Cambium Networks Corp

Previous wording

The following discussion and analysis of financial condition and results of operations was prepared to provide the reader with a view and perspective of our business through the eyes of management and should be read in conjunction with the consolidated financial statements and related notes thereto of Cambium Networks Corporation (“Cambium”, “we”, “our”, or “us”) included elsewhere in this Comprehensive Form 10-K. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Comprehensive Form 10-K, particularly those discussed under Part I, Item 1A. “Risk Factors.” Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Current wording

The following discussion and analysis of financial condition and results of operations was prepared to provide the reader with a view and perspective of our business through the eyes of management and should be read in conjunction with the consolidated financial statements and related notes thereto of Cambium Networks Corporation (“Cambium”, “we”, “our”, or “us”) included elsewhere in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly those discussed under Part I, Item 1A. “Risk Factors.” Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Previous wording

The Enterprise portfolio includes a complete range of indoor and outdoor Wi-Fi access points, indoor and hardened copper and optical-based Ethernet switches, and security gateway and software-defined wide area network ("SD-WAN") devices. During 2024, we introduced our first Wi-Fi 7 access point, the X7-35X, which will be complemented with a broad range of indoor and outdoor Wi-Fi 7 solutions as the industry transition to Wi-Fi 7 occurs.

Current wording

The Enterprise portfolio includes a complete range of indoor and outdoor Wi-Fi access points, indoor and hardened copper and optical-based Ethernet switches, and security gateway and software-defined wide area network ("SD-WAN") devices. During 2024, we introduced our first Wi-Fi 7 access point, the X7-35X, which was supplemented by the X7-53X and X7-55X in September 2025. These three Wi-Fi 7 access points will be complemented with a broad range of indoor and outdoor Wi-Fi 7 solutions as the industry transition to Wi-Fi 7 occurs.

Previous wording

The sell-down of inventory across the industry after pandemic-level highs has resulted in a reduction in customer lead times, coupled with a reduction in the prior global supply chain disruptions, and has led to a reduction in customer demand over the period from 2023 through 2024. Macroeconomic factors such as higher interest rates and inflationary pressures, which impact private sector capital investment, and concerns about a global economic slowdown and geopolitical conditions have also added to the softened demand for our products and services and increased our cost of revenues and impacted, and may continue to impact, our gross margin. We continue to see a high level of competition in our industry due to slower demand and aggressive pricing. We also see increased competition and pricing pressure from new competitors such as Starlink significantly driving down global connectivity prices, with satellite bandwidth costs dropping roughly 77% over the last five years due to its rapid constellation deployment and lower manufacturer costs. We have also seen increased competition from mobile network operators who are buttressing their networks to include fixed wireless broadband, and from original design manufacturers who are trying to increase their market share by selling directly to major telecommunications providers. We believe that these market pressures will continue to negatively impact revenues for the foreseeable future. We may continue to face risks of technology shifts that could result in inventory becoming obsolete before it is deployed, including as the industry continues its shift to Wi-Fi 7.

Current wording

Macroeconomic factors such as higher interest rates and inflationary pressures, which impact private sector capital investment, and concerns about a global economic slowdown and geopolitical conditions added to the softened demand for our products and services that we experienced over 2023 and 2024 coming out of the pandemic, and increased our cost of revenues and impacted, and may continue to impact, our gross margin. We continue to see a high level of competition in our industry due to slower demand and aggressive pricing. We also see increased competition and pricing pressure from new competitors such as Starlink significantly driving down global connectivity prices, with satellite bandwidth costs dropping roughly 77% over the last five years due to its rapid constellation deployment and lower manufacturer costs. We have also seen increased competition from mobile network operators who are using excess capacity in their mobile network to address fixed wireless broadband needs, and from original design manufacturers who are trying to increase their market share by selling directly to major telecommunications providers. We believe that these market pressures will continue to negatively impact revenues and gross margins for the foreseeable future. We may continue to face risks of technology shifts that could result in inventory becoming obsolete before it is deployed, including as the industry continues its shift to Wi-Fi 7.

Previous wording

We are also impacted by the increases in the prices of memory chips from our semiconductor suppliers. Prices for memory chips are increasing faster for newer generations, with components for Wi-Fi 7 considerably more expensive than the price increases for Wi-Fi 6 components relative to components needed for Wi-Fi 5.

