XBP Global Holdings, Inc. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward-Looking Statements The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with a review of the other Items included in this Annual Report and our December 31, 2025 Consolidated Financial Statements included elsewhere in this report. Certain statements contained in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may be deemed to be forward-looking statements. See “Special Note Regarding Forward Looking-Statements.” Unless otherwise indicated or the context otherwise requires, references in this section to “we,” “our,” “us,” “XBP Global”, “the Company” and similar terms are to BPA before the Business Combination, and to XBP Global Holdings, Inc. following the Business Combination. Amounts disclosed are in thousands of United States dollars unless otherwise noted. Overview XBP Global is a multinational technology and services company powering intelligent workflows for organizations worldwide. Our proprietary platforms and agentic AI-driven automationenable our clients to entrust us with their most impactful digital transformations and mission-critical operations. Our operational foundation is further defined by deep domain expertise across industries and the public and private sectors, including decades of experience helping clients navigate shifting global regulatory frameworks and supporting compliance with the rigorous standards required by government entities and highly scrutinized industries, including banking, healthcare and insurance. We pair this expertise with platform-agnostic, end-to-end structured workflows that combine AI-driven automation with dedicated human-in-the-loop exception handling and orchestration software, enabling our clients to transition from labor-intensive, reactive operations to digitally orchestrated, exception-driven workflows. From enabling payment gateways and data exchanges across multiple systems, to matching inputs against contracts and handling exceptions, to ultimately depositing payments and distributing communications, our solutions address the full life cycle of transaction processing and enterprise information management. Our Applied Workflow Automation segment provides services powered by intelligent, AI-enabled workflows that generate outcomes for clients’ systems. Revenue primarily stems from transactions processed and includes payment processing, data capture, analysis, decisioning, distribution and transformation across industries and the public and private sectors, primarily in Americas and Europe, and increasingly in Asia. Our Technology segment primarily focuses on sales of recurring software licenses and related maintenance, hardware solutions and related maintenance and professional services. As of December 31, 2025, we had 10,600 employees in 20 countries operating either remotely from our business facilities or co-located at our clients’ facilities. History XBP Global Holdings, Inc. was originally incorporated as CF Acquisition Corp. VIII, a blank check company formed under the laws of the State of Delaware on July 8, 2020. On March 16, 2021, the Company consummated its initial public offering. The Company’s initial purpose was to effect a business combination with one or more businesses. On October 9, 2022, CF Acquisition Corp. VIII entered into a merger agreement with XBP Europe, Inc., at the time a subsidiary of ETI. The business combination was completed on November 30, 2023, at which time the Company was renamed XBP Europe Holdings, Inc., reflecting the purchase of ETI’s historical European operations, and the Company’s shares and public warrants started trading on The Nasdaq Stock Market LLC under the ticker symbols “XBP” and “XBPEW,” respectively. On July 29, 2025, XBP Europe Holdings, Inc. finalized its acquisition of BPA, ETI’s historical operations in the Americas and Asia, as part of the Business Combination pursuant to the MIPA. The consideration for the sale was $1.00, reflecting the encumbered nature of BPA which at the time of entry into the MIPA was involved in the Chapter 11 Cases. The Business Combination was subject to certain conditions subsequent including emergence of BPA and certain of its affiliates from the Chapter 11 Cases, which occurred on July 29, 2025. Prior to the Business Combination, the Company and BPA had both been indirect subsidiaries of ETI. ETI remains a stockholder of the Company and a related 40 Table of Contents party; see Note 20, Related-Party Transactions . In connection with the Business Combination, the Company changed its name from “XBP Europe Holdings, Inc.” to “XBP Global Holdings, Inc.” Together with the European operations acquired in 2023, the Company’s current global platform is built upon a portfolio of acquired and predecessor entities with more than 50 years of commercial and operational history. The Business Combination was accounted for as a reverse acquisition in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). Under this method of accounting, XBP Europe Holdings, Inc. (now XBP Global) was treated as the “acquired” company for financial reporting purposes even though BPA survives as an indirect wholly-owned subsidiary of XBP Global. BPA Chapter 11 Reorganization On March 3, 2025, BPA commenced the Chapter 11 Cases. On July 29, 2025 (the “Emergence Date”), BPA consummated the Restructuring and emerged from bankruptcy having satisfied or waived all the conditions set forth in the Plan. In accordance with ASC 852, Reorganizations (“ASC 852”), BPA was required to apply fresh-start accounting upon its emergence from bankruptcy. The Company evaluated transaction activity of BPA between July 31, 2025 and the Emergence Date and concluded that the Convenience Date was appropriate for the adoption of fresh-start accounting which resulted in BPA becoming a new entity for financial reporting purposes as of the Convenience Date. On the Emergence Date, in connection with the consummation of the Restructuring and pursuant to the Plan: ● The Company’s Third Amended and Restated Certificate of Incorporation was filed with the Delaware Secretary of State and became effective, increasing authorized shares to 400,000,000 shares of Common Stock, and 20,000,000 shares of preferred stock of the Company, and changing the Company’s name to XBP Global Holdings, Inc. ● The Company issued 8,179,982 shares of Common Stock to holders of Allowed Notes Claims (claims based on the 2026 Indentures (as defined below), and as further defined in the Plan) and for backstop and funding fees, resulting in 11,751,597 shares of Common Stock issued and outstanding, and new warrants to purchase 663,242 shares of Common Stock to GP 3XCV LLC and XCV-STS, LLC (two subsidiaries of ETI). The issuances reflected a Plan Equity Value based on a valuation of BPA equity at $407.0 million and an overall implied equity valuation of the combined company of $585.7 million and were exempt from registration under Section 1145 of the U.S. Bankruptcy Code. The warrants have standard terms and are exercisable immediately at Plan Equity Value. ● The Company entered into the Tax Funding Agreement (the “Tax Funding Agreement”) with the Reorganized Debtors (the BPA Debtors following the Restructuring), as Agent, and the Consenting ETI Parties. The Tax Funding Agreement provides for the Consenting ETI Parties to fund certain Transaction Tax Liabilities (as defined in the Plan) (up to an initial funding obligation of $15 million and any excess over $25 million), with security over Blocked ETI Shares (as defined therein) and provisions for release upon payment. ● The Reorganized BPA Debtors entered into certain exit financing arrangements (refer to the description of “Indebtedness” below), including: o An Indenture reflecting the issuance of $183.0 million of the July 2030 Notes as defined and described further in the description of “Indebtedness” below, in a cashless rollover of a comparable amount of debtor-in-possession obligations from the Chapter 11 Cases, plus $18.0 million in the XBP Funding, with the remaining $10.0 million of debtor-in-possession obligations from the Chapter 11 Cases being cancelled and replaced with $6.0 million of loans under the Super Senior Term Loan as defined and described further in the description of “Indebtedness” below. 