XBP Europe Holdings Inc

Previous wording

The continued success of the Company’s business is driven by its people. Its operation centers are located in areas where the value proposition the Company offers is attractive relative to other local opportunities, resulting in an engaged, educated multi-lingual workforce that is able to make a meaningful global contribution from their local marketplace. As of March 31, 2024, the Company had approximately 1,500 employees (of which 175 were part-time employees) across 16 countries (14 across Europe and in Morocco as well as the U.S., where our chief executive officer and chief financial officer are located).

Current wording

The continued success of the Company’s business is driven by its people. Its operation centers are located in areas where the value proposition the Company offers is attractive relative to other local opportunities, resulting in an engaged, educated multi-lingual workforce that is able to make a meaningful global contribution from their local marketplace. As of June 30, 2024, the Company had approximately 1,500 employees (of which 159 were part-time employees) across 16 countries (14 across Europe and in Morocco as well as the U.S., where our chief executive officer and chief financial officer are located).

Previous wording

XBP Europe, Inc. was incorporated in Delaware on September 28, 2022 to facilitate the Business Combination. On November 30, 2023, following the closing of the Business Combination, it became a wholly owned subsidiary of XBP Europe Holdings, Inc., and its shares started trading on the Nasdaq Stock Market under the ticker “XBP” and its warrants started trading on the Nasdaq Stock Market under the ticker symbol “XBPEW”. Together with its subsidiaries, the Company constitutes a collection of entities, which have comprised the core European business of ETI since the 1995 merger between Texas-based BancTec, Inc. and Recognition International, Inc. The Company’s subsidiaries and predecessor entities have been serving clients in the European marketplace for over 45 years. In 2018, through the acquisitions of Asterion International and Drescher Full-Service Versand, ETI further expanded its geographic and client reach across Europe.

Current wording

XBP Europe, Inc. was incorporated in Delaware on September 28, 2022 to facilitate the Business Combination. On November 30, 2023, following the closing of the Business Combination, it became a wholly owned subsidiary of the Comapny, and the Company’s shares started trading on the Nasdaq Stock Market under the ticker “XBP” and its warrants started trading on the Nasdaq Stock Market under the ticker symbol “XBPEW”. Together with its subsidiaries, the Company constitutes a collection of entities, which have comprised the core European business of ETI since the 1995 merger between Texas-based BancTec, Inc. and Recognition International, Inc. The Company’s subsidiaries and predecessor entities have been serving clients in the European marketplace for over 45 years. In 2018, through the acquisitions of Asterion International and Drescher Full-Service Versand, ETI further expanded its geographic and client reach across Europe.

Previous wording

The following tables present a reconciliation of EBITDA and Adjusted EBITDA to our net loss, the most directly comparable GAAP measure, for the three months ended March 31, 2024 and 2023:

Current wording

The following tables present a reconciliation of EBITDA and Adjusted EBITDA to our net loss, the most directly comparable GAAP measure, for the three and six months ended June 30, 2024 and 2023:

Previous wording

Bills & Payments and Technology segments constituted 71.6%, and 28.4%, respectively, of our total net revenue for the three months ended March 31, 2024, compared to 78.4%, and 21.6%, respectively, for the three months ended March 31, 2023. The revenue changes by reporting segment were as follows:

Current wording

Bills & Payments and Technology segments constituted 75.6%, and 24.4%, respectively, of our total net revenue for the three months ended June 30, 2024, compared to 71.3%, and 28.7%, respectively, for the three months ended June 30, 2023. The revenue changes by reporting segment were as follows:

Previous wording

Selling, general and administrative expenses (“SG&A expenses”) decreased by $0.5 million, or 5.6%, to $7.9 million for the three months ended March 31, 2024, compared to $8.4 million for the three months ended March 31, 2023. The decrease was primarily attributable to cost optimization initiatives, resulting in reduced operating lease and facility expenses for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. SG&A expenses remains unchanged as a percentage of revenue at 19.7% for the three months ended March 31, 2024 as compared to 19.7% for the three months ended March 31, 2023.

Current wording

Selling, general and administrative expenses (“SG&A expenses”) decreased by $1.2 million, or 15.6%, to $7.0 million for the three months ended June 30, 2024, compared to $8.2 million for the three months ended June 30, 2023. The decrease was primarily attributable to cost optimization initiatives, resulting in reduced operating lease and facility expenses for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. SG&A expenses decreased as a percentage of revenue at 19.1% for the three months ended June 30, 2024 as compared to 19.3% for the three months ended June 30, 2023.