Current wording

We are also impacted by the increases in the prices of memory chips from our semiconductor suppliers. Prices for memory chips have increased rapidly for newer generations of memory, which has had an impact on the supply of current memory, impacting components for both Wi-Fi 7 and Wi-Fi 6. We expect this to continue for the foreseeable future due to the scaling of AI data centers.

Previous wording

We continue to monitor the impact of macroeconomic factors, including a potential global recession, inflationary pressures, monetary policy shifts, trade wars and growing political tensions globally that continue to impact our industry and our business. We also believe that our customers continue to grapple with the impact of these macroeconomic factors on their businesses and future investment plans, resulting in business uncertainty and a more constrained approach to forecasts and orders, resulting in a decrease in visibility to customer demand. Any prolonged economic disruptions, continued uncertainty over global trade wars, as well as further deterioration in the global economy or outbreaks of international hostilities could have a negative impact on demand from our customers in future periods.

Current wording

We continue to monitor the impact of macroeconomic factors, including a potential global recession, inflationary pressures, monetary policy shifts, trade wars and growing political tensions globally that continue to impact our industry and our business. We also believe that our customers continue to grapple with the impact of these macroeconomic factors on their businesses and future investment plans, leading to business uncertainty and a more constrained approach to forecasts and orders, and decreasing visibility into customer demand. Any prolonged economic disruptions, continued uncertainty over global trade wars, as well as further deterioration in the global economy or outbreaks of international hostilities, could have a negative impact on demand from our customers in future periods.

Previous wording

We continue to be out of compliance with financial and other covenants under our Amended Credit Agreement with Bank of America, and such defaults continued through 2025 and are expected to continue into 2026. In addition, we ceased payment of required quarterly principal and periodic interest on the term loan facility and of quarterly interest on the revolving credit facility as of June 2025. Such defaults afford the lender the right to declare the amounts outstanding immediately due and payable. We continue to have regular discussions with the lender, we have not been able to obtain a waiver of the defaults from the lender, or otherwise refinance the indebtedness. If the lender were to accelerate the maturity and declare the full outstanding principal and interest immediately due and payable, we would not be able to repay the debt, and therefore, there is substantial uncertainty we would be able to continue as a going concern. Absent acceleration, our Amended Credit Agreement mature on November 17, 2026. Absent an infusion of capital from financing or divestiture, we will be unable to repay this indebtedness when it comes due. Refer to Note 7. Debt, to our consolidated financial statements of this Comprehensive Form 10-K for additional information.

Current wording

We continue to be out of compliance with financial and other covenants under our Amended Credit Agreement, and such defaults continued through 2025 and are expected to continue into 2026. In addition, we ceased payment of required quarterly principal and periodic interest on the term loan facility and of quarterly interest on the revolving credit facility as of June 2025. Such defaults afford the lender the right to declare the amounts outstanding immediately due and payable. We continue to have regular discussions with the lender and we have not been able to obtain a waiver of the defaults from the lender or otherwise refinance the indebtedness. If the lender were to accelerate the maturity and declare the full outstanding principal and interest immediately due and payable, we would not be able to repay the debt, and therefore, there is substantial uncertainty we would be able to continue as a going concern. Absent acceleration, our Amended Credit Agreement matures on November 17, 2026. Absent an infusion of capital from financing or divestiture, we will be unable to repay this indebtedness when it comes due. Refer to Note 6. Debt, to our consolidated financial statements of this Annual Report on Form 10-K for additional information.

Previous wording

Product revenues decreased $50.3 million, or 24.2% from $208.1 million in 2023 to $157.8 million in 2024. The decrease was primarily due to our point-to-point product category, mostly in North America, partially as a result of decreased demand for defense products for the U.S. federal government. Revenues also decreased in our point-to-multi-point product category primarily driven by decreased demand for our 28 GHz products. Revenues increased in our enterprise product category driven by increased demand for our Wi-Fi 6 products.

Current wording

Product revenues decreased $16.5 million, or 10.5%, from $157.8 million in 2024 to $141.3 million in 2025. The decrease was primarily due to our point-to-multi-point product category partially as a result of lower demand for ePMP, 28 GHz and 60 GHz products, but also due to limitations on our ability to meet customer demand as a result of issues of scale, yield and supply experienced following our transition from our Mexico manufacturer to a manufacturer in Thailand. Revenues also decreased in our point-to-point product category partially as a result of lower demand for PTP accessories and impacts from moving manufacturing of certain products noted above, partially offset by higher demand for defense products in Europe, Middle East, Africa. Revenues increased in our enterprise product category driven by increased demand for switching products and Wi-Fi 7.

