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As of the end of the period covered by this report, an evaluation was carried out by management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act.
−Removed: Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that due to the material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective as of June 30, 2025.
+Added: Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that due to the material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective as of September 30, 2025.
Material Weaknesses in Internal Control over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
−Removed: In its assessment of the effectiveness of internal control over financial reporting as of June 30, 2025, management determined that there were deficiencies in Adtran’s internal control over financial reporting that constituted material weaknesses that continue to exist as of June 30, 2025.
+Added: In its assessment of the effectiveness of internal control over financial reporting as of September 30, 2025, management determined that there were deficiencies in Adtran’s internal control over financial reporting that constituted material weaknesses that continue to exist as of September 30, 2025.
Such material weaknesses were as follows:
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Management’s Remediation Efforts
−Removed: To remediate the material weaknesses in Adtran’s internal control over financial reporting related to the risks of material misstatement, including financial statement preparation, presentation and disclosure of transactions and the non-controlling interest, Adtran has begun to implement its remediation plan that included the introduction of new or enhanced controls over the reconciliation and review of Adtran's consolidated financial statements, global identification and reassessment of all key processes and controls, increased training and awareness of control activities, and increased scrutiny on control performance and documentation standards.
−Removed: Adtran's management believes that the continuation of its remediation plan along with the foregoing actions will support the improvement of the Company’s internal control over financial reporting, and, through its efforts to identify, design, and implement the necessary control activities, will be effective in remediating such material weaknesses.
−Removed: To remediate the material weaknesses in Adtran’s internal control over financial reporting relating to accounting of non-routine, unusual or complex events and transactions for non-controlling interest and the receivable purchase and servicing agreement, Adtran has implemented a remediation plan that involved introducing new controls over the identification and review of contracts, transactions or arrangements that may result in a financial obligation including the use of an accounting third-party consultant as needed to ensure proper presentation of these items within its financial statements.
−Removed: These controls have been in place since the third quarter of 2024.
−Removed: To remediate the material weakness relating to the communication of accurate information internally and with those charged with governance, Adtran has begun to implement a remediation plan that includes the establishment of a cross-functional internal control and communication policy, the consolidation and refinement of reporting processes, the implementation of a centralized communication platform, enhanced internal control policies, training sessions for personnel on internal control expectations, and the strengthening of the internal audit function’s role in testing the effectiveness of communication-related controls on a periodic basis.
−Removed: To remediate the material weakness relating to maintaining effective controls over an inventory suspense account, Adtran has implemented a remediation plan that includes the re-design of Adtran’s reconciliation workflow for inventory and cost of goods sold accounts, enhanced ERP system configurations, customized reconciliation tools that provide exception-based reporting, training sessions for personnel on inventory and cost of goods sold recognition principles, enhanced review and oversight through a formal review process within an automated reconciliation tool and enhanced review procedures.
−Removed: We have implemented certain of the above-referenced controls and are in the process of testing their effectiveness, and we both plan to initiate and have begun to initiate certain other controls.
+Added: To remediate the material weaknesses in Adtran’s internal control over financial reporting related to the risks of material misstatement, including financial statement preparation, presentation and disclosure of transactions and the non-controlling interest, Adtran has continued the implementation of its remediation plan that includes the introduction of new or enhanced controls over the review of Adtran's consolidated financial statements, global identification and reassessment of all key processes and controls, increased training and awareness of control activities, and increased scrutiny of control performance and documentation standards.
+Added: Adtran's management believes that the continuation of its remediation plan along with the foregoing actions will support the improvement of the Company’s internal control over financial reporting, and, through its ongoing efforts to identify, design, and implement the necessary control activities, will be effective in remediating such material weaknesses.
+Added: To remediate the material weaknesses in Adtran’s internal control over financial reporting relating to accounting for non-routine, unusual or complex events and transactions for non-controlling interest and the receivable purchase and servicing agreement, Adtran has implemented a remediation plan that involved redesigned controls over the identification and review of contracts, transactions or arrangements that may result in a financial obligation including the use of an accounting or reporting third-party advisor as needed to ensure proper presentation of these items within its consolidated financial statements.
+Added: To remediate the material weakness relating to the communication of accurate information internally and with those charged with governance, Adtran has implemented a remediation plan that includes the enhancement of key internal control and communication policies, training sessions for personnel on internal control expectations, the implementation of a quarterly sub-certification process, and redesigned controls over the identification and review of contracts, transactions or arrangements that may result in a financial obligation.
+Added: To remediate the material weakness relating to maintaining effective controls over an inventory suspense account, Adtran has implemented its remediation plan that includes the redesign of the reconciliation control specific to the suspense account and enhanced its review procedures (including over aged items) and training sessions for personnel on reconciliation procedures.
+Added: The redesigned control operated for each of the three months in the quarter ended September 30, 2025.
+Added: We have implemented certain of the above-referenced controls, as and to the extent disclosed above, and are in the process of testing their effectiveness, and we continue to implement certain other controls.
We will continue to devote significant time and attention to these remediation efforts.
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Changes in Internal Control over Financial Reporting
−Removed: There were no changes in Adtran’s internal control over financial reporting that occurred during the most recent fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
+Added: The third quarter remediation activities described above are changes in Adtran’s internal control over financial reporting that occurred during the most recent fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
OTHER INFORMATION
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.