Previous wording

Total depreciation and amortization expense was $1.0 million and $0.9 million for the three months ended March 31, 2024 and 2023, respectively. The increase in total depreciation and amortization expense by $0.1 million was primarily due to an increase in amortization expense related to outsource contract costs during the three months ended March 31, 2024.

Current wording

Total depreciation and amortization expense was $0.9 million and $0.9 million for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

Interest expense was $1.4 million for the three months ended March 31, 2024, compared to $1.3 million for the three months ended March 31, 2023, largely due to higher pension interest cost and an increase in borrowing costs due to an increase in relevant borrowing reference rates during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

Interest expense was $1.5 million for the three months ended June 30, 2024, compared to $1.2 million for the three months ended June 30, 2023, largely due to higher pension interest cost and an increase in borrowing costs due to an increase in relevant borrowing reference rates during the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Previous wording

Related party interest expense, net was $19 thousand for the three months ended March 31, 2024 compared to related party interest expense, net of $45 thousand for the three months ended March 31, 2023.

Current wording

Related party interest expense, net was $22 thousand for the three months ended June 30, 2024 compared to related party interest income, net of $51 thousand for the three months ended June 30, 2023.

Previous wording

The change in fair value of warrant liability during the three months ended March 31, 2024 was a gain of $37 thousand. The change in fair value of warrant liability resulted from the remeasurement of the Private Warrant liability between December 31, 2023 and the end of the reporting period, March 31, 2024.

Current wording

The change in fair value of warrant liability during the three months ended June 30, 2024 was a gain of $3 thousand. The change in fair value of warrant liability resulted from the remeasurement of the Private Warrant liability between March 31, 2024 and the end of the reporting period, June 30, 2024.

Previous wording

The Company had an income tax expense of $0.5 million for the three months ended March 31, 2024 compared to an income tax expense of $0.1 million for the three months ended March 31, 2023. The increase in the income tax expenses for the current period is higher than the same period last year due to an increase in profitability in the Netherlands and Germany.

Current wording

The Company had an income tax expense of $0.5 million for the three months ended June 30, 2024 compared to an income tax expense of $0.4 million for the three months ended June 30, 2023. The increase in the income tax expenses for the current period is higher than the same period last year due to due to an increase in profitability in the Netherlands and Germany.

Previous wording

For the three months ended March 31, 2024, our net revenue on a consolidated basis decreased by $2.4 million, or 5.7%, to $40.4 million (including related party revenue of $0.1 million) from $42.8 million (including related party revenue of $0.0 million) for the three months ended March 31, 2023. On a constant currency basis, net revenue declined by 7.3% or $3.1 million, offset by the positive impact of foreign currency accounting for 1.6% or $0.7 million.

Current wording

For the six months ended June 30, 2024, our net revenue on a consolidated basis decreased by $8.7 million, or 10.2%, to $76.5 million (including related party revenue of $0.1 million) from $85.2 million (including related party revenue of $0.1 million) for the six months ended June 30, 2023. On a constant currency basis, net revenue declined by $9.1 million or 10.7%, offset by the positive impact of foreign currency accounting for $0.4 million or 0.5%.

Previous wording

Bills & Payments — Net revenue attributable to bills and payments segment was $28.9 million for the three months ended March 31, 2024, compared to $33.6 million for the three months ended March 31, 2023. The revenue decline of $4.7 million, or 14.0%, is primarily attributable to completion of projects, lower volumes and client contract ends, offset by the positive impact of newly won business, some of which is in early stage of ramp. On a constant currency basis, revenue declined by 15.4% or $5.2 million, offset by the positive impact of foreign currency accounting for a 1.5% or $0.5 million.

Current wording

Bills & Payments — Net revenue attributable to bills and payments segment was $56.2 million for the six months ended June 30, 2024, compared to $63.8 million for the six months ended June 30, 2023. The revenue decline of $7.6 million, or 11.9%, is primarily attributable to completion of projects, lower volumes and client contract ends, offset by the positive impact of newly won business, some of which is in early stage of ramp. On a constant currency basis, revenue declined by $7.9 million or 12.4%, offset by the positive impact of foreign currency accounting for $0.3 million or 0.5%.

