Dolby Laboratories

None of the warning signs we check for were found.

We look for five warning signs: doubt it can keep going, weak checks on its own accounts, a notice that its past accounts can't be relied on, a change of auditor, and one customer bringing in a big share of sales. We don't check lawsuits, investigations or debt yet.

We checked the auditor's report, internal controls, restatement notices, auditor changes and big customers in the 10-K filed 18 Nov 2025, plus the 10-Q filed 30 Jul 2026 and 5 later 8-Ks.

Cheap for a reason is the question the numbers cannot answer.

Whether the price already reflects the risks is what the deep dive is for.

• The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not currently known to us or that we currently deem less significant may also affect our business operations or financial results. If any of the following risks actually occur, our stock price, business, operating results and financial condition could be materially adversely affected.

  Could happen

  Maintaining a credit facility and future debt obligations could adversely affect our business and financial condition. We maintain a revolving credit facility (the “Credit Facility”) with Bank of America, N.A. which is currently undrawn. The Credit Facility provides us with an additional source of capital and liquidity, but maintaining a debt facility inevitably presents certain risks. We are subject to certain covenants and other obligations under the Credit Facility, such as maintaining a required gross leverage ratio, avoiding certain liens and paying commitment fees. Our failure to comply with these covenants could result in the declaration of an event of default and cause us to be unable to borrow under the Credit Facility or result in the acceleration of the maturity of any indebtedness thereunder. In the event we draw on the Credit Facility, our debt obligations could adversely impact us by, for example, requiring us to use a large portion of our cash flow to service the debt, which would reduce the amount of cash flow available to fund working capital, capital expenditures, and other business activities. Borrowing under the Credit Facility would also increase our exposure to interest rate risk from variable rate indebtedness.

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• The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not currently known to us or that we currently deem less significant may also affect our business operations or financial results. If any of the following risks actually occur, our stock price, business, operating results and financial condition could be materially adversely affected.

  Could happen

  Adverse changes to tariffs, trade agreements, and trade policies may have a negative effect on our business and results of operations. The United States and other countries in our supply chain or in which we have sales have imposed and may impose additional tariffs and other trade regulations, or may adversely adjust prevailing tariff levels and other trade restrictions. We rely on contract manufacturers and component suppliers, some of which are located outside of the United States, and we export our products to and license our technology in foreign countries. As such, newly implemented tariffs and potential future tariffs or other trade barriers could, directly or indirectly, increase the cost or time required to produce or deliver our products and may increase the costs associated with licensing our technology. Our results may also be impacted indirectly by the imposition of tariffs and other trade barriers on our customers and licensees. If the cost to manufacture products that incorporate our technology, such as consumer electronics or cars, is increased as a result of tariffs, it may exert general pricing pressure which could lead manufacturers to discontinue including our technology in their products or to seek price reductions. If the costs or lead times associated with exporting licensees’ products or the components thereof result in higher prices or longer lead times for end consumers, sales of those products may decrease and thus royalty payments to us based on unit shipments may decrease. More generally, the imposition of tariffs and the outbreak of a trade war may lead to general negative economic effects, such as decreased consumer demand, recession or the elevated risk of recession, or higher inflationary pressures, which could adversely impact our business and results of operations.

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• The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not currently known to us or that we currently deem less significant may also affect our business operations or financial results. If any of the following risks actually occur, our stock price, business, operating results and financial condition could be materially adversely affected.

  Could happen

  Some of our patents incorporated into the AAC audio coding standard and the AVC digital video coding standard, from which we derive a significant portion of our licensing revenue, have expired and others will expire over the next several years. While there are alternative versions of these standards that offer different features and that incorporate patents that have later expirations, licensees may see less value in those alternative versions, resulting in a decrease in royalty revenue. A decrease in royalty revenue may also result in decreased revenue from patent pool administration fees. Our patents are incorporated into newer coding standards that represent successive generations of technology, such as, in the case of AAC, Extended HE-AAC and, in the case of AVC, HEVC whose patents generally expire later than the AAC and AVC patents and to which many of the AAC and AVC licensees have, are in the process of, or may in the future transition. However it is not certain that all or most licensees will transition to such newer technologies.

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• The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not currently known to us or that we currently deem less significant may also affect our business operations or financial results. If any of the following risks actually occur, our stock price, business, operating results and financial condition could be materially adversely affected.

  Already happened

  In the case of our patent coverage related to DD and DD+ audio codec technologies, some of our relevant patents have expired and will expire in the coming years, but others will continue to apply. We have continued to innovate and develop IP to support these standardized technologies and their various implementations, including generating patents associated with different or new features of the technologies and obtaining patents that generally expire later than those incorporated into the original standards. Our customers use our DD and DD+ implementation for quality, reliability, and performance and to take advantage of other elements of these offerings such as Dolby branding, even in locations where we have not had or no longer have applicable patent coverage. Nevertheless, revenue attributed to DD and DD+ technologies has declined and is expected to continue to decline due, in part, to expiration of relevant patents. Many of our partners have adopted newer generations of our offerings such as Dolby AC-4 technologies, the associated patents of which generally expire later than those associated with DD and DD+. We will continue to work to transition our DD and DD+ licensees to our newer technologies, but the success of such efforts is not guaranteed.

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