscription (1) 2,959 2,975 Service (1) 6,628 7,252 Amortization expense on acquired intangible assets 4,592 4,459 Total cost of revenue 14,179 14,686 Gross profit 24,239 20,165 Operating expenses: Sales and marketing 21,167 22,409 Research, development and engineering 26,209 26,577 General and administrative 17,073 18,071 Amortization expense on acquired intangible assets 1,097 1,065 Impairment of lease right of use assets and leasehold improvements — 250 Total operating expenses 65,546 68,372 Operating loss (41,307 ) (48,207 ) Other income, net 2,341 2,452 Loss before income taxes (38,966 ) (45,755 ) Provision for income taxes (44 ) (204 ) Net loss $ (39,010 ) $ (45,959 ) Loss per share: Loss per share — basic $ (1.83 ) $ (2.26 ) Loss per share — diluted $ (1.83 ) $ (2.26 ) Weighted average shares outstanding — basic 21,261 20,322 Weighted average shares outstanding — diluted 21,261 20,322 Comprehensive loss: Unrealized gain (loss) on marketable securities, net of tax of $0 $ (13 ) $ 138 Foreign currency translation adjustment, net of tax of $0 (406 ) 1,661 Other comprehensive income (loss) $ (419 ) $ 1,799 Net loss (39,010 ) (45,959 ) Comprehensive loss $ (39,429 ) $ (44,160 ) (1) Cost of revenue for Subscription and Service excludes amortization expense on acquired intangible assets.
As of December 31, 2023 , the Company has federal and state research and experimental tax credits of $13,469 and $11,915, respectively, which have a carryforward of 20 years.
As of December 31, 2024 , the Company has federal research and experimental tax credits of $14,746, which have a carryforward of 20 years.
Diluted earnings per common share is calculated by dividing earnings to common shares by the weighted-average number of common shares, as adjusted for the potentially dilutive effect of stock options, and unvested RSUs and PRSUs. The dilutive effect of stock options, and unvested RSUs and PRSUs is determined 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.
Major Customers The following customers accounted for 10% or more of revenue: Year Ended December 31, 2023 2022 Customer A 46 % 46 % Customer B 21 % 17 % Long-lived tangible assets by geographical area Long-lived tangible assets by geographic area were as follows: December 31, December 31, 2023 2022 United States $ 1,535 $ 2,324 Europe 35 66 Total $ 1,570 $ 2,390 ( 5 ) Stock-Based Compensation Stock-based compensation includes expense charges for all stock-based awards to employees and directors.
Major Customers The following customers accounted for 10% or more of revenue: Year Ended December 31, 2024 2023 Customer A 41 % 46 % Customer B 15 % * Customer C 14 % 21 % F- 14 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (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, 2024 2023 United States $ 1,026 $ 1,535 Europe 14 35 Total $ 1,040 $ 1,570 ( 5 ) Stock-Based Compensation Stock-based compensation includes expense charges for all stock-based awards to employees and directors.
The common shares were offered at a price of $25.90 per share, and the gross cash proceeds to the Company were $58,275. The Company incurred $55 of legal costs related to the offering. The closing of the registered direct offering occurred on April 7, 2022.
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.
Major Customers The following customers accounted for 10% or more of trade accounts receivable, net: December 31, December 31, 2023 2022 Company A 56 % 55 % Company B 13 % * * Less than 10% F-19 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) ( 8 ) Business Combination On January 3, 2022, the Company completed its acquisition of EVRYTHNG, a London-based product cloud company.
Major Customers The following customers accounted for 10% or more of trade accounts receivable, net: December 31, December 31, 2024 2023 Company A 47 % 56 % Company B 12 % * Company C * 13 % * Less than 10% F- 18 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) ( 8 ) Property and Equipment Property and equipment are stated at cost.
