What changed in this filing

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Item 1. Financial Statements

2026-05-05 compared with 2025-11-04 · 223 added, 684 removed, 540 unchanged (63% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

September 30,

Current Assets

Cash and cash equivalents

Restricted cash

Accounts receivable, less allowance for credit losses of $ 1,237 and $ 1,300 as of September 30, 2025

Accounts receivable, less allowance for credit losses of $ 1,652 and $ 1,318 as of March 31, 2026

and December 31, 2025, respectively

3 unchanged sentences

Prepaid expenses and other current assets

Short-term investments - deferred compensation

Assets held for sale

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Accrued wages and benefits

Deferred compensation liability

Income tax payable

5 unchanged sentences

Non-current pension liability

Deferred compensation liability

Non-current lease obligations

5 unchanged sentences

200,000 shares authorized;

80,093 shares issued and 79,831 outstanding as of September 30, 2025 and

80,803 shares issued and 80,546 outstanding as of March 31, 2026 and

80,188 shares issued and 79,926 outstanding as of December 31, 2025

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Less treasury stock at cost:

262 and 266 shares as of September 30, 2025

257 and 262 shares as of March 31, 2026

and December 31, 2025, respectively

5 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Network Solutions

3 unchanged sentences

Network Solutions

Network Solutions - charges and inventory write-down

Services & Support

2 unchanged sentences

Research and development expenses

Goodwill impairment

Operating Loss

Operating Income (Loss)

Interest and dividend income

Interest expense

Net investment gain

Other income (expense), net

Loss Before Income Taxes

Net investment loss

Other income, net

Income (Loss) Before Income Taxes

Income tax (expense) benefit

Net Income (Loss)

Net Income attributable to non-controlling interest (1)

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– diluted (2)

(1) For the three and nine months ended September 30, 2025 we accrued $ 2.5 million and $ 7.5 million, respectively, net income attributable to non-controlling interest, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA.

For the three and nine months ended September 30, 2024, we accrued $ 2.4 million and $ 7.4 million, respectively, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA.

(1) For the three months ended March 31, 2026 and 2025 we accrued $ 2.2 million and $ 2.4 million, respectively, of net income attributable to non-controlling interest, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA.

(2) Loss per common share attributable to ADTRAN Holdings, Inc.

- basic and diluted - reflects a $ 0.5 million and a $ 2.0 million effect of redemption of RNCI for the three and nine months ended September 30, 2025, respectively, and a $ 3.0 million effect of redemption of RNCI for the three and nine months ended September 30, 2024.

- basic and diluted - reflects a $ 0.3 million and a $( 3 ) thousand effect of redemption of RNCI for the three months ended March 31, 2026 and 2025.

See Note 15 for additional information.

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Three Months Ended

Nine Months Ended

September 30,

Net Income (Loss)

Other Comprehensive (Loss) Income, net of tax

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Annual recurring compensation earned

Other comprehensive income, net of tax

Other comprehensive loss, net of tax

Dividends accrued on unvested restricted stock units

Deferred compensation adjustments, net of tax

1 unchanged sentence

ADTRAN stock options exercised

ADTRAN stock-based compensation expense

Redemption of redeemable non-controlling interest

Adtran Networks Stock-based compensation expense

Balance as of March 31, 2025

Annual recurring compensation earned

Other comprehensive income, net of tax

ADTRAN RSUs and restricted stock vested

ADTRAN stock options exercised

ADTRAN stock-based compensation expense

Redemption of redeemable non-controlling interest

Balance as of June 30, 2025

Annual recurring compensation earned

Other comprehensive loss, net of tax

ADTRAN RSUs and restricted stock vested

ADTRAN stock options exercised

ADTRAN stock-based compensation expense

Purchase of capped calls related to the convertible senior notes

Redemption of redeemable non-controlling interest

Balance as of September 30, 2025

Balance as of March 31, 2026

See accompanying notes to condensed consolidated financial statements.

5 unchanged sentences

Annual recurring compensation earned

Other comprehensive loss, net of tax

Other comprehensive income, net of tax

Deferred compensation adjustments, net of tax

5 unchanged sentences

Balance as of March 31, 2025

Annual recurring compensation earned

Other comprehensive loss, net of tax

Deferred compensation adjustments, net of tax

ADTRAN RSUs and restricted stock vested

ADTRAN stock-based compensation expense

Redemption of redeemable non-controlling interest

Adtran Networks stock-based compensation expense

Balance as of June 30, 2024

Annual recurring compensation earned

Other comprehensive loss, net of tax

ADTRAN RSUs and restricted stock vested

ADTRAN stock-based compensation expense

Redemption of redeemable non-controlling interest

Adtran Networks stock-based compensation expense

Balance as of September 30, 2024 (Restated)

See accompanying notes to condensed consolidated financial statements.

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(In thousands)

Nine Months Ended

September 30,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

Goodwill impairment

Amortization of revolving credit facility issuance costs

Amortization of debt issuance cost

Amortization of convertible notes issuance costs

Gain on investments, net

Loss on investments, net

Net loss on disposal of property, plant and equipment

1 unchanged sentence

Deferred income taxes

Inventory write down - business efficiency program

Inventory reserves

2 unchanged sentences

Other receivables

Income taxes receivable

Income taxes receivable, net

Prepaid expenses, other current assets and other assets

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Proceeds from stock option exercises

Proceeds from receivables purchase agreement

Repayments on receivables purchase agreement

Proceeds from draw on revolving credit agreement

Repayment of revolving credit agreement

Proceeds from issuance of convertible notes

Payment for redemption of redeemable non-controlling interest

Payment of annual recurring compensation to non-controlling interest

Payments for capped call transactions related to convertible senior notes

Payment of debt issuance costs on revolving credit facility and convertible notes

Net cash used in financing activities

Net increase in cash, cash equivalents and restricted cash

Payments on financing agreement

Redemption of redeemable non-controlling interest

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents

Effect of exchange rate changes

Cash and cash equivalents, beginning of period

Cash, cash equivalents and restricted cash, end of period

Cash and cash equivalents, end of period

Supplemental disclosure of cash financing activities:

Cash paid for interest expense

Cash paid for income taxes, net of refunds

Cash paid for interest

Cash (refund) paid for income taxes, net

Cash used in operating activities related to operating leases

3 unchanged sentences

Purchases of property, plant and equipment included in accounts payable

Purchases of property, plant and equipment included in other non-current liabilities

Debt issuance costs included in accrued expenses and other liabilities

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

ADTRAN Holdings, Inc.

(“ADTRAN” or the “Company”) is a leading global provider of networking and communications platforms, software, systems and services focused on the broadband access market, serving a diverse domestic and international customer base in multiple countries that includes large, medium and small Service Providers, alternative Service Providers, such as utilities, municipalities and fiber overbuilders, cable/MSOs, SMBs and distributed enterprises, including Fortune 500 companies with sophisticated business continuity applications, and federal, state and local government agencies.

(“Adtran” or the “Company”) is a leading global provider of networking and communications platforms, software, systems and services focused on the broadband access market, serving a diverse domestic and international customer base in multiple countries that includes large, medium and small Service Providers, alternative Service Providers, such as utilities, municipalities and fiber overbuilders, cable/MSOs, SMBs and distributed enterprises, including Fortune 500 companies with sophisticated business continuity applications;

and federal, state and local government agencies.

Our innovative solutions and services enable voice, data, video and internet-communications across a variety of network infrastructures and are currently in use by millions worldwide.

We support our customers through our direct global sales organization and our distribution networks.

We support our customers through our direct global sales organization and distribution networks.

Our success depends upon our ability to increase unit volume and market share through the introduction of new products and succeeding generations of products having optimal selling prices and increased functionality as compared to both the prior generation of a product and to the products of competitors in order to gain market share.

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The Company solely owns ADTRAN, Inc.

and is the majority shareholder of Adtran Networks SE (“Adtran Networks”).

and is the majority shareholder of Adtran Networks.

is a leading global provider of open, disaggregated networking and communications solutions.

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We believe that the combined technology portfolio can best address current and future customer needs for high-speed connectivity from the network core to the end consumer, especially upon the convergence of solutions at the network edge.

Liquidity, Domination and Profit and Loss Transfer Agreement, Notes Offering and Credit Facility

Domination and Profit and Loss Transfer Agreement, Liquidity, Credit Facility and Notes Offering

The DPLTA between the Company, as the controlling company, and Adtran Networks, as the controlled company, which was executed on December 1, 2022, became effective on January 16, 2023, as a result of its registration with the commercial register ( Handelsregister ) of the local court ( Amtsgericht ) at the registered seat of Adtran Networks (Jena).

Under the DPLTA, subject to certain limitations pursuant to applicable law and the specific terms of the DPLTA, (i) the Company is entitled to issue binding instructions to the management board of Adtran Networks, (ii) Adtran Networks will transfer its annual profit to the Company, subject to, among other things, the creation or dissolution of certain reserves, and (iii) the Company will absorb the annual net loss incurred by Adtran Networks.

The Company’s payment obligation in satisfaction of the requirement that it absorb Adtran Networks’ annual net loss applies to the net loss generated by Adtran Networks in 2024 and it will apply to any net loss generated by Adtran Networks in 2025.

Pursuant to the terms of the DPLTA, each Adtran Networks shareholder (other than the Company) has received an offer to elect either (1) to remain an Adtran Networks shareholder and receive from us recurring compensation in cash of € 0.52 per share for each full fiscal year of Adtran Networks (the "Annual Recurring Compensation"), or (2) to put their Adtran Networks shares to the Company in exchange for compensation in cash of € 17.21 per share, plus guaranteed interest (the "Exit Compensation").

The Company’s payment obligation in satisfaction of the requirement that it absorb Adtran Networks’ annual net loss applied to the net loss generated by Adtran Networks in 2025 and it will apply to any net loss generated by Adtran Networks in 2026.

The guaranteed interest under the Exit Compensation is calculated from the effective date of the DPLTA to the date the shares are tendered, less any Annual Recurring Compensation paid.

The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that w as 1.27 % as o f September 30, 2025.

Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately € 322.7 million or $ 378.7 mi llion, based on an exchange rate as of September 30, 2025, and reflecting interest accrued through September 30, 2025 during the pendency of the appraisal proceedings discussed below.

The guaranteed interest ra te is 5.0 % plus a variable component (according to the German Civil Code) that was 1.27 % as of March 31, 2026.

Assuming all the minority holders of currently outstanding Adtran Networks shares w ere to elect the second option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately € 304.4 million or approximately $ 351.7 million, based on an exchange rate as of March 31, 2026, and reflecting interest accrued through March 31, 2026 during the pendency of the appraisal proceedings discussed below.

Shareholders electing the first option of Annual Recurring Compensation may later elect the second option.

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Accordingly, the Company does not expect a final decision on the DPLTA appraisal proceedings to be rendered and published prior to 2027, and most likely not until 2028 or beyond.

Additionally, our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately € 8.5 million (or $ 10.0 million based on the exchange rate as of September 30, 2025) per year assuming none of the minority Adtran Networks shareholders as of September 30, 2025 were to elect Exit Compensation.