Previous wording

Technology — For the three months ended March 31, 2024, net revenue attributable to the Technology segment increased by $2.3 million, or 24.3%, to $11.5 million from $9.2 million for the three months ended March 31, 2023. The revenue increase in the Technology segment was largely due to a higher volume of software licenses sold and an increase in technology implementation and professional services revenue, which was partially offset by lower hardware revenues and a large one-time license sale in the first quarter of 2023. On a constant currency basis, revenue increased by 22.3% or $2.0 million, while a positive impact of foreign currency accounted for another 2.0% or $0.2 million.

Current wording

Technology — For the six months ended June 30, 2024, net revenue attributable to the Technology segment decreased by $1.1 million, or 5.2%, to $20.3 million from $21.4 million for the six months ended June 30, 2023. The revenue decrease in the Technology segment was largely due to a higher volume of software licenses sold, partially offset by increase in technology implementation and professional services revenue. On a constant currency basis, revenue decreased by $1.2 million or 5.8%, offset by the positive impact of foreign currency accounted for $0.1 million or 0.5%.

Previous wording

For the three months ended March 31, 2024, the cost of revenue decreased by $2.9 million (including decrease in related party cost of $0.0 million), or 8.8%, compared to the three months ended March 31, 2023. Total cost of revenue decreased by 10.6% or $3.6 million on a constant currency basis, offset by the positive impact of foreign currency of 1.8% or $0.6 million, when compared to the cost of revenue for the three months ended March 31, 2023.

Current wording

For the six months ended June 30, 2024, the cost of revenue decreased by $4.1 million (including decrease in related party cost of $0.0 million), or 6.4%, compared to the six months ended June 30, 2023. Total cost of revenue decreased by $4.6 million or 7.1% on a constant currency basis, offset by the positive impact of foreign currency of $0.4 million or 0.7%, when compared to the cost of revenue for the six months ended June 30, 2023.

Previous wording

In the Bills & Payments segments, the decrease was primarily attributable to the corresponding decline in revenues. Costs to the Bills & Payments segment decreased by $3.4 million, or 11.9%. On a constant currency basis, cost of revenue at Bills & Payments segment declined by 13.7% or $3.9 million, offset by the positive impact of foreign currency of 1.8% or $0.5 million.

Current wording

In the Bills & Payments segments, the decrease was primarily attributable to the corresponding decline in revenues, partially offset by higher ramp cost for major projects in Germany and UK. Costs to the Bills & Payments segment decreased by $4.8 million, or 8.7%. On a constant currency basis, cost of revenue at Bills & Payments segment declined by $5.2 million or 9.4%, offset by the positive impact of foreign currency accounted for $0.4 million or 0.7%.

Previous wording

The cost of revenue in the Technology segment increased by $0.5 million, or 10.4%, primarily due to the change in the revenue mix within the Technology segment. On a constant currency basis, cost of revenue at the Technology segment increased by 8.5% or $0.4 million, and positive foreign currency impact accounted for 1.9% or $0.1 million.

Current wording

The cost of revenue in the Technology segment increased by $0.7 million, or 7.6%, primarily due to the change in the revenue mix within the Technology segment. On a constant currency basis, cost of revenue at the Technology segment increased by $0.6 million or 6.9%, and positive foreign currency impact accounted for $0.1 million or 0.7%.

Previous wording

The decrease in cost of revenues as a percent of revenue on a consolidated basis was primarily due to a decrease in cost of supplies for resale and external services. Cost of revenue for the three months ended March 31, 2024 was 75.4% of revenue compared to 77.9% of revenue for the three months ended March 31, 2023.

Current wording

The decrease in cost of revenues as a percent of revenue on a consolidated basis was primarily due to a decrease in cost of supplies for resale and external services. Cost of revenue for the six months ended June 30, 2024 was 78.3% of revenue compared to 75.2% of revenue for the six months ended June 30, 2023.

Previous wording

Related party expense was $1.0 million for the three months ended March 31, 2024 compared to $1.2 million for the three months ended March 31, 2023. The decrease was primarily driven by the cost optimization initiatives taken during the current period.

Current wording

Related party expense was $2.2 million for the six months ended June 30, 2024 compared to $2.3 million for the six months ended June 30, 2023. The decrease was primarily driven by the cost optimization initiatives taken during the current period, partially offset by increase in related party service fees.

Previous wording

Foreign exchange losses were $0.8 million for the three months ended March 31, 2024 compared to foreign exchange losses of $0.3 million for the three months ended March 31, 2023, primarily due to a higher realized exchange losses for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

Foreign exchange losses were $1.5 million for the six months ended June 30, 2024 compared to foreign exchange losses of $0.9 million for the six months ended June 30, 2023, primarily due to a higher unrealized exchange losses for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Previous wording

At March 31, 2024 and December 31,2023 cash and cash equivalents totaled $3.5 million and $6.9 million, respectively.

