GoPro, Inc.
For the period ended Jun 30, 2026. Filed Aug 10, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 10, 2026
GPRO$0.90+4.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-11.
0001500435-26-000018
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0001500435-26-000036
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 140 previous paragraphs and 160 current paragraphs.
84 unchanged; 52 reworded; 18 added; 3 removed; 1 previous and 6 current paragraphs rearranged.
Tables are not compared: 13 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
In May 2026, we began shipping our MISSION 1 Series of cameras, which feature a 50-megapixel 1” sensor and our new GP3 processor. The MISSION 1 Series of cameras is comprised of MISSION 1 PRO and MISSION 1. MISSION 1 PRO is our flagship camera, which shoots 8K video at 60 frames per second (FPS), 8K Open Gate video in 4:3 aspect ratio at 30 FPS, 4K video at 240 FPS, and 1080p video at 960 FPS. The MISSION 1 camera is similar to the MISSION 1 PRO, but is limited to 8K video at 30 FPS, 4K Open Gate video in 4:3 aspect ratio at 120 FPS, and 4K video at 120 FPS. Additionally, we began shipping the MISSION 1 PRO Grip Edition in May 2026, which bundles the MISSION 1 PRO camera with a 2-in-1 grip solution that can be used as an ergonomic grip or mountable metal cage. In July 2026, we began shipping our Mission 1 Pro Creator Edition and Mission 1 Pro Ultimate Creator Edition. The Mission 1 Pro Creator Edition combines the Mission 1 Pro, Media Mod, Volta 2 and Wireless Mic kit while the Mission 1 Pro Ultimate Creator Edition combines the Mission 1 Pro, Media Mod, Wireless Mic kit, Fluid AI Pro gimbal and Light Mod.
Current report
Second Quarter 2026 financial performance
Current report
Additionally, we have not identified goodwill impairment triggering events since the issuance of our first quarter financial information and through the end of the second quarter of 2026. As such, we concluded that it is not more likely than not that the fair value of our single reporting unit is less than the carrying value as of June 30, 2026. While there was no required goodwill impairment test, our market capitalization of $141.5 million exceeded the carrying value of our single reporting unit of negative $32.7 million or over 100% as of June 30, 2026, which was not adjusted for an acquisition control premium, which would further increase the percentage the fair value exceeded the carrying value.
Current report
Total revenue for the three months ended June 30, 2026 was $104.9 million, of which, $76.0 million was from hardware sales and $29.0 million was from subscription and services. Hardware revenue decreased 39.9% from the prior year period primarily due to a 51.7% year-over-year decrease in camera units shipped. Camera units shipped decreased 51.7% year-over-year primarily due to channel partners reducing their on-hand inventories by approximately 120 thousand units, or 19.1%, sequentially and by approximately 228 thousand units, or 30.9%, year-over-year, as well as significantly higher average selling prices due to the launches of the MISSION 1 series of cameras, MAX2, and modest price increases across our other cameras due to tariffs and higher memory pricing. Subscription and services revenue increased 10.6% from the prior year period primarily due to an increase in the average revenue per user driven by a slight price increase of our Premium subscription in December 2025, partially offset by a 10.7% decrease in subscribers as camera units shipped decreased year-over-year. Retail revenue was $58.4 million for the three months ended June 30, 2026 and represented 55.7% of total revenue, compared to 73.0% of total revenue for the same period in 2025. GoPro.com revenue, which includes subscription and service revenue, was $46.5 million for the three months ended June 30, 2026 and represented 44.3% of total revenue, compared to 27.0% of total revenue in the prior year period.
Current report
Total revenue for the six months ended June 30, 2026 was $204.0 million, of which, $148.1 million was from hardware sales and $55.9 million was from subscription and services. Hardware revenue decreased 36.7% from the prior year period primarily due to a 41.5% year-over-year decrease in camera units shipped. Camera units shipped decreased 41.5% from the prior year period primarily due to channel partners reducing their on-hand inventories by approximately 120 thousand units, or 19.1%, sequentially and by approximately 228 thousand units, or 30.9%, year-over-year, as well as significantly higher average selling prices due to the launches of the
Current report
MISSION 1 series of cameras, MAX2, and modest price increases across our other cameras due to tariffs and higher memory pricing. Subscription and services revenue increased 5.3% from the prior year period primarily due to an increase in the average revenue per user driven by a slight price increase of our Premium subscription in December 2025, partially offset by a 10.7% decrease in subscribers as camera units shipped decreased year-over-year. Retail revenue was $119.3 million for the six months ended June 30, 2026 and represented 58.5% of total revenue, compared to 71.6% of total revenue for the same period in 2025. GoPro.com revenue, which includes subscription and service revenue, was $84.7 million for the six months ended June 30, 2026 and represented 41.5% of total revenue, compared to 28.4% of total revenue in the prior year period.
Current report
Gross margin of 17.6% for the six months ended June 30, 2026 decreased from 34.1% in the same period of 2025, or 1,650 bps, primarily due to an aggregate $39.6 million in discrete charges related to certain component purchase commitments (1,920 bps), lower volume and higher camera unit costs (670 bps), higher supply chain costs as a percentage of total revenue (510 bps), and lower volume and higher accessory unit costs (40 bps), partially offset by an $18.9 million reduction to cost of revenue following CBP’s approval of certain IEEPA tariff refund claims (930 bps), an increase in higher-margin subscription and service revenue as a percentage of total revenue (490 bps), and lower sales incentives (70 bps).
Current report
The year-over-year decrease of $0.9 million, or 7.1%, in total general and administrative expense for the three months ended June 30, 2026 compared to the same period of 2025 was primarily driven by a $0.5 million decrease in consulting and professional services and a $0.5 million decrease in restructuring costs, partially offset by a $0.2 million increase in administration charges.
Current report
The year-over-year decrease of $8.0 million, or 26.7%, in total general and administrative expense for the six months ended June 30, 2026 compared to the same period of 2025 was primarily driven by a $5.7 million decrease in litigation expense, a $1.6 million decrease in restructuring costs, and a $0.7 million decrease in stock-based compensation expense.
Current report
Second quarter 2026 restructuring. In April 2026, we approved a restructuring plan (the Second Quarter 2026 Restructuring Plan) to reduce our global workforce by approximately 23% compared to our headcount as of March
Current report
31, 2026. In the second quarter of 2026, we began implementing the Second Quarter 2026 Restructuring Plan and recorded $2.2 million of severance charges. At the time of approval of the Second Quarter 2026 Restructuring Plan, we expected to incur an aggregate severance charge in the range of $11.5 million to $15.0 million that would be substantially complete by the end of 2026. However, given the events described in Note 1 Summary of business and significant accounting policies, we are currently unable in good faith to estimate the amount, or range of amounts, expected to be incurred in connection with the remainder of the Second Quarter 2026 Restructuring Plan or to estimate the timing of future cash expenditures.
Current report
Our ability to use these net operating losses and tax credit carryforwards may be subject to annual limitations if we experience certain cumulative ownership changes, as defined under Sections 382 and 383 of the Internal Revenue Code (IRC). An ownership change under the IRC generally occurs when the ownership of one or more 5% stockholders increases by more than 50 percentage points over a rolling three-year period.
Current report
For the period ended June 30, 2026, we were in compliance with the liquidity and minimum unused availability financial covenants contained in the 2021 Credit Agreement; however, we were not in compliance with the minimum EBITDA or the minimum asset coverage ratio of 1.15x under the 2025 Credit Agreement. On July 9, 2026, we entered into Waiver and Amendment No. 3 to the 2025 Credit Agreement that among other things, waived the second quarter of 2026 EBITDA and asset coverage ratio non-compliance as of June 30, 2026. Additionally, on July 9, 2026, we entered into Waiver and Amendment No. 4 to the 2021 Credit Agreement that among other things, waived (i) a failure to deliver annual financial statements without a “going concern” or like qualification, and related notice requirement, and (ii) defaults related to compliance with certain affirmative and negative covenants. No upfront cash fee was paid solely in consideration for the waiver. However, in connection with Waiver and Amendment No. 4 to the 2021 Credit Agreement, we entered into the Fee Letter, which provides for contingent and other fees, and mandatory repayments described above. There are outstanding letters of credit under the 2021 Credit Agreement which total $5.0 million for certain duty-related requirements which were not collateralized by any cash on hand. As of June 30, 2026, we had $24.4 million outstanding under the 2021 Credit Agreement and had zero available to draw given the $10.0 million unused availability covenant.
Current report
During the three and six months ended June 30, 2026, we issued 15.5 million shares of our Class A common stock due to the exercise of the conversion option by YA II PN for a principal amount of $11.2 million of the Convertible Debentures. Additionally, subsequent to June 30, 2026, we issued 2.7 million shares of our Class A common stock due to the exercise of the conversion option by YA II PN for a principal amount of $1.8 million of the Convertible Debentures. Refer to the derivatives financial instrument accounting policy included in Note 1 Summary of business and significant accounting policies.
Current report
Derivative financial instruments
Current report
We evaluate financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815 Derivatives and Hedging. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then marked-to-market at each reporting date, with changes in fair value recorded in other income (expense), net, in the condensed consolidated statements of operations. We determined that the conversion feature of the Convertible Debentures created a derivative liability that required bifurcation from the host debt instrument as discussed in Note 4 Financing arrangements. A Monte Carlo simulation was used to determine the fair value of the derivative liability, however, the as-converted value was greater than the fair value calculated under the Monte
Current report
Carlo simulation. Therefore, we used the as-converted value to estimate the fair value of the derivative liability, as discussed in Note 2 Fair value measurements. The as-converted value is sensitive to significant increases in our stock price, and because the derivative instrument is classified as a liability and remeasured at each reporting date, significant increases in our stock price could result in material volatility in our reported earnings. Additionally, the IEEPA Claim in the IEEPA Agreement created a derivative liability as discussed in Note 4 Financing arrangements. The fair value of the IEEPA Claim was determined based on observable transaction prices for identical IEEPA refund rights. If observable transaction prices change significantly, or if the U.S Supreme Court reverses their ruling that tariffs imposed under the International Emergency Economic Powers Act were unlawful, the fair value of the IEEPA Claim could be materially impacted.
