This Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and other parts of this Quarterly Report on Form 10-Q (“Quarterly Report”) contain forward-looking statements, within the meaning of the safe harbor provisions under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. Forward-looking statements reflect current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “will,” “believe,” “could,” “should,” “would,” “may,” “anticipate,” “intend,” “plan,” “estimate,” “expect,” “project” or the negative of these terms or other similar expressions. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part II, Item 1A of this Quarterly Report, and Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, as amended, under the heading “Risk Factors”. The following discussion should be read in conjunction with the audited consolidated financial statements and notes thereto included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2025, as amended. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law. Each of the terms the “Company,” “Identiv,” “we,” “us” and “our” as used herein refers collectively to Identiv, Inc. and its wholly-owned subsidiaries, unless otherwise stated. Overview We currently have one reportable segment: the IoT Business segment. The IoT Business develops, manufactures, and supplies specialty Internet of Things ("IoT") solutions tailored for the healthcare, logistics, smart packaging industries and other high-value end markets. Our strategy is focused on developing highly engineered and specialized IoT inlays, tags, and labels for applications that provide significant value to our global customers. These specialty radio-frequency identification ("RFID") IoT devices, including near field communication ("NFC"), high frequency ("HF"), ultra-high frequency ("UHF") and Bluetooth Low Energy ("BLE") technology are attached to or embedded into physical items, such as medical device consumables, pill containers, wine bottles, consumer appliances, and sports jerseys, providing those items with a unique digital identity. These devices enable unique and secure digital interaction with the physical world while simultaneously capturing relevant data which can then be analyzed and managed by the end customer. We sell our products across multiple industries, focusing on pharmaceutical and medical devices, consumer electronics, mobile devices, wine and spirits, luxury goods, libraries, and logistics. Recent Developments Pending Asset Sale On June 24, 2026, we entered into a Stock and Asset Purchase Agreement (the "Purchase Agreement") with Trackonomy Systems, Inc., a Delaware corporation ("Trackonomy" or "Buyer"). Upon the terms and subject to the conditions set forth in the Purchase Agreement, at the closing of the transactions contemplated thereby, we will sell our specialty Internet of Things business (the "IoT Business") through the sale of substantially all of our operating assets, including all outstanding shares of Identiv (Thailand) Co., Ltd, our wholly-owned subsidiary, and $25.0 million in cash, subject to adjustment, to Buyer, in exchange for $50.0 million of shares of Series C Preferred Stock of Buyer ("Buyer Series C Preferred Stock"), at a value of $20.07 per share (the "Purchase Price"), and the assumption of certain liabilities related to the IoT Business (collectively, the "Asset Sale"). The consummation of the Asset Sale is subject to the satisfaction or waiver, to the extent permitted by applicable law, of various conditions, including (i) the affirmative vote of the holders of a majority of the outstanding shares of our common stock and our Series B non-voting convertible preferred stock., $0.001 par value per share ("Series B Preferred Stock"), voting together as a single class (the Series B Preferred Stock voting on an as-converted basis), present in person or by proxy and entitled to vote thereon at the Annual Meeting (the "Required Stockholder Approval"), (ii) the absence of any order or law enjoining, restraining, prohibiting or making illegal the consummation of the Asset Sale, (iii) the absence of any pending or overtly threatened legal proceeding challenging or seeking to restrain or prohibit the consummation of the Asset Sale, (iv) each party’s representations and warranties being true and correct to the applicable specified standard as of the date of the Purchase Agreement and as of the closing of the Asset Sale, (v) each party’s material compliance with covenants required to be performed or complied with prior to or on the closing of the Asset Sale, (vi) Buyer’s receipt of our closing certificate and our receipt of Buyer's closing certificate, (vii) delivery of the stock certificate representing a number of shares of Buyer Series C Preferred Stock (the "Buyer Series C Shares") equal to $50.0 million, divided by $20.07 per share, (viii) delivery of the ancillary agreements, (ix) delivery of the Purchased Assets and the Purchased Cash (each as defined in the Purchase Agreement), and (x) the filing by Buyer of a charter amendment with the Secretary of State of the State of Delaware to increase the authorized number of shares of Buyer Series C Preferred Stock. 