Cambium Networks Corp

Previous wording

The following discussion and analysis of financial condition and results of operation 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 Quarterly Report on Form 10-Q and with the financial statements and related notes and Management’s Discussion and Analysis in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed April 7, 2026. In our annual report on Form 10-K for the year ended December 31, 2024, we restated financial statements for the three-month and nine- month periods ended September 30, 2024. The financial results included herein for this period reflect the impact of the restatement. Results for the three-month and nine-month periods ended September 30, 2025 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 operation 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 Quarterly Report on Form 10-Q and with the financial statements and related notes and Management’s Discussion and Analysis in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed May 1, 2026. Results for the three-month period ended March 31, 2026 are not necessarily indicative of the results that may be expected for any period in the future.

Previous wording

The FWB portfolio spans point-to-point ("PTP") and point-to-multi-point ("PMP") architectures over multiple standards, and frequency bands, including licensed, unlicensed, and lightly licensed spectrum, and fiber products. During 2024, both our PMP4600 and PMP 450v platforms received Federal Communications Commission ("FCC") approval to operate in the recently released 6 GHz band in conjunction with our approved Automated Frequency Coordination ("AFC") service.

Current wording

The FWB portfolio spans point-to-point ("PTP") and point-to-multi-point ("PMP") architectures over multiple standards, and frequency bands, including licensed, unlicensed, and lightly licensed spectrum, and fiber products. Our PMP4600 and PMP 450v platforms have Federal Communications Commission ("FCC") approval to operate in the 6 GHz band in conjunction with our approved Automated Frequency Coordination ("AFC") service, which is gaining adoption in other regions.

Previous 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 have 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.

Current wording

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 continue to adversely impact demand for our products and services, and increased our cost of revenues and 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 spent 2025 moving production of select products from a third-party manufacturer in Mexico, to a third-party manufacturer in Thailand. The move has been challenged by logistics and production issues due to the complexity of the impacted products as well as challenges present when utilizing a new manufacturer. While the majority of impacted products are in production, issues of scale, yield and supply chain continue to limit our ability to meet customer demand, and this may continue into 2026.

Current wording

We spent 2025 moving production of select products from a third-party manufacturer in Mexico, to a third-party manufacturer in Thailand. The move has been challenged by logistics and production issues due to the complexity of the impacted products as well as challenges present when utilizing a new manufacturer. While the majority of impacted products are in production, issues of scale, yield and supply chain continue to limit our ability to meet customer demand, and this continues into 2026.

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, 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 continued 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 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 continued outbreaks of international hostilities could have a negative impact on demand from our customers in future periods.

Previous wording

The impact of reverse globalization, including a more nationalistic trend globally leading to increasing government requirements for domestically produced products or limiting the sourcing of components and other products from China and elsewhere, has led us to limit our reliance on third-party manufacturers in China and move manufacturing to other locations, particularly Thailand, which has caused some disruptions in our supply operations, together with the impact of moving manufacture of some products to suppliers who have no recent experience building similar products. Nationalistic trends are occurring in various geographies which may make it impractical for us to do business in some countries.

Current wording

The impact of reverse globalization, including a more nationalistic trend globally leading to increasing government requirements for domestically produced products or limiting the sourcing of components and other products from China and elsewhere, has led us to limit our reliance on third-party manufacturers in China. Accordingly, we have moved manufacturing to other locations, particularly Thailand, which has caused some disruptions in our supply operations. Such moves have also required moving manufacture of some products to suppliers who have no recent experience building similar products, further impacting supply operations. Nationalistic trends are occurring in various geographies which may make it impractical for us to do business in some countries, or to seek manufacture in other countries in which we do not currently manufacture products.

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 into 2026. In addition, we ceased payment of required quarterly principal and interest on the term loan facility and of periodic 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 Quarterly Report on Form 10-Q for additional information.