The foregoing amounts do not reflect any potential increase in payment obligations that we may have depending on the outcome of ongoing appraisal proceedings in the German court.

The Annual Recurring Compensation is due on the third banking day following the ordinary general shareholders’ meeting of Adtran Networks for the respective preceding fiscal year (but in any event within eight m onths following expiration of the fiscal year).

With respect to the 2023 fiscal year, Adtran Networks’ ordinary general shareholders’ meeting occurred on June 28, 2024 and, therefore, the Annual Recurring Compensation was paid on July 3, 2024.

With respect to the 2024 fiscal year, Adtran Networks’ ordinary general shareholder meeting occurred on June 27, 2025 and, therefore, the Annual Recurring Compensation was paid on July 1, 2025.

During the three months ended September 30, 2025 and 2024, we accrued $ 2.5 million and $ 2.4 million, respectively, in Annual Recurring Compensation.

During the nine months ended September 30, 2025 and 2024, we accrued $ 7.5 million and $ 7.4 million, respectively, in Annual Recurring Compensation.

The Annual Recurring Compensation is reflected as an increase to retained deficit.

Additionally, our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximat ely € 7.8 million (or $ 9.0 million based on the current exchange rate) per year assuming none of the minority Adtran Networks shareholders as of March 31, 2026 were to elect Exit Compensation.

The foregoing amounts do not reflect any potential increase in payment obligations that we may have depending on the outcome of ongoing appraisal proceedings in Germany.

With respect to the 2025 fiscal year, Adtran Networks’ ordinary general shareholder meeting is scheduled for the second quarter of 2026, and the Annual Recurring Compensation will be due on the third banking day following the meeting.

During the three months ended March 31, 2026 and 2025, we a ccrued $ 2.2 million and $ 2.4 million, respectively, in Annual Recurring Compensation.

The Annual Recurring Compensation is reflected as an increase to retained deficit in the Condensed Consolidated Balance Sheets.

On July 18, 2022, ADTRAN, Inc., as the borrower, and ADTRAN Holdings, Inc.

entered into a credit agreement with a syndicate of banks, including Wells Fargo Bank, National Association, as administrative agent (“Administrative Agent”), and the other lenders named therein (“Credit Agreement”), which has since been amended six times.

The Company had access to $ 319.2 million on its Credit Facility for future borrowings;

however, as of September 30, 2 025, the Company was limited to additional borrowings of $ 232.0 million based on debt c ovenant compliance metrics.

The Company had access to $ 319.2 million on its Credit Facility for future borrowings based on debt c ovenant compliance metrics.

The financial covenants under the Credit Agreement, as amended, require the Company to maintain a Consolidated Total Net Leverage Ratio of 5.00 x, a Consolidated Senior Secured Net Leverage Ratio of 3.25 x ( 4.0 x to 3.5 x during a Springing Covenant Period) and a Consolidated Fixed Charge Coverage Ratio of 1.25 x (as such terms are defined in the Credit Agreement).

In addition, during a Springing Covenant Period the cash and cash equivalents of the credit parties must be at least $ 50.0 million and the cash and cash equivalents of the Company and its subsidiaries must be at least $ 70.0 million.

See Note 11, Credit Agreement for additional information regarding the terms of the Wells Fargo Credit Agreement.

On October 18, 2022, the Company's Board of Directors authorized the Company to purchase additional shares of Adtran Networks through open market purchases not to exceed 15,346,544 sh ares.

As of September 30, 2025, and as of the date of issuance of these financial statements, the Company has sufficient liquidity to meet a majority of its payment obligations under the DPLTA pertaining to Exit Compensation.

For the three and nine months ended September 30, 2025, less than one thousand shares and approximately 0.9 million shares, respectively, of Adtran Networks stock were tendered to the Company.

This resulted in total Exit Compensation payments of approximately € 16.9 million or $ 19.9 million based on the applicable exchange rates at the time of the transactions being paid to Adtran Networks shareholders.

For the three and nine months ended September 30, 2024, approximately 0.8 million shares of Adtran Networks stock were tendered to the Company.

This resulted in Exit Compensation payments of approximately € 15.7 million, or $ 17.4 million, based on the applicable exchange rates at the time of the transactions, being paid to Adtran Networks shareholders.

The Credit Agreement matures in July 2027.

The Company intends to refinance or replace the existing Credit Agreement with a new credit facility during the second quarter of 2026.

There can be no assurances that this renewal will occur on terms acceptable to the Company, or at all.

On October 18, 2022, the Company's Board of Directors authorized the Company to purchase additional shares of Adtran Networks through open market purchases not to exceed 15,346,544 shares.

As of March 31, 2026, and as of the date of issuance of these financial statements, the Company has sufficient liquidity to meet the majority of its payment obligations under the DPLTA pertaining to Exit Compensation.

For the three months ended March 31, 2026, approximately 0.2 million shares of Adtran Networks stock were tendered to the Company and Exit Compensation of € 3.6 million or approximately $ 4.1 million are to be settled in cash in April 2026.

For the three months ended March 31, 2025, less than one thousand shares of Adtran Networks stock were tendered to the Company and exit compensation payments of € 12 thousand or $ 13 thousand based on the applicable exchange rates at the time of the transactio n were paid to Adtran Networks shareholders.

We believe the probability that more than a small minority of Adtran Networks shareholders elect to receive Exit Compensation in the next twelve months is remote based on the following factors:

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After deducting the initial purchasers’ discounts, commissions, and estimated offering expenses, the Company received net proceeds of $ 192.6 million.

As of September 30, 2025, and as of the date of issuance of these financial statements, management believes that the Company has sufficient liquidity to meet its payment obligations under the Notes through its operating cash flow and the borrowings available under the Credit Agreement.

The Company experienced revenue declines in the year ended December 31, 2024.

However, customers began replenishing their inventories to meet increasing demand, and revenue increased throughout the first three quarters of 2025.

In 2023, the Company suspended dividend payments and effectuated a business efficiency program (the "Business Efficiency Program"), which targeted the reduction of ongoing operating expenses and focused on enhancing capital efficiency.

The Business Efficiency Program was completed as of December 31, 2024.

In addition, the Company continues to assess the probability that the sale of its headquarters in Huntsville will occur and has determined it is probable of occurring in the next twelve months.

In summary, the Company believes that its cash, cash equivalents and restricted cash, working capital management initiatives and availability to access cash under the Wells Fargo credit facility will be adequate to meet our business operating requirements, our capital expenditures and our expected obligations under both the Notes and the DPLTA, including anticipated levels of Exit Compensation, as well as to support our ability to continue to comply with our debt covenants under the Credit Facility for at least the next twelve months,

from the issuance of these financial statements.

See Note 11, Credit Agreements, for additional information regarding the terms of the Amendments of the Credit Agreement.

The Company believes that its cash and cash equivalents, working capital management initiatives and availability to access cash under the Wells Fargo credit facility or other future sources of capital will be adequate to meet our business operating requirements, our capital expenditures and our expected obligations under both the Notes and the DPLTA, including anticipated levels of Exit Compensation, as well as to support our ability to continue to comply with our debt covenants under the Credit Facility for at least the next twelve months, from the issuance of these financial statements.

See Note 10, Credit Agreements, for additional information regarding the terms of the Amendments of the Wells Fargo Credit Agreement.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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The interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in ADTRAN Holdings, Inc.

Amendment No.

1 to the Annual Report on Form 10-K for the year ended December 31, 2024 , filed with the SEC on May 20, 2025 ("2024 Form 10-K/A").

Restatement of Previously Issued Financial Statements

As discussed in the financial statements as of and for the year ended December 31, 2024 included in our 2024 Form 10-K/A, we identified errors in our previously issued financial statements related to the historical accounting for certain inventory and cost of goods sold transactions (“Adjustment”).

The affected periods included the annual periods ended December 31, 2023 and 2024 and the interim periods ended March 31, 2024, June 30, 2024 and September 30, 2024.

In connection with the identification of the Adjustment, the Audit Committee oversaw an internal investigation into the circumstances surrounding the Adjustment and its impact on the Company’s historical financial statements.

Based on the findings of the internal investigation, it was determined that the underlying errors giving rise to the Adjustment were not properly addressed in the Company’s previously filed financial statements as of and for the years ended December 31, 2024 and 2023 and were not communicated to the Audit Committee or the independent auditors prior to the filing of the initial 2024 Annual Report on Form 10-K.

As described in Part I, Item 4 of this report, the Company is taking certain remedial actions to address the material weaknesses in its internal controls associated with these findings.

On August 4, 2025, we received a letter from the Atlanta regional office of the SEC in connection with a non-public, fact-finding inquiry, requesting that we voluntarily provide information regarding the internal investigation.

The identified errors referenced above impacted the Condensed Consolidated Financial Statements as of and for the three and nine months ended September 30, 2024, among other periods as previously disclosed.

Below is a summary description of the significant errors in the Company's Condensed Consolidated Financial Statements as of and for the three and nine months ended September 30, 2024:

ADJ 1 - Pursuant to the terms of the DPLTA, each Adtran Networks shareholder (other than the Company) is entitled to receive from us an Annual Recurring Compensation payment of € 0.52 per share.

The Company erroneously accrued this liability every quarter at € 0.59 per share, overstating the associated accrual, the net income attributable to non-controlling interest and the net loss attributable to ADTRAN Holdings, Inc.

for fiscal periods beginning with the quarter ended March 31, 2023 through the quarter ended June 30, 2024.

ADJ 2 - For the periods beginning with the quarter ended March 31, 2023 through the quarter ended June 30, 2024, the Company remeasured the RNCI each quarter-end at the current exchange rate of euros to U.S.

The Company treated the RNCI as a monetary mezzanine equity instrument but should have treated it as a non-monetary mezzanine equity instrument not subject to remeasurement.

ADJ 3 - For the year ended December 31, 2023 through the year ended December 31, 2024, the Company understated cost of revenue and overstated inventory in the Company's Adtran Networks subsidiary due to a system error.

In addition, there were adjustments in the Company's U.S and Australian subsidiaries related to inventory reserves that were understated.

ADJ 4 - For the year ended December 31, 2023 through the year ended December 31, 2024, the Company understated goodwill and overstated income tax receivable.

The understatement was attributable to corrections to goodwill and deferred income tax associated with goodwill for an internal divestiture of a wholly owned subsidiary required by statutory laws in Europe.

In addition to the misstatements identified above, the Company has corrected other immaterial errors.

These other errors are quantitatively and qualitatively immaterial, individually and in the aggregate.

However, the Company has corrected these other errors as part of the correction for the significant errors described above.

We assessed the materiality of the errors on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No.

99, “Materiality,” codified in ASC Topic 250, Accounting Changes and Error Corrections.

Based on this assessment, we concluded that the errors, in the aggregate, are material to the September 30, 2024 financial statements and therefore, we have restated

those financial statements herein.

Furthermore, we made adjustments to correct for other previously identified immaterial errors.

The Company has also restated impacted amounts within the accompanying footnotes to the Condensed Consolidated Financial Statements.

See Note 20 for further information about the restatement.

Annual Report on Form 10-K for the year ended December 31, 2025 , filed with the SEC on February 26, 2026.

Use of Estimates

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GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period.