18 The Purchase Agreement includes customary representations, warranties and covenants of us and Buyer. Between the execution of the Purchase Agreement and the closing of the Asset Sale, each of us and Buyer has agreed to operate its respective business in the ordinary course and to comply with certain operating covenants applicable to it. Pursuant to the terms of the Purchase Agreement, each equity award, including each RSU award, that is held by an employee of the IoT Business who remains employed by the Company (or an affiliate) through the closing of the Asset Sale and who, effective as of immediately following the Asset Sale, becomes an employee of Buyer (or an affiliate of Buyer or who remains an employee of Identiv (Thailand) Co., Ltd.) (the “Transferred Employees”), will vest effective as of immediately prior to the closing of the Asset Sale. In addition, effective as of immediately prior to the closing of the Asset Sale, our board of directors (“Board of Directors”) has determined that it is in the best interests of the Company and its stockholders to accelerate the vesting of each RSU that is held by an employee of the Company (or an affiliate) as of the closing of the Asset Sale. RSUs held by our non-employee directors will remain outstanding and continue to vest according to their terms. In addition, under the terms of the Purchase Agreement, Transferred Employees will be entitled to receive a pro-rated payment in respect of their annual (or other short-term) cash bonus and/or commission opportunity which has a performance period that is ongoing as of the closing of the Asset Sale. The amount of such payment shall be determined based upon actual performance achieved as of the date of the closing of the Asset Sale in accordance with the terms of the applicable plan or arrangement and multiplied by a quotient, the numerator of which is equal to the number of calendar days elapsed between the first (1st) day of the applicable performance period and the date of the closing of the Asset Sale (inclusive of the date of the closing of the Asset Sale) and the denominator of which is equal to the number of days in the applicable performance period. In addition, certain of our employees, including Edward Kirnbauer, our Chief Financial Officer, are eligible to receive a transaction bonus in connection with the Asset Sale, payable upon the earlier of (a) the conclusion of a retention period following the closing of the Asset Sale and (b) the dissolution of the Company, subject to the employee’s continuous service through such date (or as otherwise approved by the Company). The retention period ranges from six months to twelve months. Following the completion of the Asset Sale, we intend to continue to be a public company operating under a new corporate name to be determined. With respect to the remaining corporate entity, we intend to transition to a new business model focused on providing physical artificial intelligence ("AI") solutions through the acquisition of targeted compliance software-as-a-service (“SaaS”) businesses in highly regulated industries that we believe may benefit from integration with Buyer’s physical AI platform, including the incorporation of BLE- and RFID-enabled physical data (such anticipated business, the “Physical AI Solutions Business”). Following the closing of the Asset Sale, Buyer will own the "Identiv" tradename and all related intellectual property. Management’s discussion and analysis of financial condition and results of operations addresses historical periods and does not take into account the Asset Sale, which will affect our proposed business on a go-forward basis, assuming the Asset Sale closes. For additional information regarding the risks related to the proposed Asset Sale, see “Risks Related to the Asset Sale” and “Risks Related to the Proposed Physical AI Solutions Business if the Asset Sale is Completed” under “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. Factors Affecting Our Performance Market Adoption Our financial performance depends on the pace, scope and depth of end-user adoption of our RFID and BLE products in multiple industries. That pace, scope and depth has resulted in large fluctuations in our operating results. We believe improvements over time in chip capabilities at lower costs have increased the opportunities for product engineers to integrate RFID into their products to create new and more engaging customer experiences, reduce counterfeiting, and ensure proper product use and adherence. Furthermore, we believe improvements in BLE chip capabilities, and the development of lower cost multi-component manufacturing processes have increased the opportunities for organizations to integrate BLE into their product and transport packaging to streamline supply chains, reduce shrink and wastage, support regulatory compliance, and increase operational efficiency. Though we believe the number of opportunities for RFID- and BLE-based solutions