Current wording

We have been and continue to be out of compliance with financial and other covenants under our credit agreement with Bank of America, which creates doubt about our ability to continue as a going concern. We ceased payment of required quarterly principal and interest on the term loan facility and of periodic 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. Absent acceleration, our credit agreement matures on November 17, 2026. Absent an infusion of capital from outside financing or a divestiture of business lines, we will be unable to repay this indebtedness when it comes due. Refer to Note 5. Debt, to our consolidated financial statements of this Quarterly Report on Form 10-Q for additional information.

Previous wording

We continue to take actions to improve our profitability and focus on operating efficiency and therefore are reducing discretionary spending, deferring capital expenditures and implementing cost reductions to align our cost structure with current and expected revenue levels. We are actively seeking additional capital through possible divestitures and/or capital raising transactions and working on accommodation with our lenders to provide us with the financial flexibility needed to meet our obligations as they come due over the next twelve months. Our ability to achieve these objectives depends in part on our expectations regarding macro-conditions in the markets in which we compete, customer acceptance and purchases of our products, buying decisions by our distributors, improvements in our manufacturing challenges with transition to new manufacturers, and other factors that are not all within our control.

Current wording

We continue to take actions to improve our profitability and focus on operating efficiency and reducing discretionary spending, deferring capital expenditures and implementing cost reductions to align our cost structure with current and expected revenue levels. We are actively seeking additional capital through possible divestitures and/or capital raising transactions and working on accommodations with our lender to provide us with the financial flexibility needed to meet our obligations as they come due over the next twelve months. Our ability to achieve these objectives depends on our ability to complete one or more divestitures of business lines and/or obtain alternative sources of financing in a timely fashion, as well as on our expectations regarding macro-conditions in the markets in which we compete, customer acceptance and purchases of our products, buying decisions by our distributors, improvements in our manufacturing challenges with transition to new manufacturers, and other factors. Many of these factors are not within our control and there is no assurance we can successfully navigate the financial challenges we face.

Previous wording

Total revenue was $43.0 million, a decrease of 3.7% year-over-year

Current wording

Total revenue was $44.6 million, an increase of 32.1% year-over-year

Previous wording

Total costs of revenues and operating expenses were $48.8 million

Current wording

Total costs of revenues and operating expenses were $45.7 million

Previous wording

Gross profit has been and will continue to be affected by various factors, including changes in product mix. The margin profile of products within each of our core product categories can vary significantly depending on the operating performance, features and manufacturer of the product. Generally, our gross margins on backhaul and fixed wireless access point products are greater than those on our CPE products. Because the ratio of CPE to PTP and PMP access points typically increases as network operators build out the density of their networks, increases in follow-on sales to network operators as a percentage of our total sales generally have a downward effect on our overall gross margins. Finally, gross margin will also vary as a function of changes in pricing due to competitive pressure, our third-party manufacturing and other production costs, cost of shipping and logistics, provision for excess and obsolete inventory, loss on supplier commitments, and other factors. We expect our gross margins will fluctuate from period to period depending on the interplay of these various factors.

Current wording

Gross profit has been and will continue to be affected by various factors, including changes in product mix. The margin profile of products within each of our core product categories can vary significantly depending on the operating performance, features and manufacturer of the product. Generally, our gross margins on backhaul and fixed wireless access point products are greater than those on our CPE products. Because the ratio of CPE to PMP access points typically increases as network operators build out their networks, increases in follow-on sales to network operators as a percentage of our total sales generally have a downward effect on our overall gross margins. Finally, gross margin will also vary as a function of changes in pricing due to competitive pressure, our third-party manufacturing and other production costs, cost of shipping and logistics, provision for excess and obsolete inventory, loss on supplier commitments, and other factors. We expect our gross margins will fluctuate from period to period depending on the interplay of these various factors.

Previous wording

We classify our operating expenses as research and development, sales and marketing, and general and administrative expense. Personnel costs are the primary component of each of these operating expense categories, which consist of costs such as salaries, sales commissions, benefits, and bonuses, as well as share-based compensation expense. Depreciation and amortization of long-lived assets is separately disclosed in the statements of operations and comprehensive loss. In 2024 and 2025, we recorded impairments of goodwill, intangibles, software and long-lived assets and this is separately disclosed in the statements of operations and comprehensive loss.