Current report
•adjusted EBITDA and non-GAAP net income (loss) excludes gains (losses) related to derivative liabilities as they are not reflective of ongoing operating results in the period and hinder our ability to assess core operational performance;
Removed paragraphs (3)
Previous report
First Quarter 2026 financial performance
Previous report
Total revenue for the three months ended March 31, 2026 was $99.1 million, of which, $72.2 million was from hardware sales and $26.9 million was from subscription and services. Hardware revenue decreased 32.8% from the prior year period primarily due to a 30.6% year-over-year decrease in camera units shipped. The decrease in camera units shipped was primarily due to modest price increases due to tariffs, lower promotional activity, an increasingly global competitive landscape, and consumer-related macroeconomic issues. Subscription and services revenue was flat against the prior year period of $26.9 million, primarily due to an increase in the average revenue per user driven by a slight price increase of our Premium subscription in December 2025, partially offset by an 8.4% decrease in subscribers as camera units shipped decreased year-over-year. Retail revenue was $60.9 million for the three months ended March 31, 2026 and represented 61.5% of total revenue, compared to 69.9% of total revenue for the same period in 2025. GoPro.com revenue, which includes subscription and service revenue, was $38.2 million for the three months ended March 31, 2026 and represented 38.5% of total revenue, compared to 30.1% of total revenue in the prior year period.
Previous report
•adjusted EBITDA and non-GAAP net income (loss) excludes a gain (loss) related to a derivative liability because it is not reflective of ongoing operating results in the period, and hinders our ability to assess core operational performance;
Reworded paragraphs (52)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC. This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, include forward-looking statements that involve risks and uncertainties as described under the heading Special Note About Forward-Looking Statements in this Quarterly Report on Form 10-Q. You should review the disclosures under the heading Risk Factors in Part I, Item 1A. of the Annual Report on Form 10-K for the year ended December 31, 2025 in addition to the Risk Factors disclosed in Part II, Item 1A. of this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. Our MD&A is provided in addition to the accompanying condensed consolidated financial statements and accompanying notes to assist readers in understanding our results of operations, financial condition and cash flows.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC. This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, include forward-looking statements that involve risks and uncertainties as described under the heading Special Note About Forward-Looking Statements in this Quarterly Report on Form 10-Q. You should review the disclosures under the heading Risk Factors in Part I, Item 1A. of the Annual Report on Form 10-K for the year ended December 31, 2025 in addition to the Risk Factors disclosed in Part II, Item 1A. of our Quarterly Reports on Form 10-Q for the three months ended March 31, 2026 and June 30, 2026 for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. Our MD&A is provided in addition to the accompanying condensed consolidated financial statements and accompanying notes to assist readers in understanding our results of operations, financial condition and cash flows.
Previous wording
•Results of Operations. Analysis of our financial results comparing the first quarter of 2026 to 2025.
Current wording
•Results of Operations. Analysis of our financial results comparing the second quarter and first six months of 2026 to 2025.
Previous wording
In September 2025, we began shipping our MAX2 waterproof 360-camera featuring True 8K video, 10-bit color video in 8K at 30 frames per second (FPS), 29-megapixel resolution for 360-degree photos, and easily replaceable lenses made from water-repelling optical glass. In addition, MAX2 includes in-camera POV and Selfie Video Modes, six built-in microphones that provide 360 audio and wireless Bluetooth functionality, built-in GPS, MAX HyperSmooth image stabilization, 360-degree MAX TimeWarp Video, and MAX SuperView. MAX HyperSmooth provides high performance video stabilization, while MAX SuperView provides a wide field of view. Our MAX2 camera also includes a MAX Enduro battery which increases recording time and improves cold-weather performance. The Quik app includes editing tools for our MAX2 camera such as AI Object Tracking and MotionFrame editing.
Current wording
In September 2025, we began shipping our MAX2 waterproof 360-camera featuring True 8K video, 10-bit color video in 8K at 30 FPS, 29-megapixel resolution for 360-degree photos, and easily replaceable lenses made from water-repelling optical glass. In addition, MAX2 includes in-camera POV and Selfie Video Modes, six built-in microphones that provide 360 audio and wireless Bluetooth functionality, built-in GPS, MAX HyperSmooth image stabilization, 360-degree MAX TimeWarp Video, and MAX SuperView. MAX HyperSmooth provides high performance video stabilization, while MAX SuperView provides a wide field of view. Our MAX2 camera also includes a MAX Enduro battery which increases recording time and improves cold-weather performance. The Quik app includes editing tools for our MAX2 camera such as AI Object Tracking and MotionFrame editing.
Previous wording
In September 2024, we began shipping our HERO13 Black flagship camera that includes our GP2 processor, HyperSmooth 6.0 image stabilization, hybrid-log gamma (HLG) high dynamic range (HDR) photos and videos in 5.3K at 60 FPS and 4K at 60 FPS, and a higher capacity battery resulting in longer runtimes and improved thermal performance. HyperSmooth 6.0 image stabilization features AutoBoost, which analyzes up to 4x more data compared to HyperSmooth 5.0 while supporting 360-degree Horizon Lock. The HERO13 Black also includes 10-bit color video at up to 5.3K video at 60 FPS, 27-megapixel photo resolution, 8:7 aspect ratio video for a larger vertical field of view, and HyperView, which allows for a 16:9 field of view, SuperView and Horizon Leveling. The HERO13 Black also includes a front-facing and rear touch display, TimeWarp 3.0, a Timecode Sync feature, and a Night Effects Time Lapse feature. In March 2025, we shipped a limited edition HERO13 Black in a Polar White colorway, and in June 2025, we shipped another limited edition HERO13 Black in a Forest Green colorway, both of which included all of the features of our flagship camera. We also offer our Ultra Wide Lens Mod, Macro Lens Mod, Anamorphic Lens Mod and a ND Filter 4-Pack for HERO13 Black. The Ultra Wide Lens Mod allows for an ultra wide-angle digital lens for 4K video at 60 FPS, the Macro Lens Mod allows the HERO13 Black to focus on objects 4x closer than prior generation cameras, and the Anamorphic Lens Mod captures ultra wide-angle footage with reduced distortion and lets anyone tell their stories using the 21:9 aspect ratio used in feature films. The ND Filter 4-Pack allows the HERO13 Black to create motion blur. Additionally, we offer our HERO13 Black Creator Edition, which combines the HERO13 Black, Volta, Enduro Battery, Media Mod, and Light Mod to create professional-quality videos.
Current wording
In September 2024, we began shipping our HERO13 Black camera that includes our GP2 processor, HyperSmooth 6.0 image stabilization, hybrid-log gamma (HLG) high dynamic range (HDR) photos and videos in 5.3K at 60 FPS and 4K at 60 FPS, and a higher capacity battery resulting in longer runtimes and improved thermal performance. HyperSmooth 6.0 image stabilization features AutoBoost, which analyzes up to 4x more data compared to HyperSmooth 5.0 while supporting 360-degree Horizon Lock. The HERO13 Black also includes 10-bit color video at up to 5.3K video at 60 FPS, 27-megapixel photo resolution, 8:7 aspect ratio video for a larger vertical field of view, and HyperView, which allows for a 16:9 field of view, SuperView and Horizon Leveling. The HERO13 Black also includes a front-facing and rear touch display, TimeWarp 3.0, a Timecode Sync feature, and a Night Effects Time Lapse feature. In March 2025, we shipped a limited edition HERO13 Black in a Polar White colorway, and in June 2025, we shipped another limited edition HERO13 Black in a Forest Green colorway, both of which included all of the features of our HERO13 Black camera. We also offer our Ultra Wide Lens Mod, Macro Lens Mod, Anamorphic Lens Mod and a ND Filter 4-Pack for HERO13 Black. The Ultra Wide Lens Mod allows for an ultra wide-angle digital lens for 4K video at 60 FPS, the Macro Lens Mod allows the HERO13 Black to focus on objects 4x closer than prior generation cameras, and the Anamorphic Lens Mod captures ultra wide-angle footage with reduced distortion and lets anyone tell their stories using the 21:9 aspect ratio used in feature films. The ND Filter 4-Pack allows the HERO13 Black to create motion blur. Additionally, we offer our HERO13 Black Creator Edition, which combines the HERO13 Black, Volta, Enduro Battery, Media Mod, and Light Mod to create professional-quality videos.
Previous wording
Our HERO13 Black, HERO13 Black Creator Edition, LIT HERO, HERO, HERO12 Black, HERO12 Black Creator Edition, MAX2, and MAX cameras are compatible with our ecosystem of mountable and wearable accessories.
Current wording
Our MISSION 1 PRO, MISSION 1, HERO13 Black, HERO13 Black Creator Edition, LIT HERO, HERO, HERO12 Black, HERO12 Black Creator Edition, MAX2, and MAX cameras are compatible with our ecosystem of mountable and wearable accessories.
Previous wording
We offer our Premium subscription, which includes unlimited cloud storage of GoPro content supporting source video and photo quality, damaged camera replacement, cloud storage up to 100 gigabytes (GB) of non-GoPro content, the delivery of highlight videos automatically via our mobile app when GoPro camera footage is uploaded to the user’s GoPro cloud account using Auto Upload or when GoPro camera footage is uploaded to the user’s GoPro cloud account via the user’s mobile phone. Our Premium subscription also provides access to a high-quality live streaming service on GoPro.com, as well as discounts on GoPro cameras, lifestyle gear, mounts and accessories. In February 2024, we launched our Premium+ subscription which includes cloud storage up to 500 GB of non-GoPro content, HyperSmooth Pro and all of the same features included in the Premium subscription.
Current wording
We offer our Premium subscription, which includes unlimited cloud storage of GoPro content supporting source video and photo quality, damaged camera replacement, cloud storage up to 100 gigabytes (GB) of non-GoPro content, the delivery of highlight videos automatically via our mobile app when GoPro camera footage is uploaded to the user’s GoPro cloud account using Auto Upload or when GoPro camera footage is uploaded to the user’s GoPro cloud account via the user’s mobile phone. Our Premium subscription also provides access to a high-quality live streaming service on GoPro.com, as well as discounts on GoPro cameras, lifestyle gear, mounts and accessories. We also offer our Premium+ subscription which includes cloud storage up to 500 GB of non-GoPro content, HyperSmooth Pro and all of the same features included in the Premium subscription.
Previous wording
We continue to monitor the current evolving macroeconomic landscape. Inflation, fluctuating interest rates, tariffs, component pricing, consumer spending, and recession concerns place increasing pressure on many areas of our business, including hardware and software product pricing and operating expenses. In the past, the strength of the U.S. dollar relative to other foreign currencies largely impacted our revenue and gross margin. Revenue from the U.S. was 55.8% and 46.8% of revenue for the three months ended March 31, 2026 and 2025, respectively. If the U.S. dollar strengthens relative to other foreign currencies in the future, our financial results will be negatively impacted. See Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025 and Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q for the three months ended March 31, 2026 for further discussion of the possible impact of evolving macroeconomic conditions on our business.