Previous wording

Subscriptions and services revenues increased $0.8 million, or 4.6% from $18.6 million in 2023 to $19.5 million in 2024. The increase was primarily due to increased volume of software subscriptions on fixed wireless broadband products.

Current wording

Subscriptions and services revenues decreased $1.1 million, or 5.7%, from $19.5 million in 2024 to $18.4 million in 2025. The decrease was primarily due to lower services revenue partially offset by increased volume of software subscriptions on enterprise products.

Previous wording

PMP revenues decreased $22.3 million, or 23.3%, from 2023 to 2024. PMP revenues decreased in all regions except the Caribbean and Latin America regions, driven by decreased demand from our service providers for our 28 GHz, PMP 450 and ePMP products.

Current wording

PMP revenues decreased $13.8 million, or 18.8%, from 2024 to 2025. PMP revenues decreased in all regions except the Caribbean and Latin America regions, driven by decreased demand from our service providers for our 28 GHz and ePMP products and the limitations on our ability to meet customer demand following our transition from our Mexico manufacturer to a manufacturer in Thailand.

Previous wording

Enterprise revenues increased $5.9 million, or 13.3% from 2023 to 2024, with the largest increase in Europe, Middle East, and Africa due to increased demand for Wi-Fi 6 and switching products partially offset by decreased demand for Wi-Fi 5 products. Enterprise revenues decreased in North America, mostly driven by decreased demand for Wi-Fi 6 and switching products.

Current wording

Enterprise revenues increased $2.9 million, or 5.7%, from 2024 to 2025, with the largest increase in North America. The increase is mostly driven by higher demand for switching products and Wi-Fi 7 products, partially offset by lower demand for Wi-Fi 5 products.

Previous wording

Revenues decreased in 2024 compared to 2023, with the largest decrease in North America. The decrease in revenues in North America was driven mostly by decreased PTP revenues driven by lower demand for defense products for the U.S. Government, decreased PMP product revenues driven mostly by lower demand for ePMP and PMP 450 products and decreased enterprise product revenues driven by decreased demand for switching and Wi-Fi 6 products. Revenues in Europe, Middle East, Africa increased year-over-year, mostly from increased enterprise product revenues by increased demand for Wi-Fi 6 and switching products, partially offset by decreased PTP product category revenues driven by decreased demand for defense products. Revenues in Caribbean and Latin America remained relatively flat year-over year, with decreased PTP product revenues mostly offset by increased enterprise and PMP product revenues. The decrease in revenues in Asia Pacific was driven by decreased revenues across all product categories.

Current wording

Revenues decreased in 2025 compared to 2024, with the largest decrease in North America. All regions were impacted by the move of the manufacturing of certain products from Mexico to Thailand. In addition to the impact of the move, the decrease in PMP and PTP revenues in North America was related to lower demand across all products within these categories, partially offset by increased enterprise product revenues driven by higher demand for switching and Wi-Fi 7 products. Revenues in Europe, Middle East, Africa decreased year-over-year, mostly from decreased PMP and enterprise product revenues, mostly offset by increased PTP product category revenues driven by increased demand for defense products. Revenues in Caribbean and Latin America decreased year-over-year, mostly from decreased PMP and PTP revenues due to lower demand spread across all products within these categories. The decrease in revenues in Asia Pacific was driven by decreased revenues in PMP and PTP, mostly offset by increased revenues in enterprise products with higher demand for Wi-Fi 6 and switching products.

Previous wording

Cost of revenues for products decreased $35.2 million, or 24.9%, from $141.3 million for 2023 to $106.1 million for 2024. The decrease in cost of revenues was primarily due to $8.0 million lower excess and obsolescence and $5.8 million lower loss on supplier commitment expense, along with decreased revenues resulting in lower direct materials costs and lower freight costs.

Current wording

Cost of revenues for products decreased $19.8 million, or 18.7%, from $106.1 million for 2024 to $86.3 million for 2025. The decrease in cost of revenues was primarily due to $13.2 million lower loss on supplier commitment expense, $4.3 million lower excess and obsolescence, along with decreased revenues resulting in lower direct materials costs and lower freight and duty costs. These costs are partially offset by nonrecurring expenses related to the move of manufacturing from Mexico to Thailand and restructuring activities.