Significant estimates include allowance for credit losses on accounts receivable and contract assets, excess and obsolete inventory reserves, warranty reserves, customer rebates, determination and accrual of the deferred revenue related to performance obligations under contracts with customers, estimated costs to complete obligations associated with deferred and accrued revenue and network installations, estimated income tax provision and income tax contingencies, fair value of stock-based compensation, assessment of goodwill and other intangibles for impairment, estimated lives of intangible assets, estimates of intangible assets upon measurement, estimated pension liability and fair value of investments and estimated contingent liabilities.

Significant estimates include allowance for credit losses on accounts receivable and contract assets, excess and obsolete inventory reserves, determination and accrual of the deferred revenue related to performance obligations under contracts with customers, estimated costs to complete obligations associated with deferred and accrued revenue and network installations, estimated income tax provision and income tax contingencies, fair value of stock-based compensation, assessment of goodwill and other intangibles for impairment, estimated lives of intangible assets, estimates of intangible assets upon measurement, estimated pension liability and fair value of investments and estimated contingent liabilities.

Actual amounts could differ significantly from these estimates.

We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of ongoing inflationary pressures, continued elevated interest rates, currency fluctuations and political tensions as of September 30, 2025, and through the date of this report.

We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of ongoing inflationary pressures, continued elevated interest rates, instability in the financial services industry, currency fluctuations and political tensions as of March 31, 2026, and through the date of this report.

These conditions could result in further impacts to the Company's consolidated financial statements in future reporting periods.

The accounting matters assessed included, but were not limited to, the allowance for credit losses, stock-based compensation, carrying value of goodwill, intangibles and other long-lived assets, financial assets, valuation allowances for tax as sets, revenue recognition and costs of revenue.

Restricted Cash

Restricted cash consists of cash pledged as collateral, which is permitted to be withdrawn for the purpose of financing the purchase of additional outstanding shares of Equity Interests (as defined in the Credit Agreement) of Adtran Networks.

See Note 11 for additional information.

Convertible Senior Notes

We account for our convertible senior notes with embedded conversion features in accordance with ASC 470-20, under which convertible debt instruments would only be separated into multiple components if they were issued at a substantial premium or if embedded derivatives requiring bifurcation were identified.

The convertible senior notes (the "2030 Notes" or the “Notes”) were not issued at a substantial premium, and we analyzed the provisions of the 2030 Notes and did not identify any material embedded features which would require bifurcation from the host debt.

As such, the 2030 Notes are accounted for entirely as a liability, net of unamortized issuance costs.

The carrying amount of the liability is classified as long-term as the instrument does not mature within one year of the balance sheet date and the holder is not permitted to demand repayment of the principal within one year of the balance sheet date.

However, if conditions to convertibility are met and holders are expected to convert within one year as described further in Note 12, we may be required to reclassify the carrying amount of the liability to current.

Issuance costs are amortized to interest expense using the effective interest rate method.

During the nine months ended September 30, 2025, there were no other significant changes to our critical accounting policies as described in the financial statements contained in the 2024 Form 10-K/A.

During the three months ended March 31, 2026, there were no other significant changes to our critical accounting policies or estimates from those described in the financial statements contained in the 2025 Form 10-K.

Recent Accounting Pronouncements Not Yet Adopted

In September 2025, the Financial Accounting Standards Board (“FASB”) issued ASU 2025-06, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

In September 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2025-06, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software," which is intended to modernize the accounting for the costs of internal-use software given the evolution of software development to the incremental and iterative development method.

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The Company is currently evaluating the impact of adopting this guidance on the consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses (DISE) (Topic 220):

Improvements to Income Statement Disclosures", which applies to all public business entities and is intended to enhance disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

The amendments are effective prospectively for annual periods beginning after December 15, 2026, and early adoption and retrospective application are permitted.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, as amended by ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date", which applies to all public business entities (PBEs) and is intended to enhance disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

The amendments are effective prospectively for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption and retrospective application are permitted.

The Company is currently evaluating the effect that adoption of ASU 2024-03 will have on our disclosures.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures", which is intended to enhance the transparency, decision usefulness and effectiveness of income tax disclosures.

The amendments in this ASU require a public entity to disclose a tabular tax rate reconciliation, using both percentages and currency, with specific categories.

A public entity is also required to provide a qualitative description of the states and local jurisdictions that make up the majority of the effect of the state and local income tax category and the net amount of income taxes paid, disaggregated by federal, state and foreign taxes and also disaggregated by individual jurisdictions.

The amendments also remove certain disclosures that are no longer considered cost beneficial.

The amendments are effective prospectively for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted.

The resulting new annual disclosure requirements will be reflected in our 2025 report on Form 10-K.

The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

Recently Adopted Accounting Pronouncements

There are currently no recently adopted accounting pronouncements that are expected to have a material effect on the Condensed Consolidated Financial Statements.

CASH, CASH EQUIVALENTS AND RESTRICTED CASH

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheet that agree to the total of the same such amounts shown in the Condensed Consolidated Statement of Cash Flows:

(In thousands)

September 30, 2025

December 31, 2024

Cash and cash equivalents

Restricted cash

Cash, cash equivalents and restricted cash

The Company did no t have any restricted cash as of December 31, 2024.

See Note 11 for additional information regarding restricted cash.

REVENUE AND RECEIVABLES

The following is a description of the principal activities from which revenue is generated by reportable segment:

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These solutions include fiber termination solutions for residential, business and wholesale subscribers, Wi-Fi access solutions for residential and business subscribers, Ethernet switching and network edge virtualization solutions for business subscribers, and cloud software solutions covering a mix of subscriber types.

Our Optical Networking Solutions are used by communications Service Providers, internet content providers and large-scale enterprises to securely interconnect metro and regional networks over fiber.

This revenue category includes hardware- and software-based products and services.

Our solutions within this category include open optical terminals, open line systems, optical subsystems and modules, network infrastructure assurance systems, and automation platforms that are used to build high-scale, secure and assured optical networks.

Our Access & Aggregation Solutions are solutions that are used by communications Service Providers to connect residential subscribers, business subscribers and mobile radio networks to the Service Providers’ metro network, primarily through fiber-based connectivity.

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Our solutions within this category are a mix of fiber access and aggregation platforms, precision network synchronization and timing solutions, and access orchestration solutions that ensure highly reliable and efficient network performance.

Our Optical Networking Solutions are used by communications Service Providers, internet content providers and large-scale enterprises to securely interconnect metro and regional networks over fiber.

This revenue category includes hardware- and software-based products and services.

The following tables disaggregate revenue by reportable segment and revenue category:

Three Months Ended

September 30, 2025

September 30, 2024

March 31, 2026

March 31, 2025

(In thousands)

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Subscriber Solutions

Access & Aggregation Solutions

Optical Networking Solutions

Nine Months Ended

September 30, 2025

September 30, 2024

(In thousands)

Network Solutions

Services & Support

Network Solutions

Services & Support

Subscriber Solutions

Access & Aggregation Solutions

Optical Networking Solutions

The aggregate amount of transaction price allocated to remaining performance obligations (“RPO”) that have not been satisfied as of September 30, 2025 related to non-cancellable contractual maintenance agreements, non-cancellable contractual SaaS and subscription services, and non-cancellable hardware contracts amounted to $ 174.0 million.

The Company identified an immaterial error in its 2024 RPO disclosure of $ 325.7 million where it incorrectly included cancellable contracts and inappropriately applied the practical expedient under ASC 606.

The Company has corrected the disclosure to remove the cancellable portion of RPO amounts and to reflect the impact of discontinuing the use of the practical expedient to exclude contracts with an original expected duration of one year or less.

The corrected amount of the RPO is $ 185.4 million as of December 31, 2024.

The Company will generally satisfy the remaining performance obligations as we transfer control of the products ordered or services to our customers, excluding maintenance services, which are satisfied over time.

The aggregate amount of transaction price allocated to remaining performance obligations ("RPO") that have not been satisfied as of March 31, 2026 related to non-cancellable contractual maintenance agreements, non-cancellable contractual SaaS and subscription services, and non-cancellable hardware contracts amounted to $ 159.2 million.

The majority of the Company's performance obligations will generally be satisfied within a year and any remaining performance obligations are typically recognized over one to three years .

The following table provides information about accounts receivable, contract assets and unearned revenue from contracts with customers:

(In thousands)

September 30, 2025

March 31, 2026

December 31, 2025

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Non-current unearned revenue

(1) Included in other receivables.

(1) Included in other receivables on the Condensed Consolidated Balance Sheets.

Accounts Receivable

The allowance for credit losses wa s $ 1.2 m illion and $ 1.3 million as of September 30, 2025 and December 31, 2024, respectively.

Receivables Purchase Agreement

On July 1, 2024, the Company entered into a receivables purchase agreement (the “Factoring Agreement”) with a third-party financial institution, which accelerates receivable collection and helps to better manage cash flow.

Total accounts receivables factored as of the end of September 30, 2025, totaled $ 23.6 million net of $ 3.7 million retained pursuant to the Factoring Agreement in the reserve account.

Total accounts receivables factored as of the end of September 30, 2024, totaled $ 16.7 million net of $ 3.7 million retained pursuant to the Factoring Agreement in the reserve account.

The allowance for credit losses was $ 1.7 million and $ 1.3 million as of March 31, 2026, and December 31, 2025, respectively, related to accounts receivable.

Receivables Purchase Agreements

On July 1, 2024, the Company entered into a receivables purchase agreement (the “Factoring Agreement”) with a third-party financial institution (the “Factor”), which accelerates receivable collection and helps to better manage cash flow.

Total accounts receivables factored as of the end of March 3 1, 2026, totaled $ 26.1 million of which $ 3.9 million was retained pursuant to the Factoring Agreement in the reserve account.

Total accounts receivables factored as of the end of March 3 1, 2025, totaled $ 11.2 million of which $ 3.7 million was retained pursuant to the Factoring Agreement in the reserve account.

The Factoring Agreement provides for up to $ 40.0 million in factoring capacity, subject to eligible receivables and reserve requirements, secured by the receivables.

The balance in the reserve account is included in other assets.

The Company at its own expense does have collection and administrative responsibilities for the sold receivables and that is its only continuing involvement with the factoring party.

The Company is not compensated for the servicing of the factoring program and deems the costs of servicing the receivables sold to be immaterial.

During the three and nine months ended September 30, 2025, the Company received $ 49.2 million and $ 119.4 million, in cash proceeds from the Factoring Agreement, respectively, and during the three and nine months ended September 30, 2024, the Company received $ 39.9 million, in cash proceeds from the Factoring Agreement, which are recorded as a component of accounts receivable in operating cash flows on the Condensed Consolidated Statement of Cash Flows.

The cost of the F actoring Agreement is included in interest expense in the Condensed Consolidated Statements of Loss and totaled $ 0.5 million and $ 0.3 million for the three months ended September, 30, 2025 and 2024, respectively, and $ 1.0 million and $ 0.3 million for the nine months ended September 30, 2025 and 2024, respectively.

On December 19, 2023, the Company entered into a receivables purchase agreement (the "Prior Factoring Agreement") with a third-party financial institution which qualified for treatment as a secured borrowing with a pledge of collateral under Accounting Standards Codification ("ASC") Topic 810, Consolidation.