has increased, the evaluation period and customer adoption for new applications can take anywhere from six months to several years, depending on the industry and application. BLE inlays and labels are a newer technology and product category, which carry additional market adoption risks as these solutions have not been widely scaled across multiple industries. We believe the underlying long-term trend is continued RFID and BLE adoption across multiple verticals, but regulated industries like healthcare take longer to optimize the technology and fully understand the benefits. We also believe that expanding use cases foster adoption across verticals and into other markets. If RFID and BLE market adoption, and adoption of our products specifically, does not meet our expectations then our growth 19 prospects and operating results will be adversely affected. If we are unable to meet end-user or customer volume or performance expectations, then our business prospects may be adversely affected. In contrast, if our RFID and BLE sales exceed expectations, then our revenue and profitability may be positively affected. Given the uncertainties of the specific timing of our new customer deployments for RFID and BLE solutions, we cannot assure you that we will have appropriate inventory and capacity levels or that we will not experience inventory shortfalls or overages in the future or acquire inventory at costs to maintain gross margins. We attempt to mitigate those risks by being deeply embedded in our customers’ product design cycles and commercialization planning, working with our chip partners on long lead time components, managing our limited capital equipment needs within a short cycle and attempting to future proof our facilities to accommodate several scenarios for growth potential. These new customer deployments typically depend on new product development, and we cannot assure that technical product and manufacturing process development will result in meeting all product and cost requirements given the risks associated with development activities. If end users with sizable projects change requirements or choose to delay them due to market conditions, strategic prioritization, or other reasons we may experience significant fluctuation in revenue on a quarterly or annual basis. We have experienced such fluctuations, and expect to experience these fluctuations in the future, and we anticipate that uncertainty to continue to characterize our business for the foreseeable future. RFID and BLE Device Production Transition At the end of the second quarter of 2025, we ceased the production of our RFID and BLE devices in our manufacturing facility in Singapore. Our customers have been requalified in our manufacturing facility in Thailand. As a result, we are maintaining and producing products from one location. Focus on High-Margin Opportunities To strengthen and grow our core channel business, we are prioritizing higher margin opportunities with existing customers and channel partners. Higher margin opportunities often involve complex devices as compared to standard specification products, and require a certain amount of customization or engineering new product development for the customer. Increasing technological complexity often necessitates more development resources and longer evaluation periods to ensure the product meets customer needs. In choosing to prioritize higher margin opportunities, we have, and may continue to, decide not to support low-margin projects that may generate revenue. This has and may continue to result in a negative impact on our operating results. Competitive Landscape We have seen a large increase in global production capacity at several of our RFID competitors. This has resulted in competitive pricing pressure, and, in response, we exited some of our lowest margin business. We largely completed the exit of our lowest margin business by the end of fourth quarter of 2025, although we do still compete in some verticals that are highly competitive and are experiencing competitive pressure. Impacts of Macroeconomic Conditions and Other Factors on our Business We conduct operations internationally with sales in the Americas, Europe and the Middle East, and Asia-Pacific regions. Our manufacturing operations are primarily performed at our manufacturing facility in Thailand, and to a lesser extent, with third-party contract manufacturers in Southeast Asia. We purchase certain products and key components from a limited number of sources that depend on the supply chain, including freight, to receive components, transport finished goods and deliver our products across the world. As a result, adverse global and regional economic conditions have and may continue to materially affect our business, results of operations, and financial condition. Such conditions, including but not limited to, geopolitical tensions, inflation, tariffs, sanctions or other trade restrictions, slower growth or recession, higher interest rates and currency fluctuations and other conditions that may impact market