Previous wording

Cost of revenues for subscriptions and services decreased $0.4 million, or 4.7%, from $8.6 million for 2023 to $8.2 million for 2024. The decrease in cost of revenues was primarily due to decreased direct services costs.

Current wording

Cost of revenues for subscriptions and services increased $1.0 million, or 11.7%, from $8.2 million for 2024 to $9.2 million for 2025. The increase in cost of revenues was primarily due to increased direct services costs.

Previous wording

Gross margin for products increased from 32.1% in 2023 to 32.7% in 2024. The increase mostly reflects the impact of the above mentioned decreases in excess and obsolescence reserve and loss on supplier commitments offset by lower revenue from higher margin products.

Current wording

Gross margin for products increased from 32.7% in 2024 to 38.9% in 2025. The increase mostly reflects the impact of the above mentioned decreases in excess and obsolescence reserve and loss on supplier commitments offset by lower revenues from higher margin products.

Previous wording

Gross margin for subscriptions and services increased from 53.8% in 2023 to 57.9% in 2024. The increase mostly reflects the higher subscriptions and services revenue impact on certain fixed costs along with decreased variable costs.

Current wording

Gross margin for subscriptions and services decreased from 57.9% in 2024 to 50.1% in 2025. The decrease mostly reflects the impact from decreased services revenue.

Previous wording

Research and development expense decreased $14.2 million, or 26.5%, from $53.5 million in 2023 to $39.3 million in 2024. Research and development expense decreased mainly due to $6.3 million lower employee-related expense, mostly due to decreased headcount from the reductions completed in 2023, $2.5 million lower outside contractor spend and $1.4 million lower engineering material spend due to fewer projects, $1.5 million lower restructuring expense as most restructuring occurred in 2023, $0.9 million lower share-based compensation expense due to the lower headcount, $0.5 million higher research and development tax credit, $0.4 million lower homologation and regulatory spend due to the timing and number of projects and $0.4 million lower lease expense and $0.3 million lower travel-related expense due to restrictions place on business travel in 2024.

Current wording

Research and development expense decreased $6.4 million, or 16.4%, from $39.3 million in 2024 to $32.9 million in 2025. Research and development expense decreased mainly due to $3.6 million lower employee-related expense, mostly due to decreased headcount from the reductions completed in 2025, $1.2 million lower share-based compensation expense due to no new awards in 2025 along with suspension of ESPP, $0.9 million lower outside contractor spend and $0.3 million lower engineering material spend due to fewer projects, $0.5 million lower homologation and regulatory spend due to the timing and number of projects, $0.5 million lower lease expense and $0.5 million higher capitalized software costs, offset by $0.8 million lower research and development tax credit due to lower headcount and fewer project qualifying for the credit and $0.2 million higher travel-related expenses.

Previous wording

Sales and marketing expense decreased $6.2 million, or 14.4%, from $42.9 million in 2023 to $36.7 million in 2024. The decrease in sales and marketing expense was primarily due to $3.6 million lower employee-related expense, mostly due to decreased headcount from the reductions completed in 2023, $1.0 million lower outside contractor spend, $0.9 million lower trade show and marketing-related spend, and $0.8 million lower share-based compensation expense due to lower headcount.

Current wording

Sales and marketing expense decreased $5.5 million, or 15.1%, from $36.7 million in 2024 to $31.2 million in 2025. The decrease in sales and marketing expense was primarily due to $3.1 million lower employee-related expense, mostly due to decreased headcount from the reductions completed in 2025, $1.7 million lower variable compensation expense, $0.9 million lower share-based compensation expense due no new awards in 2025 along with lower headcount and suspension of ESPP, $0.3 million lower travel-related spend, partially offset by $0.5 million higher restructuring costs related to the 2025 restructurings.

Previous wording

General and administrative expense decreased $2.1 million, or 7.3%, from $28.1 million in 2023 to $26.0 million in 2024. The decrease in general and administrative expense was primarily due to $1.3 million reduction in nonrecurring costs, mostly related to expenses incurred in 2023 related to the Chief Executive Officer transition that did not repeat in 2024, $0.3 million lower employee-related expense, mostly due to decreased headcount, $0.3 million lower professional fees, $0.2 million lower travel-related expenses and $0.2 million lower insurance expense, partially offset by $0.2 million higher outside contractor spend to backfill due to employee attrition.