The Prior Factoring Agreement was terminated on July 1, 2024.

For the nine months ended September 30, 2024, the Company incurred program fee expenses of $ 0.6 million .

During the three months ended March 31, 2026 and 2025, the Company received $ 51.8 million and $ 31.8 million, in cash proceeds from the Factoring Agreement, respectively.

Contract Assets

No allowance for credit losses was recorded for the three and nine months ended September 30, 2025 and 2024, respectively, related to contract assets.

No allowance for credit losses was recorded for the three months ended March 31, 2026 and 2025, respectively, related to contract assets.

Unearned Revenue

Of the outstanding unearned revenue balances as of December 31, 2024, $ 9.3 m illion and $ 44.1 million were recognized as revenue during the three and nine months ended September 30, 2025 , respectively.

Of the $ 65.1 million of outstanding unearned revenue balances as of December 31, 2023, $ 10.03 million and $ 43.1 million were recognized as revenue during the three and nine months ended September 30, 2024, respectively.

The Company’s effective tax rate changed from an expense of 1.4 % of pre-tax loss for the three months ended September 30, 2024, to an expense of 18.3 % of pre-tax loss for the three months ended September 30, 2025, and changed from a benefit of 3.9 % of pre-tax loss for the nine months ended September 30, 2024, to an expense of 5.5 % of pre-tax loss for the nine months ended September 30, 2025.

The changes in the effective tax rate for the three and nine months ended September 30, 2025, were driven primarily by loss jurisdictions for which the recognition of tax benefits on pre-tax losses were limited due to a valuation allowance.

Of the outstanding unearned revenue balances as of December 31, 2025 , $ 23.1 million were recognized as revenue during the three months ended March 31, 2026.

Of the $ 52.7 outstanding unearned revenue balances as of December 31, 2024, $ 21.9 million were recognized as revenue during the three months ended March 31, 2025 .

The Company’s effective tax rate changed from a benefit o f 4.2 % of pre-tax loss for the three months ended March 31, 2025, to an expense of 67.3 % of pre-tax income for the three months ended March 31, 2026.

The change in the effective tax rate for the three months ended March 31, 2026, was driven primarily by loss jurisdictions for which the recognition of tax benefits on pre-tax losses incurred during the first quarter of 2026 were limited due to valuation allowance.

The Company continually reviews the adequacy of its valuation allowance and recognizes the benefits of deferred tax assets only as the assessment indicates that it is more likely than not that the deferred tax assets will be recognized in accordance with ASC 740, Income Taxes.

As of September 30, 2025, the Company had net deferred tax assets totaling $ 101.2 million, and a valuation allowance totaling $ 115.7 million against those deferred tax assets.

Our assessment of the realizability of our deferred tax assets includes the evaluation of historical operating results, as well as the evaluation of evidence which requires significant judgment, including the evaluation of our three-year cumulative income position, future taxable income projections and tax planning strategies.

As of March 31, 2026 , the Company had net deferred tax assets totaling $ 113.9 million, and a valuation allowance totaling $ 124.5 million against those deferred tax assets.

Our assessment of the realizability of our deferred tax assets includes the evaluation of historical operating results, as well as the evaluatio n of evidence which requires significant judgment, including the evaluation of our three-year cumulative income position, future taxable income projections and tax planning strategies.

Should management’s conclusion change in the future and an additional valuation allowance, or a partial or full release of the valuation allowance becomes necessary, it may have a material effect on our consolidated financial statements.

On July 4, 2025, the “One Big Beautiful Bill Act” (OBBBA) was signed into law, which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025.

In addition, the OBBBA makes changes to certain U.S.

corporate tax provisions, but many are generally not effective until 2026.

Due to the timing of enactment within our current period end, the Company has undergone efforts to reasonably estimate the impact of the Act on our condensed consolidated financial statements and there were no material impacts to the financial statements.

We will continue to evaluate the full impact of these legislative changes as more guidance becomes available.

STOCK-BASED COMPENSATION

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2024 Directors Stock Plan (“2024 Directors Plan”).

No additional awards will be granted under the Company’s previous stock incentive plans, including the 2020 Employee Stock Incentive Plan, the 2020 Directors Stock Plan, or the 2015 Employee Stock Incentive Plan.

Outstanding awards granted under the Company's prior equity incentive plans will remain subject to the terms of such applicable plans, and shares under such plans that are cancelled or forfeited will be available for issuance under the 2024 Employee Plan or the 2024 Directors Plan, as applicable.

Under the 2024 Employee Plan, the Company is authorized to issue 4.0 million shares of common stock to certain employees, key service providers and advisors through incentive stock options and non-qualified stock options, stock appreciation rights, RSUs and restricted stock, any of which may be subject to performance-based conditions.

RSUs and restricted stock granted under the 2024 Employee Plan will typically vest pursuant to a four-year vesting schedule beginning on the first anniversary of the grant date.

Stock options granted under the 2024 Employee Plan will typically become exercisable beginning after one year of continued employment, normally pursuant to a four-year vesting schedule beginning on the first anniversary of the grant date and have a ten-year contractual term.

Stock options, RSUs and restricted stock granted under the 2024 Employee Plan reduce the shares authorized for issuance under the 2024 Employee Plan by one share of common stock for each share underlying the award.

Forfeitures, cancellations and expirations of awards granted under the prior employee stock incentive plans increase the shares authorized for issuance under the 2024 Employee Plan by one share of common stock for each share underlying the award.

Under the 2024 Directors Plan, the Company is authorized to issue 0.7 million shares of common stock through stock options, restricted stock and RSUs to non-employee directors.

Stock awards issued under the 2024 Directors Plan typically will become vested in full on the first anniversary of the grant date.

Stock options issued under the 2024 Directors Plan will have a ten-year contractual term.

Stock options, restricted stock and RSUs granted under the 2024 Directors Plan reduce the shares authorized for issuance under the 2024 Directors Plan by one share of common stock for each share underlying the award.

Forfeitures, cancellations and expirations of awards granted under the 2020 Directors Stock Plan increase the shares authorized for issuance under the 2024 Directors Plan by one share of common stock for each share underlying the award.

As of September 30, 2025 , 4.2 million shares were available for issuance pursuant to awards that may be made in the future under shareholder-approved equity plans.

For the three months ended September 30, 2025 and 2024, stock-based compensation expense was $ 2.9 million and $ 3.7 million, respectively, and for the nine months ended September 30, 2025 and 2024 , stock-based compensation expense was $ 8.7 milli on and $ 11.5 million, respectively.

PSUs, RSUs and Restricted Stock - ADTRAN Holdings, Inc.

The following table summarizes the changes of the PSUs, RSUs and restricted stock outstanding during the nine months ended September 30, 2025:

As of March 31, 2026 , 5.5 m illion shares were available for issuance pursuant to awards that may be made in the future under stockholder-approved equity plans.

For the three months ended March 31, 2026 and 2025, stock-based compensation expense was $ 1.8 million and $ 3.2 million, respectively.

PSUs, RSUs and Restricted Stock

The following table summarizes the PSUs, RSUs and restricted stock outstanding as of December 31, 2025, and March 31, 2026 and the changes that occurred during the three months ended March 31, 2026:

(in thousands)

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PSUs, RSUs and restricted stock forfeited

Unvested PSUs, RSUs and restricted stock outstanding, September 30, 2025

Unvested PSUs, RSUs and restricted stock outstanding, March 31, 2026

The fair value of PSUs with performance conditions, RSUs and restricted stock is equal to the closing price of the Company's stock on the date of grant.

The fair value of PSUs with market conditions is calculated using a Monte Carlo simulation valuation method.

As of September 30, 2025 , total unrecognized compensation expense related to the non-vested portion of market-based PSUs, RSUs and restricted stock was approximately $ 15.7 million, which will be recognized over the remaining weighted-average period of 2.6 years.

As of September 30, 2025 , there was $ 9.9 million of unrecognized compensation expense related to unvested performance-based PSUs (not considered probable), which will be recognized over the remaining requisite service period of 0.3 years if achievement of the performance obligation becomes probable.

As of March 31, 2026 , total unrecognized compensation expense related to non-vested portion of performance-based PSUs, market-based PSUs, RSUs and restricted stock was approximately $ 12.1 million, which will be recognized over the remaining weighted-average period of 2.2 years.

Unrecognized compensation expense will be adjusted for actual forfeitures.

Stock Options - ADTRAN Holdings, Inc.

The following table summarizes the changes of the stock options outstanding that occurred during the nine months ended September 30, 2025:

Stock Options

(in thousands)

Weighted Avg.

Exercise Price

Weighted Avg.

Intrinsic Value

(in thousands)

Stock options outstanding, December 31, 2024

Stock options exercised

Stock options forfeited

Stock options expired

Stock options outstanding, September 30, 2025

Stock options exercisable, September 30, 2025

As of September 30, 2025 , there was $ 0.7 million of unrecognized compensation expense related to stock options which will be recognized over the remaining weighted-average period of 0.4 years.

The determination of the fair value of stock options assumed or granted by ADTRAN was estimated using the Monte Carlo method and is affected by its stock price, as well as assumptions regarding a number of complex and subjective variables that may have a significant impact on the fair value estimate.

The stock option pricing model requires the use of several assumptions that impact the fair value estimate.

These variables include, but are not limited to, the volatility of the Company's stock price and employee exercise behaviors.

All of the options were previously issued at exercise prices that approximated fair market value at the date of grant.

The aggregate intrinsic value of stock options represents the total pre-tax intrinsic value (the difference between the Company's closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2025 .

The amount of aggregate intrinsic value was $ 4.6 million as of September 30, 2025, which will change based on the fair market value of the Company's stock.

The total pre-tax intrinsic value of options exercised during the nine months ended September 30, 2025 , and 2024 was $ 0.7 million and $ 34 thousand , respectively.

During the three and nine months ended September 30, 2025 and 2024, 0.5 million and 0.1 million stock options vested, respectively.

LONG TERM INVESTMENTS

The Company has cash equivalents and investments which are held at fair value as follows:

Fair Value Measurements as of September 30, 2025 Using

Fair Value Measurements as of March 31, 2026 Using

(In thousands)

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Deferred compensation plan assets

(1) The money market fund balances of $ 0.2 million and $ 5.5 million as of September 30, 2025 and December 31, 2024, respectively, are included in cash and cash equivalents on the balance sheet.

(1) The money market fund balances of $ 0.2 million as of March 31, 2026 and December 31, 2025, are included in cash and cash equivalents on the balance sheet.

Market prices are obtained from a variety of industry standard data providers, large financial institutions and other third-party sources.

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Level 2 – Significant inputs that are observable;

values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly;

values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly and

Level 3 – Significant unobservable inputs;

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These inputs could include information supplied by investees.

INVENTORY, NET

Inventory consisted of the following:

As of March 31, 2026 and December 31, 2025, inventory, net was comprised of the following:

(In thousands)

September 30, 2025

March 31, 2026

December 31, 2025

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Inventory reserves are established for estimated excess and obsolete inventory equal to the difference between the cost of the inventory and the estimated net realizable value of the inventory based on estimated reserve percentages, which considers historical usage, known trends, inventory age and market conditions.