The following table summarizes information about stock option awards outstanding December 31, 2023 : Options Outstanding Options Exercisable Weighted Weighted Remaining Average Remaining Average Number Contractual Exercise Number Contractual Exercise Exercise Price Outstanding Life (Years) Price Outstanding Life (Years) Price $21-$24 1 6.85 $ 22.15 1 6.85 $ 22.15 F- 16 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) Restricted Stock Awards Activity The following table reconciles the unvested balance of RSAs: Weighted Average Number of Grant Date Shares Fair Value Unvested balance, December 31, 2021 360 $ 34.90 Granted 54 $ 18.36 Vested (187 ) $ 32.72 Forfeited (31 ) $ 36.90 Unvested balance, December 31, 2022 196 $ 32.06 Granted 45 $ 22.10 Vested (130 ) $ 30.18 Forfeited (6 ) $ 34.89 Unvested balance, December 31, 2023 105 $ 29.89 The fair value of RSAs vested is as follows: Year Ended December 31, 2023 2022 Fair value of RSA vested $ 3,273 $ 4,445 Restricted Stock Units Activity The following table reconciles the unvested balance of RSU awards: Weighted Average Number of Grant Date Units Fair Value Unvested balance, December 31, 2021 — $ — Granted 601 $ 26.31 Vested (144 ) $ 30.25 Forfeited (87 ) $ 26.31 Unvested balance, December 31, 2022 370 $ 24.77 Granted 298 $ 23.20 Vested (161 ) $ 24.46 Forfeited (65 ) $ 25.17 Unvested balance, December 31, 2023 442 $ 23.77 The fair value of RSU awards vested is as follows: Year Ended December 31, 2023 2022 Fair value of RSU awards vested $ 4,893 $ 2,509 F- 17 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) Performance Restricted Stock Units Activity The following table reconciles the unvested balance of PRSU awards: Weighted Average Number of Grant Date Units Fair Value Unvested balance, December 31, 2020 124 $ 11.08 Granted — $ — Vested (1) (82 ) $ 15.54 Forfeited (1) (42 ) $ 11.08 Unvested balance, December 31, 2021 — $ — Granted 73 $ 31.93 Vested — $ — Forfeited (6 ) $ 32.02 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 ( 1 ) Includes the impact of modification of 21 PRSUs which were cancelled and reissued at a grant date fair value of $28.93.
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, 2022 196 $ 32.06 Granted 45 $ 22.10 Vested (130 ) $ 30.18 Forfeited (6 ) $ 34.89 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 The fair value of RSAs vested is as follows: Year Ended December 31, 2024 2023 Fair value of RSAs vested $ 2,234 $ 3,273 F- 16 Table of Contents DIGIMARC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (In thousands, except per share data) 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, 2022 370 $ 24.77 Granted 298 $ 23.20 Vested (161 ) $ 24.46 Forfeited (65 ) $ 25.17 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 The fair value of RSU awards vested is as follows: Year Ended December 31, 2024 2023 Fair value of RSU awards vested $ 5,747 $ 4,893 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, 2021 — $ — Granted 73 $ 31.93 Vested — $ — Forfeited (6 ) $ 32.02 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 Change in units based on performance expectations 30 $ 22.37 Granted 73 $ 36.77 Vested (60 ) $ 22.37 Forfeited (20 ) $ 34.17 Unvested balance, December 31, 2024 215 $ 32.08 The fair value of PRSU awards vested is as follows: Year Ended December 31, 2024 2023 Fair value of PRSU awards vested $ 2,370 $ 54 ( 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.
The aggregate amount of the transaction prices from contractual obligations that are unsatisfied or partially unsatisfied was $31,798 and $29,600, as of December 31, 2023 and 2022 , respectively.
The aggregate amount of the transaction prices from contractual obligations that are unsatisfied or partially unsatisfied was $25,215 and $31,798, as of December 31, 2024 and 2023 , respectively. As of December 31, 2024 , the Company expects $20,171 of the $25,215 to be recognized as revenue during 2025 .
Revenue by geographic area, based upon the “bill-to” location, was as follows: Year Ended December 31, 2023 2022 Domestic $ 11,380 $ 10,029 International (1) 23,471 20,168 Total $ 34,851 $ 30,197 ( 1 ) Revenue from the Central Banks, consisting of a consortium of central banks around the world, is classified as international revenue.