Current wording
We continue to monitor the current evolving macroeconomic landscape. Inflation, fluctuating interest rates, tariffs, component pricing, consumer spending, and recession concerns place increasing pressure on many areas of our business, including hardware and software product pricing and operating expenses. In the past, the strength of the U.S. dollar relative to other foreign currencies largely impacted our revenue and gross margin. Revenue from the U.S. was 59.4% and 50.3% of revenue for the six months ended June 30, 2026 and 2025, respectively. If the U.S. dollar strengthens relative to other foreign currencies in the future, our financial results will be negatively impacted. See Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025 and Part II, Item 1A. Risk Factors of our Quarterly Reports on Form 10-Q for the three months ended March 31, 2026 and June 30, 2026 for further discussion of the possible impact of evolving macroeconomic conditions on our business.
Previous wording
Revenue for the three months ended March 31, 2026 was $99.1 million, of which, $72.2 million was from hardware sales and $26.9 million was from subscription and services. Hardware revenue decreased 32.8% from the prior year period primarily due to a 30.6% year-over-year decrease in camera units shipped. The decrease in camera units shipped was primarily due to modest price increases due to tariffs, lower promotional activity, an increasingly global competitive landscape, and consumer-related macroeconomic issues. Subscription and services revenue was flat against the prior year period of $26.9 million, primarily due to an increase in the average revenue per user driven by a slight price increase of our Premium subscription in December 2025, partially offset by an 8.4% decrease in subscribers as camera units shipped decreased year-over-year. Retail revenue was $60.9 million for the three months ended March 31, 2026 and represented 61.5% of total revenue, compared to 69.9% of total revenue for the same period in 2025. GoPro.com revenue, which includes subscription and service revenue, was $38.2 million for the three months ended March 31, 2026 and represented 38.5% of total revenue, compared to 30.1% of total revenue in the prior year period. Our overall subscription attach rate from both sales on GoPro.com and from post-camera purchases at retail was 51% for the three months ended March 31, 2026, up from 49% in the prior year quarter. Our aggregate retention rate for annual subscribers was 71% for the three months ended March 31, 2026, compared to 70% for the same period in 2025. Our gross margin percentage for the three months ended March 31, 2026 of 4.3% was negatively impacted primarily by a discrete $24.5 million charge related to certain component purchase commitments. Our gross margin percentage for the three months ended March 31, 2025 was 32.1%. Net loss for the three months ended March 31, 2026 was $80.8 million, compared to a net loss of $46.7 million for the same period in 2025. Adjusted EBITDA for the three months ended March 31, 2026 was negative $49.8 million, compared to negative $15.7 million for the same period in 2025.
Current wording
Revenue for the three months ended June 30, 2026 was $104.9 million, of which, $76.0 million was from hardware sales and $29.0 million was from subscription and services. Hardware revenue decreased 39.9% from the prior year period primarily due to a 51.7% year-over-year decrease in camera units shipped. Camera units shipped decreased 51.7% year-over-year primarily due to channel partners reducing their on-hand inventories by approximately120 thousand units, or 19.1%, sequentially and by approximately 228 thousand units, or 30.9%, year-over-year, as well as significantly higher average selling prices due to the launches of the MISSION 1 series of cameras, MAX2, and modest price increases across our other cameras due to tariffs and higher memory pricing. Subscription and services revenue increased 10.6% from the prior year period primarily due to an increase in the average revenue per user driven by a slight price increase of our Premium subscription in December 2025, partially offset by a 10.7% decrease in subscribers as camera units shipped decreased year-over-year. Retail revenue was $58.4 million for the three months ended June 30, 2026 and represented 55.7% of total revenue, compared to 73.0% of total revenue for the same period in 2025. GoPro.com revenue, which includes subscription and service revenue, was $46.5 million for the three months ended June 30, 2026 and represented 44.3% of total revenue, compared to 27.0% of total revenue in the prior year period. Our overall subscription attach rate from both sales on GoPro.com and from post-camera purchases at retail was 69% for the three months ended June 30, 2026, up from 54% in the prior year quarter. Our aggregate retention rate for annual subscribers was 67% for the three months ended June 30, 2026, compared to 68% for the same period in 2025. Our gross margin percentage for the three months ended June 30, 2026 was 30.2%, compared to 35.8% for the same period in 2025. Net loss for the three months ended June 30, 2026 was $51.0 million, compared to a net loss of $16.4 million for the same period in 2025. Adjusted EBITDA for the three months ended June 30, 2026 was negative $29.5 million, compared to negative $5.7 million for the same period in 2025.
Previous wording
We perform an annual assessment of our goodwill during the fourth quarter of each calendar year, or more frequently if indicators of potential impairment exist, such as an adverse change in business climate, declines in market capitalization or a decline in the overall industry demand, that would indicate it is more likely than not that the fair value of our single reporting unit is less than the carrying value. If we determine that it is more likely than not that the fair value of our single reporting unit is less than the carrying value, we measures the amount of impairment as the amount the carrying value of our single reporting unit exceeds the fair value, up to the carrying value of goodwill, by using a discounted cash flow method and market approach method.
Current wording
We perform an annual assessment of our goodwill during the fourth quarter of each calendar year, or more frequently if indicators of potential impairment exist, such as an adverse change in business climate, declines in market capitalization or a decline in the overall industry demand, that would indicate it is more likely than not that the fair value of our single reporting unit is less than the carrying value. If we determine that it is more likely than not that the fair value of our single reporting unit is less than the carrying value, we measure the amount of impairment as the amount the carrying value of our single reporting unit exceeds the fair value, up to the carrying value of goodwill, by using a discounted cash flow method and market approach method.
Previous wording
In the first quarter of 2026, we identified goodwill impairment triggering events, including: (i) the conclusion of substantial doubt regarding our ability to continue as a going concern, which represents a negative qualitative indicator; and (ii) a significant decline in revenue and gross margin compared to the prior year period. As a result, we performed an interim qualitative goodwill impairment assessment as of March 31, 2026. We evaluated each triggering event and concluded that, while they represent negative qualitative factors, the quantitative evidence did not indicate that these events would more likely than not reduce the reporting unit’s fair value below its carrying amount. Specifically, as of March 31, 2026, our market capitalization of $126.4 million exceeded the carrying value of our single reporting unit of negative $1.9 million by approximately 101%, before any acquisition control premium, representing the synergies a market participant would obtain when obtaining control of the business. Based on this assessment, we concluded it is not more likely than not that the fair value of our single reporting unit is less than its carrying value, and no goodwill impairment charge was recorded in the first quarter of 2026.
Current wording
In the first quarter of 2026, we identified goodwill impairment triggering events, including (i) the conclusion of substantial doubt regarding our ability to continue as a going concern, which represents a negative qualitative indicator; and (ii) a significant decline in revenue and gross margin compared to the prior year period. As a result, we performed an interim qualitative goodwill impairment assessment as of March 31, 2026. We evaluated each triggering event and concluded that, while they represent negative qualitative factors, the quantitative evidence did not indicate that these events would more likely than not reduce the reporting unit’s fair value below its carrying amount. Using the market capitalization approach, the fair value of our single reporting unit is estimated based on the trading price of our stock at the test date, which is further adjusted by an acquisition control premium representing the synergies a market participant would obtain when obtaining control of the business. Specifically, as of March 31, 2026, our market capitalization of $126.4 million exceeded the carrying value of our single reporting unit of negative $1.9 million by approximately 101%, before any acquisition control premium, representing the synergies a market participant would obtain when obtaining control of the business. Based on this assessment, we concluded it is not more likely than not that the fair value of our single reporting unit is less than its carrying value, and no goodwill impairment charge was recorded in the first quarter of 2026.
Previous wording
As a result of the same impairment triggering events identified, which resulted in an interim qualitative goodwill impairment assessment, we performed an interim quantitative long-lived asset impairment assessment as of March 31, 2026. As we have a single asset group, we considered the undiscounted operating and disposal cash flows to assess recoverability. Based on this assessment, we concluded the carrying amount of our long-lived assets are recoverable and no long-lived asset impairment charge was recorded in the first quarter of 2026.
Current wording
As a result of the same impairment triggering events identified, which resulted in an interim qualitative goodwill impairment assessment, we performed an interim quantitative long-lived asset impairment assessment as of March 31, 2026. As we have a single asset group, we considered the undiscounted operating and disposal cash flows to assess recoverability. Based on this assessment, we concluded the carrying amount of our long-lived assets were recoverable and no long-lived asset impairment charge was recorded in the first quarter of 2026. No long-lived asset impairment triggering events occurred in the second quarter of 2026.
Previous wording
Driving profitability through improved efficiency, lower costs, and better execution. We incurred operating losses in the first quarter of 2026 and for the full year 2025 and may incur further losses in the future. While our prior restructuring actions have reduced our operating costs compared to our historical levels, wecontinue to make strategic decisions to drive volume, growth, and profitability in our business. We are implementing our 2026 operational plan and changing our approach to operate in a leaner, more focused manner that we believe is sustainable and strategic for long-term success and improved financial performance. This includes pursuing a hardware and software product roadmap we believe will drive innovation, differentiation, and growth. In the longer term, this includes increasingour total addressable market by introducing new, innovative hardware and software products, increasing unit sales volume of our new and existing products, and increasing our subscriber base. Our expectation is that sales from our retail channel will continue to increase relative to sales on GoPro.com. While growth in subscribers and subscription and service revenue has slowed, we continue to make strategic decisions to enhance our subscription offerings to grow subscribers and increase subscriber retention that results in an increase in subscription and service revenue.
Current wording
Driving profitability through improved efficiency, lower costs, and better execution. We incurred operating losses in the first half of 2026 and for the full year 2025 and may incur further losses in the future. While our prior restructuring actions have reduced our operating costs compared to our historical levels, wecontinue to make strategic decisions to drive volume, growth, and profitability in our business. We are implementing our 2026 operational plan and changing our approach to operate in a leaner, more focused manner that we believe is sustainable and strategic for long-term success and improved financial performance. This includes pursuing a hardware and software product roadmap we believe will drive innovation, differentiation, and growth. In the longer term, this includes increasingour total addressable market by introducing new, innovative hardware and software products, increasing unit sales volume of our new and existing products, and increasing our subscriber base. Our expectation is that sales from our retail channel will continue to increase relative to sales on GoPro.com. While growth in subscribers and subscription and service revenue has slowed, we continue to make strategic decisions to enhance our subscription offerings to grow subscribers and increase subscriber retention that results in an increase in subscription and service revenue.