volatility, consumer confidence and spending may adversely affect demand for our products and our operations. For example, armed conflicts and heightened geopolitical tensions in the Middle East, including ongoing U.S. and Israeli military operations against Iran and the closure of the Strait of Hormuz, pose risks to the global economy and to our business, even though we do not have direct operations in the region. An escalation of military action in the Middle East has begun and may continue to adversely affect global supply chains, including through disruptions to shipping routes and increases in transit times and freight costs for components and raw materials. Recently, the macroeconomic conditions described above have had a greater impact on our consumer-facing applications, where demand for higher-end products has softened, resulting in forecast adjustments for the second half of the year. For example, one of our larger consumer-facing customers has built up significant inventory positions over the last three quarters and is pausing new order 20 activity in the coming months, to align inventories with current demand. The customer expects to resume its order activity late this year. Further, we are seeing chip allocation delays for certain products, delaying production and shipment of some orders. We have also experienced price increases from several of our suppliers. As a result, we are assessing the impact on our product costs and have begun, and intend to continue to introduce price increases to help offset costs. Price increases, however, may not successfully offset cost increases and reduced demand, and could result in loss of market share, which may adversely impact our financial position, results of operations, and cash flows. The imposition of, or increase in, tariffs applicable to us has and will continue to increase our costs unless we are able to offset them, including through leveraging tariff exemptions, optimizing our supply chain or sourcing from alternative suppliers, or increasing prices. In addition, tariff policies, rates, exemptions, and related trade restrictions have changed and may continue to change, which could increase the cost, uncertainty and complexity of our supply chain, sourcing, pricing and margin-management efforts. While we have developed a pass-through strategy intended to protect margins, the amount of Thailand-origin components required to obtain a valid certificate of origin remains uncertain, particularly in light of recent U.S. enforcement efforts aimed at preventing transshipment. We do not believe our activities constitute transshipments; however, in the event our products are determined to be transshipments, they would be subject to higher tariffs. There can be no assurance that we will be able to offset or mitigate the resulting increase in our costs, and if we are unable to pass on any cost increases or if supply and demand conditions do not support price increases for our products, our revenue and gross margin would be negatively impacted. As of June 30, 2026, approximately 10% of our business is exposed to U.S. tariffs due to our manufacturing in Thailand. Anticipated Effects of Pending Asset Sale Our anticipated go-forward business will be materially affected by the Asset Sale, assuming it is completed. Because the assets and operations to be sold constitute substantially all of our operating business and revenue-generating activities, following the closing of the Asset Sale, unless and until we complete one or more acquisitions, we will not have a meaningful operating business, our revenue will consist solely of payments for transition services to Buyer, if any, and our operating activities will be significantly reduced. We will continue to incur public company expenses despite our substantially reduced operations and revenue, and our cash resources will be reduced by our $25.0 million contribution to Buyer, subject to adjustment pursuant to the Purchase Agreement, transaction-related fees and expenses, ongoing losses and the costs of operating as a public company. Although we are actively evaluating potential acquisition opportunities and currently intend to complete an acquisition shortly after the closing of the Asset Sale, there can be no assurance that we will do so on the timeline currently expected or at all, or that any acquired business will generate sufficient revenue or cash flow to sustain our operations. For additional information regarding the risks related to the proposed Asset Sale, see “Risks Related to the Asset Sale” and “Risks Related to the Proposed Physical AI Solutions Business if the Asset Sale is Completed” under “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. 21 Results of Operations Our results of operations for the three and six months ended June 30, 2026 and 2025 are as follows (in thousands, except percentages). Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change Net revenue $ 5,681 $ 5,040 13 % $ 13,094 $ 10,309 27 % Gross profit (loss) 916 (474 ) 293 % 2,207 (342 ) 745 % Gross profit (loss) margin 16 % (9 %) 17 % (3 %) Operating expenses: Research and development 950 890 7 % 1,951 1,677 16 % Selling and marketing 1,290 1,546 (17 %) 2,639 2,953 (11 %) General and administrative 4,128 3,057 35 % 7,251 6,203 17 % Restructuring and severance 59 420 (86 %) 81 680 (88 %) Total operating expenses 6,427 5,913 9 % 11,922 11,513 4 % Loss from operations (5,511 ) (6,387 ) (9,715 ) (11,855 ) Non-operating income (expense): Interest income, net 995 1,320 (25 %) 2,042 2,532 (19 %) Foreign currency losses, net (125 ) (870 ) (86 %) (411 ) (1,400 ) (71 %) Loss from operations before income provision (4,641 ) (5,937 ) (8,084 ) (10,723 ) Income tax provision (12 ) (105 ) (89 %) (17 ) (108 ) (84 %) Net loss from operations $ (4,653 ) $ (6,042 ) $ (8,101 ) $ (10,831 ) Geographic net revenue based on each customer’s ship-to location is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change Americas $ 2,820 $ 1,833 54 % $ 8,234 $ 4,071 102 % Europe and the Middle East 2,154 1,964 10 % 3,592 3,751 (4 %) Asia-Pacific 707 1,243 (43 %) 1,268 2,487 (49 %) Total $ 5,681 $ 5,040 $ 13,094 $ 10,309 Percentage of net revenue: Americas 50 % 36 % 63 % 39 % Europe and the Middle East 38 % 39 % 27 % 36 % Asia-Pacific 12 % 25 % 10 % 25 % Total 100 % 100 % 100 % 100 % 22 Net Revenue Net revenue for the three and six months ended June 30, 2026 was $5.7 million and $13.1 million, respectively, and increased by $641,000 and $2.8 million, respectively compared with net revenue of $5.0 million and $10.3 million in the comparable periods of 2025. Net revenue in the Americas for the three and six months ended June 30, 2026 increased 54% and 102%, respectively, compared with the comparable periods of 2025. The increase for the three months ended June 30, 2026 compared with the prior year period was due to higher unit sales of RFID transponder products, while the increase for the six months ended June 30, 2026 compared to the comparable prior year period was primarily due to one of our customers ordering their full-year volume in the first quarter of 2026, totaling approximately $2.8 million. Net revenue in Europe, the Middle East, and the Asia-Pacific for the three and six months ended June 30, 2026 was $2.9 million and $4.9 million, respectively, a decrease of 11% and 22%, respectively, compared with $3.2 million and $6.2 million in the comparable periods of 2025. The decreases were primarily due to lower unit sales of RFID transponder products, including transitioning sales from contract manufacturers in the Asia-Pacific region to shipping directly to one of our large customers in the Americas. Gross Profit (Loss) and Gross Margin Gross profit for the three and six months ended June 30, 2026 was $916,000 and $2.2 million, respectively, compared with a gross loss of $474,000 and $342,000 in the comparable periods of 2025. Gross profit (loss) represents net revenue less direct cost of product sales, manufacturing overhead, other costs directly related to preparing the product for sale including freight, scrap, and inventory adjustments, where applicable. Gross profit margin for the three and six months ended June 30, 2026 increased to 16% and 17%, respectively, from gross loss margins of 9% and 3% in the comparable periods of 2025. The increases in gross profit margin were primarily attributable to cost savings and efficiencies achieved in procurement and production with the transition of production to our Thailand production facility, improved facility utilization, and the elimination of manufacturing production costs associated with our discontinued Singapore operation. In addition, the improvement in gross profit margin in the three and six months ended June 30, 2026 was the result of charges to cost of revenue of approximately $639,000 and $889,000, during the three and six months ended June 30, 2025, respectively, recorded for obsolete inventory at our Singapore production facility. We expect there will be variation in our gross profit from period to period, as our gross profit has been and will continue to be affected primarily by varying mix among our products. Within each product category, gross margins have tended to be consistent, but over time may be affected by a variety of factors, including, without limitation, competition, product pricing, the volume of sales in any given quarter, manufacturing volumes, product configuration and mix, the availability of new products, product enhancements, inventory write-downs and the cost and availability of components. At the end of the second quarter of 2025, we ceased production of RFID transponder devices in our manufacturing facility in Singapore. We have requalified our customers in our Thailand production facility. Furthermore, at the end of the fourth quarter of 2025, we completed the shutdown activities at our Singapore facility. As a result of the elimination of manufacturing production costs from our Singapore facility, we expect gross profit margins associated with our current customer base to continue to improve in 2026 but would expect some near-term variability