Current wording

We classify our operating expenses as research and development, sales and marketing, and general and administrative expense. Personnel costs are the primary component of each of these operating expense categories, which consist of costs such as salaries, sales commissions, and benefits, as well as share-based compensation expense. Depreciation and amortization of long-lived assets is separately disclosed in the statements of operations and comprehensive loss.

Previous wording

In addition to personnel costs, research and development expense consists of costs associated with the design and development of our products, product certification, travel, recruiting, shared facility and shared IT costs. We generally recognize research and development expense as incurred. For certain of our software projects under development, we capitalize the development cost during the period between determining technological feasibility of the product and commercial release. We amortize the capitalized development cost upon commercial release, generally over three years, and include the amortization costs in cost of revenues on our statements of operations. We typically do not capitalize costs related to the development of first-generation product offerings as technological feasibility generally coincides with general availability of the software.

Current wording

In addition to personnel-related costs, research and development expense consists of costs associated with the design and development of our products, product certification, travel, recruiting, shared facility and shared IT costs. We generally recognize research and development expense as incurred. For certain of our software projects under development, we capitalize the development cost during the period between determining technological feasibility of the product and commercial release. We amortize the capitalized development cost upon commercial release, generally over three years, and include the amortization costs in cost of revenues on our statements of operations and comprehensive loss. We typically do not capitalize costs related to the development of first-generation product offerings as technological feasibility generally coincides with general availability of the software.

Previous wording

In addition to personnel costs for sales, marketing, service and product line management personnel, sales and marketing expenses consist of our training programs, trade shows, marketing programs, promotional materials, demonstration equipment, national and local regulatory approval on our products, travel and entertainment, recruiting and shared facilities and shared IT costs.

Current wording

In addition to personnel-related costs for sales, marketing, service and product line management personnel, sales and marketing expenses consist of our training programs, trade shows, marketing programs, promotional materials, demonstration equipment, national and local regulatory approval on our products, travel and entertainment, recruiting and shared facilities and shared IT costs.

Previous wording

Depreciation and amortization expenses consist of depreciation related to fixed assets such as computer equipment, furniture and fixtures, and testing equipment, as well as amortization related to acquired and software for internal use and definite lived intangibles.

Current wording

Depreciation and amortization expenses consist of depreciation related to fixed assets such as computer equipment, furniture and fixtures, and testing equipment, as well as amortization related to acquired software and software for internal use.

Previous wording

The following table presents the consolidated statements of operations, as well as the percentage relationship to total revenues for items included in our consolidated statements of operations for the three-month and nine-month periods ended September 30, 2024 compared to the three-month and nine-month periods ended September 30, 2025 (in thousands):

Current wording

The following table presents the consolidated statements of operations, as well as the percentage relationship to total revenues for items included in our consolidated statements of operations for the three-month period ended March 31, 2025 compared to the three-month period ended March 31, 2026 (in thousands):

Previous wording

Subscriptions and services revenues decreased $0.2 million, or 4.7%, from $5.0 million for the three-month period ended September 30, 2024 to $4.7 million for the three-month period ended September 30, 2025. The decrease was primarily due to lower revenues for both services and software subscriptions.

Current wording

Subscriptions and services revenues decreased $0.3 million, or 6.5%, from $4.6 million for the three-month period ended March 31, 2025 to $4.3 million for the three-month period ended March 31, 2026. The decrease was due to lower revenues for both services and software subscriptions.

Previous wording

Our PMP product revenues decreased $2.4 million, or 13.1%, from the three-month period ended September 30, 2024 to 2025. The decrease in point-to-multi-point revenues was driven by lower revenues in Europe, Middle East, Africa and Caribbean and Latin America, mostly due to lower demand of our ePMP and PMP 450 products, partially offset by increased revenues in North America, mostly for our 60 GHz product.

Current wording

Our PMP product revenues increased $4.3 million, or 32.6%, from the three-month period ended March 31, 2025 to 2026. The increase in point-to-multi-point revenues was driven by higher revenues in all regions except North America, mostly due to higher demand for our 60 GHz products in North America and ePMP in Europe, Middle East, Africa, partially offset lower demand for PMP 450 products in North America.

