Bandwidth Inc.

Phone Recovery Services, LLC and Phone Administrative Services, Inc. acting or purporting to act on behalf of applicable jurisdictions, or the applicable county or city itself, have filed multiple lawsuits against us and/or one of our subsidiaries alleging that we failed to bill, collect and remit certain taxes and surcharges associated with the provision of 911 services.

We have been named in a lawsuit that remains unresolved and is associated with the collection and remittance of 911 taxes and surcharges in Cook and Kane Counties, Illinois, the City of Chicago, Illinois, and the State of Illinois. The complaint alleges that we failed to bill, collect and remit certain taxes and surcharges associated with 911 services pursuant to applicable laws. We intend to vigorously defend this lawsuit and believe we have meritorious defenses.

On July 10, 2025, the City and County of San Francisco Tax Collector (“City of San Francisco”) issued a Corrected Tax Collector Decision on Petition for Redetermination to us, asserting an Access Line Tax (“ALT”) deficiency in the amount of $4 million. We dispute the City of San Francisco’s application of the ALT to us as well as the amount of the deficiency. We paid and placed on deposit the amount under protest on July 25, 2025, as required by law. On August 7, 2025, we filed a Claim for Refund with the City of San Francisco seeking a refund of the full amount. If we are unable to resolve the Claim for Refund with the City of San Francisco, or if the City of San Francisco denies the Claim for Refund, we anticipate that we will file a Complaint for Refund challenging the assessment in the Superior Court of the State of California, and believe we have meritorious arguments that support a refund of the full amount.

In addition to the litigation discussed above, from time to time, we may be subject to legal actions and claims in the ordinary course of business. We have received, and may in the future continue to receive, claims from third parties relating to number management and billing, employment-related claims, claims arising from customer misuse of our offerings, and claims asserting, among other things, infringement of their intellectual property rights. Future litigation may be necessary to defend ourselves, our partners and our customers by determining the scope, enforceability and validity of third-party proprietary rights, or to establish our proprietary rights or to recover amounts owed to us.

The results of any current or future litigation in which we engage cannot be predicted with certainty. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.