Current wording

General and administrative expense increased $0.4 million, or 1.6%, from $26.0 million in 2024 to $26.4 million in 2025. The increase in general and administrative expense was primarily due to $2.1 increase in outside contractor spend due to employee attrition and additional staff added for restatement, $2.2 million higher legal fees and $1.3 million higher audit fees due to audit overrun and restatement, partially offset by $1.5 million lower staff-related expenses due to employee attrition and $0.4 million lower nonrecurring costs related to the Chief Executive Officer transition that did not repeat in 2025, $1.3 million lower share-based compensation expense due to lower headcount, no new awards in 2025 and suspension of ESPP, $0.9 million lower bad debt expense, $0.4 million lower other fees and expenses, $0.3 million lower insurance costs, $0.3 million lower nonrecurring expenses related to the headquarters office move in 2024 and restructuring in 2024 and $0.1 million lower travel-related expenses.

Previous wording

Depreciation and amortization expense decreased $0.7 million, or 11.7%, from $6.2 million in 2023 to $5.4 million in 2024. The decrease in depreciation and amortization was mostly driven by a reduction of depreciation and amortization recorded in the fourth quarter of 2024 as a result of the impairment on property and equipment and customer relationships intangible recorded during the third quarter of 2024, partially offset by higher amortization on the leasehold improvement on the new Hoffman Estates headquarters office.

Current wording

Depreciation and amortization expense decreased $4.3 million, or 74.7%, from $5.8 million in 2024 to $1.5 million in 2025. The decrease in depreciation and amortization was mostly driven by a reduction of depreciation and amortization as a result of the impairment on property and equipment and customer relationships intangible recorded during the third quarter of 2024.

Previous wording

We incurred a $25.5 million impairment charge in 2024, with no comparable charge in 2023, associated with the impairment of our property and equipment, goodwill, customer relationships intangible, internal use software, and software marketed for external sale. Refer to the Note 6. Goodwill and intangible assets in our consolidated financial statements included in this Comprehensive Form 10-K for details regarding the impairments recorded.

Current wording

We incurred a $25.5 million impairment charge in 2024, and $0.2 million charge in 2025, associated with the impairment of our property and equipment, goodwill, customer relationships intangible, internal use software, and software marketed for external sale. Refer to the Note 3. Property and equipment, Note 4. Software and Note 5. Goodwill and intangible assets in our consolidated financial statements included in this Annual Report on Form 10-K for details regarding the impairments recorded.

Previous wording

Interest expense increased $3.3 million, or 131.8% from $2.5 million in 2023 to $5.8 million in 2024. The increase was primarily due to interest expense incurred in 2024 as a result of drawing $45.0 million against the revolving credit facility in the first quarter of 2024, and an increase in the interest rate on the term loan due to the covenant default in the third quarter of 2024. In addition, the Company expensed $0.6 million of fees in 2024 related to an aborted amendment to our secured credit agreement.

Current wording

Interest expense increased $3.2 million, or 54.4%, from $5.8 million in 2024 to $9.0 million in 2025. The increase was primarily due to interest expense incurred as a result of drawing $45.0 million against the revolving credit facility, mostly in the first quarter of 2024 and an increase in the interest rate on the term loan due to the covenant default in the third quarter of 2024 along with lower interest income on lower cash balances. This increase was partially offset by $0.6 million of fees expensed in 2024 related to an aborted amendment to our secured credit agreement.

Previous wording

Other expense, net decreased from expense of $0.3 million in 2023 to expense of $0.1 million in 2024. The change is primarily associated with foreign currency fluctuations.

Current wording

Other expense, net remained mostly flat from 2024 to 2025. The change is primarily associated with foreign currency fluctuations.