Previous wording

PTP product revenues increased $2.8 million, or 32.4%, from the three-month period ended September 30, 2024 to 2025 mostly driven by higher demand for PTP from defense customers.

Current wording

PTP product revenues increased $1.9 million, or 22.0%, from the three-month period ended March 31, 2025 to 2026 mostly driven by higher demand for PTP from defense customers along with an increase in unlicensed microwave products.

Previous wording

Revenues decreased in North America and Latin America and increased in Europe, Middle East, Africa and Asia Pacific from the three-month period ended September 30, 2024 to September 30, 2025. North America revenues decreased $1.3 million, or 5.8%, driven mostly by lower enterprise product revenues with lower demand for switching products partially offset by higher demand for Wi-Fi 6 products, mostly offset by higher revenues for PTP products driven by higher demand from defense customers and higher revenues for PMP products, mostly higher demand for 60 GHz products. Europe, Middle East, Africa revenues increased $0.7 million, or 5.7%, mostly driven by higher PTP product revenues due to higher demand for both PTP accessories and from defense customer, higher enterprise product revenues due to higher demand for both switching and Wi-Fi products, partially offset by lower PMP revenues mostly due to lower demand for ePMP products. Caribbean and Latin America revenues decreased $1.7 million, or 30.5%, across all product categories. Asia Pacific revenues increased $0.6 million, or 14.7%, mostly driven by increased enterprise product revenues with increased demand for Wi-Fi 6 products.

Current wording

Revenues increased in all regions from the three-month period ended March 31, 2025 to March 31, 2026. North America revenues increased $0.5 million, or 2.5%, driven mostly by higher enterprise product revenues with higher demand for Wi-Fi 7 as the conversion to Wi-Fi 7 has begun, partially offset by lower demand for PTP and PMP products. Europe, Middle East, Africa revenues increased $5.0 million, or 45.0%, with revenues increasing across all product categories, but mostly driven by higher PMP and PTP product revenues due to higher demand for ePMP products and PTP products from defense customer and higher enterprise product revenues due to higher demand for switching products. Caribbean and Latin America revenues increased $2.8 million, or 204.8%, across all product categories, mostly driven by enterprise with Wi-Fi 6 products and PMP with ePMP products. Asia Pacific revenues increased $2.6 million, or 88.8%, across all product categories, mostly driven by higher PMP product revenues from 60 GHz and PTP product revenues.

Previous wording

Cost of revenues for products decreased $20.0 million, or 24.1%, from $82.8 million for the nine-month period ended September 30, 2024 to $62.9 million for the nine-month period ended September 30, 2025. The decrease in cost of revenues was primarily driven by lower revenues along with a $7.8 million decrease in excess and obsolescence reserve and $9.9 million decrease in loss on supplier commitment expense partially offset by $0.9 million of nonrecurring expenses incurred in 2025 related to moving certain manufacturing from Mexico to Thailand and $0.2 million higher restructuring expense.

Current wording

Cost of revenues for products increased $4.1 million, or 24.5%, from $16.9 million for the three-month period ended March 31, 2025 to $21.1 million for the three-month period ended March 31, 2026. The increase in cost of revenues was primarily driven by higher revenues, a $2.0 million decrease in the release of loss on supplier commitment expense and $1.0 million decrease in the release of excess and obsolescence reserve, partially offset by $0.4 million lower nonrecurring expenses in 2026, comprised of $0.2 million incurred in 2025 related to moving manufacturing from Mexico to Thailand and $0.2 million of restructuring expenses incurred in 2025 related to the headcount reductions in February 2025.

Previous wording

Cost of revenues for subscriptions and services decreased $0.1 million, or 6.6%, from $1.9 million for the three-month period ended September 30, 2024 to $1.8 million for the three-month period ended September 30, 2025. The decrease in cost of revenues was primarily due to lower professional services cost of revenues.

Current wording

Cost of revenues for subscriptions and services decreased $1.4 million, or 61.7%, from $2.2 million for the three-month period ended March 31, 2025 to $0.9 million for the three-month period ended March 31, 2026. The decrease was primarily due to lower professional services cost of revenues.