41 Table of Contents o The Super Senior Term Loan consisting of $40.0 million of new loans used to refinance the BPA Debtors’ prepetition senior secured term loan facility, which was in the aggregate principal amount of approximately $38.9 million, plus accrued interest, fees, and expenses, and $6.0 million of take-back loans, secured by Term Loan Priority Collateral (as defined therein). o An Amended and Restated Credit and Security Agreement with BRF Finance Co. LLC, as Agent, and the lenders party thereto, amending and restating the Second Lien Note, dated February 27, 2023, as defined and described further in the description of “Indebtedness” below, providing for term loans bearing interest at Term SOFR plus 7.5%, and other terms as set forth therein. o The ABL Facility, as defined and described further in the description of “Indebtedness” below, with MidCap Financial Trust as Agent and Lender, providing a $150 million revolving credit facility, secured by ABL Priority Collateral (as defined therein), with terms including interest at SOFR plus Applicable Margin (3.75%-4.25% based on EBITDA), maturity 36 months from closing, financial covenants (e.g., Fixed Charge Coverage Ratio), and other customary provisions. In addition, on the Emergence Date, the 2026 Indentures were terminated, and all obligations thereunder were cancelled and discharged, with holders of claims thereunder receiving distributions of Common Stock as described above. The ABL Facility also replaced BPA’s then existing securitization arrangements with PNC Bank. As a result of the Restructuring and the Business Combination, the Company was no longer considered a “controlled company” under the rules of The Nasdaq Stock Market. Prior to the Restructuring and the Business Combination, BTC, an indirect subsidiary of ETI, owned approximately 60.7% of the Company’s Common Stock. Pursuant to the Plan, BTC’s shares were distributed to holders of Allowed Notes Claims (including ETI). Post-issuance of new shares under the Plan, beneficial ownership is dispersed, with no beneficial holder owning more than 50% of the voting securities of the Company. As of December 31, 2025 ETI held approximately 25.7%, Gates Capital Management approximately 24.4%, and Avenue Capital approximately 9.3%, in each case, assuming the exercise of all warrants held by the Consenting ETI Parties. The Restructuring and the Business Combination represent a dissipation of control, not a “change of control” in the traditional sense, because no new third party acquired control of XBP Europe Holdings, Inc. as a result of the Restructuring of the BPA Debtors and the subsequent Business Combination. As of the date of this report, there are no known arrangements that may result in a further change in control. Predecessor and Successor The “Predecessor” company information refers to the financial information prior to the Emergence Date, which reflects the combined historical financial statements of BPA prepared using BPA’s previous combined basis of accounting. The “Successor” company information refers to the financial information beginning August 1, 2025 and reflects the consolidated financial statements of XBP Global, including the financial statement effects of recording fair value adjustments and the capital structure resulting from the Business Combination and fresh start accounting of BPA. Black lines have been drawn to separate the Successor’s financial information from that of the Predecessor since their financial statements are not comparable as a result of the application of acquisition accounting and the Company’s capital structure resulting from the Business Combination and fresh start accounting of BPA. The Predecessor period includes a $1.56 billion net reorganization gain from debt discharge and fresh-start adjustments, which is non-recurring and significantly affects comparability with the Successor period. See Note 4, Fresh Start Accounting and Note 2, Basis of Presentation and Summary of Significant Accounting Policies for additional information. Reverse Stock Split On December 12, 2025, we effected the Reverse Stock Split of our issued and outstanding shares of our Common Stock. At the effective time of the Reverse Stock Split, every ten (10) shares of Common Stock issued and outstanding were automatically combined into one (1) share of issued and outstanding Common Stock, without any change in the par value per share. Our Common Stock began trading on The Nasdaq Capital Market on a Reverse Stock Split-adjusted basis on December 15, 2025. There was no change in our ticker symbol as a result of the Reverse Stock Split. All 42 Table of Contents information related to Common Stock, stock options, restricted stock units, warrants and earnings per share have been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented. Our Segments Our two reportable segments are Applied Workflow Automation and Technology. These segments are comprised of significant strategic business units that align our products and services with how we manage our business, approach our key markets, and interact with our clients based on their respective industries. Applied Workflow Automation: the Applied Workflow Automation segment provides services powered by intelligent, AI-enabled workflows that generate outcomes for clients’ systems. Revenue primarily stems from transactions processed and includes payment processing, data capture, analysis, decisioning, distribution and transformation across industries and the public and private sectors, primarily in Americas and Europe, and increasingly in Asia. The Applied Workflow Automation segment includes the Company’s Bills & Payments, healthcare industry solutions, on-site enterprise solutions, integrated communications and enterprise legal management business units which serve leading banks, payers and providers, utilities as well as federal, regional and local government entities. ​ Technology: the Technology segment focuses on the sale of recurring and perpetual software licenses, software maintenance and professional services, as well as hardware solutions and maintenance. The Company offers an industry-agnostic and cross-departmental suite of products, with primary focus on scalable workflows leveraging AI through neural networks together with deep domain expertise. The Company also offers industry specific platforms for the banking and healthcare industries. Revenues The Company’s revenues are primarily generated from a transaction based pricing model for the various types of volumes processed and a mix of fixed management fee and transactional revenue for document logistics and location services. Our healthcare services business generates revenues primarily from a transaction based pricing model for the various types of volumes processed for healthcare payers and providers. Our support services in connection with various legal matters generate revenues primarily based on time and materials pricing as well as through transactional services priced on a per item basis. In addition, the Company also sells recurring and perpetual software licenses, as well as maintenance and other professional services. Licensing options are flexible, and clients can purchase a license covering a maximum number of transactions, as well as multi-year term licenses with flexible renewal options. People We draw on the business and technical expertise of our talented and diverse global workforce to provide our clients with high-quality services. Our business leaders bring a strong diversity of experience in our industry and a track record of successful performance and execution. As of December 31, 2025, we had approximately 10,600 employees globally, with 5,400 employees located in Americas and EMEA, and the remainder located primarily in India and the Philippines. Costs associated with our employees represent the most significant expense for our business. We incurred personnel costs of $162.9 million, $186.8 million and $367.7 million for the periods August 1, 2025 to December 31, 2025 (Successor), January 1, 2025 to July 31, 2025 (Predecessor), and for the year ended December 31, 2024 (Predecessor), respectively. The majority of our personnel costs are variable and are incurred only while we are providing our services. In certain jurisdictions, for example many countries in Europe, there is a statutory payment requirement for any people made redundant due to automation or relocation of delivery locations. 43 Table of Contents Facilities We lease and own numerous facilities worldwide with larger concentrations of space in California, Connecticut, Illinois, Iowa, Michigan, Texas, Washington, Canada, France, Germany, India, and the Philippines. Our owned and leased facilities house general offices, sales offices, service locations, and production facilities. The size of our active property portfolio as of December 31, 2025 was approximately 1.8 million square feet. As of December 31, 2025, our active property portfolio comprised of 83 leased properties and 5 owned properties. We believe that our current facilities are suitable and adequate for our current business. Because of the interrelation of our business segments, each of the segments uses substantially all of these properties at least in part. Key Performance Indicators We use a variety of operational and financial measures to assess our performance. Among the measures considered by our management are the following: ● Revenue by segment; ● Gross profit by segment; and ● Adjusted EBITDA (which is a non-GAAP financial measure). Revenue by segment We analyze our revenue by comparing actual monthly revenue to internal projections and prior periods across our operating segments in order to assess performance, identify potential areas for improvement, and determine whether segments are meeting management’s expectations. Gross profit by segment The Company defines Gross Profit as revenue less cost of revenue (exclusive of depreciation and amortization). The Company uses Gross Profit by segment to assess financial performance at the segment level. Non-GAAP Financial Measures To supplement its financial data presented on a basis consistent with GAAP, this report contains certain non-GAAP financial measures, including EBITDA, Adjusted EBITDA and Pro forma Adjusted EBITDA. The Company has included these non-GAAP financial measures because they are financial measures used by management to evaluate the Company’s core operating performance and trends, to make strategic decisions regarding the allocation of capital and new investments. We believe these measures also provide useful information to investors by allowing consistent period-to-period comparisons of our operating results after removing the effects of our capital structure, asset base, and certain non-recurring items. These measures exclude certain expenses that are required under GAAP. The Company excludes these items because they are non-recurring or non-cash expenses that are determined based in part on the Company’s underlying performance. EBITDA, Adjusted EBITDA and Pro forma Adjusted EBITDA We define EBITDA as net income (loss), plus taxes, interest expense, and depreciation and amortization. We define Adjusted EBITDA as EBITDA plus non-recurring transaction costs, non-cash equity compensation, restructuring and related expenses, loss/(gain) on sale of assets, impairment of goodwill and other non-recurring items such as reorganization items. We define Pro forma Adjusted EBITDA as Adjusted EBITDA plus management’s estimates of the impact of the acquisition of XBP Europe Holdings, Inc. and reorganization of BPA, had such transactions occurred at the beginning of the earliest period presented. 