Previous wording

For the year ended December 31, 2023, the Company's effective tax rate was (30.9)%. The effective tax rate differed from the U.S. statutory rate of 21.0% primarily due to a pretax loss, the net increase in the valuation allowance of $37.3 million, a tax benefit on Foreign Derived Intangible Income of $2.9 million, and a benefit on research and development credits of $2.4 million. For the year ended December 31, 2024, the Company's effective tax rate was 2.4%. The effective tax rate differed from the U.S. statutory rate of 21.0% primarily due to a pretax loss, the net increase in the valuation allowance of $12.3 million, a foreign tax rate differential of $(2.5) million, $2.7 million return to provision adjustment primarily due to a tax method change in the U.S. 2023 tax return related to the tax capitalization of our research and development expenditures, $1.5 million for establishment of a deferred tax liability for withholding tax on non-permanent investment in subsidiaries, a $1.2 million tax expense related to share-based compensation, and a benefit on research and development credits of $(0.3) million. See Note 13. Income taxes in the Notes to the consolidated financial statements for more information related to income taxes.

Current wording

The Company recorded income tax benefit of $1.9 million and a provision for income taxes of $1.5 million for the years ended December 31, 2024 and 2025, with an income tax rate of 2.4% and (4.2)%, respectively. For the year ended December 31, 2024, the Company's effective tax rate of 2.4% differed from the U.S. statutory rate of 21.0% primarily due to a pretax loss, the net increase in the valuation allowance of $12.3 million, a foreign tax rate differential of $(2.5) million, $2.7 million return to provision adjustment primarily due to a tax method change in the U.S. 2023 tax return related to the tax capitalization of our research and development expenditures, $1.5 million for establishment of a deferred tax liability for withholding tax on non-permanent investment in subsidiaries, a $1.2 million tax expense related to share-based compensation, and a benefit on research and development credits of $(0.3) million. For the year ended December 31, 2025, the Company's effective tax rate of (4.2)% differed from the U.S. statutory rate of 21.0% primarily due to a pretax loss, the net increase in the valuation allowance of $9.5 million, a foreign tax rate differential of ($1.5) million, a $0.9 million tax expense related to share-based compensation, and a benefit on research and development credits of $0.5 million. See Note 12. Income taxes in the Notes to the consolidated financial statements for more information related to income taxes.

Previous wording

As of December 31, 2024, we had a cash balance of $34.9 million, an increase of $16.2 million from December 31, 2023. We drew $45.0 million on our revolving credit facility in the first half of 2024 for working capital needs mainly to: (i) fund normal operating expenses; (ii) meet interest and principal requirements of our outstanding indebtedness; and (iii) fund capital expenditures. Following this draw down, we have no remaining available liquidity under our revolving credit facility. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending to support development efforts, the timing of new product introductions, market acceptance of our products and overall economic conditions. We continue to focus on cost management, operating efficiency and efficient discretionary spending. We expect to regularly assess our liquidity needs and market conditions and may raise additional equity or seek alternative sources of financing if and when our board of directors determines that doing so is in our best interest.

Current wording

As of December 31, 2025, we had a cash balance of $11.3 million, a decrease of $23.6 million from December 31, 2024. We drew $45.0 million on our revolving credit facility in the first half of 2024 for working capital needs mainly to: (i) fund normal operating expenses; (ii) meet interest and principal requirements of our outstanding indebtedness; and (iii) fund capital expenditures. Following this draw down, we have no remaining available liquidity under our revolving credit facility. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending to support development efforts, the timing of new product introductions, market acceptance of our products and overall economic conditions. We continue to focus on cost management, operating efficiency and efficient discretionary spending. We expect to regularly assess our liquidity needs and market conditions and may seek alternative sources of financing if and when our board of directors determines that doing so is in our best interest. As noted below, our Amended Credit Agreement with Bank of America matures on November 17, 2026. Absent an infusion of capital from financing or divestiture, we will be unable to repay this indebtedness when it becomes due.

Previous wording

As of December 31, 2024, we had $22.8 million outstanding principal debt under our term loan facility and $45.0 million outstanding on our revolving credit facility. There is no availability remaining on the revolving credit facility. The effective interest rate on the term credit facility at December 31, 2024 was 10.24% and the weighted-average interest rate on our revolving credit facility was 8.73%. These rates do not include an additional 2% default rate penalty that was added on both the term credit facility and revolving credit facilities as a result of the events of default that first occurred during the third quarter of 2024. We are required to make quarterly principal payments of $0.7 million under the term credit facility and quarterly interest payments under both the term loan facility and the revolving credit facility. For the year ended December 31, 2024, all quarterly principal and interest payments were made in accordance with the terms of the Amended Credit Agreement. Beginning with the quarter ended June 30, 2025, we ceased making principal and interest payments on the term loan and interest payments on the revolving credit facility.