in gross product margin to the extent we scale production for a new large program in 2026. Operating Expenses Information about our operating expenses for the three and six months ended June 30, 2026 and 2025 is set forth below (dollars in thousands). Research and Development Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change Research and development $ 950 $ 890 7 % $ 1,951 $ 1,677 16 % as a % of net revenue 17 % 18 % 15 % 16 % Research and development expenses consist primarily of employee compensation and fees for the development of RFID and BLE inlays, labels, and tags. The majority of our research and development activities focused on the customization of existing products and the development of new offerings for emerging market opportunities. Research and development expenses for the three and six months ended June 30, 2026 increased in dollars compared to the comparable prior periods in 2025 primarily due to an increase in payroll related costs and external contractor expenses. 23 Selling and Marketing Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change Selling and marketing $ 1,290 $ 1,546 (17 %) $ 2,639 $ 2,953 (11 %) as a % of net revenue 23 % 31 % 20 % 29 % Selling and marketing expenses consist primarily of employee compensation as well as customer lead generation activities, tradeshow participation, advertising and other marketing and selling costs. Selling and marketing expenses for the three and six months ended June 30, 2026 decreased compared to the comparable periods in 2025 primarily due to lower payroll-related costs, trade show and travel and entertainment costs, which is attributed to reduced headcount in sales and marketing year over year. General and Administrative Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change General and administrative $ 4,128 $ 3,057 35 % $ 7,251 $ 6,203 17 % as a % of net revenue 73 % 61 % 55 % 60 % General and administrative expenses consist primarily of compensation expenses for employees performing administrative functions, and professional fees incurred for legal, auditing and other consulting services. General and administrative expenses for the three and six months ended June 30, 2026 increased in dollars compared to the comparable periods in 2025 primarily due to higher strategic review-related costs of $1.5 million and $1.9 million, respectively, partially offset by lower stock-based compensation expense, professional fees, and external contractor expenses. Restructuring and Severance Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change Restructuring and severance $ 59 $ 420 (86 %) $ 81 $ 680 (88 %) Restructuring and severance expenses for the three and six months ended June 30, 2026 decreased compared to the comparable periods in 2025 primarily due to severance costs of $312,000 and $334,000, respectively, and the impairments of an operating lease right-of-use asset of $108,000 and $346,000, respectively, associated with the shutdown related activities and vacated production space at our Singapore manufacturing facility in the three and six months ended June 30, 2025. Non-operating Income (Expense) Information about our non-operating income (expense) for the three and six months ended June 30, 2026 and 2025 is set forth below (dollars in thousands). Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change Interest income, net $ 995 $ 1,320 (25 %) $ 2,042 $ 2,532 (19 %) Foreign currency losses, net $ (125 ) $ (870 ) (86 %) $ (411 ) $ (1,400 ) (71 %) Interest income, net consists of interest income generated on our cash equivalents net of interest costs. The decrease in interest income, net for the three and six months ended June 30, 2026 compared to the comparable periods of 2025 was primarily attributable to lower average monthly balances on our money market accounts and treasury bills. Changes in currency valuation in the periods mainly were the result of exchange rate movements between the U.S. Dollar, the Euro and the Thai Baht. Our foreign currency gains and losses primarily result from the valuation of current assets and liabilities denominated in a currency other than the functional currency of the respective entity in the local financial statements. 24 Income Tax Provision Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % Change 2026 2025 % Change Income tax provision $ (12 ) $ (105 ) (89 %) $ (17 ) $ (108 ) (84 %) Effective tax rate 0 % 2 % 0 % 1 % As of June 30, 2026, our deferred tax assets are fully offset by a valuation allowance. ASC 740, Income Taxes, provides for the recognition of deferred tax assets if realization of such assets is more likely than not. Based upon the weight of available evidence, which includes historical operating performance, reported cumulative net losses since inception and difficulty in accurately forecasting our future results, we provided a full valuation allowance against all of our net U.S. and foreign deferred tax assets. We reassess the need for our valuation allowance on a quarterly basis. If it is later determined that a portion or all of the valuation