During the twelve months ended December 31, 2024, the Company recorded an inventory write-down of $ 8.6 million, as a result of a strategy shift which included discontinuance of certain product lines in connection with the Business Efficiency Program of which $ 4.1 million relates to inventory write-downs and $ 4.5 million relates to other charges, all of which are included in cost of revenue in the Condensed Consolidated Statements of Loss for the nine months ended September 30, 2024.

PROPERTY, PLANT AND EQUIPMENT, NET

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

(In thousands)

September 30, 2025

March 31, 2026

December 31, 2025

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Long-lived assets used in operations are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the undiscounted cash flows estimated to be generated by the asset are less than the asset’s carrying value.

Depreciation and amortization expense was $ 7.9 million and $ 7.2 million for the three months ended September 30, 2025 and 2024 , respectively, and $ 22.3 million and $ 21.2 million fo r the nine months ended September 30, 2025 and 2024, respectively, which is recorded in cost of revenue, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Loss.

Depreciation expense was $ 8.1 million and $ 6.9 million for the three months ended March 31, 2026 and 2025, respectively, which is recorded in cost of revenue, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Loss.

Assets Held For Sale

On December 31, 2024, the Company determined it met the held for sale criteria pursuant to ASC 360, "Impairment and Disposal of Long-Live Assets" on the Company's property located at the North and South Towers in its Huntsville, Alabama campus and ceased recording depreciation on the assets.

On December 31, 2025, the Company determined that it continued to meet the held for sale criteria pursuant to ASC 360, "Impairment and Disposal of Long-Live Assets" on a portion of the Company's property located at its Huntsville, Alabama campus and ceased recording depreciation on the assets.

The Company continues to assess the probability that the sale of its headquarters in Huntsville will occur and has determined it is probable of occurring in the next twelve months .

The Company records assets held for sale at the lower of their carrying value or fair value.

The total carrying value of assets held for sale was $ 11.9 million as of September 30, 2025 and December 31, 2024, respectively, and is separately recorded on the balance sheet.

The changes in the carrying amount of goodwill for the nine months ended September 30, 2025 and the twelve months ended December 31, 2024, are as follows:

The total carrying value of assets held for sale was $ 11.9 million as of March 31, 2026 and December 31, 2025, respectively, and is separately recorded on the balance sheet.

The changes in the carrying amount of goodwill for the three months ended March 31, 2026 and the twelve months ended December 31, 2025, are as follows:

(In thousands)

Network Solutions

Services & Support

As of December 31, 2024

Goodwill impairment

Foreign currency translation adjustments

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Foreign currency translation adjustments

As of September 30, 2025

As of March 31, 2026

Goodwill represents the excess purchase price over the fair value of net assets acquired.

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In addition, the Company performs an interim impairment assessment prior to our annual measurement date whenever events or changes in circumstances indicate that the carrying amount of such assets (or group of assets) may not be recoverable.

No impairment of goodwill was recognized during the three and nine months ended September 30, 2025.

No impairment of goodwill was recognized during the three months ended September 30, 2024.

The Company determined upon its quantitative impairment assessment to recognize a goodwill impairment of $ 297.4 million, during the nine months ended September 30, 2024.

As of September 30, 2025, accumulated goodwill impairment losses totaled $ 335.3 million.

INTANGIBLE ASSETS, NET

Intangible assets, net as of September 30, 2025, and December 31, 2024, consisted of the following:

As of September 30, 2025

No impairment of goodwill was recognized during the three months ended March 31, 2026 and 2025.

As of March 31, 2026 , accumulated goodwill impairment losses totaled $ 335.3 million.

INTANGIBLE ASSETS

Intangible assets as of March 31, 2026 and December 31, 2025, consisted of the following:

As of March 31, 2026

As of December 31, 2025

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Licensed agreements

No impairment losses related to intangible assets were recorded during the three and nine months ended September 30, 2025 and 2024.

Amortization expense was $ 15.7 million and $ 16.1 million in the three months ended September 30, 2025 and 2024 , respectively, and $ 46.4 million and $ 46.5 million in the nine months ended September 30, 2025 and 2024, respectively and was included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Loss.

No impairment losses of intangible assets were recorded during the three months ended March 31, 2026 and 2025.

Amortization expense was $ 16.9 million and $ 14.9 million in the three months ended March 31, 2026 and 2025, respectively, and was included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Loss.

During the three months ended March 31, 2026, the Company had development costs of $ 8.4 million for developed technology assets with a weighted average amortization period of three years with no expected residual value.

Estimated future amortization expense of intangible assets is as follows:

(In thousands)

September 30, 2025

CREDIT AGREEMENT

The carrying value of the Company's non-current revolving credit facility was as follows:

March 31, 2026

CREDIT AGREEMENTS

The carrying amounts of the Company's non-current revolving credit facility in its Condensed Consolidated Balance Sheets were as follows:

(In thousands)

September 30, 2025

March 31, 2026

December 31, 2025

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Total non-current revolving credit facility

As of March 31, 2026 and December 31, 2025, the estimated fair value of our revolving credit agreement approximates the carrying value.

As of March 31, 2026, the weighted average interest rate on our revolving credit agreement was 8.92 %.

Revolving Credit Agreement

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3”), the Fourth Amendment to Credit Amendment, dated June 4, 2024 among Adtran Networks (the "German Borrower") and the parties set forth above ("Amendment No.

4") and the Fifth Amendment to Credit Agreement and Waiver, dated May 6, 2025, among the German Borrower and the parties set forth above (“Amendment No.

4"), the Fifth Amendment to Credit Agreement and Waiver, dated May 6, 2025, among the German Borrower and the parties set forth above (“Amendment No.

5”), and the Sixth Amendment and Consent Credit Agreement, dated September 16, 2025, among the U.S.

the German Borrower and the lenders party thereto ("Amendment No.

(the Original Credit Agreement as amended by Amendment No.

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5, the “Existing Credit Agreement”).

On September 16, 2025, the U.S.

Borrower, the German Borrower, and the lenders party thereto, including the Administrative Agent, entered into the Sixth Amendment and Consent to Credit Agreement, dated September 16, 2025 (“Amendment No.

the Existing Credit Agreement as amended by Amendment No.

6, the “Amended Credit Agre ement”).

Amendment No.

6, among other things, (i) provides for a consent from the lenders to the issuance by the Company of new unsecured convertible indebtedness in an amount not to exceed $ 230.0 million, notwithstanding the cap on the amount of Permitted Convertible Indebtedness (as defined in the Amended Credit Agreement) the Company is permitted to incur, (ii) requires that the net cash proceeds of the new unsecured convertible indebtedness be used to (a) repay outstanding revolving credit loans under the Amended Credit Agreement, (b) pay fees, costs, and expenses related to Amendment No.

6 and the issuance of the new unsecured convertible indebtedness and (c) cash collateralize the obligations of the Company and its subsidiaries under the Amended Credit Agreement (with such cash only being permitted to be withdrawn for the purpose of financing the purchase of additional outstanding shares of Equity Interests (as defined in the Amended Credit Agreement) of the German Borrower that were not owned by the Company and its subsidiaries as of August 9, 2023 pursuant to Section 5, paragraph 1 of the DPLTA), and (iii) after the prepayment contemplated in the foregoing clause (ii)(a) and the provision of cash collateral contemplated in the foregoing clause (ii)(c), amends provisions governing the Subline (as defined below) to provide that future prepayments in respect of borrowings under the Subline will no longer permanently reduce the commitments in respect of the Subline.

As of September 30, 2025, the Company had $ 7.5 million of cash collateral which is permitted to be withdrawn for the purpose of financing the purchase of additional outstanding shares of Adtran Networks stock as defined in the Amended Credit Agreement.

As of September 30, 2025, the Amended Credit Agreement provided for a secured revolving credit facility of up to $ 350.0 million of borrowings, $ 50.0 million of which is solely available to the German Borrower.

As of September 30, 2025, the Company’s borrowings under the revolving line of credit were $ 25.0 million, of which all was borrowed under the Subline by the German Borrower.

The credit facilities provided under the Amended Credit Agreement mature in July 2027,

As of March 31, 2026, the Amended Credit Agreement provided for a secured revolving credit facility of up to $ 350.0 million of borrowings, $ 50.0 million of which is solely available to the German Borrower.

As of March 31, 2026, the Company’s borrowings under the revolving line of credit were $ 25.0 million.

The credit facilities provided under the Amended Credit Agreement mature in July 2027, but the U.S.

Borrower may request extensions subject to customary conditions.

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Borrower may utilize up to $ 50.0 million of the $ 350.0 million total revolving facility for the issuance of letters of credit.

As of September 30, 2025, the U.S.

Borrower had a total of $ 5.8 million in letters of credit under the Amended Credit Agreement, leaving a net amount (after giving effect to the $ 25.0 million of outstanding borrowings described above) of $ 319.2 million available for future borrowings;

however, as of September 30, 2025, the Company was limited to addit ional borrowings of $ 232.0 million based on debt covenant compliance metrics.

As of March 31, 2026, the U.S.

Any future credit extensions under the Amended Credit Agreement are subject to customary conditions precedent.

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Moreover, the Amended Credit Agreement provides for a sublimit under the existing $ 350.0 million revolving commitments in an aggregate amount of $ 50.0 million (“Subline”), which Subline is available for borrowings by th e German Borrower.

The Company had no borrowings under the Subline as of March 31, 2026.

The existing swing line sublimit and letter of credit sublimit under the Amended Credit Agreement remain available to the U.S.

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Otherwise, the loans under the Subline are subject to substantially the same terms and conditions under the Amended Credit Agreement (including with respect to the interest rate and maturity date) as the other existing revolving commitments.

borrowings under the Amended Credit Agreement bear interest at a rate tied to the Base Rate (as defined in the Amended Credit Agreement) or SOFR, at the Company’s option, and all E.U.

borrowings bear interest at a rate tied to the Euro Interbank Offered Rate as administered by the European Money Markets Institute (or a comparable or successor administrator approved by the Administrative Agent), in each case plus applicable margins which vary based on the consolidated net leverage ratio of the Company and its subsidiaries as determined pursuant to the terms of the Amended Credit Agreement.

Default interest is 2.00 % per annum in excess of the rate otherwise applicable.

As of September 30, 2025, the weighted average interest rate on our revolving credit agreements was 9.50 %.

The Company made certain representations and warranties to the lenders in the Amended Credit Agreement that are customary for credit arrangements of this type.

The Company also agreed to maintain a Consolidated Total Net Leverage Ratio of 5.00 x, a Consolidated Senior Secured Net Leverage Ratio of 3.25 x ( 4.0 x to 3.5 x during a “Springing Covenant Period,” as defined below) and a Consolidated Fixed Charge Coverage Ratio of 1.25 x (as such ratios are defined in the Amended Credit Agreement).

A “Springing Covenant Event” occurs when at least sixty percent ( 60.0 %) of the outstanding shares of Adtran Networks that were not owned by the Company and its subsidiaries as of August 9, 2023 have been tendered and purchased by the Company.