44 Table of Contents Results of Operations Year Ended December 31, 2025 Compared to Year Ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Successor ​ ​ Predecessor ​ Combined (Non-GAAP) ​ Predecessor ​ ​ ​ ​ ​ ​ ​ ​ Period from August 1, 2025 through December 31, ​ ​ Period from January 1, 2025, through July 31, ​ Year Ended December 31, ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ 2025 ​ 2025 ​ ​ ​ 2024 ​ ​ ​ Change ​ ​ ​ % Change Revenue (including related party revenue): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Applied Workflow Automation ​ $ 321,618 ​ ​ $ 401,593 ​ $ 723,211 ​ $ 816,447 ​ $ (93,236) ​ ​ (11.4)% Technology ​ 37,763 ​ ​ 30,068 ​ 67,831 ​ 56,243 ​ 11,588 ​ 20.6% Total revenue ​ 359,381 ​ ​ 431,661 ​ 791,042 ​ 872,690 ​ (81,648) ​ (9.4)% Cost of revenue (exclusive of depreciation and amortization): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Applied Workflow Automation ​ 264,474 ​ ​ 329,433 ​ 593,907 ​ 665,401 ​ (71,494) ​ (10.7)% Technology ​ 14,917 ​ ​ 10,548 ​ 25,465 ​ 18,523 ​ 6,942 ​ 37.5% Total cost of revenues (exclusive of depreciation and amortization) ​ 279,391 ​ ​ 339,981 ​ 619,372 ​ 683,924 ​ (64,552) ​ (9.4)% Selling, general and administrative expenses ​ 49,669 ​ ​ 53,946 ​ 103,615 ​ 124,440 ​ (20,825) ​ (16.7)% Depreciation and amortization ​ 26,225 ​ ​ 22,313 ​ 48,538 ​ 50,307 ​ (1,769) ​ (3.5)% Impairment of goodwill ​ ​ 320,292 ​ ​ ​ — ​ ​ 320,292 ​ ​ 108,489 ​ ​ 211,803 ​ 195.2% Related party expense ​ 5,386 ​ ​ 5,750 ​ 11,136 ​ 10,971 ​ 165 ​ 1.5% Operating profit (loss) ​ (321,582) ​ ​ 9,671 ​ (311,911) ​ (105,441) ​ (206,470) ​ 195.8% Interest expense, net ​ 24,237 ​ ​ 75,226 ​ 99,463 ​ 101,939 ​ (2,476) ​ (2.4)% Debt modification and extinguishment costs (gain), net ​ ​ — ​ ​ ​ 121 ​ ​ 121 ​ ​ 363 ​ ​ (242) ​ ​ (66.7)% Sundry expense (income), net ​ 274 ​ ​ 1,644 ​ 1,918 ​ (2,087) ​ 4,005 ​ (191.9)% Other income, net ​ (1,596) ​ ​ (28) ​ (1,624) ​ (515) ​ (1,109) ​ 215.3% Loss before reorganization items and income taxes ​ ​ (344,497) ​ ​ ​ (67,292) ​ ​ (411,789) ​ ​ (205,141) ​ ​ (206,648) ​ ​ 100.7% Reorganization items ​ ​ 1,615 ​ ​ ​ (1,557,825) ​ ​ (1,556,210) ​ ​ — ​ ​ (1,556,210) ​ ​ 100.0% Net profit (loss) before income taxes ​ (346,112) ​ ​ 1,490,533 ​ 1,144,421 ​ (205,141) ​ 1,349,562 ​ (657.9)% Income tax expense ​ 5,011 ​ ​ 35,875 ​ 40,886 ​ 10,009 ​ 30,877 ​ 308.5% Net profit (loss) ​ $ (351,123) ​ ​ $ 1,454,658 ​ $ 1,103,535 ​ $ (215,150) ​ $ 1,318,685 ​ (612.9)% ​ Revenue For the year ended December 31, 2025, our net revenue on a consolidated basis decreased by $81.6 million, or 9.4%, to $791.0 million (including related party revenue of $3.0 million) from $872.7 million (including related party revenue of $5.6 million) for the year ended December 31, 2024. Applied Workflow Automation and Technology segments constituted 91.4%, and 8.6%, respectively, of our total net revenue for the year ended December 31, 2025, compared to 93.6%, and 6.4%, respectively, for the year ended December 31, 2024. The revenue changes by reporting segment were as follows: Applied Workflow Automation — Net revenue attributable to Applied Workflow Automation segment was $723.2 million for the year ended December 31, 2025, compared to $816.4 million for the year ended December 31, 2024. The revenue decline of $93.2 million, or 11.4%, is primarily attributable to lower postage revenue, lower one-time projects and client contract ends, offset by the inclusion of a newly acquired entity in the successor period and revenue from newly won business. Technology — For the year ended December 31, 2025, net revenue attributable to the Technology segment increased by $11.6 million, or 20.6%, to $67.8 million from $56.2 million for the year ended December 31, 2024. The revenue increase in the Technology segment was largely due to inclusion of newly acquired entity in the successor period. Cost of revenue For the year ended December 31, 2025, the cost of revenue decreased by $64.5 million, or 9.4%, compared to the year ended December 31, 2024. 45 Table of Contents In the Applied Workflow Automation segment, the decrease was primarily attributable to reduced cost resulting from completed projects and optimization efforts. Cost of revenue to the Applied Workflow Automation segment decreased by $71.5 million, or 10.7%. The cost of revenue in the Technology segment increased by $6.9 million, or 37.5%, primarily due to the inclusion of the newly acquired entity in the successor period within the Technology segment. Cost of revenue for the year ended December 31, 2025, was 78.3% of revenue compared to 78.4% of revenue for the year ended December 31, 2024. The marginal decrease in cost of revenues as a percentage of revenue on a consolidated basis was primarily due to changes in revenue mix during the current period. Selling, general and administrative expenses Selling, general and administrative expenses (“SG&A expenses”) decreased $20.8 million, or 16.7%, to $103.6 million for the year ended December 31, 2025, compared to $124.4 million for the year ended December 31, 2024. The decrease was primarily attributable to a lower provision for bad debts, decrease in legal and professional fees, and a one-time benefit from the write-off of certain aged liabilities, these favorable impacts were partially offset by an increase in government penalties, higher severance payouts associated with restructuring initiatives, receipt of insurance claim payment in 2024 and the inclusion of incremental SG&A expenses from the newly acquired entity. SG&A expenses decreased as a percentage of revenue to 13.1% for the year ended December 31, 2025, as compared to 14.3% for the year ended December 31, 2024. Depreciation and amortization Total depreciation and amortization expenses were $48.5 million for the year ended December 31, 2025, compared to $50.3 million for the year ended December 31, 2024. Impairment of goodwill Impairment of goodwill for the year ended December 31, 2025 was $320.3 million. During the period August 1, 2025 to September 30, 2025, the Company experienced a sustained and significant decline in its market capitalization causing the market capitalization to fall below the Company’s book value after the application of fresh start accounting at Emergence Date. Management concluded that this sustained decline, combined with revised long-term projections compared to those used to compute enterprise value of the reconstituted Successor as set forth in the Disclosure Statement for Joint Plan of Reorganization approved by the Bankruptcy Court, represented a triggering event under ASC 350. In connection with the completion of the interim impairment test, the Company recorded an impairment charge of $215.8 million and $80.0 million to goodwill relating to the reporting units reported under the Applied Workflow Automation segment and Technology segment, respectively, during the period August 1, 2025 to September 30, 2025. Additionally, later during the fourth quarter of 2025 (Successor), the Company conducted its annual budgeting process along with an update to its long-range plan. Following the completion of that process, the Company made an evaluation based on changes in the Company’s long-term projections, concluding that a triggering event for an impairment analysis had occurred for certain reporting units reported under the Applied Workflow Automation segment. Revised long-term projections resulted in lower than previously projected long-term future cash flows for certain reporting units which reduced the estimated fair values to below their carrying values. Accordingly, the Company performed quantitative impairment test as of December 31, 2025 (Successor), resulting in an impairment charge of $24.5 million to goodwill relating to the reporting units reported under the Applied Workflow Automation segment. Therefore, as a result of these two interim impairment assessments performed on September 30, 2025 (Successor) and December 31, 2025 (Successor), impairment charges totalling $320.3 million, were recorded to goodwill for the period August 1, 2025 to December 31, 2025 (Successor). Impairment of goodwill for the year ended December 31, 2024 (Predecessor) was $108.5 million. 