Previous wording
Investing in research and development and enhancing our customer experience. Our performance is significantly dependent on the investments we make in research and development, including our ability to retain highly skilled and experienced research and development personnel. As part of our strategic focus on operational efficiency and implementation of our 2026 operational plan, we have adjusted certain investments in research and development while continuing to prioritize projects that support long-term growth of our Company, including the launch of our new system-on-chip GP3-based cameras beginning in the second quarter of 2026. We expect the timing of new hardware product releases to continue to have a significant impact on our revenue and we must continually develop and introduce innovative new cameras, software, and other new offerings. We plan to further build upon our integrated mobile and cloud-based storytelling solutions, as well as our subscription offerings. Our investments, including those for marketing and advertising, and those related to development efforts associated with our acquisition in 2024, may not successfully drive increased revenue and our customers may not accept our new offerings. Further, we have and will continue to incur substantial research and development expenses and if our efforts are not successful, we may not recover the value of these investments.
Current wording
Investing in research and development and enhancing our customer experience. Our performance is significantly dependent on the investments we make in research and development, including our ability to retain highly skilled and experienced research and development personnel. As part of our strategic focus on operational efficiency and implementation of our 2026 operational plan, we have adjusted certain investments in research and development while continuing to prioritize projects that support long-term growth of our Company, including the launch of our new MISSION 1 Series of cameras beginning in the second quarter of 2026. We expect the timing of new hardware product releases to continue to have a significant impact on our revenue and we must continually develop and introduce innovative new cameras, software, and other new offerings. We plan to further build upon our integrated mobile and cloud-based storytelling solutions, as well as our subscription offerings. Our investments, including those for marketing and advertising, and those related to development efforts associated with our acquisition in 2024, may not successfully drive increased revenue and our customers may not accept our new offerings. Further, we have and will continue to incur substantial research and development expenses and if our efforts are not successful, we may not recover the value of these investments.
Previous wording
Gross margin of 4.3% for the three months ended March 31, 2026 decreased from 32.1% in the same period of 2025, or 2,780 bps, primarily due to a discrete $24.5 million charge related to certain component purchase commitments (2,480 bps), lower hardware average selling prices and higher camera unit costs (710 bps), and higher supply chain costs as a percentage of total revenue (190 bps), partially offset by an increase in higher-margin subscription and service revenue as a percentage of total revenue (360 bps), and lower sales incentives (240 bps).
Current wording
Gross margin of 30.2% for the three months ended June 30, 2026 decreased from 35.8% in the same period of 2025, or 560 bps, primarily due to a discrete $15.2 million charge related to certain component purchase commitments (1,410 bps), lower volume and higher camera unit costs (710 bps), higher supply chain costs as a percentage of total revenue (800 bps), and higher sales incentives (90 bps), partially offset by an $18.9 million reduction to cost of revenue following U.S. Customs and Border Protection’s (CBP) approval of certain IEEPA tariff refund claims (1,800 bps), an increase in higher-margin subscription and service revenue as a percentage of total revenue (610 bps), and higher accessory gross margin (40 bps).
Previous wording
The year-over-year decrease of $1.1 million, or 3.8%, in total research and development expense for the three months ended March 31, 2026 compared to the same period of 2025 was primarily driven by a $1.3 million decrease in stock-based compensation expense, a $0.8 million decrease in cash-based personnel-related costs, and a $0.7 million decrease in restructuring costs, partially offset by a $1.8 million increase in consulting and professional services.
Current wording
The year-over-year decrease of $0.9 million, or 2.8%, in total research and development expense for the three months ended June 30, 2026 compared to the same period of 2025 was primarily driven by a $1.1 million decrease in cash-based personnel-related costs, a $0.8 million decrease in stock-based compensation expense, and a $0.7 million decrease in consulting and professional services, partially offset by a $2.1 million increase in restructuring costs.
Previous wording
The year-over-year decrease of $7.0 million, or 41.6%, in total general and administrative expense for the three months ended March 31, 2026 compared to the same period of 2025 was primarily driven by a $4.2 million decrease in litigation expense, a $1.1 million decrease in restructuring costs, a $0.7 million decrease in stock-based compensation expense, a $0.4 million decrease in cash-based personnel-related costs, and a $0.4 million decrease in allocated facilities, depreciation, and supporting overhead expenses.
Current wording
The year-over-year decrease of $2.0 million, or 3.3%, in total research and development expense for the six months ended June 30, 2026 compared to the same period of 2025 was primarily driven by a $2.1 million decrease in stock-based compensation expense, a $1.9 million decrease in cash-based personnel-related costs, and a $0.4 million decrease in allocated facilities, depreciation, and supporting overhead expenses, partially offset by a $1.3 million increase in restructuring costs and a $1.1 million increase in consulting and professional services.
Previous wording
The total sales and marketing expense for the three months ended March 31, 2026 was consistent with the same period of 2025. This was primarily driven by a $0.8 million decrease in consulting and professional services, a $0.5 million decrease in restructuring costs, and a $0.3 million decrease in stock-based compensation expense, partially offset by a $1.5 million increase in advertising and marketing expenses, primarily attributable to social media campaigns and promotional activity.
Current wording
The year-over-year increase of $3.7 million, or 7.6%, in total sales and marketing expense for the six months ended June 30, 2026 compared to the same period of 2025 was primarily driven by a $6.1 million increase in advertising and marketing expenses, primarily attributable to social media campaigns and promotional activity, partially offset by a $0.9 million decrease in cash-based personnel-related costs, a $0.7 million decrease in consulting and professional services, $0.6 million decrease in allocated facilities, depreciation, and supporting overhead expenses, and a $0.5 million decrease in stock-based compensation expense.
Previous wording
Third quarter 2024 restructuring. In August 2024, we approved a restructuring plan (the Original Restructuring Plan) and in October 2024, we approved an amended restructuring plan (the Updated Restructuring Plan). In connection with the Original Restructuring Plan and Updated Restructuring Plan, we reduced our global workforce by 25% compared to our headcount ending Q2 2024, and we recorded restructuring charges of $18.7 million, including $12.7 million related to severance and $6.0 million of project cancellation costs.
Current wording
Third quarter 2024 restructuring. In August 2024, we approved a restructuring plan (the Original Restructuring Plan) and in October 2024, we approved an amended restructuring plan (the Updated Restructuring Plan). In connection with the Original Restructuring Plan and Updated Restructuring Plan, we reduced our global workforce by 25% compared to our headcount ending Q2 2024, and we recorded restructuring charges of $18.7 million, including $12.7 million related to severance and $6.0 million of project cancellation costs. As of June 30, 2026, the Company expects to pay the remaining restructuring liability related to the Updated Restructuring Plan in cash.
Previous wording
Total other income (expense), net was an expense of $21.7 million for the three months ended March 31, 2026 compared to income of $0.2 million in the same period of 2025. The year-over-year change of $21.9 million was primarily due to the impact of our assessment of the 2025 Credit Agreement amendment on February 27, 2026, which resulted in an $8.9 million loss on the extinguishment of debt, and a $5.8 million loss related to changes in value of the claims for the potential refund of IEEPA tariffs transferred to Mateo Financing, LLC as further discussed in Note 4 Financing arrangements. The year-over-year change was also driven by a $7.4 million net loss related to the derivative liability recognized and remeasured during the three months ended March 31, 2026 as part of the Securities Purchase Agreement discussed in Note 4 Financing arrangements, partially offset by a $2.8 million gain on the revaluation of the warrants issued in connection with the 2025 Credit Agreement as discussed in Note 4 Financing arrangements.
Current wording
Total other income (expense), net was an expense of $33.0 million for the six months ended June 30, 2026 compared to expense of $1.0 million in the same period of 2025. The year-over-year change of $32.0 million was primarily due to a $10.5 million loss related to changes in value of the claims for the potential refund of IEEPA tariffs transferred to Mateo Financing, LLC as further discussed in Note 4 Financing arrangements, and the impact of our assessment of the 2025 Credit Agreement amendment on February 27, 2026, which resulted in an $8.9 million loss on the extinguishment of debt. The year-over-year change was also driven by a $7.5 million net loss related to the derivative liability recognized and remeasured as part of the Securities Purchase Agreement with YA II PN discussed in Note 4 Financing arrangements, a $5.7 million increase in non-cash interest expense primarily related to the Securities Purchase Agreement, and a $2.6 million increase in cash interest expense primarily related to 2025 Credit Agreement, partially offset by a decrease in interest related to our 2025 convertible senior notes which matured in November 2025. These expenses and losses were partially offset by a $2.6 million net gain on the revaluation of the warrants issued in connection with the 2025 Credit Agreement as discussed in Note 4 Financing arrangements and a $1.2 million gain on the sale of intellectual property that did not reoccur in the same period of 2025.
Previous wording
We recorded an income tax expense of $1.8 million for the three months ended March 31, 2026 on a pre-tax net loss of $79.0 million. Our income tax expense for the three months ended March 31, 2026 primarily resulted from a tax expense of $1.2 million on pre-tax book income in certain tax jurisdictions and discrete items that included $1.3 million of nondeductible equity tax expense for employee stock-based compensation and $0.6 million from the establishment of valuation allowance on foreign deferred tax assets due to the substantial doubt about our ability to continue as a going concern, partially offset by a net decrease in the domestic valuation allowance of $1.2 million.
Current wording
We recorded an income tax expense of $2.6 million for the six months ended June 30, 2026 on a pre-tax net loss of $129.2 million. Our income tax expense for the six months ended June 30, 2026 primarily resulted from a tax expense of $2.4 million on pre-tax book income in certain tax jurisdictions and discrete items that included $1.2 million of nondeductible equity tax expense for employee stock-based compensation and $0.6 million from the establishment of a valuation allowance on foreign deferred tax assets due to the substantial doubt about our ability to continue as a going concern, partially offset by a net decrease in the domestic valuation allowance of $1.0 million and tax benefit on foreign provision to income tax return adjustments of $0.5 million.
Previous wording
Each quarter, we assess the realizability of our deferred tax assets under ASC Topic 740. We assess available positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize our deferred tax assets. In the assessment for the period ended March 31, 2026, we concluded that it remains more likely than not that our United States federal and state deferred tax assets would not be realizable. As of March 31, 2026, the total valuation allowance on United States federal and state net deferred tax assets was $344.6 million.
Current wording
Each quarter, we assess the realizability of our deferred tax assets under ASC Topic 740. We assess available positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize our deferred tax assets. In the assessment for the period ended June 30, 2026, we concluded that it remains more likely than not that our deferred tax assets would not be realizable. As of June 30, 2026, the total valuation allowance on United States federal and state net deferred tax assets was $344.6 million.