Previous wording

Gross margin for products increased from 32.3% for the nine-month period ended September 30, 2024 to 38.4% for the nine-month period ended September 30, 2025. The increase primarily reflects the impact from the decrease in our excess and obsolescence reserve and loss on supplier commitment expense partially offset by the nonrecurring expense incurred in 2025 related to moving certain manufacturing from Mexico to Thailand.

Current wording

Gross margin for products increased from 41.9% for the three-month period ended March 31, 2025 to 47.7% for the three-month period ended March 31, 2026. The increase primarily reflects the impact from increased revenue from higher margin products, the absence of nonrecurring expenses incurred in 2025 partially offset by the reduction in the benefit from the release of both loss on supplier commitment expense and excess and obsolescence reserve.

Previous wording

Gross margin for subscriptions and services increased from 61.0% for the three-month period ended September 30, 2024 to 61.8% for the three-month period ended September 30, 2025. The increase primarily reflects the impact of lower costs of revenues compared to the decrease in revenue.

Current wording

Gross margin for subscriptions and services increased from 51.9% for the three-month period ended March 31, 2025 to 80.3% for the three-month period ended March 31, 2026. The increase primarily reflects the impact of lower professional services cost of revenues.

Previous wording

Research and development expense decreased $1.6 million, or 17.3% from $9.3 million for the three-month period ended September 30, 2024 to $7.7 million for the three-month period ended September 30, 2025. The decrease in research and development expense was primarily due to $0.9 million lower staff-related costs, mostly due to a reduction in headcount from February 2025 restructuring activities, $0.4 million lower share-based compensation expense, $0.2 million lower outside contractor spend and $0.1 million lower lease-related expenses.

Current wording

Research and development expense decreased $1.4 million, or 15.5% from $9.3 million for the three-month period ended March 31, 2025 to $7.9 million for the three-month period ended March 31, 2026. The decrease in research and development expense was primarily due to $0.8 million lower staff-related costs, mostly due to a reduction in headcount from February 2025 restructuring activities, $0.6 million lower restructuring expense incurred in 2025 related to the February 2025 restructuring, $0.4 million lower share-based compensation expense, $0.2 million lower engineering materials spend due to fewer projects, and $0.2 million outside contractor and other expenses, partially offset by $0.8 million lower capitalized software development costs due to fewer projects being eligible for capitalization.

Previous wording

Sales and marketing expense decreased $1.3 million, or 15.7%, from $8.4 million for the three-month period ended September 30, 2024 to $7.1 million for the three-month period ended September 30, 2025. The decrease in sales and marketing expense was primarily due to $0.7 million lower staff-related costs, mostly due to the reduction in headcount from February 2025 restructuring, $0.2 million lower share-based compensation expense, $0.2 million lower restructuring expenses and $0.1 million lower variable compensation expense.

Current wording

Sales and marketing expense decreased $0.8 million, or 10.0%, from $8.4 million for the three-month period ended March 31, 2025 to $7.6 million for the three-month period ended March 31, 2026. The decrease in sales and marketing expense was primarily due to $0.7 million lower restructuring expense incurred in 2025 related to the February 2025 restructuring, $0.3 million lower staff-related costs, mostly due to the reduction in headcount from February 2025 restructuring, $0.2 million lower share-based compensation expense, $0.2 million lower restructuring expenses, partially offset by $0.4 million higher variable compensation expense and $0.2 million higher outside contractor expense.

Previous wording

General and administrative expense increased $0.8 million, or 13.6%, from $6.2 million for the three-month period ended September 30, 2024 to $7.1 million for the three-month period ended September 30, 2025. The increase in general and administrative expense was primarily due to $0.7 million higher legal spend, $0.7 million higher contractor spend due to employee attrition and $0.2 million higher audit fees and $0.2 million higher bad debt expense, partially offset by $0.3 million lower staff-related costs due to employee attrition, $0.4 million lower share-based compensation expense and $0.2 million lower restructuring expenses.

