Cambium Networks Corp

Evaluation of disclosure controls and procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended, or the Exchange Act), as of September 30, 2024, the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of such date, our disclosure controls and procedures were not effective because of material weaknesses in our internal control over financial reporting, previously reported in Part II, Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2023, and as described below during the three-month period ended September 30, 2024.

Material Weaknesses

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.

As disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2023, management identified the following material weaknesses in internal controls over financial reporting during the year ended December 31, 2023:

Management concluded that our control environment was ineffective in identifying changes in risk and designing internal controls that are responsive to risks. As a result, certain process-level controls related to the determination of our inventory excess and obsolescence reserve and recoverability of deferred tax assets were not designed effectively in that they were not designed to appropriately evaluate methodology and assumptions, operate with a sufficient level of precision, nor adequately address information utilized in the performance of the controls.

The control deficiencies resulted in material errors to our inventory excess and obsolescence reserve and deferred tax asset valuation allowance that have been corrected in the consolidated financial statements as of and for the year ended December 31, 2023. Furthermore, the control deficiencies described above created a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis. Therefore, we concluded that the deficiencies represent material weaknesses in our internal control over financial reporting and our internal control over financial reporting was not effective as of December 31, 2023.

In addition, management identified the following material weakness in internal controls over financial reporting during the three-month period ended September 30, 2024:

Management concluded that we did not have sufficient resources with the appropriate technical accounting expertise to be able to assist us in identifying, evaluating and addressing complex technical accounting issues that affect our consolidated financial statements on a timely basis.

This control deficiency resulted in an initial failure to correctly classify debt as of September 30, 2024. This control deficiency also resulted in an initial failure to identify impairment triggering events in our long-lived assets and goodwill as of September 30, 2024. By not taking these impairment triggering events into consideration, the Company could have failed to recognize whether an asset group or reporting unit was impaired in accordance with ASC 360-10 and ASC 350-10, respectively. We reclassified $20.2 million of the term loan facility, $0.1 million of unamortized debt issuance costs associated with the term loan facility and $45.0 million of the revolving credit facility from Long-term debt, net to Current portion of long-term debt, net within the condensed consolidated balance sheet as of September 30, 2024. We also reclassified $0.2 million of unamortized debt issuance costs associated with the revolving credit facility from Other noncurrent assets to Other current assets within the condensed consolidated balance sheet as of September 30, 2024. No impairments were identified following the quantitative impairment testing on our long-lived assets and goodwill as of September 30, 2024.

Management has determined that the identified deficiency is related to employee turnover and insufficient internal resources in technical accounting and financial reporting impacting the control environment in the third quarter of 2024, and, therefore, relates to the three-month period ended September 30, 2024, and does not affect previously reported periods. The control deficiency described above created a reasonable probability that a material misstatement to the condensed consolidated financial statements would not be prevented or detected on a timely basis. Therefore, we concluded that the deficiency represents a material weakness in our internal control over financial reporting and our internal control over financial reporting was not effective as of September 30, 2024.

Ongoing Remediation Efforts to Address the Previously Identified Material Weaknesses

Management, with oversight from the Audit Committee of our Board of Directors, is taking steps to remediate the control deficiencies which resulted in the material weaknesses described above by implementing changes to our internal control over financial reporting. Management is in the process of enhancing, and will continue to enhance, the risk assessment process and design and implementation of internal controls over financial reporting. The remediation measures to correct the previously identified material weaknesses include enhancing the design and implementation of existing controls and creating new controls as needed to address identified risks, adding personnel and providing additional training to personnel including the appropriate level of documentation to be maintained to support internal controls over financial reporting. In addition, we intend to enhance our technical accounting expertise within the Company to better identify and address complex technical accounting issues as they arise.

As we continue to evaluate and work to improve our internal control over financial reporting, management may determine to take additional measures to strengthen controls or to modify the remediation plan described above. When fully implemented and operational, we believe the controls we have designed or plan to design will remediate the control deficiency that has led to the material weaknesses that we have identified. The previously identified material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in internal control

We continue working towards implementing processes and procedures to address the material weaknesses noted above. Other than changes in personnel, including the previously announced departure of our Chief Accounting Officer, there were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on effectiveness of controls and procedures

None.