Current wording

At June 30, 2024 and December 31,2023 cash and cash equivalents totaled $15.6 million and $6.9 million, respectively.

Previous wording

As of March 31, 2024, and in comparison to December 31, 2023, total debt increased by $0.6 million primarily due to an increase in the outstanding amount under the Revolving Working Capital Loan Facility (See “*Indebtedness”*below), partially offset by repayments of term loans.

Current wording

As of June 30, 2024, and in comparison to December 31, 2023, total debt increased by $15.6 million primarily due to an increase in the outstanding amount under the 2024 Revolving Credit Facility (See “*Indebtedness”*below).

Previous wording

The Company has utilized COVID-19 relief measures in various European jurisdictions, including permitted deferrals of certain payroll, social security and value added taxes. At the end of the first quarter 2024, the Company paid a significant portion of these deferred payroll taxes, social security and value added taxes. The remaining balance of deferred payroll taxes, social security and value added taxes is expected to be paid by April 2027, or later, as per deferment timeline as established by local laws and regulations.

Current wording

The Company has utilized COVID-19 relief measures in various European jurisdictions, including permitted deferrals of certain payroll, social security and value added taxes. At the end of the second quarter 2024, the Company paid a significant portion of these deferred payroll taxes, social security and value added taxes. The remaining balance of deferred payroll taxes, social security and value added taxes is expected to be paid by April 2027, or later, as per deferment timeline as established by local laws and regulations.

Previous wording

The Company believes the current cash, cash equivalents and cash flows from financing activities are sufficient to meet the Company’s working capital and capital expenditure requirements for a period of at least twelve months. To the extent existing cash, cash from operations, and amounts available for borrowing are insufficient to fund future activities, the Company may need to raise additional capital. The Company may require funding for a variety of reasons, including, but not limited to, cost overruns for reasons outside of its control and it may experience slower sales than anticipated. If the Company’s current cash on hand is not sufficient to meet its financing requirements for the next twelve months, it may have to raise funds to allow it to continue to operate its business and execute on its business plan. The Company cannot be certain that funding will be available on acceptable terms or at all particularly given the amount of Company securities being offered, the terms of such securities and the potential duration of any offering. To the extent that the Company raises additional funds by issuing equity securities, its stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that may impact the Company’s ability to conduct business or return capital to investors. If the Company is unable to raise additional capital on acceptable terms, it may have to significantly scale back, delay or discontinue certain businesses, restrict its operations or obtain funds by entering into agreements on unattractive terms.

Current wording

The Company believes the current cash, cash equivalents and cash flows from financing activities are sufficient to meet the Company’s working capital and capital expenditure requirements for a period of at least twelve months. To the extent existing cash, cash from operations, and amounts available for borrowing are insufficient to fund future activities, the Company may need to raise additional capital. The Company may require funding for a variety of reasons, including, but not limited to, cost overruns for reasons outside of its control and it may experience slower sales than anticipated. If the Company’s current cash on hand is not sufficient to meet its financing requirements for the next twelve months, it may have to raise funds to allow it to continue to operate its business and execute on its business plan. The Company cannot be certain that funding will be available on acceptable terms or at all particularly given the amount of Company securities being offered, the terms of such securities and the potential duration of any offering. To the extent

Previous wording

Analysis of Cash Flow Changes between the three months ended March 31, 2024 and 2023

Current wording

Analysis of Cash Flow Changes between the six months ended June 30, 2024 and 2023

Previous wording

Operating Activities — Net cash used in operating activities was $3.6 million for the three months ended March 31, 2024, compared to net cash used in operating activities of $4.7 million for the three months ended March 31, 2023. The decrease of $1.1 million in cash used in operating activities was largely due to a lower net loss, lower outflows

Current wording

Operating Activities — Net cash used in operating activities was $5.5 million for the six months ended June 30, 2024, compared to net cash used in operating activities of $1.5 million for the six months ended June 30, 2023. The increase of $4.0 million in cash used in operating activities was largely due to a higher net loss, lower inflows from related parties payable, accounts receivable, and prepaid expense and other assets, partially offset by lower outflows related to accounts payable and deferred revenue.

Previous wording

Investing Activities — Net cash used in investing activities was $0.4 million for the three months ended March 31, 2024, compared to net cash used in investing activities of $0.6 million for the three months ended March 31, 2023. The decrease of $0.2 million in cash used in investing activities due to reduction in additions of property, plant and equipment during the three months ended March 31, 2024.