46 Table of Contents Related party expenses Related party expense was $11.1 million for the year ended December 31, 2025, compared to $11.0 million for the year ended December 31, 2024. Refer to Note 20, Related Party Transactions to our audited consolidated and combined financial statements as of and for the years ended December 31, 2025 and 2024 contained elsewhere in this Annual Report for additional information regarding the Company’s related party transactions. Interest expense, net Interest expense, net was $99.5 million for the year ended December 31, 2025, compared to $101.9 million for the year ended December 31, 2024. Debt modification and extinguishment costs (gain), net There was $0.1 million of debt modification and extinguishment cost for the year ended December 31, 2025, while there was $0.4 million debt modification and extinguishment cost for the year ended December 31, 2024. Sundry expense (income), net The increase in sundry expense, net of $4.0 million over the prior year period, was primarily attributable to exchange rate fluctuations on foreign currency transactions. Other expense (income), net Other income, net was a gain of $1.6 million for the year ended December 31, 2025, compared to a gain of $0.5 million for the year ended December 31, 2024. Reorganization items Reorganization items for the year ended December 31, 2025, includes a material net reorganization gain of $1.56 billion. This gain was predominantly non-cash, stemming from two principal accounting mandates: the gain realized from the settlement of pre-petition liabilities subject to compromise, the gain recognized under Fresh Start Accounting, further augmented by a non-cash gain resulting from the mandatory derecognition of unamortized debt discount, premium and issuance costs associated with the extinguishment of the prior capital structure, reflecting the mandated revaluation of the balance sheet to fair value upon emergence. These substantial, positive adjustments were partially offset by the operational costs required to execute the plan, including essential legal and professional fees. Income Tax Expense We recorded an income tax expense of $40.9 million for the year ended December 31, 2025, and an income tax expense of $10.0 million for the year ended December 31, 2024. The tax expense for the year ended December 31, 2025 is higher than the year ended December 31, 2024, due to permanent adjustments relating to goodwill impairment and reorganization items as well as an increase in deferred tax expense relating to establishment of deferred tax liabilities on Fresh Start adjustments. The Company’s effective tax rate for the period from August 1, 2025 through December 31, 2025 (Successor) is (1.4)%. The effective tax rate for the Successor period was primarily impacted by the goodwill impairment, increase of valuation allowance on the current period disallowed interest deduction as well as increase in uncertain tax positions recorded in the period from August 1, 2025 through December 31, 2025 (Successor). The Company’s effective tax rate for the period from January 1, 2025 through July 31, 2025 (Predecessor) is 2.4%. The effective tax rate for the period was primarily impacted by fresh start accounting adjustments recorded in connection with the Company's emergence from bankruptcy. The Company recorded income tax expense related to the recognition of deferred tax liabilities arising from fresh start accounting adjustment, including the remeasurement of assets and liabilities. In addition, the company recognized tax expense associated with the reduction of deferred tax assets related to debt instruments. These amounts 47 Table of Contents were partially offset by tax benefits associated with the reversal of book restructuring gain and changes in the valuation allowance on deferred tax assets. The Company’s effective tax rate for the year ended December 31, 2024 (Predecessor) was (4.9)%. The effective tax rate for 2024 was primarily impacted by goodwill impairment and increase in valuation allowance recorded against current year deferred tax assets. In addition, the effective tax rate was impacted by changes in uncertain tax positions recognized during the period. Other Financial Information (Non-GAAP Financial Measures) We view EBITDA, Adjusted EBITDA and Pro forma Adjusted EBITDA as important indicators of performance. We define EBITDA as net (loss) income, plus income tax expenses, interest expense, net and depreciation and amortization. We define Adjusted EBITDA as EBITDA plus non-recurring transaction costs, non-cash equity compensation, restructuring and related expenses, loss/(gain) on sale of assets, impairment of goodwill and other non-recurring items such as reorganization items. We define Pro forma Adjusted EBITDA as Adjusted EBITDA plus management’s estimates of the impact of the acquisition of XBP Europe Holdings, Inc. and reorganization of BPA, had such transactions occurred at the beginning of the earliest period presented. We present EBITDA, Adjusted EBITDA and Pro forma Adjusted EBITDA because we believe they provide useful information regarding the factors and trends affecting our business in addition to measures calculated under GAAP. Note Regarding Non-GAAP Financial Measures EBITDA, Adjusted EBITDA and Pro forma Adjusted EBITDA are not financial measures presented in accordance with GAAP. We believe that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our financial performance and results of operations as our board of directors and management use EBITDA, Adjusted EBITDA and Pro forma Adjusted EBITDA to assess our financial performance, because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization) and items outside the control of our management team. Net income/loss is the GAAP measure most directly comparable to EBITDA, Adjusted EBITDA and Pro forma Adjusted EBITDA. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Each of these non-GAAP financial measures have important limitations as analytical tools because they exclude some but not all items that affect the most directly comparable GAAP financial measures. These non-GAAP financial measures are not required to be uniformly applied, are not audited and should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. Because EBITDA, Adjusted EBITDA and Pro forma Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. 48 Table of Contents Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024 The following table presents a reconciliation of EBITDA, Adjusted EBITDA and Pro forma Adjusted EBITDA to our net profit (loss), the most directly comparable GAAP measure, for the periods August 1, 2025 to December 31, 2025 (Successor), January 1, 2025 to July 31, 2025 (Predecessor) and the year ended December 31, 2024 (Predecessor). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Successor ​ ​ Predecessor ​ Combined (Non-GAAP) ​ Predecessor ​ ​ Period from August 1, 2025 through December 31, ​ ​ Period from January 1, 2025 through July 31, ​ Year Ended December 31, ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2024 Net profit (loss) ​ $ (351,123) ​ ​ $ 1,454,658 ​ $ 1,103,535 ​ $ (215,150) Income tax expense ​ 5,011 ​ ​ 35,875 ​ 40,886 ​ 10,009 Interest expense, net ​ 24,237 ​ ​ 75,226 ​ 99,463 ​ 101,939 Depreciation and amortization ​ 26,225 ​ ​ 22,313 ​ 48,538 ​ 50,307 EBITDA ​ (295,650) ​ ​ 1,588,072 ​ 1,292,422 ​ (52,895) Transactions costs (1) ​ 5,426 ​ ​ — ​ 5,426 ​ 608 Non-cash equity compensation (2) ​ 886 ​ ​ 204 ​ 1,090 ​ 1,598 Restructuring and related expenses (3) ​ ​ 3,713 ​ ​ ​ — ​ ​ 3,713 ​ ​ — Loss/(gain) on sale of assets (4) ​ ​ 2,395 ​ ​ ​ 1,967 ​ ​ 4,362 ​ ​ (96) Debt modification and extinguishment costs (gain), net ​ ​ — ​ ​ ​ 121 ​ ​ 121 ​ ​ 363 Network outage event related insurance recoveries, net of settlement costs ​ ​ (4,733) ​ ​ ​ — ​ ​ (4,733) ​ ​ (7,085) Reorganization items ​ ​ 1,615 ​ ​ ​ (1,557,825) ​ ​ (1,556,210) ​ ​ — Impairment of goodwill ​ 320,292 ​ ​ — ​ 320,292 ​ 108,489 Adjusted EBITDA ​ ​ 33,944 ​ ​ ​ 32,539 ​ ​ 66,483 ​ ​ 50,982 Impact of acquisition and reorganization (5) ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,937 ​ ​ 3,021 Pro forma Adjusted EBITDA ​ ​ ​ ​ ​ ​ ​ ​ $ 69,420 ​ $ 54,003 ​ (1) Represents non-recurring legal, consulting and other fees and expenses incurred in connection with acquisitions, dispositions, debt-exchanges and other extraordinary transactions and events during the applicable period. (2) Represents the non-cash charges related to stock-based compensation. (3) Represents one-time costs associated with restructuring, including employee severance, legal, and lease termination costs. (4) Represents a loss/(gain) recognized on the disposal of property, plant, and equipment and other assets. (5) Represents management’s estimates of the impact of the acquisition of XBP Europe Holdings, Inc. and reorganization of BPA, had such transactions occurred at the beginning of fiscal 2024. ​ 49 Table of Contents Liquidity and Capital Resources Overview Our primary source of liquidity is principally cash generated from operating activities supplemented as necessary on a short‑term basis by borrowings. As of December 31, 2025, we had total indebtedness of $387.6 million following the Business Combination and emergence from Chapter 11, and we incurred interest expense of approximately $24.2 million and $75.2 million during the periods August 1, 2025 to December 31, 2025 (Successor) and January 1, 2025 to July 31, 2025 (Predecessor), respectively. We believe our current level of cash and short-term financing capabilities along with future cash flows from operations are sufficient to meet the needs of the business for at least the next twelve months. However, compliance with the Company’s restrictive financial covenants in the Company’s financing agreements is tested as of specified measurement dates and may, from time to time, depend on the Company’s operating performance and the successful execution of planned transactions, including asset dispositions or other balance sheet actions. Our ability to meet those financial covenants can be affected by events beyond our control, and we may not be able to meet those covenants. There can be no assurance that any planned transactions will be completed on a timely basis, on acceptable terms, or at all. Even if the Company is in compliance with its debt covenants as of the date of filing of this Annual Report, subsequent developments or our inability to successfully execute planned transactions, could result in non-compliance in future periods. Liquidity is the availability of adequate amounts of cash with an enterprise to meet its needs for cash