Upon the occurrence of a Springing Covenant Event, the Company will enter a “Springing Covenant Period”, defined as the fiscal quarter in which a Springing Covenant Event occurs and the three (3) consecutive fiscal quarters thereafter.

During a Springing Covenant Period, the Company’s leverage ratios are increased.

In addition, the cash and cash equivalents of the credit parties must be at least $ 50.0 million and the cash and cash equivalents of the Company and its subsidiaries must be at least $ 70.0 million.

As of September 30, 2025, the Company was in compliance with all covenants.

The Amended Credit Agreement also contains customary events of default, such as misrepresentation and a default in the performance or observance of any covenant (subject to customary cure periods and materiality thresholds).

Upon the occurrence and during the continuance of an event of default, the Administrative Agent is entitled to take various actions, including the acceleration of all amounts due under the Amended Credit Agreement.

All obligations under the Amended Credit Agreement (including under the Subline) are guaranteed by the U.S.

Borrower and certain subsidiaries of the U.S.

Borrower (“Full Facility Guarantors”).

To secure such guarantees, the U.S.

Borrower and the Full Facility Guarantors have granted security interests in favor of the Administrative Agent over substantially all of their tangible and intangible assets, and the U.S.

Borrower has granted mortgages in favor of the Administrative Agent over certain owned real estate assets.

Certain of the German Borrower's subsidiaries (the “Subline Guarantors”) have also provided a guarantee solely of the obligations in respect of the Subline.

Furthermore, to secure such guarantees, the German Borrower and the Subline Guarantors have granted security interests in favor of the Administrative Agent over substantially all of their tangible and intangible assets.

Upon repayment in full and termination of the Subline, the guarantees by the Subline Guarantors and the liens granted by the German Borrower and the Subline Guarantors to secure obligations under the Subline will be released.

CONVERTIBLE SENIOR NOTES AND CAPPED CALLS

1 unchanged sentence

(In thousands)

September 30, 2025

March 31, 2026

December 31, 2025

Convertible senior notes

1 unchanged sentence

Non-current convertible senior notes

The estimated fair value of the 2030 Notes was $ 226.3 million as of September 30, 2025.

The estimated fair value of the 2030 Notes, Level 2 inputs of the valuation hierarchy, were determined based on the quoted bid prices of the 2030 Notes in an over-the-counter market on the last trading day of the reporting period.

The estimated fair value of the 2030 Notes was $ 273.9 million and $ 217.5 million as of March 31, 2026 and December 31, 2025, respectively.

The estimated fair value of the 2030 Notes, based on Level 2 inputs of the valuation hierarchy, were determined based on the quoted bid prices of the 2030 Notes in an over-the-counter market on the last trading day of the reporting period.

The effective interest rate of the 2030 Notes over their expected life is 4.7 %.

The following is a summary of interest expense for the 2030 Notes:

Three and Nine Months Ended

Three Months Ended

(In thousands)

September 30, 2025

March 31, 2026

Contractual interest

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The 2030 Notes are convertible at the option of the holders of the 2030 Notes before June 15, 2030, only under the following circumstances:

(1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on December 31, 2025, if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on December 31, 2025, if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price for each of at least 20 trading days, whether or not consecu tive, during the last 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) if the trading price per $ 1,000 principal amount of the 2030 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;

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or (4) if the Company calls (or is deemed to have called) the 2030 Notes for redemption.

From and after June 15, 2030, noteholders may convert their 2030 Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

From and after June 15, 2030, noteholders may convert their 2030 Notes at any time at their election until

the close of business on the second scheduled trading day immediately before the maturity date.

The Company will settle conversions by paying cash up to the aggregate principal amount of the 2030 Notes to be converted and paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the Notes being converted, based on the applicable conversion rate.

The 2030 Notes will be redeemable, in whole or in part (subject to certain limitations described below), at the Company’s option at any time, and from time to time, on or after September 20, 2028 and on or before the 46th scheduled trading day immediately before the maturity date, but only if (i) the Notes are “Freely Tradable” (as defined in the Indenture) as of the date the Company sends the related redemption notice, and all accrued and unpaid additional interest, if any, has been paid in full as of the most recent interest payment date occurring on or before the date the Company sends the related redemption notice;

and (ii) the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice;

and (ii) the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the last 30 consecutive trading days ending on, and includi ng, the trading day immediately before the date the Company sends the related redemption notice;

and (2) the trading day immediately before the date the Company sends such redemption notice.

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The Capped Calls have an initial strike price of app roximately $ 11.52 per share, subject to certain adjustments substantially similar to those applicable to the corresponding 2030 Notes.

Calls have an initial cap price of approximately $ 15.51 per share, subject to certain adjustments.

The Capped Calls have an initial cap price of approximately $ 15.51 per share, subject to certain adjustments.

The Capped Calls cover, subject to anti-dilution adjustments, approximately 17.5 million shares of the Company’s common stock.

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The Capped Calls do not meet the criteria for separate accounting as a derivative as they are indexed to the Company's stock and meet the requirements to be classified in equity and, as such, are not remeasured each reporting period.

The premiums paid for the Capped Calls were included as a net reduction to additional paid-in capital within stockholders’ equity during the quarter ended September 30, 2025.

EMPLOYEE BENEFIT PLANS

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We maintain a defined benefit pension plan covering employees in certain foreign countries.

The net amounts of the unfunded pension liability as of September 30, 2025 and December 31, 2024 were as follows:

The net amounts recognized in the Condensed Consolidated Balance Sheets for the unfunded pension liability as of March 31, 2026 and December 31, 2025 were as follows:

(In thousands)

Balance Sheet Location

September 30, 2025

March 31, 2026

December 31, 2025

9 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

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Net periodic pension cost

The components of net periodic pension cost, other than the service cost component, are included in other income (expense), net in the Condensed Consolidated Statements of Loss.

The components of net periodic pension cost, other than the service cost component, are included in other income, net in the Condensed Consolidated Statements of Loss.

Service cost is included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Loss.

The Company made cash contributions to the defined benefit pension plans totaling $ 3.0 million during the nine months ended September 30, 2025 and 2024, respectively.

The Company made contributions to the defined benefit pension plans totaling $ 1.1 million during the three months ended March 31, 2026 and 2025.

Contributions to the defined benefit pension plans for the remainder of 2026 will be limited to benefit payments to retirees which are paid out of the operating cash flows of the Company and are expected to be approximately $ 1.6 million.

1 unchanged sentence

The following tables present the changes in accumulated other comprehensive income, net of tax, by component:

Three Months Ended September 30, 2025

Three Months Ended March 31, 2026

(In thousands)

2 unchanged sentences

ASU 2018-02 Adoption

Balance as of June 30, 2025

Balance as of December 31, 2025

Other comprehensive income (loss) before

3 unchanged sentences

Net current period other comprehensive loss

Balance as of September 30, 2025

Three Months Ended September 30, 2024

(In thousands)

Currency Translation

ASU 2018-02 Adoption

Balance as of June 30, 2024

Other comprehensive (loss) income before

reclassifications

Amounts reclassified from accumulated other

comprehensive income

Net current period other comprehensive income

Balance as of September 30, 2024 (Restated)

Nine Months Ended September 30, 2025

Balance as of March 31, 2026

Three Months Ended March 31, 2025

(In thousands)

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Net current period other comprehensive income

Balance as of September 30, 2025

Nine Months Ended September 30, 2024

(In thousands)

Currency Translation

ASU 2018-02 Adoption

Balance as of December 31, 2023

Other comprehensive loss before reclassifications

Amounts reclassified from accumulated other

comprehensive income

Net current period other comprehensive income (loss)

Balance as of September 30, 2024 (Restated)

The following tables present the details of reclassifications out of accumulated other comprehensive income:

Three Months Ended September 30, 2025

Balance as of March 31, 2025

The following tables present the details of reclassifications out of accumulated other comprehensive (loss) income:

Three Months Ended March 31, 2026

(In thousands)

Comprehensive

Affected Line Item in the

Statement Where Net

Loss Is Presented

Amount Reclassified from Accumulated

Other Comprehensive Loss

Affected Line Item

Unrealized gain on available-for-sale securities:

Net realized loss on sales of securities

Net investment gain

Net investment loss

Defined benefit plan adjustments – actuarial loss

Other income (expense)

Other (expense) income

Total reclassifications for the period, before tax

Total reclassifications for the period, net of tax

Three Months Ended September 30, 2024

Three Months Ended March 31, 2025

(In thousands)

Comprehensive

Affected Line Item in the

Statement Where Net

Loss Is Presented

Amount Reclassified from Accumulated Other Comprehensive Income

Affected Line Item

Unrealized gain on available-for-sale securities:

Net realized gain on sales of securities

Net investment gain

Defined benefit plan adjustments – actuarial gain

Other income (expense)

Total reclassifications for the period, before tax

Total reclassifications for the period, net of tax

Nine Months Ended September 30, 2025

(In thousands)

Comprehensive

Affected Line Item in the

Statement Where Net Loss

Unrealized gain (loss) on available-for-sale securities:

Net realized loss on sales of securities

Net investment gain

Net investment loss

Defined benefit plan adjustments – actuarial gain

Other income (expense)

Total reclassifications for the period, before tax

Total reclassifications for the period, net of tax

Nine Months Ended September 30, 2024

(In thousands)

Comprehensive

Affected Line Item in the

Statement Where Net Loss

Unrealized gain (loss) on available-for-sale securities:

Net realized loss on sales of securities

Net investment gain

Defined benefit plan adjustments – actuarial loss

Other income (expense)

Other (expense) income

Total reclassifications for the period, before tax

3 unchanged sentences

Three Months Ended

September 30, 2025

September 30, 2024

March 31, 2026

March 31, 2025

(In thousands)

Unrealized gain (loss) on available-for-sale securities

Reclassification adjustment for amounts related to available-for-sale investments included in net (loss) gain

Reclassification adjustment for amounts related to available-for-sale investments included in net loss

Reclassification adjustment for amounts related to defined benefit plan adjustments included in net (loss) gain

1 unchanged sentence

Total Other Comprehensive (Loss) Income

Nine Months Ended

September 30, 2025

September 30, 2024

(In thousands)

Unrealized gain (loss) on available-for-sale securities

Reclassification adjustment for amounts related to available-for-sale investments included in net (loss) gain

Reclassification adjustment for amounts related to defined benefit plan adjustments included in net gain

Foreign currency translation adjustments

Total Other Comprehensive Income (Loss)

REDEEMABLE NON-CONTROLLING INTEREST

As of September 30, 2025 , the non-controlling Adtran Networks stockholders’ equity ownership percentage in Adtran Networks was approximately 31.4 %.

The following table summarizes the RNCI activity for the nine months ended September 30, 2025 and for the year ended December 31, 2024:

Nine Months Ended

As of March 31, 2026 and December 31, 2025, the non-controlling Adtran Networks stockholders’ equity ownership percentage in Adtran Networks was approximately 28.8 % and 29.2 %, respectively.

The following table summarizes the redeemable non-controlling interest activity for the three months ended March 31, 2026 and for the year ended December 31, 2025:

Three Months Ended

For the Year Ended

(In thousands)

September 30, 2025

March 31, 2026

December 31, 2025

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Annual recurring compensation payable on untendered outstanding shares under the DPLTA must be recognized as it is accrued.