Previous wording
Our primary source of cash is receipts from sales of our hardware products, and subscription and service. Other sources of cash are from proceeds from the issuance of convertible notes, borrowings under our credit facility and credit agreement, the sale of Class A common stock pursuant to the Subscription Agreement, and facility subleases. Our primary uses of cash are for inventory procurement, payroll-related expenses, general operating expenses, including advertising, marketing, office rent, purchases of property and equipment, other costs of revenue including components, such as memory, acquisitions, interest, and taxes.
Current wording
Our primary source of cash is receipts from sales of our hardware products, and subscription and service. Other sources of cash are from proceeds from the issuance of debt, the sale of Class A common stock pursuant to the Subscription Agreement, as discussed in Note 9 Related party transactions, and facility subleases. Our primary uses of cash are for inventory procurement, payroll-related expenses, general operating expenses, including advertising, marketing, office rent, purchases of property and equipment, other costs of revenue including components, such as memory, acquisitions, interest, and taxes.
Previous wording
As of March 31, 2026, our cash, cash equivalents, and marketable securities totaled $40.7 million. The overall cash used in operating activities of $36.6 million for the three months ended March 31, 2026 was primarily attributable to a net loss of $80.8 million, partially offset by net cash inflows from other non-cash expenses of $30.9 million, andchanges in our working capital of $13.3 million. Working capital changes for the three months ended March 31, 2026 of $13.3 million were the result of a $31.5 million decrease in accounts receivables and a $6.2 million decrease in inventory, partially offset by a $24.3 million decrease in accounts payable and other liabilities. As of March 31, 2026, $3.2 million of cash was held by our foreign subsidiaries.
Current wording
As of June 30, 2026, our cash, cash equivalents, and marketable securities totaled $27.3 million. The overall cash used in operating activities of $47.4 million for the six months ended June 30, 2026 was primarily attributable to a net loss of $131.8 million, partially offset by net cash inflows from other non-cash expenses of $43.2 million, andchanges in our working capital of $41.3 million. Working capital changes for the six months ended June 30, 2026 of $41.3 million were the result of a $39.4 million increase in accounts payable and other liabilities, and a $33.1 million decrease in accounts receivables, partially offset by a $20.4 million increase in prepaid expenses and other assets, an $8.3 million increase in inventory, and a $2.5 million decrease in deferred revenue . As of June 30, 2026, $2.8 million of cash was held by our foreign subsidiaries.
Previous wording
In January 2021, we entered into a credit agreement which provides for a revolving credit facility (2021 Credit
Current wording
In January 2021, we entered into a credit agreement which provides for a revolving credit facility (2021 Credit Facility) and we amended the credit agreement in March 2023, August 2025 and February 2026. Additionally, on July 9, 2026, we entered into a Waiver and Amendment No. 4 to the credit agreement (as amended, collectively, the 2021 Credit Agreement). Under the 2021 Credit Agreement, we may borrow up to an aggregate amount of $35.0 million (subject to an asset coverage ratio requirement of 1.5x) until the Borrowing Base Conversion Date, which was June 30, 2026 (the date on which the lender implemented a borrowing base following the completion of an appraisal, field exam and other collateral diligence measures). The asset coverage ratio is defined as the ratio of (i) the sum of (a) our cash and cash equivalents in the United States plus specified percentages of other qualified debt investments (Qualified Cash) plus (b) specified percentages of the net book values of our accounts receivable and certain inventory to (ii) $50.0 million. After the Borrowing Base Conversion Date, which was June 30, 2026, the amount that may be borrowed under the 2021 Credit Agreement is based on a customary borrowing base calculation, and up to $50.0 million with zero currently available. Amendment No. 3 under the 2021 Credit Agreement extended the maturity of the 2021 Credit Agreement to June 2027, changed the interest rate at which borrowed funds accrue interest, and changed the liquidity minimums, as discussed in Note 4 Financing arrangements. Amendment No. 3 under the 2021 Credit Agreement was accounted for as a debt modification, resulting in no gain or loss as there was no unamortized debt discount at the time of the modification. Amendment No. 4 under the 2021 Credit Agreement revised certain provisions of the 2021 Credit Agreement to permit the transactions contemplated by the Woodman Purchase Agreement discussed in Note 13 Subsequent events, further increased the interest rate at which borrowed funds accrue interest after June 30, 2026 through maturity, and granted certain waivers as discussed in Note 4 Financing arrangements. In connection with the Waiver and Amendment No. 4 under the 2021 Credit Agreement, on July 9, 2026, we entered into a second supplemental fee letter (the Fee Letter) with the lender under the 2021 Credit Agreement, which provides for the payment of certain fees to the lender, including a $5.0 million restructuring fee payable upon the occurrence of certain bankruptcy events of default, which restructuring fee may be reduced to zero upon a successful refinancing of the amounts outstanding under the 2021 Credit Facility as a result of a bankruptcy or insolvency proceeding under certain conditions; and a success fee in the amount of $1.0 million 181 days after July 9, 2026, which success fee may be reduced if the amounts outstanding under the 2021 Credit Facility are refinanced or repaid prior to such date. The Fee Letter also provides…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Borrowed funds accrue interest, at our option, at a rate equal to either (i) a per annum rate equal to the base rate plus a margin of 2.50% or (ii) a per annum rate equal to the Secured Overnight Financing Rate (SOFR) plus a 10 basis point premium and a margin of 3.50%. We are required to pay a commitment fee on the unused portion of the 2021 Credit Facility of 0.25% per annum. Amounts owed under the 2021 Credit Agreement are guaranteed by certain of our United States subsidiaries and secured by a first-priority security interest in substantially all of our assets and certain of our subsidiaries (including intellectual property registrations and applications, which is subject to an intercreditor agreement).
Current wording
Borrowed funds accrue interest, at our option, at a rate equal to either (i) a per annum rate equal to the base rate plus a margin of 3.50% or (ii) a per annum rate equal to the Secured Overnight Financing Rate (SOFR) plus a 10 basis point premium and a margin of 4.50%. We are required to pay a commitment fee on the unused portion of the 2021 Credit Facility of 0.25% per annum. Amounts owed under the 2021 Credit Agreement are guaranteed by certain of our United States subsidiaries and secured by a first-priority security interest in substantially all of our assets and certain of our subsidiaries (including intellectual property registrations and applications, which is subject to an intercreditor agreement).
Previous wording
The 2021 Credit Agreement contains customary representations, warranties, affirmative and negative covenants, and events of default. The negative covenants include restrictions on the incurrence of liens and indebtedness, certain investments, dividends, stock repurchases, and other matters, all subject to certain exceptions. In addition, we are required to maintain liquidity (the sum of unused availability under the 2021 Credit Facility and our Qualified Cash) of at least (i) $25.0 million from February 27, 2026 as discussed in Note 4 Financing arrangements through June 30, 2026, (ii) $30.0 million during the period from July 1, 2026 through July 31, 2026, (iii) $35.0 million during the period from August 1, 2026 through August 31, 2026, and (iv) $40.0 million from September 1, 2026 through the maturity date (of which at least $10.0 million shall be attributable to Qualified Cash during all periods), and maintain a minimum unused availability under the credit facility of at least $10.0 million after the Borrowing Base Conversion Date. The 2021 Credit Agreement also includes customary events of default that include, among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments and change of control. Upon an event of default, the lender may, subject to customary cure rights, require the immediate payment of all amounts outstanding.
Current wording
Qualified Cash) of at least (i) $25.0 million from February 27, 2026 as discussed in Note 4 Financing arrangements through June 30, 2026, (ii) $30.0 million during the period from July 1, 2026 through July 31, 2026, (iii) $35.0 million during the period from August 1, 2026 through August 31, 2026, and (iv) $40.0 million from September 1, 2026 through the maturity date (of which at least $10.0 million shall be attributable to Qualified Cash during all periods), and maintain a minimum unused availability under the 2021 Credit Facility of at least $10.0 million after the Borrowing Base Conversion Date. The 2021 Credit Agreement also includes customary events of default that include, among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments and change of control. Upon an event of default, the lender may, subject to customary cure rights, require the immediate payment of all amounts outstanding.
Previous wording
For the period ended December 31, 2025, we were in compliance with the liquidity and asset coverage ratio financial covenants contained in the 2021 Credit Agreement; however, the 2021 Credit Agreement also required us to be in compliance with the financial covenants within the 2025 Credit Agreement. We were not in compliance with the 2025 Credit Agreement asset coverage ratio of 1.25x or the minimum EBITDA covenant of not less than $10.0 million for the fiscal quarter ending December 31, 2025 and subsequently cured the non-compliance by entering into an amendment on February 27, 2026. For the period ended March 31, 2026, we were in compliance with the liquidity and asset coverage ratio financial covenants contained in the 2021 Credit Agreement; however, we were not in compliance with the minimum asset coverage ratio of 1.05x under the 2025 Credit Agreement. On May 8, 2026, we received a waiver from the Lender under the 2025 Credit Agreement waiving the asset coverage ratio non-compliance as of March 31, 2026. There are outstanding letters of credit under the 2021 Credit Agreement which total $9.2 million for certain duty-related requirements which were not collateralized by any cash on hand. As of March 31, 2026, we had $25.5 million outstanding under the 2021 Credit Agreement and had zero available to draw.
Current wording
For the period ended December 31, 2025, we were in compliance with the liquidity and asset coverage ratio financial covenants contained in the 2021 Credit Agreement; however, the 2021 Credit Agreement also required us to be in compliance with the financial covenants within the 2025 Credit Agreement. We were not in compliance with the 2025 Credit Agreement asset coverage ratio of 1.25x or the minimum EBITDA covenant of not less than $10.0 million for the fiscal quarter ending December 31, 2025 and subsequently cured the non-compliance by entering into an amendment on February 27, 2026. For the period ended March 31, 2026, we were in compliance with the liquidity and asset coverage ratio financial covenants contained in the 2021 Credit Agreement; however, we were not in compliance with the minimum asset coverage ratio of 1.05x under the 2025 Credit Agreement. On May 8, 2026, we received a waiver from the Lender under the 2025 Credit Agreement waiving the asset coverage ratio non-compliance as of March 31, 2026.