requirements. At December 31, 2025 (Successor) and December 31, 2024 (Predecessor) cash, restricted cash, and cash equivalents totalled $68.7 million and $64.1 million, respectively, including restricted cash of $31.6 million and $52.4 million, respectively. In the ordinary course of business, we enter into contracts and commitments that obligate us to make payments in the future. These obligations include borrowings, interest obligations, purchase commitments, operating and finance lease commitments, employee benefit payments and taxes. The current maturities under the Second Lien Note, the secured borrowings under the BR Exar AR Facility, the 2028 Term Loan Facilities (each as defined and further described in “Indebtedness” below) and the other debts are $15.8 million, $1.4 million, $3.3 million and $14.8 million, respectively. We were in compliance with all financial covenants as of December 31, 2025. See Note 13, Long-Term Debt and Credit Facilities , Note 15, Employee Benefit Plans , and Note 16, Commitments and Contingencies , to our consolidated and combined financial statements herein for further information on material cash requirements from known contractual and other obligations. The Predecessor recently emerged from the Chapter 11 Cases. As a result, near-term liquidity is expected to be negatively impacted due to the requirement to satisfy certain pre-petition liabilities pursuant to the Plan. This constrained liquidity is expected to continue until such time as these liabilities are fully settled. In addition, our indebtedness that we incurred in connection with or that otherwise survived the Restructuring limits our financial flexibility and requires substantial ongoing cash flows for debt service. We plan to spend approximately 1.0% of total revenue on total capital expenditures over the next twelve months. Our business model has evolved to leverage cloud hosted platforms. This has reduced our capital expenditures and increased our operating expenses. This is the primary driver of changes in our capital expenditures when compared with historical periods. Our future cash requirements will depend on many factors, including our rate of revenue growth, our investments in strategic initiatives, applications or technologies, operation centers and acquisition of complementary businesses, which may require the use of significant cash resources and/or additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all, which may adversely impact our business, operating results and financial condition. The Company utilized COVID-19 relief measures in various European jurisdictions, including permitted deferrals of certain payroll, social security and value added taxes. At the end of the third quarter 2024, the Company paid a significant portion of these deferred payroll taxes, social security and value added taxes. The remaining balance of deferred payroll taxes, social security and value added taxes is expected to be paid by April 2027, or later, as per deferment timelines as established by local laws and regulations. 50 Table of Contents The Company believes the current cash, cash equivalents and cash flows from operating and financing activities are sufficient to meet the Company’s working capital and capital expenditure requirements for a period of at least twelve months. To the extent existing cash, cash from operations, and amounts available for borrowing are insufficient to fund future activities, the Company may need to raise additional capital. The Company may require funding for a variety of reasons, including, but not limited to, cost overruns for reasons outside of its control, lower-than-expected sales or compliance with restrictive financial covenants in the Company’s financing agreements. If the Company’s current cash on hand is not sufficient to meet its financing requirements for the next twelve months, it may have to raise funds to allow it to continue to operate its business and execute on its business plan. The Company cannot be certain that funding will be available on acceptable terms or at all, particularly given the amount of Company securities being offered, the terms of such securities and the potential duration of any offering. To the extent that the Company raises additional funds by issuing equity securities, its stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that may impact the Company’s ability to conduct business or return capital to investors. If the Company is unable to raise additional capital on acceptable terms, it may have to significantly scale back, delay or discontinue certain businesses, restrict its operations or obtain funds by entering into agreements on unattractive terms. Further, any failure to comply with the restrictive covenants in the Company’s financing agreements could result in an event of default. In such circumstances, the Company may be required to seek waivers or amendments from its lenders, which may not be granted and, if granted, could impose additional costs, more restrictive terms or other adverse conditions. The need to obtain waivers or amendments, or the occurrence of a default, may also require public disclosure and could adversely affect the Company’s liquidity, access to capital, reputation and business prospects. An event of default could permit lenders to accelerate the Company’s indebtedness and exercise remedies against collateral securing such indebtedness. A significant portion of our indebtedness could become immediately due and payable. We cannot be certain whether we would have, or would be able to obtain, sufficient funds to make these accelerated payments. If any such indebtedness is accelerated, our assets may not be sufficient to repay in full such indebtedness and our other indebtedness. If the Company is unable to repay amounts outstanding under its financing agreements when due, the lenders thereunder could, subject to the terms of the financing agreements, seek to foreclose on the collateral that is pledged to secure the indebtedness outstanding under such facility. Known Trends and Uncertainties The workflow automation industry continues to face pricing pressure from competitive bidding, technological disruption from AI and automation, and client demand for lower-cost offshore solutions. We are exposed to these trends through our reliance on long-term contracts that may be renewed at lower rates or terminated early. Pricing pressure in the workflow automation industry, potential loss of key client contracts (no single client exceeds 10% of revenue, but concentration exists in financial services and government sectors), and transitional challenges from the July 2025 restructuring (including client and vendor uncertainty and integration costs) are reasonably likely to affect future results of operations and liquidity. Management is addressing these through continued cost optimization, targeted client retention initiatives, and integration of the acquired operations to stabilize relationships. Cash Flows The following table summarizes our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Successor ​ ​ Predecessor ​ Combined (Non-GAAP) ​ Predecessor ​ ​ ​ ​ ​ Period from August 1 through December 31, ​ ​ Period from January 1 2025 through July 31, ​ Year Ended December 31, ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ Change Net cash provided by (used in) operating activities ​ $ 18,232 ​ ​ $ (159,942) ​ $ (141,710) ​ $ 23,267 ​ $ (164,977) Net cash used in investing activities ​ (6,336) ​ ​ (2,690) ​ (9,026) ​ (6,488) ​ ​ (2,538) Net cash provided by (used in) financing activities ​ 13,109 ​ ​ 145,264 ​ 158,373 ​ (2,756) ​ 161,129 Subtotal ​ $ 25,005 ​ ​ $ (17,368) ​ $ 7,637 ​ 14,023 ​ $ (6,386) Effect of exchange rates on cash, restricted cash and cash equivalents ​ (234) ​ ​ (2,804) ​ (3,038) ​ (3,451) ​ 413 Net increase (decrease) in cash, restricted cash and cash equivalents ​ $ 24,771 ​ ​ $ (20,172) ​ $ 4,599 ​ $ 10,572 ​ $ (5,973) ​ 51 Table of Contents Analysis of Cash Flow Changes between the year ended December 31, 2025 and December 31, 2024 Operating Activities— The increase of $165.0 million in net cash used in operating activities for the year ended December 31, 2025 was primarily due to return of accounts receivable of approximately $74.5 million on the Emergence Date which were previously sold under certain Securitization Facility of the Predecessor and the refund of amounts received for such sold accounts receivables, increase in payments for accounts payable and accrued liabilities by $11.8 million, cash paid for reorganization activities of $70.7 million and lower gross profit (revenue less cost of revenue) by $17.0 million. This increase in net cash used in operating activities was partially offset by lower selling, general and administrative expenses of $20.8 million reflecting cost optimization following the Restructuring. Investing Activities— The increase of $2.5 million in net cash used in investing activities for the year ended December 31, 2025 was primarily due to a $2.6 million increase in cash used for purchase of property, plant and equipment and $2.1 million decrease in proceeds from sale of assets partially offset by a $0.6 million reduction in additions to internally developed software. Financing Activities— Cash provided by financing activities during the year ended December 31, 2025 was $158.4 million, primarily as a result of $40.7 million of proceeds from borrowings under the BR Exar AR Facility, $18.0 million of proceeds from the Revolving Credit Facility (as defined and further described in “Indebtedness” below), $80.0 million from new-money loans borrowed pursuant to certain debtor-in-possession (“DIP”) financing agreement in connection with the Chapter 