Current wording

General and administrative expense increased $1.7 million, or 26.8%, from $6.3 million for the three-month period ended March 31, 2025 to $8.0 million for the three-month period ended March 31, 2026. The increase in general and administrative expense was primarily due to $0.8 million higher contractor spend due to employee attrition, $0.8 million higher audit fees due to the restatement, and $0.8 million higher legal fees, partially offset by $0.4 million lower staff-related costs due to employee attrition and $0.2 million lower share-based compensation expense.

Previous wording

Other expense (income), net changed from an expense of $0.1 million for the nine-month period ended September 30, 2024 to income of $0.04 million for the nine-month period ended September 30, 2025 and relates to changes in foreign exchange rates.

Current wording

Other expense (income), net changed from an expense of $0.1 million for the three-month period ended March 31, 2025 to income of $0.2 million for the three-month period ended March 31, 2026, driven by favorable impact from changes in foreign exchange rates.

Previous wording

Due to forecasting uncertainty for 2024 and 2025, our provision for income taxes at September 30, 2024 and September 30, 2025 is based on three-month actual results. Our provision for income taxes was $1.7 million for the three-month period ended September 30, 2024 versus a provision for income taxes of $0.3 million for the three-month period ended September 30, 2025. The effective income tax rates were (5.2)% and (4.2)% over the same periods, respectively. For the three-month period ended September 30, 2024, the effective tax rate of (5.2)% was different from the statutory rate of 21.0% primarily due to prior year tax adjustment due to the filing of the U.S. tax return. For the three-month period ended September 30, 2025, our effective tax rate of

Current wording

Our provision for income taxes is based upon the estimated annual tax rate for the year applied to federal, state and foreign income. Our provision for income taxes was $0.4 million for the three-month period ended March 31, 2025 versus a provision for income taxes of $0.4 million for the three-month period ended March 31, 2026. The effective income tax rates were (3.2)% and (13.6)% over the same periods, respectively. Our effective tax rates were different from the statutory rate of 21.0% primarily due to an increase in the valuation allowance on the net deferred tax assets.

Previous wording

As of September 30, 2025, we had a cash balance of $10.0 million, a decrease of $24.9 million from December 31, 2024. Our primary liquidity needs are: (i) to fund normal operating expenses; (ii) to meet interest and principal requirements of our outstanding indebtedness; and (iii) to fund capital expenditures. 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 additional capital through possible divestiture if and when our board of directors determines that doing so is in our best interest.

Current wording

As of March 31, 2026, we had a cash balance of $6.1 million, a decrease of $5.2 million from December 31, 2025. Our primary liquidity needs are: (i) to fund normal operating expenses; and (ii) to fund capital expenditures. 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.

Previous wording

As of September 30, 2025, we were not in compliance with our quarterly fixed charge coverage ratio and quarterly consolidated leverage ratio covenants, and these defaults continued through 2025 and into 2026. In addition, in June 2025, we ceased paying principal and interest on our term loan facility and interest on our revolving credit facility. Such defaults afford Bank of America the right to declare the amounts outstanding thereunder immediately due and payable. We continue to work with the bank to address our noncompliance with the covenants, but have not been able to obtain a waiver of the defaults, or otherwise refinance such indebtedness. If we are not able to obtain a waiver of the defaults or otherwise refinance such indebtedness, and if the lender 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. Please refer to Note 7. Debt in the Notes to the Unaudited Consolidated Financial Statements, regarding our debt outstanding under our credit facilities.

Current wording

As of March 31, 2026, we were not in compliance with our quarterly fixed charge coverage ratio and quarterly consolidated leverage ratio covenants. In June 2025, we ceased paying principal and interest on our term loan facility and interest on our revolving credit facility. Such defaults afford the lender the right to declare the amounts outstanding thereunder immediately due and payable. We continue to work with the bank to address our noncompliance with the covenants, but have not been able to obtain a waiver of the defaults, or otherwise refinance such 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. We may not be able to access additional capital resources or financing due to a variety of reasons, including the restrictive covenants in our credit agreement, the status of our financial condition, or the lack of available capital due to global economic conditions. If our operating cash flow is not sufficient to meet our requirements, and we are unable to access additional financing on favorable terms, or at all, our business, financial condition and results of operations could be materially adversely affected and we could cease as a going concern. Please refer to Note 5. Debt in the Notes to the Unaudited Consolidated Financial Statements, regarding our debt outstanding under our credit facilities.