Previous wording
Notwithstanding the waiver received on May 8, 2026, we concluded that substantial doubt exists about our ability to continue as a going concern, as further described in Note 1 Summary of business and significant accounting policies. Based on our current financial forecasts, we do not expect to be able to comply with our financial covenants under the 2021 Credit Agreement and 2025 Credit Agreement within the next twelve months. We are actively evaluating potential remediation options, including seeking waivers or amendments from the lenders; however, no waiver or amendment, other than for the existing waiver, has been obtained as of the date of the issuance of these condensed consolidated financial statements, and there can be no assurance that any such relief will be obtained. Given the absence of a waiver or amendment obtained prior to the issuance of these condensed consolidated financial statements, ASC 470-10-45 Debt requires us to classify as current, all obligations under the 2021 Credit Agreement, the 2025 Credit Agreement, the Convertible Debentures, as direct default and cross-default provisions embedded in each respective agreement could, upon an event of default, permit the applicable lenders to declare all outstanding principal and accrued interest immediately due and payable. As a result, the outstanding balance under the 2025 Credit Agreement has been classified as short-term debt in the condensed consolidated balance sheet as of March 31, 2026.
Current wording
During the three months ended March 31, 2026 and six months ended June 30, 2026, we concluded that substantial doubt existed about our ability to continue as a going concern, as further described in Note 1 Summary of business and significant accounting policies. Based on our current financial forecasts, we expect that we will not be able to repay the 2021 Credit Agreement under Amendment No. 4 in 180 days and comply with our financial covenants under the 2021 Credit Agreement and the 2025 Credit Agreement as of the next measurement date. We are actively evaluating potential remediation options, including seeking waivers or amendments from our lenders and other repayment options; however, no waiver or amendment, other than those described herein, has been obtained as of the date of the issuance of these condensed consolidated financial statements, and there can be no assurance that any such relief will be obtained. As a result, beginning with the period ended March 31, 2026, ASC 470-10-45 Debt required us to classify as current all obligations under the 2021 Credit Agreement, the 2025 Credit Agreement and the Convertible Debentures, as direct default and cross-default provisions embedded in each respective agreement could, upon an event of default, permit the applicable lenders to declare all outstanding principal and accrued interest immediately due and payable. The outstanding balance under the 2021 Credit Agreement continues to be classified as short-term debt in the condensed consolidated balance sheet as of June 30, 2026 as it is also due within a year.
Previous wording
On August 4, 2025, we entered into a credit agreement with Farallon Capital Management, L.L.C., as administrative agent and collateral agent (the Agent), and Mateo Financing, LLC (the Lender) and we amended the credit agreement on November 5, 2025 and February 27, 2026 (collectively, the 2025 Credit Agreement). The 2025 Credit Agreement provides for a second lien credit facility up to $50.0 million (the 2025 Term Loan). The 2025 Credit Agreement will mature, and any outstanding borrowings become due and payable on January 22, 2028. The February 2026 amendment revised the (i) minimum liquidity for the remaining term of the 2025 Credit Agreement, (ii) removed the EBITDA minimums for the fiscal quarter ending December 31, 2025 and for the period of four consecutive fiscal quarters ending March 31, 2026, (iii) revised the EBITDA minimum for the remainder of the 2025 Credit Agreement, and (iv) revised the minimum asset coverage ratio for periods on or prior to March 31, 2026, as discussed in Note 4 Financing arrangements. The amendment on February 27, 2026 of the 2025 Credit Agreement was accounted for as a debt extinguishment, resulting in a loss on extinguishment of $8.9 million, which was recorded in other income (expense), net, in the condensed consolidated statements of operations for the three months ended March 31, 2026.
Current wording
On August 4, 2025, we entered into a credit agreement with Farallon Capital Management, L.L.C., as administrative agent and collateral agent (the Agent), and Mateo Financing, LLC (the Lender) and we amended the credit agreement on November 5, 2025 and February 27, 2026. Additionally, on July 9, 2026, we entered into a Waiver and Amendment No. 3 to the credit agreement (as amended, collectively, the 2025 Credit Agreement). The 2025 Credit Agreement provides for a second lien credit facility up to $50.0 million (the 2025 Term Loan). The 2025 Credit Agreement will mature, and any outstanding borrowings become due and payable on January 22, 2028. Amendment No. 2 under the 2025 Credit Agreement revised the (i) minimum liquidity for the remaining term of the 2025 Credit Agreement, (ii) removed the EBITDA minimums for the fiscal quarter ending December 31, 2025 and for the period of four consecutive fiscal quarters ending March 31, 2026, (iii) revised the EBITDA minimum for the remainder of the 2025 Credit Agreement, and (iv) revised the minimum asset coverage ratio for periods on or prior to March 31, 2026, as discussed in Note 4 Financing arrangements. Amendment No. 2 was accounted for as a debt extinguishment, resulting in a loss on extinguishment of debt of $8.9 million, which was recorded in other income (expense), net, in the condensed consolidated statements of operations for the six months ended June 30, 2026. Amendment No. 3 revised certain provisions of the 2025 Credit Agreement to permit the transactions contemplated by the Woodman Purchase Agreement discussed in Note 13 Subsequent events and granted certain waivers as discussed in Note 4 Financing arrangements. As of the issuance of these financial statements, management has not yet completed its evaluation of the financial statement impact of Amendment No. 3 and is unable to reasonably estimate the financial statement effect.
Previous wording
In connection with the amendment on February 27, 2026 to the 2025 Credit Agreement, we entered into a Claim Sale and Purchase Agreement (the IEEPA Agreement) with the Lender on February 19, 2026, pursuant to which we transferred to the Lender certain of our rights and claims for potential refunds of tariffs previously paid under the International Emergency Economic Powers Act of 1977 (IEEPA), representing an aggregate claim amount of approximately $19.4 million (the IEEPA Claim). On the date of transfer, we assigned no value to the IEEPA Claim on the condensed consolidated balance sheet due to the significant uncertainty of any potential recovery prior to the U.S. Supreme Court’s ruling in Learning Resources, Inc. v. Trump. As a result of the IEEPA Agreement, we will not have rights to any future proceeds from the transferred IEEPA Claim. We accounted for the transfer of the IEEPA Claim as a derivative liability and classified the derivative liability as a Level 2 financial instrument as discussed in Note 2 Fair value measurements. Despite assigning no value to the IEEPA Claim on the condensed consolidated balance sheet on the date of transfer, we assigned an $8.7 million value to the IEEPA Claim obligation as of February 27, 2026, and recorded the derivative liability within accrued expenses and other current liabilities in the condensed consolidated balance sheets. The IEEPA Claim obligation is remeasured at each reporting period, with changes in value recorded in other income (expense), net, in the condensed consolidated statements of operations. As of March 31, 2026, the IEEPA Claim obligation was remeasured at $14.6 million.
Current wording
In connection with the amendment on February 27, 2026 to the 2025 Credit Agreement, we entered into a Claim Sale and Purchase Agreement (the IEEPA Agreement) with the Lender on February 19, 2026, pursuant to which we transferred to the Lender certain of our rights and claims for potential refunds of tariffs previously paid under the International Emergency Economic Powers Act (IEEPA), representing an aggregate claim amount of approximately $19.4 million (the IEEPA Claim). On the date of transfer, we assigned no value to the IEEPA Claim on the condensed consolidated balance sheet due to the significant uncertainty of any potential recovery prior to the U.S. Supreme Court’s ruling in Learning Resources, Inc. v. Trump. As a result of the IEEPA Agreement, we will not have rights to any future proceeds from the transferred IEEPA Claim. We accounted for the transfer of the IEEPA Claim as a derivative liability as discussed in Note 1 Summary of business and significant accounting policies and classified the derivative liability as a Level 2 financial instrument as discussed in Note 2 Fair value measurements. Despite assigning no value to the IEEPA Claim on the condensed consolidated balance sheet on the date of transfer, we assigned an $8.7 million value to the IEEPA Claim obligation as of February 27, 2026, and recorded the derivative liability within accrued expenses and other current liabilities in the condensed consolidated balance sheets. The IEEPA Claim obligation is remeasured at each reporting period, with changes in value recorded in other income (expense), net, in the condensed consolidated statements of operations. In the second quarter of 2026, we received approval by CBP of certain submitted refund claims relating to previously paid IEEPA tariffs as part of the Phase 2 CAPE tariff refunds. As a result, we recorded an $18.9 million reduction to cost of revenue and increase to other current assets for the approved refund claims in the three and six months ended June 30, 2026. Pursuant to the IEEPA Agreement, any related proceeds attributable to the IEEPA Claim, when received, will be remitted to the lender under the 2025 Credit Agreement, and accordingly, we recorded a liability for these amounts. Subsequent to June 30, 2026, we received $17.9 million of refunds from CBP, which also included interest.
Previous wording
Borrowed funds accrue interest, at our option, at a rate equal to either (i) the applicable one or three-month SOFR, plus a 10 basis point premium for one-month SOFR or 15 basis point premium for three-month SOFR, plus 7.5%, or (ii) the Base Rate plus 6.50%. The Base Rate is defined as the greater of (i) the Wall Street Journal prime rate, (ii) the federal funds rate plus 0.50% or (iii) a one month adjusted term SOFR plus 1.00%. During an event of default, the applicable interest rates are increased by 2.0% per annum. For Base Rate loans, we will pay interest on a quarterly basis and at the maturity date. For SOFR rate loans, we will pay interest at least quarterly, or more frequently, as defined in the 2025 Credit Agreement, and at the maturity date. We will make quarterly principal payments on the 2025 Term Loan, with the remaining principal due on the maturity date. Under the 2025 Credit Agreement, we may be obligated to pay additional amounts which would allow for a minimum return. The 2025 Term Loan is subject to mandatory prepayment in certain cases involving asset dispositions, debt issuances, certain receipts of cash proceeds from insurance and other extraordinary receipts, and a change in control. We are required to apply 25% of excess cash flow to repay the 2025 Term Loan. Prepayments of the 2025 Term Loan, whether optional or mandatory, before, on or after January 22, 2028, or as a result of any acceleration of the 2025 Term Loan as a result of an event of default, require a prepayment premium in an amount set forth in the 2025 Credit Agreement. Amounts owed under the 2025 Credit Agreement are guaranteed by certain domestic subsidiaries, and are secured by a second lien security interest in substantially all of our assets and certain of our subsidiaries.