Current wording

Investing Activities — Net cash used in investing activities was $0.7 million for the six months ended June 30, 2024, compared to net cash used in investing activities of $2.0 million for the six months ended June 30, 2023. The decrease of $1.3 million in cash used in investing activities was primarily due to reduction in additions of property, plant and equipment during the six months ended June 30, 2024.

Previous wording

The cash outflow of $0.4 million in investing activities for the three months ended March 31, 2024 was primarily due to additions to property, plant and equipment during the period.

Current wording

The cash outflow of $0.7 million in investing activities for the six months ended June 30, 2024 was primarily due to additions to property, plant and equipment during the period.

Previous wording

Financing Activities — Net cash provided by financing activities was $0.7 million for the three months ended March 31, 2024, compared to net cash provided by financing activities of $0.3 million for the three months ended March 31, 2023. The increase of $0.4 million in cash provided by financing activities for the three months ended March 31, 2024 was primarily due to borrowings under the Revolving Working Capital Loan Facility, partially offset by reduction in net borrowing under the securitization facility due to the entry into the Amended Factoring Agreement on September 15, 2023, which resulted in an off-balance sheet treatment of the Secured Borrowing Facility.

Current wording

Financing Activities — Net cash provided by financing activities was $15.6 million for the six months ended June 30, 2024, compared to net cash used in financing activities of $1.4 million for the six months ended June 30, 2023. The increase of $17.0 million in cash provided by financing activities for the six months ended June 30, 2024 was primarily due to borrowings under the 2024 Revolving Credit facility and Revolving Working Capital Loan Facility, partially offset by reduction in net borrowing under the securitization facility due to the entry into the Amended Factoring Agreement on September 15, 2023, which resulted in an off-balance sheet treatment of the Secured Borrowing Facility.

Previous wording

On August 25, 2020, certain entities entered into an agreement wherein amounts due from clients were pledged to a third party, in exchange for a borrowing facility in amounts up to a total of €31.0 million (the “Secured Borrowing Facility”). The proceeds from the Secured Borrowing Facility were determined by the amounts invoiced to our clients. The amounts due from clients were recorded in accounts receivable and the amount due to the third party as a liability, presented under current portion of long-term debt on the condensed consolidated balance sheets. The cost of the Secured Borrowing Facility was 0.10% of newly assigned receivables with minimum of €0.1 million in annual fees and the Secured Borrowing Facility bore interest at Euribor rate plus 0.70% on the unpaid principal amount. The Company incurred interest expense of $0 and $0.1 million for the three months ended March 31, 2024 and 2023, respectively, related to the Secured Borrowing Facility. As of March 31, 2024 and December 31,2023, the outstanding balances payable under the Secured Borrowing Facility were $0.1 million.

Current wording

On August 25, 2020, certain entities entered into an agreement wherein amounts due from clients were pledged to a third party, in exchange for a borrowing facility in amounts up to a total of €31.0 million (the “Secured Borrowing Facility”). The proceeds from the Secured Borrowing Facility were determined by the amounts invoiced to our clients. The amounts due from clients were recorded in accounts receivable and the amount due to the third party as a liability, presented under current portion of long-term debt on the condensed consolidated balance sheets. The cost of the Secured Borrowing Facility was 0.10% of newly assigned receivables with minimum of €0.1 million in annual fees and the Secured Borrowing Facility bore interest at Euribor rate plus 0.70% on the unpaid principal amount. The Company incurred interest expense of $0 and $0.1 million for the three months ended June 30, 2024 and 2023, respectively, and $0

Previous wording

The Company accounted for the transactions under the Amended Factoring Agreement as a sale under ASC 860,Transfers and Servicing, and treats it as an off-balance sheet arrangement. Net funds received from the transfers reflect the face value of the account less a fee, which is recorded as an increase to cash and a reduction to accounts receivable outstanding in the consolidated balance sheets. The Company reports the cash flows attributable to the sale of account receivables to the Factor and the cash receipts from collections made on behalf of and paid to the Factor under the Amended Factoring Agreement, on a net basis as trade accounts receivables in cash flows from operating activities in the Company’s condensed consolidated statements of cash flows.