11 Cases (“DIP New Money Loans”), $40.0 million of proceeds from the Super Senior Term Loan, $105.8 million of proceeds from the ABL Facility, $14.7 million of net proceeds from other loans and $3.5 million of net proceeds from issuance of July 2030 Notes. These inflows were partially offset by $46.4 million of repayments made under the BR Exar AR Facility, $48.9 million of principal repayments on BPA’s prepetition senior secured financing agreement and other loans, $9.7 million of repayments on the Second Lien Note, $28.8 million of repayment under the ABL Facility, $5.0 million of principal payments on finance lease obligations, and $5.5 million paid for debt issuance costs. Cash used in financing activities during the year ended December 31, 2024 was $2.8 million. This was primarily due to $59.3 million in borrowings under the BR Exar AR Facility and $14.8 million in proceeds from other loans, which were offset by $52.3 million in repayments under the BR Exar AR Facility, $6.0 million of repayments on the Second Lien Note, $11.5 million in principal repayments on BPA’s prepetition senior secured financing agreement and other loans, $6.6 million of principal repayments on finance lease obligations, and $0.5 million for debt issuance costs. Indebtedness Following is a description of the Company’s principal indebtedness outstanding as of December 31, 2025. Refer to Note 13, Long-term Debt and Credit Facilities within our consolidated and combined financial statements for additional information regarding the Predecessor’s indebtedness outstanding as of December 31, 2024, none of which remained outstanding following the Restructuring or as of December 31, 2025. July 2030 Notes On July 29, 2025, Exela Technologies BPA, LLC and Exela Finance Inc., wholly-owned subsidiaries of the Company (for this purpose, together, the “2030 Notes Issuers”), certain guarantors and U.S. Bank Trust Company, National Association, as trustee, entered into an indenture (the “July 2030 Notes Indenture”) governing the Company’s 12.0% First-Priority Senior Secured Notes due 2030 (the “July 2030 Notes”). The Company issued approximately $183.0 million aggregate principal amount of the July 2030 Notes pursuant to the Plan, which may be supplemented by additional issuances in accordance with the July 2030 Notes Indenture. In December 2025, the Company issued an additional $4.0 million in aggregate of principal amount of the July 2030 Notes generating net proceeds of $3.5 million. The July 2030 Notes bear interest at a fixed rate of 12.0% per annum, payable quarterly on January 15, April 15, July 15 and October 15 of each year, commencing January 15, 2026, and mature on July 15, 2030. Interest on overdue amounts accrues at the stated rate plus 2.0% per annum. $187.0 million aggregate principal amount of the July 2030 Notes remained outstanding as of December 31, 2025. 52 Table of Contents The July 2030 Notes may be redeemed, in whole or in part, at the 2030 Notes Issuers’ option at any time, upon not less than 10 nor more than 30 days’ prior notice, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest to, but excluding, the redemption date. In addition, the July 2030 Notes are subject to repurchase requirements upon the occurrence of certain specified events, including upon a change of control at 101% of principal plus accrued and unpaid interest and on certain asset sales or debt proceeds at 100% of principal plus accrued and unpaid interest. The July 2030 Notes Indenture limits the ability of the 2030 Notes Issuers and the guarantors to incur additional debt, pay dividends or make other restricted payments, make certain investments, create or permit liens on assets, sell or dispose of assets, and enter into transactions with affiliates, in each case subject to specified exceptions. Events of default include the failure to pay principal, interest or other amounts when due, the failure to comply with covenants or other agreements in the July 2030 Notes Indenture, defaults on other material indebtedness of the 2030 Notes Issuers or the guarantors, certain bankruptcy or insolvency events, and the entry of material judgments against the 2030 Notes Issuers or the guarantors. If an event of default occurs and is continuing, the July 2030 Notes may be declared immediately due and payable, and in the case of bankruptcy or insolvency events, the July 2030 Notes automatically become immediately due and payable. The obligations under the July 2030 Notes are fully and unconditionally guaranteed on a senior secured basis by the 2030 Notes Issuers’ U.S. subsidiary guarantors, and are secured by liens on the collateral of the 2030 Notes Issuers and such guarantors, subject to permitted liens and the terms of the Super Senior, ABL and Equal Priority Intercreditor Agreements. Under these agreements, the ABL Lenders (as described below) hold first-priority liens on receivables, inventory, cash and related assets, while the Super Senior Term Loan Lenders (as described below) and July 2030 Noteholders hold junior liens on such assets. With respect to fixed assets, equity interests, intellectual property and related assets, the Super Senior Term Loan Lenders hold first-priority liens and July 2030 Noteholders share equal second-priority liens on a pari passu basis with holders of outstanding general unsecured claims in the Chapter 11 Cases, while the ABL Lenders hold junior liens. Super Senior Term Loan On July 29, 2025, Exela Technologies BPA, LLC and Exela Finance Inc. (for this purpose, together, the “Super Senior Term Loan Borrowers”), each subsidiary of the Exela Technologies BPA, LLC, as guarantors, Ankura Trust Company, LLC, as administrative agent and collateral agent, and certain lenders (the “Super Senior Term Loan Lenders”) entered into a Financing Agreement (as amended, the “Super Senior Term Loan”), in accordance with the Plan. The Super Senior Term Loan provided for an aggregate principal amount of up to $46.0 million in senior secured term loans, consisting of (i) $40.0 million in new-money term loans, used to refinance obligations under BPA’s prepetition senior secured financing agreement and pay related fees and expenses, and (ii) $6.0 million in term loans issued to DIP lenders in exchange for and in full satisfaction of $10.0 million of DIP claims as contemplated by the Plan. Interest on the Super Senior Term Loan accrues, at the Super Senior Term Loan Borrowers’ election, either (a) at the Reference Rate, meaning the greatest of 4.0% per annum, the Federal Funds Effective Rate plus 0.5% per annum, one-month Term SOFR plus 1.0% per annum, or the Wall Street Journal Prime Rate plus 10.7% per annum, stepping down to 7.3% per annum upon the establishment of an Incremental Facility, or (b) at Term SOFR, subject to a 4.0% floor, plus 11.7% per annum, stepping down to 8.3% per annum upon the establishment of an Incremental Facility. Interest on Reference Rate Loans is payable monthly in arrears, while interest on SOFR Loans is payable at the end of each applicable interest period. Upon the occurrence of an event of default, all outstanding amounts bear interest at the applicable rate plus 2.0% per annum, payable on demand. As of December 31, 2025, there were borrowings of $46.0 million outstanding under the Super Senior Term Loan. The Super Senior Term Loan is scheduled to mature on July 28, 2028. Voluntary prepayments are permitted at any time with five business days’ notice, provided accrued interest is paid and, if applicable, a prepayment premium is payable at a rate of 2.0% if prepaid prior to the first anniversary of the Emergence Date, 1.0% if prepaid on or after the first anniversary but prior to the second anniversary, and 0% thereafter. In addition, the Super Senior Term Loan is subject to mandatory prepayments of principal with accrued interest in certain circumstances, including (a) 25.0% of annual Excess Cash Flow (beginning with the fiscal year ending December 31, 2026, payable within ten business days after delivery of annual financial statements), (b) 100% of net cash proceeds from non-permitted asset sales in excess of 53 Table of Contents $0.5 million in any fiscal year subject to reinvestment rights, (c) 100% of net cash proceeds from the issuance of indebtedness or equity securities (other than permitted issuances), and (d) certain extraordinary receipts, such as insurance recoveries and condemnation awards, subject to reinvestment rights. Upon the occurrence of an event of default such as payment defaults, covenant breaches, bankruptcy or insolvency, cross-defaults to other significant indebtedness, and judgment defaults, the obligations under the Super Senior Term Loan may be accelerated and become immediately due and payable. The obligations under the Super Senior Term Loan are guaranteed on a joint and several basis by substantially all of the Super Senior Term Loan Borrowers’ subsidiaries and are secured by a first-priority lien on substantially all of the assets of the Super Senior Term Loan Borrowers' and the guarantors, subject to permitted liens and the terms of the ABL Intercreditor Agreement (as described below) and that certain Super Senior Intercreditor Agreement. The Super Senior Term Loan contains customary affirmative and negative covenants, including limitations on additional indebtedness, the granting of liens, asset sales, restricted payments, affiliate transactions, and changes in business. It also includes a financial covenant requiring the Issuer to maintain the ratio of (a) Indebtedness to (b) Covenant Consolidated EBITDA of no greater than 1.00 to 1.00 based on the trailing 12 months ended as of the last day of the most recently ended fiscal quarter. The Super Senior Term Loan