Previous wording

Net cash used in operating activities for the nine-month period ended September 30, 2025 of $18.5 million consisted primarily of net loss of $29.7 million, adjustments for non-cash charges for depreciation and amortization and other non-cash impacts of $3.6 million, share-based compensation expense of $5.0 million and impairment charge of $0.2 million, increase in estimate of credit losses of $0.2 million, partially offset by a reduction in inventory excess and obsolescence of $2.0 million, along with changes in operating assets and liabilities that resulted in net cash inflow of $4.3 million. The changes in operating assets and liabilities consisted primarily of $13.1 million reduction in inventories, $7.8 million higher accrued liabilities, $4.9 million lower prepaid expenses and $0.7 million lower income taxes receivable, partially offset by $6.0 million increase in receivables, $1.6 million decrease in accounts payable, $0.7 million lower accrued employee compensation and $13.9 million net increase in other assets and liabilities, mostly due to an increase in supplier prepayments and decrease in loss on supplier commitment liability.

Current wording

Net cash used in operating activities for the three-month period ended March 31, 2025 of $4.8 million consisted primarily of net loss of $12.0 million, adjustments for non-cash charges for depreciation and amortization and other non-cash impacts of $1.0 million, share-based compensation expense of $2.1 million offset by a reduction in inventory excess and obsolescence of $1.4 million, along with changes in operating assets and liabilities that resulted in net cash inflow of $5.6 million. The changes in operating assets and liabilities consisted primarily of $7.0 million reduction in receivables, $5.9 million reduction in inventories and $1.6 million increase in accrued liabilities, partially offset by $3.5 million decrease in accounts payable, $0.8 million reduction in accrued employee compensation, $4.2 million lower other assets and liabilities due to adjustment for loss on supplier commitments and lower accrual for sales returns and $0.8 million increase in prepaid expenses.

Previous wording

Net cash used in operating activities for the nine-month period ended September 30, 2024 of $4.6 million consisted of net loss of $67.2 million, adjustments for non-cash charges for depreciation and amortization and other non-cash impacts of $8.2 million, share-based compensation expense of $7.6 million, inventory excess and obsolescence expense of $5.9 million, estimate of credit losses of $1.0 million, adjustments for an increase in deferred tax assets of $1.4 million, impairment charges for goodwill of $9.0 million, customer relationships intangibles of $6.6 million, property and equipment of $8.8 million, software of $0.5 million and right-of-use operating lease assets of $0.1 million, along with changes in operating assets and liabilities that resulted in net cash inflows of $13.6 million. The changes in operating assets and liabilities consisted primarily of a $14.6 million lower inventory as channel inventories decreasing, $4.4 million lower accounts receivable due to lower sales and $1.4 million higher accounts payable due to timing of payment, mostly offset by $3.1 million higher prepaid expenses due to additional supplier prepayments, $1.9 million lower accrued liabilities, $1.0 million lower accrued employee compensation, and $0.9 million higher income taxes receivable.

Current wording

Net cash used in operating activities for the three-month period ended March 31, 2026 of $4.4 million consisted primarily of net loss of $3.4 million, adjustments for non-cash charges for depreciation and amortization and other non-cash impacts of $1.0 million, share-based compensation expense of $1.3 million and change in deferred taxes of $0.1 million, offset by an increase in estimate of credit losses of $0.3 million and a reduction in inventory excess and obsolescence of $0.5 million, along with changes in operating assets and liabilities that resulted in net cash outflow of $2.6 million. The changes in operating assets and liabilities consisted primarily of $9.5 million increase in accounts receivable due to higher sales and $1.7 million increase in prepaid expenses, partially offset by $2.9 million increase in accounts payable due to timing of payments, $2.2 million increase in accrued liabilities, mostly related to an increase in accrued interest on debt, $2.1 million reduction in inventory, mostly from consumption of components, $0.7 million reduction in income taxes receivable, $0.4 million higher other assets and liabilities and $0.3 million increase in accrued employee compensation.