Current wording
Borrowed funds accrue interest, at our option, at a rate equal to either (i) the applicable one or three-month SOFR, plus a 10 basis point premium for one-month SOFR or 15 basis point premium for three-month SOFR, plus 7.5%, or (ii) the Base Rate plus 6.50%. The Base Rate is defined as the greater of (i) the Wall Street Journal prime rate, (ii) the federal funds rate plus 0.50% or (iii) a one month adjusted term SOFR plus 1.00%. During an event of default, the applicable interest rates are increased by 2.0% per annum. For Base Rate loans, we will pay interest on a quarterly basis and at the maturity date. For SOFR rate loans, we will pay interest at least quarterly, or more frequently, as defined in the 2025 Credit Agreement, and at the maturity date. We will make quarterly principal payments on the 2025 Term Loan, with the remaining principal due on the maturity date. Under the 2025 Credit Agreement, we may be obligated to pay additional amounts which would allow for a minimum return. The 2025 Term Loan is subject to mandatory prepayment in certain cases involving asset dispositions, debt issuances, certain receipts of cash proceeds from insurance and other extraordinary receipts, and a change in control. We are required to apply 25% of excess cash flow to repay the 2025 Term Loan. Prepayments of the 2025 Term Loan, whether optional or mandatory, before, on or after January 22, 2028, or as a result of any acceleration of the 2025 Term Loan as a result of an event of default, require a prepayment premium in an amount set forth in the
Previous wording
The 2025 Credit Agreement contains customary representations, warranties, and affirmative and negative covenants, including financial covenants. The negative covenants include restrictions on the incurrence of liens and indebtedness, certain investments, dividends, stock repurchases and other matters, all subject to certain exceptions. The financial covenants require (a) us to maintain liquidity (defined as the sum of unrestricted cash, cash equivalents and availability under the 2021 Credit Agreement) of at least (i) $25.0 million during the fiscal quarters ending March 31, 2026 and June 30, 2026, (ii) $30.0 million during the fiscal month ending July 31, 2026, (iii) $35.0 million during the fiscal month ending August 31, 2026 and (iv) $40.0 million during any fiscal month thereafter; (b) us not to have EBITDA (as defined in the 2025 Credit Agreement) of (i) less than $5.0 million, subject to adjustment, for the fiscal quarter ending June 30, 2026, (ii) less than zero, subject to adjustment, for the fiscal quarter ending September 30, 2026, (iii) less than zero for the fiscal quarter ending December 31, 2026, (iv) less than $20.0 million for the period of four consecutive fiscal quarters ending March 31, 2027, (v) less than $30.0 million for the period of four consecutive fiscal quarters ending June 30, 2027, (vi) less than $35.0 million for the period of four consecutive fiscal quarters ending September 30, 2027, and (vii) less than $40.0 million for the period of four consecutive fiscal quarters ending December 31, 2027 and thereafter; and (c) us not to permit an asset coverage ratio (defined as the ratio of (x) the sum of unrestricted cash, cash equivalents, and certain receivables and inventory, divided by (y) the sum of accounts payable and total debt (as defined in the 2025 Credit Agreement) of less than (i) 1.05:1.00 on or prior to March 31, 2026 or (ii) 1.15:1.00 thereafter. The EBITDA thresholds for fiscal quarters ending June 30, 2026 and September 30, 2026 are subject to potential adjustments in the event of a reduction in tariff amounts in Malaysia or Thailand (or both) to a level that is 10% or lower, as described in further detail in the 2025 Credit Agreement. To the extent there are adjustments to the tariff rates of only one of the countries, the corresponding adjustments will be apportioned accordingly.
Current wording
The 2025 Credit Agreement contains customary representations, warranties, and affirmative and negative covenants, including financial covenants. The negative covenants include restrictions on the incurrence of liens and indebtedness, certain investments, dividends, stock repurchases and other matters, all subject to certain exceptions. The financial covenants require (a) us to maintain liquidity (defined as the sum of unrestricted cash, cash equivalents and availability under the 2021 Credit Agreement) of at least (i) $25.0 million during the fiscal quarters ending March 31, 2026 and June 30, 2026, (ii) $30.0 million during the fiscal month ending July 31, 2026, (iii) $35.0 million during the fiscal month ending August 31, 2026 and (iv) $40.0 million during any fiscal month thereafter; (b) us not to have EBITDA (as defined in the 2025 Credit Agreement) of (i) less than $5.0 million, subject to adjustment, for the fiscal quarter ending June 30, 2026, (ii) less than zero, subject to adjustment, for the fiscal quarter ending September 30, 2026, (iii) less than zero for the fiscal quarter ending December 31, 2026, (iv) less than $20.0 million for the period of four consecutive fiscal quarters ending March 31, 2027, (v) less than $30.0 million for the period of four consecutive fiscal quarters ending June 30, 2027, (vi) less than $35.0 million for the period of four consecutive fiscal quarters ending September 30, 2027, and (vii) less than $40.0 million for the period of four consecutive fiscal quarters ending December 31, 2027 and thereafter; and (c) us not to permit an asset coverage ratio (defined as the ratio of (x) the sum of unrestricted cash, cash equivalents, and certain receivables and inventory, divided by (y) the sum of accounts payable and total debt (as defined in the 2025 Credit Agreement) of less than (i) 1.05:1.00 on or prior to March 31, 2026 or (ii) 1.15:1.00 thereafter. The EBITDA thresholds for fiscal quarters ending June 30, 2026 and September 30, 2026 are subject to potential adjustments in the event of a reduction in tariff amounts in Malaysia or Thailand (or both) to a level that is 10% or lower, as described in further detail in the 2025 Credit Agreement. To the extent there are adjustments to the tariff rates of only one of the countries, the corresponding adjustments will be apportioned accordingly. For the period ended June 30, 2026, no such adjustment was made to the EBITDA threshold.
Previous wording
The 2025 Credit Agreement also includes customary events of default that include, among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain material ERISA events. An event of default would also occur in the event we fail to maintain the listing of our common stock on the Nasdaq stock market for a period of 30 consecutive days. The occurrence of an event of default could result in the acceleration of the obligations under the 2025 Credit Agreement.
Current wording
The 2025 Credit Agreement also includes customary events of default that include, among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain material ERISA events. An event of default would also occur in the event we fail to maintain the listing of our common stock on the Nasdaq stock market for a period of 30 consecutive days. The occurrence of an event of default could result in the acceleration of the obligations under the 2025 Credit Agreement. On July 21, 2026, we received a notice from the Nasdaq Stock Market LLC (Nasdaq) indicating we were not in compliance with Nasdaq’s Listing Rule 5450(a)(1), as the minimum bid price of our Class A common stock has been below $1.00 per share for 30 consecutive business days. See Note 13 Subsequent events for further discussion.
Previous wording
For the period ended December 31, 2025, we were not in compliance with the asset coverage ratio of 1.25x or minimum EBITDA covenant of not less than $10.0 million for the fiscal quarter ending December 31, 2025 and we subsequently cured the non-compliance by entering into an amendment on February 27, 2026. As of March 31, 2026, we were not in compliance with the minimum asset coverage ratio of 1.05x under the 2025 Credit Agreement. On May 8, 2026, we received a waiver from the Lender under the 2025 Credit Agreement waiving the asset coverage ratio non-compliance as of March 31, 2026. No fees or consideration were paid in connection with the waiver. As of March 31, 2026, the outstanding principal under the 2025 Term Loan was $49.4 million.
Current wording
For the period ended December 31, 2025, we were not in compliance with the asset coverage ratio of 1.25x or minimum EBITDA covenant of not less than $10.0 million for the fiscal quarter ending December 31, 2025 and we subsequently cured the non-compliance by entering into an amendment on February 27, 2026. For the period ended March 31, 2026, we were not in compliance with the minimum asset coverage ratio of 1.05x. On May 8, 2026, we received a waiver from the Lender under the 2025 Credit Agreement waiving the asset coverage ratio non-compliance as of March 31, 2026. For the period ended June 30, 2026, we were not in compliance with the minimum EBITDA or the minimum asset coverage ratio of 1.15x under the 2025 Credit Agreement. On July 9, 2026, we entered into a Waiver and Amendment No. 3 to the 2025 Credit Agreement that waived (i) the EBITDA and asset coverage ratio non-compliance as of June 30, 2026, (ii) a failure to deliver annual financial statements without a “going concern” or like qualification, and related notice requirement, and (iii) a default related to compliance with certain negative covenants. No fees or consideration were paid in connection with the waiver received on July 9, 2026. As of June 30, 2026, the outstanding principal under the 2025 Term Loan was $49.0 million.
Previous wording
Notwithstanding the waiver received on May 8, 2026, we concluded that substantial doubt exists about our ability to continue as a going concern, as further described in Note 1 Summary of business and significant accounting policies. Based on our current financial forecasts, we do not expect to be able to comply with our financial covenants under the 2021 Credit Agreement and the 2025 Credit Agreement within the next twelve months. We are actively evaluating potential remediation options, including seeking waivers or amendments from its lenders; however, no waiver or amendment, other than for the existing waiver, has been obtained as of the date of the issuance of these condensed consolidated financial statements, and there can be no assurance that any such relief will be obtained. Given the absence of a waiver or amendment obtained prior to the issuance of these condensed consolidated financial statements, ASC 470-10-45 Debt requires us to classify as current, all obligations under the 2021 Credit Agreement, 2025 Credit Agreement and the Convertible Debentures, as direct default and cross-default provisions embedded in each respective agreement could, upon an event of default, permit applicable lenders to declare all outstanding principal and accrued interest immediately due and payable. As a result, the outstanding balance under the 2021 Credit Agreement has been classified as short-term debt in the condensed consolidated balance sheet as of March 31, 2026.
Current wording
During the three months ended March 31, 2026 and six months ended June 30, 2026, we concluded that substantial doubt exists about our ability to continue as a going concern, as further described in Note 1 Summary of business and significant accounting policies. Based on our current financial forecasts, we expect that we will not be able to repay the 2021 Credit Agreement under Amendment No. 4 in 180 days and comply with our financial covenants under the 2021 Credit Agreement and 2025 Credit Agreement as of the next measurement date. We are actively evaluating potential remediation options, including seeking waivers or amendments from the lenders and other repayment options; however, no waiver or amendment, other than those described herein, has been obtained as of the date of the issuance of these condensed consolidated financial statements, and there can be no assurance that any such relief will be obtained. As a result, beginning with the period ended March 31, 2026, ASC 470-10-45 Debt required us to classify as current all obligations under the 2021 Credit Agreement, the 2025 Credit Agreement, the Convertible Debentures, as direct default and cross-default provisions embedded in each respective agreement could, upon an event of default, permit the applicable lenders to declare all outstanding principal and accrued interest immediately due and payable. The outstanding balance under the 2025 Credit Agreement continues to be classified as short-term debt in the condensed consolidated balance sheet as of June 30, 2026.
