{"url_path":"/sec/dmrc/10-q/2026/item-3","section_key":"item-3","section_title":"Item 3 Quantitative and Qualitative Disclosures About Market Risk**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1438231/0001437749-26-016725-index.html","accession_number":"0001437749-26-016725","cik":"0001438231","ticker":"DMRC","issuer_name":"Old Digimarc CORP","edgar_url":"https://www.sec.gov/Archives/edgar/data/1438231/0001437749-26-016725-index.html","primary_entity_key":"0001438231","primary_entity_name":"Digimarc CORP"},"word_count":1070,"has_tables":true,"body_markdown":"**Item 3.         Quantitative and Qualitative Disclosures About Market Risk**\n\n \n\nNot applicable.\n\n \n\n**Item** **4.**         **Controls and Procedures.**\n\n \n\n**Evaluation of Disclosure Controls and Procedures**\n\n \n\nWe conducted an evaluation (pursuant to Rule 13a-15(b) of the Exchange Act), under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. These disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.\n\n \n\nBased on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q, were effective.\n\n \n\n**Changes in Controls**\n\n \n\nThere were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. \n\n   \n\n27\n\n[Table of Contents](#toc)\n\n \n\n**PART II. OTHER INFORMATION.**\n\n \n\n \n\n**Item** **1.**         **Legal Proceedings.**\n\n \n\nOn May 8, 2025, a class action lawsuit captioned *Ullom v. Digimarc Corp., et al.*, No. 3:25-cv-00779-JR (the “*Ullom*Action”) was filed against the Company in the United States District Court for the District of Oregon. An amended complaint was filed on November 26, 2025. The amended complaint purports to assert claims against the Company and its Chief Executive Officer and Chief Financial Officer pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, on behalf of a putative class of investors who purchased or otherwise acquired the Company’s shares between August 14, 2024 and February 26, 2025 (the “class period”). The *Ullom*Action seeks to recover damages allegedly caused by purported misstatements and omissions regarding the renewal status of a commercial contract, claiming that these alleged misstatements and omissions artificially inflated the price paid for our common stock during the class period.\n\n \n\nSubsequently, five derivative lawsuits were filed nominally on the Company’s behalf, including three in the United States District Court for the District of Oregon: (i) *Franchi v. McCormack et al.*, No. 3:25-cv-01543-AN, filed August 29, 2025 (as amended September 2, 2025) (the \"*Franchi*Action\"); (ii) *Chadwick v. McCormack et al.*, No. 3:25-cv-01838-JR, filed October 7, 2025 (the \"C*hadwick* action\"); and (iii) *Jensen v. McCormack et al.*, No. 3:25-cv-01891-SB, filed October 14, 2025 (the \"*Jensen* action\"); and two in the Circuit Court of the State of Oregon for the County of Multnomah: (i) *Johnson v. McCormack et al.*, No. 25-cv-56998, filed October 23, 2025 (the \"*Johnson* action\"); and (ii) *Sperry v. McCormack et al.*, No. 26-cv-00621*,* filed January 6, 2026. These derivative actions are based on the same alleged facts and circumstances as the *Ullom*Action and are against the Company’s Chief Executive Officer, Chief Financial Officer and directors. The derivative actions collectively assert claims pursuant to Sections 10(b), 14(a), and 20(a) of the Exchange Act, as well as for breaches of fiduciary duties, aiding and abetting breaches of fiduciary duties, unjust enrichment, and waste of corporate assets. Each of the five derivative lawsuits seeks to recover damages on the Company’s behalf and alleges that a legally required pre-suit demand on the Board of Directors would be futile and should be excused.\n\n \n\nOn November 4, 2025, the *Chadwick, Jensen and Franchi* Actions were consolidated and stayed pending resolution of the Company’s anticipated motion to dismiss in the *Ullom*Action. On January 5, 2026, the *Johnson* Action was stayed pending the same event. On February 9, 2026, the Company and its Chief Executive Officer and Chief Financial Officer moved to dismiss the *Ullom*Action. On February 11, 2026, the *Johnson*and the *Sperry*Actions were consolidated and remain stayed pending resolution of the defendants' motion to dismiss in the *Ullom* Action. These cases are at an early stage, and the Company believes it has defenses against the claims and is responding accordingly.\n\n \n\n**Item** **1A.**      **Risk Factors**\n\n \n\nOur business, financial condition, results of operations and cash flows may be affected by a number of factors. Detailed information about risk factors that may affect Digimarc’s actual results are set forth in Part I, Item 1A: “Risk Factors” of our 2025 Annual Report. The risks and uncertainties described in our 2025 Annual Report are those risks of which we are aware and that we consider to be material to our business, and such risk factors have not changed materially. If any of those risks and uncertainties develop into actual events, our business, financial condition, results of operations or cash flows could be materially adversely affected. In that case, the trading price of our common stock could decline.\n\n \n\n**Item** **2.**         **Unregistered Sales of Equity Securities and Use of Proceeds.**\n\n \n\n**(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers**\n\n \n\nWe repurchase shares of common stock in satisfaction of required withholding of income tax liability in connection with the vesting of restricted stock, restricted stock units and performance restricted stock units.\n\n \n\nThe following table sets forth information regarding purchases of our equity securities during the three months ended March 31, 2026:\n\n \n\n \n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n \n\n**(d)**\n\n \n\n \n \n \n \n** **\n \n \n \n** **\n \n\n**(c)**\n\n \n \n\n**Approximate**\n\n \n\n \n \n \n \n** **\n \n \n \n** **\n \n\n**Total number**\n\n \n \n\n**dollar value**\n\n \n\n \n \n \n \n** **\n \n \n \n** **\n \n\n**of shares**\n\n \n \n\n**of shares that**\n\n \n\n \n \n\n**(a)**\n\n \n \n\n**(b)**\n\n \n \n\n**purchased as**\n\n \n \n\n**may yet be**\n\n \n\n \n \n\n**Total number**\n\n \n \n\n**Average price**\n\n \n \n\n**part of publicly**\n\n \n \n\n**purchased**\n\n \n\n \n \n\n**of shares**\n\n \n \n\n**paid per**\n\n \n \n\n**announced plans**\n\n \n \n\n**under the plans**\n\n \n\n**Period**\n\n \n\n**purchased (1)**\n\n \n \n\n**share (1)**\n\n \n \n\n**or programs**\n\n \n \n\n**or programs**\n\n \n\nMonth 1\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nJanuary 1, 2026 to January 31, 2026\n\n \n \n—\n \n \n$\n—\n \n \n \n—\n \n \n$\n—\n \n\nMonth 2\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nFebruary 1, 2026 to February 28, 2026\n\n \n \n131,335\n \n \n$\n4.86\n \n \n \n—\n \n \n$\n—\n \n\nMonth 3\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nMarch 1, 2026 to March 31, 2026\n\n \n \n37,900\n \n \n$\n6.53\n \n \n \n—\n \n \n$\n—\n \n\nTotal\n\n \n \n169,235\n \n \n$\n5.23\n \n \n \n—\n \n \n$\n—\n \n\n(1)\n\nShares of common stock withheld (purchased) by us in satisfaction of required withholding of income tax liability upon vesting of restricted stock, restricted stock units and performance restricted stock units."}