Borrowers are also required to maintain liquidity of at least $2.0 million (or $10.0 million after the incurrence of any Incremental Facility). The Super Senior Term Loan Borrowers were in compliance with all financial covenants as of December 31, 2025. Second Lien Note On February 27, 2023, BPA, through its subsidiary Exela Receivables 3, LLC, and BRF Finance Co., LLC entered into a Secured Promissory Note pursuant to which BPA borrowed $31.5 million from BRF Finance Co., LLC secured by a second lien pledge of Exela Receivables 3, LLC, a subsidiary of BPA (as amended, the “Second Lien Note”). The Second Lien Note was originally scheduled to mature on June 17, 2025 and bears interest at a per annum rate of one-month Term SOFR plus 7.5%. On July 29, 2025, BPA entered into an Amended and Restated Second Lien Credit Agreement with BRF Finance Co., LLC. The amendment was executed in connection with BPA’s emergence from the Chapter 11 Cases to align the terms of the Second Lien Note with the Company’s new capital structure and intercreditor arrangements. The revised agreement extended the maturity of the Second Lien Note to March 30, 2026. At the option of the Company, the maturity of the Second Lien Note was further extended to September 30, 2026. The obligations under the Second Lien Note are fully and unconditionally guaranteed by certain subsidiaries of BPA and are secured by liens on BPA’s and certain guarantors’ assets, including accounts receivable, inventory, cash and deposit accounts, equipment, real property, equity interests in subsidiaries, intercompany obligations, general intangibles, and other related assets. Pursuant to the ABL Intercreditor Agreement, BRF Finance Co., LLC’s liens are subordinated to the liens securing the Company’s senior debt facilities; specifically, the ABL Facility with respect to receivables, inventory, cash, and related assets, and the Super Senior Term Loan and July 2030 Notes with respect to fixed assets, equity interests, and other non-ABL assets. As a result, the obligations under the Second Lien Note are effectively second-priority liens behind the senior secured debt. The Second Lien Notes requires the borrowers to maintain a minimum fixed charge coverage ratio, calculated on a trailing twelve-month basis. The minimum required ratio varies depending on the period: for the defined periods tested quarterly through December 31, 2025, and monthly from January 1, 2026, through June 30, 2026, the fixed charge coverage ratio must be not less than 0.85 to 1.00. Thereafter, for the defined periods tested monthly from July 1, 2026, through the maturity date, the fixed charge coverage ratio must be not less than 1.00 to 1.00. The Company was in compliance with all financial covenants as of December 31, 2025. During 2024 (Predecessor), the Company had repaid $6.0 million principal amount of the Second Lien Note. During the periods August 1, 2025 to December 31, 2025 (Successor) and January 1, 2025 to July 31, 2025 (Predecessor), the Company repaid $3.8 million and $6.0 million, respectively, in principal amount of the Second Lien Note. The loss on early extinguishment of debt during the period August 1, 2025 to December 31, 2025 (Successor) and January 1, 2025 to July 31, 2025 (Predecessor) totaled $0 and $0.1 million, respectively and represents write off of debt issuance costs. Loss on the early extinguishment of debt is reported within debt modification and extinguishment costs (gain), net within the Company’s consolidated and combined statements of operations. As of December 31, 2025 54 Table of Contents (Successor), there were borrowings of $15.8 million outstanding under the Second Lien Note included in the current portion of long-term debt in the consolidated balance sheet. ABL Facility On July 29, 2025, Exela Technologies BPA, LLC and certain of its subsidiaries (collectively, the “ABL Borrowers”) entered into a $150.0 million Asset-Based Lending Credit and Security Agreement (as amended, the “ABL Facility”) with MidCap Funding IV Trust, as administrative and collateral agent (the “Agent”), and a syndicate of lenders (the “ABL Lenders”). The ABL Facility was executed in connection with BPA’s emergence from the Chapter 11 Cases and provides for revolving commitments of up to $150.0 million, with an option to increase to $175.0 million through an additional tranche. The borrowing availability under the ABL Facility is limited to the lesser of (i) the aggregate revolving commitments and (ii) the borrowing base, which is calculated by reference to eligible billed and unbilled receivables, certain other receivables, eligible cash, and related assets, reduced by reserves established by the Agent. Borrowings under the ABL Facility bear an interest at Term SOFR plus an applicable margin ranging from 3.8% to 4.3%, depending on the ABL Borrowers’ trailing twelve-month EBITDA, subject to a 1.0% SOFR floor. Interest is payable monthly, with a 2.0% default premium. In addition to interest, the ABL Borrowers are required to pay an unused commitment fee of 0.5% per annum on the average daily unused portion of the commitments, customary letter of credit fees on the face amount of each outstanding letter of credit, a collateral management fee payable to the Agent, and a minimum balance fee if borrowings under the ABL Facility fall below 20.0% of the Borrowing Base. As of December 31, 2025 (Successor), there were borrowings of $76.8 million outstanding under the ABL Facility. The ABL Facility matures on July 29, 2028, and may be prepaid at any time without penalty (other than breakage costs). Mandatory repayments are required from proceeds of dispositions of the ABL Priority Collateral, certain insurance proceeds, or upon acceleration following an event of default. The events of default include failure to pay principal, interest or fees when due; breaches of covenants or other material contractual obligations; materially inaccurate representations or warranties; failure to pay specified other indebtedness above $25.0 million; bankruptcy or insolvency; final unsatisfied judgments; ERISA-related defaults; and a change in control. The obligations under the ABL Facility are guaranteed on a joint and several basis by substantially all of the ABL Borrowers’ U.S. subsidiaries. The liens securing the ABL Facility are subject to an Intercreditor Agreement (the “ABL Intercreditor Agreement”) dated July 29, 2025, among MidCap Funding IV Trust, Ankura Trust Company, LLC, as Term Agent, BRF Finance Co., LLC, as Riley Agent, and U.S. Bank Trust Company, National Association, as July 2030 Notes Trustee. The ABL Intercreditor Agreement governs lien priorities including (i) relative priorities for the collateral securing the ABL Facility obligations, the Super Senior Term Loan obligations, the July 2030 Notes Indenture obligations and the Second Lien Note obligations; (ii) collateral priorities securing (a) any Second Lien Note obligations, (b) any Super Senior Term Loan obligations, (c) any July 2030 Notes Indenture obligations, or (d) any Excess ABL Debt; and (iii) prohibition on contesting liens. The ABL Facility is secured by a first-priority lien on certain ABL Priority Collateral (including receivables, cash, inventory, deposit accounts, and related assets) and a junior lien on certain Term Priority Collateral (as defined therein), subject to the ABL Intercreditor Agreement. The ABL Facility includes customary affirmative covenants such as reporting, collateral maintenance, insurance, and inspections, and negative covenants, including restrictions on additional indebtedness, liens, asset sales, investments, affiliate transactions, and changes in business, with a minimum fixed charge coverage ratio, tested if excess availability falls below a defined threshold. The ABL Facility requires the ABL Borrowers to maintain a minimum fixed charge coverage ratio, calculated on a trailing twelve-month basis. The fixed charge coverage ratio is defined as the ratio of EBITDA less Unfinanced Capital Expenditures less Capitalized Software Expenditures, to Fixed Charges (as such terms are defined in the ABL Facility). The minimum required ratio varies depending on the period: for the defined periods tested quarterly through December 31, 2025, and monthly from January 1, 2026 through June 30, 2026, the fixed charge coverage ratio must be not less than 0.85 to 1.00. Thereafter, for the defined periods tested monthly from July 1, 2026, through the maturity date, the fixed charge coverage ratio must be not less than 1.00 to 1.00. The ABL Facility also requires maintaining minimum excess availability of not less than $7.5 million at any time for three (3) or more consecutive business days through June 30, 2026. The Company was in compliance with all financial covenants as of December 31, 2025 (Successor). 