Revenue by geographic area, based upon the “bill-to” location, was as follows: Year Ended December 31, 2024 2023 Domestic $ 10,195 $ 11,380 International (1) 28,223 23,471 Total $ 38,418 $ 34,851 ( 1 ) Revenue from the Central Banks is classified as international revenue. Reporting revenue by country for this customer is not practicable.
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.
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. 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.
Use of Estimates The preparation of the consolidated financial statements in accordance with U.S. 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 Company’s accounting policy for revenue recognition requires a higher degrees of judgment than others in their application.
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.
Unrealized holding gains and losses are excluded from earnings and are reported net of tax in “accumulated other comprehensive income (loss)” in the Consolidated Balance Sheets until realized.
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.
The Company continues to lease its former corporate headquarters in Beaverton, Oregon. The lease expires in March 2024. The remaining rent payments as of December 31, 2023 were $218 plus operating expenses, payable in monthly installments. The Company stopped using this office space as its corporate headquarters in March 2022 and attempted to sublease the space.
The lease term of the Company’s former corporate headquarters in Beaverton, Oregon ended in March 2024, with no remaining rent payments as of December 31, 2024 . The Company stopped using this office space as its corporate headquarters in March 2022. All of the Company’s leases are operating leases.
Digimarc’s technology protects digital images, audio, product packaging, and other physical items by delivering exclusive, covert digital watermarks and/or dynamic QR codes and a cloud-based record of product authentication information.
Digimarc’s technology protects digital images, audio, product packaging, gift cards, and other physical items by delivering exclusive, covert digital watermarks and/or dynamic QR codes and a cloud-based record of product authentication information. In addition, consumer engagement capabilities provide a direct, digital communications channel. Principles of Consolidation The consolidated financial statements include the accounts of Digimarc and its wholly-owned subsidiaries.
The Company recorded an “impairment of lease right of use assets and leasehold improvements” of $250 and $915 in the Consolidated Statements of Operations for the years ended December 31, 2023 and 2022 , respectively. The impairments were triggered when the Company vacated its former corporate offices in the United States and the United Kingdom.
An “impairment of lease right of use assets and leasehold improvements” of $250 was recorded in the Consolidated Statements of Operations for the twelve months ended December 31, 2023 , related to the Company’s former corporate headquarters.
The Company recognizes interest and penalties, if any, related to the unrecognized tax benefits in the provision for income taxes. Business Combinations The Company allocates the purchase price consideration to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values.
The Company recognizes interest and penalties, if any, related to the unrecognized tax benefits in the provision for income taxes.
The Company’s open tax years subject to examination in the U.S. federal jurisdiction are 2020 through 2022, in applicable state jurisdictions for the tax years 2020 through 2022, and in applicable foreign jurisdictions for tax year 2022.
The Company does not anticipate any of its unrecognized benefits will significantly increase or decrease within the next 12 months. The Company’s open tax years subject to examination in the U.S. federal jurisdiction are 2021 through 2023 , in applicable state jurisdictions for the tax years 2021 through 2023 , and in applicable foreign jurisdictions for tax year 2023 .
A summary reconciliation of the Company’s uncertain tax positions is as follows: Year Ended December 31, 2023 2022 Beginning balance $ 1,046 $ 918 Addition for current year tax positions 94 98 Addition for prior year tax positions — 30 Reduction for prior year positions (77 ) — Reduction for prior year positions resolved during the current year — — Ending balance $ 1,063 $ 1,046 The Company records accrued interest and penalties associated with uncertain tax positions in the “provision for income taxes” in the Consolidated Statements of Operations.
A summary reconciliation of the Company’s uncertain tax positions is as follows: Year Ended December 31, 2024 2023 Beginning balance $ 1,063 $ 1,046 Addition for current year tax positions 85 94 Addition for prior year tax positions — — Reduction for prior year positions (11 ) (77 ) Reduction for prior year positions resolved during the current year — — Ending balance $ 1,137 $ 1,063 As of December 31, 2024 , the total unrecognized tax benefits, if recognized, would not materially affect the Company’s effective tax rate.
RSAs are included in shares outstanding on the date of grant.
The dilutive effect of unvested RSUs and PRSUs is determined using the treasury stock method. RSAs are included in shares outstanding on the date of grant.

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