allowance is not required, it generally will be a benefit to the income tax provision in the period such determination is made. We recorded an income tax provision during the three and six months ended June 30, 2026 and 2025. The effective tax rates for the three and six months ended June 30, 2026 and 2025 differ from the federal statutory rate of 21% primarily due to a change in valuation allowance, and the provision in certain foreign jurisdictions, which are subject to higher tax rates. Liquidity and Capital Resources As of June 30, 2026, our working capital, defined as current assets less current liabilities, was $125.8 million, a decrease of $7.5 million compared to $133.3 million as of December 31, 2025. As of June 30, 2026, our cash and cash equivalents balance was $119.4 million. Our Board of Directors intends to return up to $40 million of capital to stockholders, which may be accomplished through dividends or other distributions and share repurchases, including repurchases prior to the closing of the Asset Sale. On November 7, 2024, we announced that our Board of Directors authorized a stock repurchase program, effective November 15, 2024 (the “Stock Repurchase Program”), pursuant to which we could repurchase up to $10.0 million of shares of our common stock. On June 24, 2026, our Board of Directors authorized an increase in the amount available under the Stock Repurchase Program to $40.0 million, in addition to approximately $1.9 million previously repurchased under the Stock Repurchase Program. Under the Stock Repurchase Program, we may repurchase shares of common stock on a discretionary basis from time to time through open market repurchases, privately negotiated transactions, or other means. The timing and amount of shares repurchased depends on a number of factors, including stock price, trading volume, general market and business conditions, liquidity and capital needs, and other factors. The Stock Repurchase Program does not obligate us to repurchase any specific dollar amount or acquire any specific number of shares of common stock. The Stock Repurchase Program has no expiration date and may be suspended or discontinued at any time without notice. As of June 30, 2026, approximately $40.0 million remained available under the Stock Repurchase Program. During the three and six months ended June 30, 2026 and 2025, there were no repurchases of shares of common stock under the Stock Repurchase Program. As our previously unremitted earnings have been subjected to U.S. federal income tax, we expect any repatriation of these earnings to the U.S. would not incur significant additional taxes related to such amounts. However, our estimates are provisional and subject to further analysis. Generally, most of our foreign subsidiaries have accumulated deficits and cash and cash equivalents that are held outside the United States are typically not cash generated from earnings that would be subject to tax upon repatriation if transferred to the United States. We have access to the cash held outside the United States to fund domestic operations and obligations without any material income tax consequences. As of June 30, 2026, the amount of cash included at such subsidiaries was $17.0 million. We have not, nor do we anticipate the need to, repatriate funds to the United States to satisfy domestic liquidity needs arising in the ordinary course of business. We have historically incurred operating losses and negative cash flows from operating activities, and we expect to continue to incur losses in the future. As of June 30, 2026, we had an accumulated deficit of $366.2 million. During the six months ended June 30, 2026, we had a net loss of $8.1 million. We believe our existing cash and cash equivalents, together with cash generated from operations, will be sufficient to satisfy our working capital needs to fund operations for at least the next twelve months. We may also use cash to acquire or invest in complementary businesses, technologies, services or products that would change our cash requirements. We may also choose to finance our business through public or private equity offerings, debt financings or other arrangements. However, there can be no assurance that additional capital will be available to us or that such capital will be available to us on acceptable terms. If we raise funds by issuing equity securities, dilution to stockholders could result. Debt or any equity securities issued also may provide for rights, preferences or privileges senior to those of holders of our common stock. The terms of debt securities issued or borrowings 25 could impose significant restrictions on our operations. The incurrence of additional indebtedness or the issuance of certain debt or equity securities could result in increased fixed payment obligations and could also result in restrictive covenants, such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely affect our ability to conduct our business. In addition, the issuance of additional equity securities by us, or the possibility of such