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. The decrease in investing activities for the nine-month period ended September 30, 2025 as compared to the nine-month period ended September 30, 2024 is due to lower spending on property and equipment due to restrictions on capital spending.

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.

Previous wording

During the nine-month period ended September 30, 2024, net cash provided by financing activities of $43.0 million was primarily due to $45.0 million drawn down on the revolver and proceeds received of $0.7 million from the issuance of ordinary shares under our ESPP partially offset by $2.6 million repayment of principal due under the term loan facility with Bank of America.

Current wording

During the three-month period ended March 31, 2025, net cash used by financing activities of $0.7 million was primarily due to repayment of principal due under our term loan facility.

Previous wording

During the nine-month period ended September 30, 2025, net cash used by financing activities of $1.4 million was primarily due to repayment of principal due under our term loan facility and $0.1 million for taxes paid from shares withheld for net settlement of taxes due on vesting of restricted shares issued to our employees.

Current wording

During the three-month period ended March 31, 2026, net cash used by financing activities of $13 thousand was due to taxes paid from shares withheld for net settlement of taxes due on vesting of restricted shares issued to our employees.

Previous wording

As of September 30, 2025, we had $21.5 million outstanding on our term loan facility and $45.0 million outstanding on our revolving credit facility with Bank of America. The effective interest rate on the term loan facility at September 30, 2025 was 10.19% and the weighted-average interest rate on our revolving credit facility was 9.61%. 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.

Current wording

As of March 31, 2026, we had $21.5 million outstanding on our term loan facility and $45.0 million outstanding on our revolving credit facility with Bank of America. The effective interest rate on the term loan facility at March 31, 2026 was 9.45% and the weighted-average interest rate on our revolving credit facility was 9.20%.

Previous wording

As of September 30, 2025, we were not in compliance with our quarterly fixed charge coverage ratio and quarterly consolidated leverage ratio covenants, and these defaults continued through the end of 2025 and into 2026. In addition, in June 2025, we ceased paying the principal and interest on the term loan and interest on the revolving credit facility, resulting in a payment default which is also continuing. Such defaults afford the lender the right to declare the amounts outstanding under our 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 the lender to address our non-compliance. If the lender were to accelerate the maturity of our indebtedness under the credit agreement, there is substantial uncertainty that we would be able to secure capital resources to repay the amounts due. Absent acceleration of payment, our term facility and revolving credit facility matures on November 17, 2026, at which time the outstanding principal and interest will be due. Refer to Note 7. Debt, to our unaudited consolidated financial statements in Part I of this Form 10-Q for additional information.

Current wording

As of March 31, 2026, we were not in compliance with our quarterly fixed charge coverage ratio and quarterly consolidated leverage ratio covenants. In addition, in June 2025, we ceased paying the principal and interest on the term loan and interest on the revolving credit facility, resulting in a payment default which is also continuing. Such defaults afford the lender the right to declare the amounts outstanding under our 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 the lender to address our non-compliance. If the lender were to accelerate the maturity of our indebtedness under the credit agreement, there is substantial uncertainty that we would be able to secure capital resources to repay the amounts due. Absent acceleration of payment, our term facility and revolving credit facility matures on November 17, 2026, at which time the outstanding principal and interest will be due. Refer to Note 5. Debt, to our unaudited consolidated financial statements in Part I of this Form 10-Q for additional information.

Previous wording

Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Comprehensive Form 10-K for our fiscal year ended December 31, 2024, filed on April 7, 2026, for a more complete discussion of our critical accounting policies and estimates. Since the filing of our Form 10-K, there have been no material changes in our significant accounting estimates from those disclosed therein.

Current wording

Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended December 31, 2025, filed on May 1, 2026, for a more complete discussion of our critical accounting policies and estimates. Since the filing of our Form 10-K, there have been no material changes in our significant accounting estimates from those disclosed therein.