Current wording

As of December 31, 2025, we had $21.5 million outstanding principal debt under our term loan facility and $45.0 million outstanding on our revolving credit facility. There is no availability remaining on the revolving credit facility. The effective interest rate on the term credit facility at December 31, 2025 was 9.45% and the weighted-average interest rate on our revolving credit facility was 9.23%. These rates do not include an additional 2% default rate penalty that was added on both the term credit facility and revolving credit facilities as a result of the events of default that first occurred during the third quarter of 2024. We are required to make quarterly principal payments of $0.7 million under the term credit facility and quarterly interest payments under both the term loan facility and the revolving credit facility. For the year ended December 31, 2024, all quarterly principal and interest payments were made in accordance with the terms of the Amended Credit Agreement. Beginning with the quarter ended June 30, 2025, we ceased making principal and interest payments on the term loan and interest payments on the revolving credit facility.

Previous wording

We were not in compliance with our monthly liquidity covenant as of October 31, 2024 and November 30, 2024 nor our fixed charge coverage ratio or consolidated leverage ratio covenants as of December 31, 2024. These defaults continued throughout all of 2025, and in June 2025, we ceased paying interest on the term loan and revolving credit facility, resulting in a payment default which is also continuing. Such defaults afford Bank of America the right to declare the amounts outstanding under our Amended Credit Agreement immediately due and payable. To provide us with the financing flexibility needed to meet our obligations as they come due over the next twelve months, we are actively seeking additional capital through possible divestitures and/or capital raising transactions and working with Bank of America to address our covenant non-compliance. If Bank of America were to accelerate the maturity of our indebtedness under the Amended Credit Agreement, there is substantial uncertainty we would be able to secure capital resources to repay the amounts due. Absent acceleration of payment, our term loan facility and revolving credit facility matures on November 17, 2026, at which time the outstanding principal and interest will be due. For a detailed discussion of our current credit facilities, refer to Note 7. Debt in Notes to Consolidated Financial Statements in Item 8 of Part II of this Comprehensive Form 10-K. For updated disclosure on the Credit Agreement, refer to "Credit Agreement Defaults, above.

Current wording

We were not in compliance with our quarterly fixed charge coverage ratio or consolidated leverage ratio covenants as of December 31, 2024 and December 31, 2025. In addition, since we ceased paying principal and interest on the term loan and interest on the revolving credit facility, this results in a payment default, which is also continuing in 2026. Such defaults afford Bank of America the right to declare the amounts outstanding under our Amended Credit Agreement immediately due and payable. To provide us with the financing flexibility needed to meet our obligations as they come due over the next twelve months, we are actively seeking additional capital through possible divestitures and/or capital raising transactions and working with Bank of America to address our covenant non-compliance. If Bank of America were to accelerate the maturity of our indebtedness under the Amended Credit Agreement, there is substantial uncertainty we would be able to secure capital resources to repay the amounts due. Absent acceleration of payment, our term loan facility and revolving credit facility matures on November 17, 2026, at which time the outstanding principal and interest will be due. For a detailed discussion of our current credit facilities, refer to Note 6. Debt in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. For updated disclosure on the Credit Agreement, refer to "Credit Agreement Defaults", above.

Previous wording

Net cash used in operating activities for 2023 of $16.7 million consisted primarily of net loss of $74.1 million, adjustments for non-cash charges for depreciation and amortization of $9.4 million, share-based compensation expense of $11.6 million and increase in provision for inventory excess and obsolescence of $14.1 million, $12.8 million decrease in deferred income taxes and $0.5 million increase in allowance for credit losses offset by $0.1 million reduction in warranty reserve, along with changes in operating assets and liabilities that resulted in net cash inflows of $9.2 million. The changes in operating assets and liabilities consisted primarily of a $37.4 million decrease in accounts receivable due to lower revenues, $13.2 million increase in other assets and liabilities, mostly due to an increase in noncurrent loss on supplier commitment liability and $2.0 million decrease in prepaid expenses, offset by a $27.8 million increase in inventories, mostly due to lower revenue, $13.0 million decrease in accounts payable due to timing of purchases and payments, and $2.0 million decrease in accrued employee compensation mostly due to lower accruals for our corporate bonus and sales incentive programs as a result of failure to meet metrics underlying our incentive compensation payable to employees.