Current wording

The Company accounted for the transactions under the Amended Factoring Agreement as a sale under ASC 860,Transfers and Servicing, and treats it as an off-balance sheet arrangement. Net funds received from the transfers reflect the face value of the account less a fee, which is recorded as an increase to cash and a reduction to accounts receivable outstanding in the condensed consolidated balance sheets. The Company reports the cash flows attributable to the sale of account receivables to the Factor and the cash receipts from collections made on behalf of and paid to the Factor under the Amended Factoring Agreement, on a net basis as trade accounts receivables in cash flows from operating activities in the Company’s condensed consolidated statements of cash flows.

Previous wording

During the three months ended March 31, 2024, the Company factored accounts receivable invoices totaling approximately $8.8 million pursuant to the Amended Factoring Agreement, representing the face value of the invoices. The Company recognizes factoring costs upon disbursement of funds. The Company incurred a loss on sale of accounts receivables including expenses pursuant to the Amended Factoring Agreement totaling approximately $0.2 million for

Current wording

During the six months ended June 30, 2024, the Company factored accounts receivable invoices totaling approximately $7.0 million pursuant to the Amended Factoring Agreement, representing the face value of the invoices. The Company recognizes factoring costs upon disbursement of funds. The Company incurred a loss on sale of accounts receivables including expenses pursuant to the Amended Factoring Agreement totaling approximately $0.2 million and $0.4 million for the three and six months ended June 30, 2024, respectively, which is presented in selling, general and administrative expenses (exclusive of depreciation and amortization) on the condensed consolidated statements of operations.

Previous wording

In October 2019, a wholly-owned UK subsidiary of XBP Europe (the “UK Subsidiary”) entered into a secured credit agreement (the “2019 Credit Agreement”) for a £9.0 million Secured Credit Facility (the “Secured Credit Facility”) consisting of (i) a secured Term Loan A facility in an aggregate principal amount of £2.0 million (the “Term Loan A Facility”), (ii) a secured Term Loan B facility in an aggregate principal amount of £2.0 million (the “Term Loan B Facility”), and (iii) a secured revolving credit facility in an aggregate principal amount of £5.0 million (the “Revolving Credit Facility”). On December 21, 2022, the UK Subsidiary amended its 2019 Credit Agreement, allowing the UK Subsidiary to affirm to extend the maturity of Term Loan A Facility and Term Loan B Facility to October 31, 2024 subject to compliance with financial covenants. On February 9, 2023, the UK Subsidiary amended its 2019 Credit Agreement, allowing the UK Subsidiary to extend the maturity of the Revolving Credit Facility to October 31, 2024 subject to compliance with financial covenants. The maturity of the Revolving Credit Facility has since been extended on various dates. On May 10, 2024, the maturity was further extended to August 31, 2025. As of March 31, 2024, the outstanding balance of the Term Loan A Facility, the Term Loan B Facility, and the Revolving Credit Facility was approximately $1.7 million, $0.3 million, and $6.3 million, respectively. As of December 31, 2023, the outstanding balance of the Term Loan A Facility, the Term Loan B Facility, and the Revolving Credit Facility was approximately $1.9 million, $0.4 million, and $6.4 million, respectively.

Current wording

In October 2019, a wholly-owned UK subsidiary of XBP Europe (the “UK Subsidiary”) entered into a secured credit agreement (the “2019 Credit Agreement”) for a £9.0 million Secured Credit Facility (the “Secured Credit Facility”) consisting of (i) a secured Term Loan A facility in an aggregate principal amount of £2.0 million (the “Term Loan A Facility”), (ii) a secured Term Loan B facility in an aggregate principal amount of £2.0 million (the “Term Loan B Facility”), and (iii) a secured revolving credit facility in an aggregate principal amount of £5.0 million (the “Revolving Credit Facility”). On December 21, 2022, the UK Subsidiary amended its 2019 Credit Agreement, allowing the UK Subsidiary to affirm to extend the maturity of Term Loan A Facility and Term Loan B Facility to October 31, 2024 subject to compliance with financial covenants. On February 9, 2023, the UK Subsidiary amended its 2019 Credit Agreement, allowing the UK Subsidiary to extend the maturity of the Revolving Credit Facility to October 31, 2024 subject to compliance with financial covenants. The maturity of the Revolving Credit Facility has since been extended on various dates. On May 10, 2024, the maturity was further extended to August 31, 2025. As of June 30, 2024, the outstanding balance of the Term Loan A Facility, the Term Loan B Facility, and the Revolving Credit Facility was $1.7 million, $0.1 million, and $6.3 million, respectively. As of December 31, 2023, the outstanding balance of the Term Loan A Facility, the Term Loan B Facility, and the Revolving Credit Facility was $1.9 million, $0.4 million, and $6.4 million, respectively.