For the three and nine months ended September 30, 2025 , we have accrued $ 2.5 million and $ 7.5 million, respectively, and for the year ended December 31, 2024, the Company accrued $ 9.8 million, representing the portion of the annual recurring cash compensation to the non-controlling shareholders during such periods.

On July 1, 2025, the Company paid the Annual Recurring Compensation with respect to the 2024 fiscal year, which is paid annually after the ordinary general shareholders' meeting of Adtran Networks which was held on June 27, 2025.

For the three months ended March 31, 2026, we accrued $ 2.2 m illion and for the year ended December 31, 2025, the Company accrued $ 9.3 million, representing the portion of the annual recurring cash compensation to the non-controlling shareholders du ring such periods.

The 2025 Annual Recurring Compensation accrual will be paid after the ordinary general shareholders' meeting of Adtran Networks in 2026.

The 2026 Annual Recurring Compensation accrual will be paid after the ordinary general shareholders' meeting of Adtran Networks in 2027.

LOSS PER SHARE

Basic net loss per share is computed by dividing net income by basic weighted-average shares outstanding during the period.

Diluted net income per share is computed by dividing net income by diluted weighted-average shares outstanding during the period giving effect to all potentially dilutive securities to the extent they are dilutive.

We compute the dilutive effect of shares issuable upon conversion of our 2030 notes using the if-converted method and equity awards under our employee equity incentive plans using the treasury stock method.

The calculation of basic and diluted loss per share for the quarters ended March 31, 2026 and 2025 are as follows:

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share amounts)

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Three Months Ended

Nine Months Ended

September 30,

(In thousands)

2 unchanged sentences

PSUs, RSUs and restricted stock

In connection with the offering of the 2030 Notes, the Company entered into Capped Calls which are intended to reduce or offset the potential dilution from shares of common stock issued upon conversion.

The impact of the Capped Calls is not included when calculating potentially dilutive shares since their effect is anti-dilutive.

See Note 12, Convertible Senior Notes and Capped Calls for additional information .

SEGMENT INFORMATION

The chief operating decision maker, the Company's CEO , regularly reviews the Company’s financial performance based on two reportable segments:

The chief operating decision maker is the Company's Chief Executive Officer who regularly reviews the Company’s financial performance based on two reportable segments:

(1) Network Solutions and (2) Services & Support.

6 unchanged sentences

The cloud-hosted services include a suite of SaaS applications under the Company's Mosaic One platform that manages end-to-end network and service optimization for both fiber access infrastructure and mesh Wi-Fi connectivity.

The Company backs these services with a global support organization that offers on-site and off-site support services with varying service level agreements.

The Company backs these services with a global support organization that offers on-site and off-site support services with varying SLAs.

The performance of these segments is evaluated based on revenue, gross profit and gross margin;

therefore, selling, general and administrative expenses, research and development expenses, interest and dividend income, interest expense, net investment gain, other (expense) income, net and income tax (expense) benefit are reported on a consolidated basis only.

therefore, selling, general and administrative expenses, research and development expenses, interest and dividend income, interest expense, net investment loss, other income, net and income tax (expense) benefit are reported on a consolidated basis only.

There is no inter-segment revenue.

2 unchanged sentences

Three Months Ended

September 30, 2025

September 30, 2024

(In thousands)

Cost of Revenue

Network Solutions

Services & Support

Nine Months Ended

September 30, 2025

September 30, 2024

March 31, 2026

March 31, 2025

(In thousands)

3 unchanged sentences

Services & Support

For the three months ended September 30, 2025 and 2024 , $ 4.0 million and $ 2.9 million, respectively, of depreciation and amortization expense was included in gross profit for our Network Solutions segment.

For the nine months ended September 30, 2025 and 2024 , $ 10.7 million and $ 7.4 million, respectively, of depreciation and amortization expense was included in gross profit for our Network Solutions segment.

For the three months ended September 30, 2025 and 2024 , $ 0.4 million and $ 0.1 million, respectively, of depreciation and amortization expense was included in gross profit for our Services & Support segment.

For the nine months ended September 30, 2025 and 2024 , $ 1.2 million and $ 0.2 million, respectively, of depreciation and amortization expense was included in gross profit for our Services & Support segment.

For the three months ended March 31, 2026 and 2025 , $ 1.7 million and $ 1.3 million, respectively, of depreciation expense was included in gross profit for our Network Solutions segment.

For the three months ended March 31, 2026 and 2025 , less than $ 0.1 million of depreciation expense was included in gross profit for our Services & Support segment.

Revenue by Geographic Area

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

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Although the ultimate disposition of asserted claims cannot be predicted with certainty, it is our belief that the outcome of any such claims, either individually or on a combined basis, will not have a material adverse effect on our consolidated financial position.

We intend to cooperate in response to the SEC’s inquiry.

We cannot predict the timing or outcome of the inquiry.

As disclosed in Amendment No.

1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on May 20, 2025, we identified errors in our previously issued financial statements related to the historical accounting for certain inventory and cost of goods sold transactions (“Adjustment”).

The affected periods included the annual periods ended December 31, 2023 and 2024 and the interim periods ended March 31, 2024, June 30, 2024 and September 30, 2024.

The Company has taken certain remedial actions to address the material weaknesses in its internal controls associated with these findings.

On August 4, 2025, the Company received a letter from the Atlanta regional office of the SEC in connection with a non-public, fact-finding inquiry, requesting that we voluntarily provide information regarding the internal investigation.

The Company is cooperating in response to the SEC’s inquiry and cannot predict the timing or outcome of the inquiry.

DPLTA Appraisal Proceedings

In addition to such Legal Matters, the Company is a party to appraisal proceedings relating to the DPLTA which were originally filed with the Landgericht Meiningen (Meiningen Regional Court) on February 3, 2023.

In addition to such Legal Matters, the Company is a party to appraisal proceedings relating to the DPLTA which were originally filed with the Landgericht Meiningen (Meiningen District Court) on February 3, 2023.

The DPLTA provides that Adtran Networks shareholders (other than the Company) be offered, at their election, (i) to put their Adtran Networks shares to the Company in exchange for compensation in cash of €17.21 per share, plus guaranteed interest or (ii) to remain Adtran Networks shareholders and receive recurring cash compensation of €0.52 per share for each full fiscal year of Adtran Networks.

1 unchanged sentence

While the Company believes that the compensation offered in connection with the DPLTA is fair, it notes that German courts often adjudicate increases of the cash compensation to plaintiffs in varying amounts in connection with German appraisal proceedings.

Therefore, the Company cannot rule out that the court or an appellate court may increase the cash compensation owed to the minority Adtran Networks shareholders.

Therefore, the Company cannot rule out that the first instance court or an appellate court may increase the cash compensation owed to the minority Adtran Networks shareholders.

Given the stage of the appraisal proceedings, the Company is currently unable to predict the likely outcome or estimate the potential financial impact, if any, of the appraisal proceedings.

3 unchanged sentences

The guaranteed interest under the Exit Compensation is calculated from the effective date of the DPLTA to the date the shares are tendered, less any Annual Recurring Compensation paid.

The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that was 1.27 % as of September 30, 2025 .

Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, the Company would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately € 322.7 million or $ 378.7 million, based on an exchan ge rate as of September 30, 2025, and reflecting interest accrued through September 30, 2025 , during the pendency of the appraisal proceedings discussed below.

The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that was 1.27 % as of March 31, 2026.

Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, the Company would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately € 304.4 million or approximately $ 351.7 million, based on an exchange rate as of March 31, 2026, and reflecting interest accrued through March 31, 2026 , during the pendency of the appraisal proceedings discussed below.

Shareholders electing the first option of Annual Recurring Compensation may later elect the second option.

The opportunity for outside Adtran Networks shareholders to tender Adtran Networks shares in exchange for Exit Compensation had been scheduled to expire on March 16, 2023 .

However, due to the appraisal proceedings that were initiated in 2023 in accordance with applicable German law, this time period for tendering shares has been extended pursuant to the German Stock Corporation Act (Aktiengesetz) and will end two months after the date on which a final decision in such appraisal proceedings has been published in the

Federal Gazette (Bundesanzeiger).

However, due to the appraisal proceedings that were initiated in 2023 in accordance with applicable German law, this time period for tendering shares has been extended pursuant to the German Stock Corporation Act ( Aktiengesetz ) and will end two months after the date on which a final decision in such appraisal proceedings has been published in the Federal Gazette ( Bundesanzeiger ).

Following the court's decision on a procedural matter in the DPLTA appraisal proceedings on July 14, 2025, the proceeding for the trial on the merits of the DPLTA has recommenced.

It is expected to take a minimum of 12 months for a ruling of the court on the merits and such ruling will most likely be appealed, which would be expected to take an additional 12-24 months to be resolved.

It is expected to take a minimum of 12 months for

a ruling of the court on the merits and such ruling will most likely be appealed, which would be expected to take an additional 12-24 months to be resolved.

Accordingly, the Company does not expect a final decision on the DPLTA appraisal proceedings to be rendered and published prior to 2027, and most likely not until 2028 or beyond.

Our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately € 8.5 million (or $ 10.0 million based on the exchange rate as of September 30, 2025) per year assuming none of the minority Adtran Networks shareholders were to elect Exit Compensation.

Our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximat ely € 7.8 million (or $ 9.0 million based on the current exchange rate) per year assuming none of the minority Adtran Networks shareholders were to elect Exit Compensation.

The foregoing amounts do not reflect any potential increase in payment obligations that we may have depending on the outcome of ongoing appraisal proceedings in Germany.

With respect to the 2024 fiscal year, Adtran Networks’ ordinary general shareholders' meeting occurred on June 27, 2025 and, therefore, the Annual Recurring Compensation was paid on July 1, 2025.

During the three months ended September 30, 2025 and 2024, we accrued $ 2.5 million and $ 2.4 million, respectively, in Annual Recurring Compensation.

During the nine months ended September 30, 2025 and 2024, we accrued $ 7.5 million and $ 7.4 million, r espectively, in Annual Recurring Compensation, which was reflected as an increase to retained deficit.

For the three and nine months ended September 30, 2025, less than one thousand shares and approximately 0.9 million shares, respectively, of Adtran Networks stock were tendered to the Company.

This resulted in total Exit Compensation payments of approximately € 16.9 million, or $ 19.9 million based on the applicable exchange rates at the time of the transactions, being paid to Adtran Networks shareholders.

For the three and nine months ended September 30, 2024, 0.8 million shares of Adtran Networks stock were tendered to the Company.

This resulted in total Exit Compensation payments of approximately € 15.7 million, or approximately $ 17.4 million, respectively, based on the applicable exchange rates at the time of the transactions, being paid to Adtran Networks shareholders.

With respect to the 2025 fiscal year, Adtran Networks’ ordinary general shareholders meeting is scheduled for the second quarter of 2026, and the Annual Recurring Compensation will be due on the third banking day following the meeting .

During the three months ended March 31, 2026 and 2025, we accrued $ 2.2 million and $ 2.4 million, respectively, in Annual Recurring Compensation, which was reflected as an increase to retained deficit.