Previous wording
On February 27, 2026, we entered into a securities purchase agreement (Securities Purchase Agreement) with YA II PN, Ltd. (YA II PN), a fund of Yorkville Advisors Global, LP, in connection with the issuance and sale by us of convertible debentures (the Convertible Debentures) issuable in an aggregate principal amount of up to $50.0 million. The Convertible Debentures will be convertible into shares of our Class A common stock, par value $0.0001 per share (the Common Stock) (as converted, the Conversion Shares). Conversion of the Convertible Debentures will dilute the ownership interests of existing stockholders. Pursuant to the Securities Purchase Agreement, YA II PN purchased $25.0 million in aggregate principal amount of Convertible Debentures upon the signing of the Securities Purchase Agreement. Subject to certain closing conditions, YA II PN would have been able to purchase an additional $5.0 million in aggregate principal amount of Convertible Debentures on the day prior to the filing of the Initial Registration Statement (defined below); however, the closing conditions were not met. YA II PN may still purchase and we may issue an additional $20.0 million in aggregate principal amount of Convertible Debentures on or about the second business day following the satisfaction of certain additional closing conditions, including gaining effectiveness of the Initial Registration Statement by May 15, 2026. If the closing conditions for the third tranche of Convertible Debentures are not met and remain uncured, we may trigger an event of default under the Convertible Debentures.
Current wording
On February 27, 2026, we entered into a securities purchase agreement (Securities Purchase Agreement) with YA II PN, Ltd. (YA II PN), a fund of Yorkville Advisors Global, LP, in connection with the issuance and sale by us of convertible debentures (the Convertible Debentures) issuable in an aggregate principal amount of up to $50.0 million. The Convertible Debentures are convertible into shares of our Class A common stock, par value $0.0001 per share (the Common Stock) (as converted, the Conversion Shares). Conversion of the Convertible Debentures will dilute the ownership interests of existing stockholders. Pursuant to the Securities Purchase Agreement, YA II PN purchased $25.0 million in aggregate principal amount of Convertible Debentures upon the signing of the Securities Purchase Agreement. Subject to certain closing conditions, YA II PN would have been able to purchase an additional $5.0 million in aggregate principal amount of Convertible Debentures on the day prior to the filing of the Initial Registration Statement (defined below); however, the closing conditions were not met. YA II PN may still purchase and we may issue an additional $20.0 million in aggregate principal amount of Convertible Debentures on or about the second business day following the satisfaction of certain additional closing conditions, including gaining effectiveness of the Initial Registration Statement within 20 trading days of May 15, 2026. On June 2, 2026, the Registration Statement (defined below) was declared effective by the SEC.
Previous wording
In connection with the Securities Purchase Agreement, we entered into a registration rights agreement (Registration Rights Agreement) with YA II PN pursuant to which YA II PN is entitled to certain registration rights under the Securities Act, and YA II PN has been granted demand registration rights and piggyback registration rights in addition under certain conditions. Under the Registration Rights Agreement, we were required to file a preliminary prospectus registration statement on Form S-1, which was filed on March 20, 2026 with the SEC, to register the resale by YA II PN of all Conversion Shares (Initial Registration Statement) and are required to have the Initial Registration Statement declared effective by the SEC by May 15, 2026. As of the date of this Quarterly Report on Form 10-Q, the Initial Registration Statement has not been declared effective. Failure to have the Initial Registration Statement declared effective by the SEC by May 15, 2026 would constitute a default under the Convertible Debentures, which if uncured within the timeframe set forth therein, could give rise to an event of default thereunder.
Current wording
In connection with the Securities Purchase Agreement, we entered into a registration rights agreement (Registration Rights Agreement) with YA II PN pursuant to which YA II PN is entitled to certain registration rights under the Securities Act, and YA II PN has been granted demand registration rights and piggyback registration rights in addition under certain conditions. Under the Registration Rights Agreement, we were required to file a registration statement on Form S-1, which was filed on March 20, 2026 with the SEC, to register the resale by YA II PN of all Conversion Shares (Initial Registration Statement) and were required to have the Initial Registration Statement declared effective by the SEC by May 15, 2026. On June 1, 2026, we filed Amendment No. 1 to the Initial Registration Statement (Amendment No. 1, and together with the Initial Registration Statement, the Registration Statement). On June 2, 2026, the Registration Statement was declared effective by the SEC.
Previous wording
The Convertible Debentures accrue interest at 0% per annum, unless (i) certain interest rate adjustment events occur, upon which the Convertible Debentures will bear interest at an annual rate of 5.00% until such interest rate adjustment event is resolved, or (ii) we have issued Conversion Shares that reaches a capped level within the first six months or an event of default occurs and remains uncured, upon which the Convertible Debentures will bear interest at an annual rate of 18.00%. The Convertible Debentures will mature in August 2027, unless previously redeemed. The Convertible Debentures may be redeemed prior to maturity if the volume weighted average price of our stock is less than $1.1453 on the date the redemption notice is delivered, with a redemption premium of 7% of the principal amount being paid. The Convertible Debentures will be issued at an original issue discount of 3.00%.
Current wording
The Convertible Debentures accrue interest at 0% per annum, unless (i) certain interest rate adjustment events occur, upon which the Convertible Debentures will bear interest at an annual rate of 5.00% until such interest rate adjustment event is resolved, or (ii) we have issued Conversion Shares that reaches a capped level within the first six months or an event of default occurs and remains uncured, upon which the Convertible Debentures will bear interest at an annual rate of 18.00%. The Convertible Debentures will mature in August 2027, unless previously redeemed. The Convertible Debentures may be redeemed prior to maturity if the volume weighted average price of our stock is less than $1.1453 on the date the redemption notice is delivered, with a redemption premium of 7% of the principal amount being paid. The Convertible Debentures were issued at an original issue discount of 3.00%.
Previous wording
The Convertible Debentures are convertible at the option of the holder into Common Stock equal to the applicable Conversion Amount divided by the Conversion Price. The conversion price for the Convertible Debentures will be the lower of (i) $1.1453, or (ii) 98% of the lowest daily volume weighted average price of the Common Stock during the five consecutive trading days immediately preceding the date of conversion or other date of determination, but which shall not be lower than $0.1736, (the Conversion Price). The Conversion Amount with respect to any requested conversion will equal the principal amount requested to be converted plus all accrued and unpaid interest on the Convertible Debentures as of such conversion, with fractional shares rounded up (the
Current wording
The Convertible Debentures are convertible at the option of the holder into Common Stock equal to the applicable Conversion Amount divided by the Conversion Price. The conversion price for the Convertible Debentures will be the lower of (i) $1.1453, or (ii) 98% of the lowest daily volume weighted average price of the Common Stock during the five consecutive trading days immediately preceding the date of conversion or other date of determination, but which shall not be lower than $0.1736 (the Conversion Price).
Previous wording
Conversion Amount). In addition, no conversion will be permitted to the extent that, after giving effect to such conversion, the holder together with the certain related parties would beneficially own in excess of 4.99% of the Common Stock outstanding immediately after giving effect to such conversion, subject to certain adjustments.
Current wording
The Conversion Amount with respect to any requested conversion will equal the principal amount requested to be converted plus all accrued and unpaid interest on the Convertible Debentures as of such conversion, with fractional shares rounded up (the Conversion Amount). In addition, no conversion will be permitted to the extent that, after giving effect to such conversion, the holder together with certain related parties would beneficially own in excess of 4.99% of the Common Stock outstanding immediately after giving effect to such conversion, subject to certain adjustments.
Showing the first 40 of 52 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
The year-over-year increase of $3.7 million, or 14.8%, in total sales and marketing expense for the three months ended June 30, 2026 compared to the same period of 2025 was primarily driven by a $4.6 million increase in advertising and marketing expenses, primarily attributable to social media campaigns and promotional activity, and a $0.3 million increase in restructuring costs, partially offset by a $0.7 million decrease in allocated facilities, depreciation, and supporting overhead expenses and a $0.5 million decrease in cash-based personnel-related costs.
Current report — wording carried from elsewhere
Total other income (expense), net was expense of $11.2 million for the three months ended June 30, 2026 compared to expense of $1.1 million in the same period of 2025. The year-over-year change of $10.1 million was primarily driven by a $3.8 million increase in non-cash interest expense primarily related to the Securities Purchase Agreement, a $4.7 million loss related to changes in value of the claims for the potential refund of IEEPA tariffs transferred to Mateo Financing, LLC as further discussed in Note 4 Financing arrangements, and a $1.2 million increase in cash interest expense primarily related to the 2025 Credit Agreement.
Current report — wording carried from elsewhere
We recorded an income tax expense of $0.8 million for the three months ended June 30, 2026 on a pre-tax net loss of $50.2 million. Our income tax expense for the three months ended June 30, 2026 primarily resulted from a tax expense of $1.2 million on pre-tax book income in certain tax jurisdictions, partially offset by a tax benefit on foreign provision to income tax return adjustments of $0.5 million.
Current report — wording carried from elsewhere
The 2021 Credit Agreement contains customary representations, warranties, affirmative and negative covenants, and events of default. The negative covenants include restrictions on the incurrence of liens and indebtedness, certain investments, dividends, stock repurchases, and other matters, all subject to certain exceptions. In addition, we are required to maintain liquidity (the sum of unused availability under the 2021 Credit Facility and our
Current report — wording carried from elsewhere
2025 Credit Agreement. Amounts owed under the 2025 Credit Agreement are guaranteed by certain domestic subsidiaries, and are secured by a second lien security interest in substantially all of our assets and certain of our subsidiaries.
Current report — wording carried from elsewhere
GAAP net income (loss) as we believe their inclusion would hinder our ability to assess core operational performance;
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Facility) and we amended the agreement in March 2023, August 2025, and February 2026 (collectively, the 2021 Credit Agreement). Under the 2021 Credit Agreement, we may borrow up to an aggregate amount of $35.0 million until the Borrowing Base Conversion Date (the date on which the lender implements a borrowing base following completion of an appraisal, field exam and other collateral diligence measures), unless our asset coverage ratio is less than 1.50, which would subject the amount that may be borrowed to a customary borrowing base calculation. With the February 2026 amendment, the testing of the asset coverage ratio changed from quarterly to monthly until the Borrowing Base Conversion Date. The asset coverage ratio is defined as the ratio of (i) the sum of (a) our cash and cash equivalents in the United States plus specified percentages of other qualified debt investments (Qualified Cash) plus (b) specified percentages of the net book values of our accounts receivable and certain inventory to (ii) $50.0 million. After the Borrowing Base Conversion Date, the amount that may be borrowed under the 2021 Credit Agreement is based on a customary borrowing base calculation, and up to $50.0 million. The February 2026 amendment extended the maturity of the 2021 Credit Agreement to June 2027, changed the interest rate at which borrowed funds accrue interest, and changed the liquidity minimums, as discussed in Note 4 Financing arrangements. The February 2026 amendment was accounted for as a debt modification, resulting in no gain or loss as there was no unamortized debt discount costs at the time of the modification. Upon termination of the 2021 Credit Agreement in June 2027, any outstanding borrowings will become due and payable.