Previous wording

The 2019 Credit Agreement contains financial covenants including, but not limited to (a) a Combined Cashflow Coverage Ratio, which measures the ratio of (i) Combined Cashflow and (ii) Debt Service defined as finance charges in addition to mandatory repayments in respect to the 2019 Credit Agreement, (b) Combined Interest Coverage Ratio, which measures the ratio of (i) Combined EBITDA to (ii) Combined Finance Charges, (c) a Combined Total Net Leverage Ratio, which measures the ratio of (i) Combined Net Indebtedness in respect to the last day of the most recent period to (ii) EBITDA, (d) Guaranteed Intragroup Balances, (e) the Loan to Market Value defined as the Facility A Loan outstanding to the market value of the property in each case, as defined in the 2019 Credit Agreement. The term “Combined” refers to the UK Subsidiary and its wholly-owned subsidiaries.

Current wording

The 2019 Credit Agreement contains financial covenants including, but not limited to (a) a Combined Cashflow Coverage Ratio, which measures the ratio of (i) Combined Cashflow and (ii) Debt Service defined as finance charges in addition to mandatory repayments in respect to the 2019 Credit Agreement, (b) Combined Interest Coverage Ratio, which measures the ratio of (i) Combined EBITDA to (ii) Combined Finance Charges, (c) a Combined Total Net Leverage Ratio, which measures the ratio of (i) Combined Net Indebtedness in respect to the last day of the most recent period to (ii) EBITDA, (d) Guaranteed Intragroup Balances, (e) the Loan to Market Value defined as the Facility A Loan

Previous wording

At inception, borrowings under the Secured Credit Facility bore interest at a rate per annum equal to the LIBOR plus the applicable margin of 2%, 2.5%, and 3% per annum for the Term Loan A Facility, the Term Loan B Facility, and the Revolving Credit Facility respectively. Effective October 29, 2021, borrowings under the Revolving Credit Facility bore interest at a rate per annum equal to the SONIA plus the applicable margin of 0%. Effective December 31, 2021, borrowings under the Term Loan A Facility and the Term Loan B Facility bore interest at a rate per annum equal to the SONIA plus the applicable margin of 2% and 2.5%, respectively.

Current wording

At inception, borrowings under the Secured Credit Facility bore interest at a rate per annum equal to the LIBOR plus the applicable margin of 2%, 2.5%, and 3% per annum for the Term Loan A Facility, the Term Loan B Facility, and the Revolving Credit Facility respectively. Effective October 29, 2021, borrowings under the Revolving Credit Facility bore interest at a rate per annum equal to the Sterling Overnight Index Average (“SONIA”) plus the applicable margin of 3%. Effective December 31, 2021, borrowings under the Term Loan A Facility and the Term Loan B Facility bore interest at a rate per annum equal to the SONIA plus the applicable margin of 2% and 2.5%, respectively.

Previous wording

The maturity of the Revolving Working Capital Loan Facility has since been extended on various dates subject to compliance with financial covenants. On May 10, 2024 the maturity was further extended to August 31, 2025. As of March 31, 2024 and December 31, 2023, the Revolving Working Capital Loan Facility had an outstanding principal balance of $7.3 million and $6.4 million, respectively.

Current wording

The maturity of the Revolving Working Capital Loan Facility has since been extended on various dates subject to compliance with financial covenants. On May 10, 2024 the maturity was further extended to August 31, 2025. As of June 30, 2024 and December 31, 2023, the Revolving Working Capital Loan Facility had an outstanding principal balance of $7.4 million and $6.4 million, respectively.

Previous wording

In May 2022, the UK Subsidiary entered into a committed facility agreement (the “2022 Committed Facility Agreement”), which includes a term loan for £1.4 million to be used in refinancing a property owned by XBP Europe in Dublin, Ireland (the “Property”). At inception of the 2022 Committed Facility Agreement, the borrowing bore an interest rate equal to 3.5% per annum in addition to the Bank of England Base Rate. The maturity of the 2022 Committed Facility Agreement is May 2027. As of March 31, 2024 and December 31, 2023, the 2022 Committed Facility Agreement had an outstanding balance of $1.5 million.