Current wording

Net cash used in operating activities for 2025 of $15.7 million consisted primarily of net loss of $38.5 million, adjustments for non-cash charges for depreciation and amortization of $5.1 million, share-based compensation expense of $6.4 million and increase in provision for inventory excess and obsolescence of $1.6 million, $0.3 million increase in deferred income taxes and $0.2 million impairment of capitalized software, along with changes in operating assets and liabilities that resulted in net cash inflows of $9.3 million. The changes in operating assets and liabilities consisted primarily of a $12.8 million decrease in inventory, $9.5 million increase in accrued liabilities, $4.1 million decrease in prepaid expenses and $1.4 million increase in accounts payable, mostly due to timing of purchases and payment, partially offset by $6.0 million increase in receivables, $0.1 million decrease in employee compensation and $12.1 million decrease in other assets and liabilities, mostly due to the increase in noncurrent supplier prepayments and decrease of noncurrent accrued loss on supplier commitments.

Previous wording

Our investing activities for both periods presented consisted of capital expenditures for property, equipment, internal use software and capitalized labor costs for software to be marketed for sale in support of the growth of our business.

Current wording

Our investing activities for both periods presented consisted of capital expenditures for property, equipment, internal use software and capitalized labor costs for software to be marketed for sale in support of the growth of our business. Capital spending for 2025 was $6.0 million less than 2024.

Previous wording

Net cash used in financing activities of $1.3 million for 2023 was primarily due to principal payments of $2.6 million on our term loan and $0.7 million of taxes paid on net share settlement of equity awards and a $0.1 million payment of debt issuance costs incurred with our entry into the Amended Credit Agreement. These outflows are partially offset by $1.7 million in proceeds from the issuance of ordinary shares under our employee share purchase plan and $0.5 million of proceeds received from the exercise of share options.

Current wording

Net cash used in financing activities of $1.4 million for 2025 was primarily due to principal payments of $1.3 million on our term loan and $0.1 million of taxes paid on net share settlement of equity awards.

Previous wording

Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expense and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. For a summary of all of our accounting policies, including the accounting policies discussed below, see Note 1. Description of Business and Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Comprehensive Form 10-K.

Current wording

Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expense and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. For a summary of all of our accounting policies, including the accounting policies discussed below, see Note 1. Description of Business and Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Previous wording

Goodwill and long-lived assets recoverability and impairment assessment

Current wording

Long lived assets recoverability and impairment assessment

Previous wording

Goodwill is tested for impairment annually on December 31 and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of our one reporting unit below its carrying amount. Long-lived assets are tested for recoverability if a triggering event is identified in the period and may indicate the carrying amount of these assets may not be recoverable. We consider significant events and circumstances including the excess of prior estimates of fair value compared to carrying amount, historical trends and current results, assumptions regarding future performance, operating income or cash flows, strategic initiatives and overall economic factors, including significant negative market or industry trends and macroeconomic developments, and sustained declines in our share price or market capitalization, considered in both absolute terms and relative to peers. If we determine that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, no further goodwill impairment testing is required. If indicators of impairment are identified, a quantitative impairment test is performed.

Current wording

We evaluate our long-lived assets for impairment by completing a quarterly qualitative assessment and whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. We consider historical trends and current results, assumptions regarding future performance, operating income or cash flows, strategic initiatives and overall economic factors, including significant negative market or industry trends and macroeconomic developments, considered in both absolute terms and relative to peers.

Previous wording

Considerable management judgment is necessary to estimate expected future cash flows, including evaluating the impact of operational and economic factors on our future cash flows, all of which are subject to uncertainty. The assumptions and estimates used in determining the fair value of our reporting unit involve significant elements of subjective judgment and analysis by management. Certain future events and circumstances, including deterioration of market conditions, changes in our cost of capital, a decline in actual and expected demand, among others, could result in changes to these assumptions and judgments.

Current wording

Considerable management judgment is necessary to estimate expected future cash flows, including evaluating the impact of operational and economic factors on our future cash flows, all of which are subject to uncertainty. The assumptions and estimates used involve significant elements of subjective judgment and analysis by management. Certain future events and circumstances, including deterioration of market conditions, a decline in actual and expected demand, among others, could result in changes to these assumptions and risks. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributable to the assets or asset group. If impairment is indicated, the asset is written down to its estimated fair value.