issuance, may cause the market price of our common stock to decline. If we are not able to secure additional funding when needed, we may have to curtail or reduce the scope of our business or forgo potential business opportunities. The following summarizes our cash flows for the six months ended June 30, 2026 and 2025 (in thousands): Six Months Ended June 30, 2026 2025 Net cash used in operating activities $ (7,195 ) $ (6,848 ) Net cash used in investing activities (1,589 ) (553 ) Net cash used in financing activities (441 ) (354 ) Effect of exchange rates on cash, cash equivalents, and restricted cash 23 1,448 Net decrease in cash, cash equivalents, and restricted cash (9,202 ) (6,307 ) Cash, cash equivalents, and restricted cash at beginning of period 128,909 135,946 Cash, cash equivalents, and restricted cash at end of period $ 119,707 $ 129,639 Cash flows from operating activities Cash used in operating activities for the six months ended June 30, 2026 of $7.2 million was primarily due to a net loss of $8.1 million, a decrease in cash from net changes in operating assets and liabilities of $1.8 million, partially offset by adjustments to net loss for certain non-cash items of $2.7 million, primarily consisting of depreciation, amortization, and stock-based compensation. Cash used in operating activities for the six months ended June 30, 2025 of $6.8 million was primarily due to a net loss of $10.8 million; partially offset by an increase in cash from net changes in operating assets and liabilities of $647,000 and adjustments to net loss for certain non-cash items of $3.3 million, consisting of depreciation, amortization, stock-based compensation, and impairment of operating lease right-of-use asset. Cash flows from investing activities Cash used in investing activities for the six months ended June 30, 2026 and 2025 was $1.6 million and $553,000, respectively, which related primarily to capital expenditures for our manufacturing facility in Thailand and our research and development facility in Germany. Cash flows from financing activities Cash used in financing activities for the six months ended June 30, 2026 and 2025 was $441,000 and $354,000, respectively, which related to taxes paid associated with net share settlements of RSUs and PSUs. Contractual Obligations We lease facilities, certain equipment, and automobiles under non-cancelable operating lease agreements. See Note 12, Leases, in the accompanying notes to our condensed consolidated financial statements. Purchases for inventories are highly dependent upon forecasts of customer demand. Due to the uncertainty in demand from our customers, we may have to change, reschedule, or cancel purchases or purchase orders from our suppliers. These changes may lead to vendor cancellation charges on these orders or contractual commitments. See Note 13, Commitments and Contingencies, in the accompanying notes to our condensed consolidated financial statements. Our other long-term liabilities include gross unrecognized tax benefits, and related interest and penalties. At this time, we are unable to make a reasonably reliable estimate of the timing of payments in individual years in connection with these tax liabilities. 26 Off-Balance Sheet Arrangements We have not entered into off-balance sheet arrangements, or issued guarantees to third parties. Climate Change We believe that neither climate change, nor governmental regulations related to climate change, have had a material effect on our business, financial condition or results of operations. Critical Accounting Estimates Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires management to establish accounting policies that contain estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These policies relate to revenue recognition, inventory, income taxes, long-lived assets, and stock-based compensation. We have other important accounting policies and practices; however, once adopted, these other policies either generally do not require us to make significant estimates or assumptions or otherwise only require implementation of the adopted policy and not a judgment as to the policy itself. Management bases its estimates and judgments on historical experience and on various other factors that we believe to be reasonable under 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. Despite our intention to establish accurate estimates and assumptions, actual results may differ from these estimates under different assumptions or conditions. During the three months ended June 30, 2026, management believes there have been no significant changes to the items that we disclosed within our critical accounting policies and estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025, as amended. Recent Accounting Pronouncements See Note 2, Significant Accounting Policies and Recent Accounting Pronouncements, in the accompanying notes to our unaudited condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report for a description of recent accounting pronouncements, which is incorporated herein by reference.