Current wording

In May 2022, the UK Subsidiary entered into a committed facility agreement (the “2022 Committed Facility Agreement”), which includes a term loan for £1.4 million to be used in refinancing a property owned by XBP Europe in Dublin, Ireland (the “Property”). At inception of the 2022 Committed Facility Agreement, the borrowing bore an interest rate equal to 3.5% per annum in addition to the Bank of England Base Rate. The maturity of the 2022 Committed Facility Agreement is May 2027. As of June 30, 2024 and December 31, 2023, the 2022 Committed Facility Agreement had an outstanding balance of $1.4 million.

Previous wording

The 2022 Committed Facility Agreement contains financial covenants including, but not limited to (a) a Combined Debt Service Coverage Ratio, which measures the cashflow less dividends, net capital expenditure, and taxation relative to the debt service for that relevant period, (b) interest cover, which measures EBITDA relative to the aggregate of (i) interest charges and (ii) interest element of finance leases in any relevant period, (c) Total Net Debt to EBITDA, which measures the total net debt relative to EBITDA for any relevant period, and (d) loan to market value, which measures the loan as a percentage of the aggregate market value of The Property. The term “Combined” refers to the UK subsidiary and its wholly-owned subsidiaries.

Current wording

The 2022 Committed Facility Agreement contains financial covenants including, but not limited to (a) a Combined Debt Service Coverage Ratio, which measures the cashflow less dividends, net capital expenditure, and taxation relative to the debt service for that relevant period, (b) interest cover, which measures EBITDA relative to the aggregate of (i) interest charges and (ii) interest element of finance leases in any relevant period, (c) Total Net Debt to

Previous wording

In the fourth quarter of 2023, the Company’s management approved a restructuring plan to realign the Company’s business and strategic priorities by rightsizing its workforce in certain regions. Costs and liabilities associated with management-approved restructuring activities are recognized when they are incurred. One-time employee termination costs are recognized at the time of communication to employees, unless future service is required, in which case the costs are recognized ratably over the future service period. Ongoing employee termination benefits are

Current wording

In the fourth quarter of 2023, the Company’s management approved a restructuring plan to realign the Company’s business and strategic priorities by rightsizing its workforce in certain regions. Costs and liabilities associated with management-approved restructuring activities are recognized when they are incurred. One-time employee termination costs are recognized at the time of communication to employees, unless future service is required, in which case the costs are recognized ratably over the future service period. Ongoing employee termination benefits are recognized as a liability when it is probable that a liability exists and the amount is reasonably estimable. Restructuring charges are recognized as an operating expense within the consolidated statements of operations for the year ended December 31, 2023 and related liabilities are recorded within accrued compensation and benefits on the consolidated balance sheets as of December 31, 2023. The Company periodically evaluates and, if necessary, adjusts its estimates based on currently available information.

Previous wording

The preparation of financial statements requires the use of judgments and estimates. The critical accounting policies provide a better understanding of how the Company develops its assumptions and judgments about future events and related estimations and how they can impact the Company’s financial statements. A critical accounting estimate is one that requires subjective or complex estimates and assessments and is fundamental to the Company’s results of operations. The Company bases its estimates on historical experience and on various other assumptions it believes to be reasonable according to the current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The Company believes the current assumptions, judgments and estimates used to determine amounts reflected in the condensed consolidated financial statements are appropriate; however, actual results may differ under different conditions. This discussion and analysis should be read in conjunction with the Company’s condensed consolidated financial statements and related notes included elsewhere in this report. This discussion and analysis should be read in conjunction with the Company’s financial statements and related notes included elsewhere in this report. Refer to "Critical Accounting Policies" contained in Part II, Item 7 of our 2023 Form 10-K for a complete discussion of critical accounting estimates. There have been no material changes to 2023 Form 10-K.

Current wording

The preparation of financial statements requires the use of judgments and estimates. The critical accounting policies provide a better understanding of how the Company develops its assumptions and judgments about future events and related estimations and how they can impact the Company’s financial statements. A critical accounting estimate is one that requires subjective or complex estimates and assessments and is fundamental to the Company’s results of operations. The Company bases its estimates on historical experience and on various other assumptions it believes to be reasonable according to the current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The Company believes the current assumptions, judgments and estimates used to determine amounts reflected in the condensed consolidated financial statements are appropriate; however, actual results may differ under different conditions. This discussion and analysis should be read in conjunction with the Company’s condensed consolidated financial statements and related notes included elsewhere in this report. This discussion and analysis should be read in conjunction with the Company’s financial statements and related notes included elsewhere in this report. Refer to "Critical Accounting Estimates" contained in Part II, Item 7 of our 2023 Form 10-K for a complete discussion of critical accounting estimates. There have been no material changes to 2023 Form 10-K.