In addition, under the DPLTA, subject to certain limitations pursuant to applicable law and the specific terms of the DPLTA, (i) the Company is entitled to issue binding instructions to the management board of Adtran Networks, (ii) Adtran Networks will transfer its annual profit to the Company, subject to, among other things, the creation or dissolution of certain reserves, and (iii) the Company will absorb the annual net loss incurred by Adtran Networks.

2 unchanged sentences

Certain contracts, customers and jurisdictions in which we do business require us to provide various guarantees of performance such as bid bonds, performance bonds and customs bonds.

As of September 30, 2025 and December 31, 2024 , we had commitments related to these bonds totaling $ 18.0 million and $ 15.7 million, respectively, which expire at various dates throug h April 2029 .

As of March 31, 2026 and December 31, 2025, we had commitments related to these bonds totaling $ 22.2 mil li on and $ 22.4 million, respectively, which expire at various dates through April 2029 .

In general, we would only be liable for the amount of these guarantees in the event of default under each contract, the probability of which we believe is remote.

3 unchanged sentences

Certain of our inventory purchase obligations with contract manufacturers and suppliers relate to arrangements to secure supply and pricing for certain product components for multi-year periods.

As of September 30, 2025, purchase obligations totaled $ 211.2 mi llion.

RESTRUCTURING

On November 6, 2023, due to the uncertainty around the then-current macroeconomic environment and its impact on customer spending levels, the Company’s management decided to implement a Business Efficiency Program targeting the reduction of ongoing operating expenses and focusing on capital efficiency.

This included certain salary reductions, an early retirement program, a site consolidation plan to include lease impairments and the sale of owned real estate (including the sale of our headquarters in Huntsville), inventory write downs from product discontinuances, and the suspension of the quarterly dividend.

The Business Efficiency Program was completed as of December 31, 2024.

During the three and nine months ended September 30, 2024, we recognized $ 5.9 million and $ 40.6 million of costs related to the Business Efficiency Program, respectively.

The costs recognized during the nine months ended September 30, 2024, included total other renegotiated charges and inventory write-down of $ 8.6 million as a result of a strategy shift which included discontinuance of certain items in connection with the Business Efficiency Program, of which, $ 4.1 million relates to inventory write-downs and $ 4.5 million relates to other charges, and are included in cost of revenue in the Condensed Consolidated Statements of Loss.

A reconciliation of the beginning and ending restructuring liabilities, which is included in accrued wages and benefits and accounts payable as of September 30, 2025 and December 31, 2024, is as follows:

Three Months Ended

Nine Months Ended

(In thousands)

September 30, 2025

Balance at beginning of period

Adjusted accrued costs

Balance as of September 30, 2025

For the Year Ended

(In thousands)

December 31, 2024

Balance as of December 31, 2023

Amounts charged to cost and expense

Balance as of December 31, 2024

Restructuring expenses included in the Condensed Consolidated Statements of Loss are for the three and nine months ended September 30, 2025 and 2024:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Network Solutions - Cost of revenue

Network Solutions - charges and inventory write-down

Services & Support - Cost of revenue

Cost of revenue

Selling, general and administrative expenses

Research and development expenses

Total restructuring expenses

The following table represents the components of restructuring expenses by geographic area for the three and nine months ended September 30, 2025 and 2024:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

United States

International

Total restructuring expenses

RESTATEMENT OF QUARTERLY FINANCIAL INFORMATION

As previously disclosed in our Form 10-K/A and as discussed in Note 1 “Summary of Significant Accounting Policies”, the following tables reflect the impact of errors and other previously identified immaterial errors to the specific line items presented in our previously reported (a) Condensed Consolidated Balance Sheets;

(b) Condensed Consolidated Statements of Loss and Condensed Consolidated Statements of Comprehensive Income (Loss);

(d) Condensed Consolidated Statements of Cash Flows as of and for the nine months ended September 30, 2024.

As of September 30, 2024

Adj Reference

Current Assets

Cash and cash equivalents

Accounts receivable, less allowance for credit losses of $ 420 as of September 30, 2024

Other receivables

Income tax receivable

Inventory, net

Prepaid expenses and other current assets

Total Current Assets

Property, plant and equipment, net

Intangibles, net

Deferred tax assets

Other non-current assets

Long-term investments

LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND EQUITY

Current Liabilities

Accounts payable

Unearned revenue

Accrued expenses and other liabilities

Accrued wages and benefits

Income tax payable, net

Total Current Liabilities

Non-current revolving credit agreement outstanding

Deferred tax liabilities

Non-current unearned revenue

Non-current pension liability

Deferred compensation liability

Non-current lease obligations

Other non-current liabilities

Total Liabilities

Commitments and contingencies (see Note 18)

Redeemable Non-Controlling Interest

Common stock, par value $ 0.01 per share;

200,000 shares authorized;

79,233 shares issued and 78,967 outstanding as of September 30, 2024

Additional paid-in capital

Accumulated other comprehensive income

Retained deficit

Treasury stock at cost:

266 shares as of September 30, 2024

Total Liabilities, Redeemable Non-Controlling Interest and Equity

Three Months Ended September 30, 2024

Nine Months Ended September 30, 2024

Adj Reference

Network Solutions

Services & Support

Total Revenue

Cost of Revenue

Network Solutions

Network Solutions - Inventory Write Down

Services & Support

Total Cost of Revenue

Selling, general and administrative expenses

Research and development expenses

Goodwill impairment

Operating Loss

Interest and dividend income

Interest expense

Net investment gain

Other (expense), net

Loss Before Income Taxes

Income tax (expense) benefit

Net Income attributable to non-controlling interest (1)

Net Loss attributable to ADTRAN Holdings, Inc.

Weighted average shares outstanding – basic

Weighted average shares outstanding – diluted

Loss per common share attributable to ADTRAN Holdings, Inc.

Other Comprehensive Income (Loss), net of tax

Defined benefit plan adjustments

Foreign currency translation gain (loss)

Other Comprehensive Income (Loss), net of tax

Comprehensive Loss, net of tax

Comprehensive Income attributable to non-controlling interest

Comprehensive Loss attributable to ADTRAN Holdings, Inc., net of tax

Retained Deficit

Accumulated Other Comprehensive Income

Additional paid-in capital

(In thousands)

Balance as of June 30, 2024

Annual recurring compensation earned

Other comprehensive income, net of tax

ADTRAN RSUs and restricted stock vested

ADTRAN stock-based compensation expense

Redemption of redeemable non-controlling interest

Adtran Networks stock-based compensation expense

Modification of stock options

Balance as of September 30, 2024

Nine Months Ended September 30, 2024

Adj Reference

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

Goodwill impairment

Amortization of debt issuance cost

Gain loss on investments

Net loss on disposal of property, plant and equipment

Stock-based compensation expense

Deferred income taxes

Inventory write down

Inventory reserves

Change in operating assets and liabilities:

Accounts receivable, net

Other receivables

Income taxes receivable

Prepaid expenses, other current assets and other assets

Accounts payable

Accrued expenses and other liabilities

Income taxes payable

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property, plant and equipment

Purchases of intangibles - developed technology

Proceeds from sales and maturities of available-for-sale investments

Purchases of available-for-sale investments

Proceeds from beneficial interests in securitized accounts receivable

Net cash used in investing activities

Cash flows from financing activities:

Tax withholdings related to stock-based compensation settlements

Proceeds from stock option exercises

Proceeds from receivables purchase agreement

Repayments on receivables purchase agreement

Repayment of revolving credit agreements

Payment for redemption of redeemable non-controlling interest

Payment of annual recurring compensation to non-controlling interest

Payment of debt issuance cost

Net cash used in financing activities

Net increase in cash and cash equivalents

Effect of exchange rate changes

Cash, cash equivalents and restricted cash, beginning of year

Cash, cash equivalents and restricted cash, end of year

Supplemental disclosure of cash financing activities

Cash paid for interest

Cash paid for income taxes, net of refunds

Cash used in operating activities related to operating leases

Supplemental disclosure of non-cash investing activities:

Right-of-use assets obtained in exchange for lease obligations

Purchases of property, plant and equipment included in accounts payable

Redemption of redeemable non-controlling interest

SUBSEQUENT EVENTS

Termination of Deferred Compensation Plans

On November 3, 2025, in an effort to streamline the benefits offered to members of management and other key employees, the Company terminated its Deferred Compensation Program for Employees (the "Deferred Compensation Plan") and its Equity Deferral Program for Employees (together with the Deferred Compensation Plan, the "Plans").

The Plans are deferred compensation plans that have provided certain members of management or highly compensated employees, including certain of our named executive officers, with an opportunity to defer the receipt of a portion of their cash compensation, bonus, or other specified compensation.

Each of the Plans has been maintained as an unfunded, nonqualified plan providing benefits based on the participant’s notional account balance at the time of retirement or separation, death or (with respect to the Deferred Compensation Plan) a change in control.

The Company has also terminated its deferred compensation plans for its non-employee directors.

See Part II, Item 5(a) of this report for additional information regarding the terminated deferred compensation plans.

As of March 31, 2026, purchase obligations totale d $ 223.7 mi llion.

Tariff Refund

On February 20, 2026, the U.S.

Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA").

The ultimate availability, timing, and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments.

Following the Supreme Court’s decision, the U.S.

presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs (including tariffs on semiconductors, which are expected to increase in June 2027).

The Company has concluded that the potential refund of IEEPA tariffs should be evaluated under a loss recovery model pursuant to Accounting Standards Codification ("ASC") 410‑30.

The tariffs at issue were previously capitalized to inventory and subsequently expensed through cost of goods sold.

Accordingly, any refund represents a recovery of previously recognized costs, and recognition is limited to amounts previously recorded.

Under the loss recovery model, an asset for recovery may be recognized only when receipt is considered probable, as defined under ASC 450‑20.

While the Supreme Court ruling establishes a legal basis for recovery, material uncertainty remains regarding the administrative process required to obtain refunds.

Customs and Border Protection ("CBP") system became operational on April 20, 2026.

Given the lack of clarity surrounding refund execution to determine expected recovery amount, the Company has concluded that recovery of the IEEPA tariffs is not probable as of the reporting date.

Accordingly, no refund receivable has been recognized.

Management will continue to monitor developments, including CBP implementation milestones, formal guidance on claim submission, and claim acceptance processes.

Additionally, Adtran may owe money to customers depending on final assessments of contractual or implicit passthrough obligations.

The Company will continue to monitor developments related to both refund recoverability and customer refund considerations and will update its accounting conclusions in future periods as facts and circumstances evolve.

401(k) Plan Corrective Action

In June 2024, the Company identified that within our Adtran, Inc.

401(k) plan for the year ended 2023, that deferrals and matching contributions should have been applied to vested equity award amounts in accordance with the plan documents.

As such, we filed a voluntary correction program (“VCP”) application with the IRS and the Company is still in negotiations with the IRS regarding the appropriate corrective actions for this failure.

Nonetheless, based on the current facts and circumstances surrounding the VCP negotiations, the Company accrued $ 1.4 million during the year ended December 31, 2025.

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.

What changed 10-Q

Item 1. Financial Statements