55 Table of Contents Senior Credit Facilities Agreement In June 2024, XBP Europe, Inc., a wholly owned subsidiary of the Company, together with certain other subsidiaries, entered into a Facilities Agreement (the “Facilities Agreement”) with HSBC UK Bank plc (“HSBC”) for a £15.0 million and €10.5 million secured credit facility consisting of (i) a single draw, secured Term Loan A facility in an aggregate principal amount of £3.0 million (the “2028 Term Loan A Facility”), (ii) a single draw, secured Term Loan B facility in an aggregate principal amount of €10.5 million (the “2028 Term Loan B Facility”, collectively with the 2028 Term Loan A Facility, the “2028 Term Loan Facilities”) and (iii) a multi-draw, multi-currency secured revolving credit facility in an aggregate principal amount of £12.0 million (the “Revolving Credit Facility”), and, together with the 2028 Term Loan Facilities, (the “Senior Credit Facilities”). Pursuant to the original Facilities Agreement, the 2028 Term Loan Facilities mature on June 26, 2028, and the Revolving Credit Facility matures on June 26, 2027, with certain extension rights at the discretion of HSBC. Borrowings under the 2028 Term Loan A Facility, the 2028 Term Loan B Facility and Revolving Credit Facility bear interest at a rate per annum equal to the SONIA plus the applicable margin of 3.25%, Euro Interbank Offered Rate (“EURIBOR”) plus the applicable margin of 3.25% and Reference Rate plus the applicable margin of 3.25%, respectively. “Reference Rate” for any period means (i) Secured Overnight Financing Rate (“SOFR”) for funds extended in U.S. Dollars; (ii) the EURIBOR, for funds extended in Euros; (iii) the SONIA, for funds extended in Pounds Sterling; and the Stockholm Interbank Offered Rate (“STIBOR”) for funds extended in Swedish Krona. On July 25, 2025, an amendment to the Facilities Agreement was executed to permit the borrowing of an additional sum of €16.1 million, the equivalent of £14.0 million, under the Revolving Credit Facility. The drawdowns were made in Euro and used for general corporate purposes. This amendment extended the maturity of the Revolving Credit Facility to June 26, 2028, and updated certain definitions and covenants reflecting the Company’s new corporate structure following the Business Combination as discussed in Note 5 , Business Combination . The Senior Credit Facilities continue to be secured by first-ranking security interests over substantially all assets of XBP Europe, Inc. and other borrower and guarantor subsidiaries, including cash, receivables, inventory, intercompany receivables, shares in subsidiaries, and related assets. The amendment added a new covenant restricting XBP Global Holdings, Inc., as the parent of XBP Europe, Inc., from providing certain guarantees or other credit support. Except as otherwise provided by applicable law, all obligations under the Facilities Agreement are jointly and severally unconditionally guaranteed by the European subsidiaries of XBP Europe, Inc. The outstanding principal amount of the 2028 Term Loan A Facility is scheduled to be repaid in fifteen (15) equal quarterly installments of £150 thousand, which commenced September 30, 2024, with the remaining outstanding principal amount of £750 thousand payable at maturity along with accrued and unpaid interest. The outstanding principal amount of the 2028 Term Loan B Facility is scheduled to be repaid in fifteen (15) equal quarterly installments of €525 thousand, which commenced September 30, 2024, with the remaining outstanding principal amount of €2.6 million payable at maturity along with accrued and unpaid interest. The Company may, at any time, prepay the principal of the Senior Credit Facilities. Each prepayment shall be accompanied by the payment of accrued interest, without any premium or penalty. However, the Company is limited to a maximum of four voluntary prepayments of the Revolving Credit Facility within any consecutive twelve-month period. During the period August 1, 2025 to December 31, 2025, the Company repaid $1.6 million of outstanding principal amount under the 2028 Term Loan A Facility and 2028 Term Loan B Facility. As of December 31, 2025, the outstanding balance of the 2028 Term Loan A Facility, the 2028 Term Loan B Facility, and the Revolving Credit Facility was approximately $2.8 million, $8.6 million, and $35.6 million, respectively. The Facilities Agreement contains financial covenants including, but not limited to, (i) a consolidated total leverage ratio of not greater than 2.50 to 1.00 (with step-downs to (a) 2.25 to 1.00 starting January 1, 2025 and (b) 2.00 to 1.00 starting January 1, 2026); (ii) a cash flow coverage ratio of at least 1.10:1.00; and (iii) a consolidated interest coverage ratio of not less than 4.00 to 1.00. The Facilities Agreement and indenture governing the Senior Credit Facilities contains certain affirmative and negative covenants limiting the ability of the XBP Europe, Inc. to effect mergers and change of control events as well as certain other limitations, including limitations on (i) incurrence of additional indebtedness or liens, (ii) dispositions of assets, (iii) substantial changes of the general nature of the business, (iv) entering into restrictive agreements, (v) making certain investments, loans, advances, guarantees and acquisitions, (vi) prepaying certain indebtedness, (vii) the declaration and payment of dividends or other restricted payments, (viii) 56 Table of Contents engaging in transactions with affiliates, or (ix) amending certain material documents. As of December 31, 2025, the Company was in compliance with all affirmative and negative covenants under its Facilities Agreement, including all financial covenants, except for a temporary technical non‑compliance with the net leverage covenant arising from the timing of an intercompany cash transfer on December 31, 2025. The lender has acknowledged this matter, and no remedies were exercised or are expected to be exercised. BR Exar AR Facility On February 12, 2024, certain of the Company’s subsidiaries entered into a receivables purchase agreement with BR Exar, LLC (“BREL”), an affiliate of B. Riley Commercial Capital, LLC (as subsequently amended on various dates in connection with each monthly sale of certain existing receivables, up to and including December 31, 2025 (the “BR Exar AR Facility”)). The Company received an aggregate of $15.2 million and $22.1 million, net of legal and other fees of $1.8 million and $1.6 million, respectively, under the BR Exar AR Facility during the periods August 1, 2025 to December 31, 2025 (Successor) and January 1, 2025 to July 31, 2025 (Predecessor), respectively. Under the terms of the BR Exar AR Facility during the periods August 1, 2025 to December 31, 2025 (Successor) and January 1, 2025 to July 31, 2025 (Predecessor), certain of the Company’s subsidiaries agreed to sell certain existing receivables and all of their future receivables to BREL until such time as BREL shall have collected $17.0 million and $25.5 million, respectively, net of any costs, expenses or other amounts paid to or owing to the buyer under the agreement. BREL collected $23.0 million and $25.8 million under the BR Exar AR Facility during the periods August 1, 2025 to December 31, 2025 (Successor) and January 1, 2025 to July 31, 2025 (Predecessor), respectively. As of December 31, 2025, and December 31, 2024, there was a $1.4 million and $7.8 million of outstanding balance, respectively, under the BR Exar AR Facility included in the current portion of long-term debt in the consolidated and combined balance sheets. Amended Factoring Agreement On September 15, 2023, certain European subsidiaries of the Company entered into an amendment to a secured borrowing facility (the “Amended Factoring Agreement”) for a non-recourse factoring program pursuant to which an unrelated third party (the “Factor”) purchases certain approved and partially approved accounts receivables (as defined in the Amended Factoring Agreement) from certain subsidiaries of the Company (the “Relevant Entities”) up to a maximum amount of €15.0 million while assuming the risk of non-payment on the purchased accounts receivables up to the level of approval. The Relevant Entities have no continuing involvement in the transferred accounts receivable, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors of the relevant entities. As of December 31, 2025, the Company’s outstanding factored accounts receivable totalled approximately $2.6 million pursuant to the Amended Factoring Agreement, representing the face value of the factored invoices. Key financial covenants under our credit facilities include a maximum leverage ratio and a minimum fixed charge coverage ratio. As of December 31, 2025, we were in compliance with all financial covenants and had sufficient headroom under the primary tests. A breach could result in an event of default and acceleration of indebtedness. Management monitors financial covenant compliance closely and maintains contingency plans, including potential covenant amendments or refinancing, should operating performance fall short of expectations. Subsequent Debt Amendments Subsequent to December 31, 2025, we entered into additional amendments to the BR Exar AR Facility, the ABL Facility and the Super Senior Term Loan. For a detailed description of the terms of these subsequent amendments, See Note 22, Subsequent Events to the consolidated financial statements included in Item 8 of this Annual Report. Additional Information with Respect to the Super Senior Term Loan Borrowers Under the terms of the Super Senior Term Loan, the Company is required to present additional information that reflects the consolidated and combined financial condition, results of operations and cash flows of the Super Senior Term Loan Borrowers separate from the consolidated financial condition, results of operations and cash flows of the rest of the Company as of and for the periods presented. This additional information for 2025 is presented below. 57 Table of Contents Consolidated and Combined Balance Sheets as of December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Successor (1) ​ Non-Super Senior Term Loan Borrower Subsidiaries (2) ​ Eliminations (3) ​ Super Senior Term Loan Borrowers (4)=(1)-(2)-(3) ​ ​ Consolidated ​ Non-GAAP ​ Non-GAAP ​ Non-GAAP ​ ​ December 31, ​ December 31, ​ December 31, ​ December 31, ​ ​ ​ ​ 2025 ​ 2025 ​ 2025 ​ 2025 Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 37,113 ​ $ 6,097 ​ $ — ​ $ 31,016 Restricted cash ​ 31,553 ​ — ​ ​ — ​ 31,553 Accounts receivable, net ​ ​ 130,281 ​ ​ 29,243 ​ ​ — ​ ​ 101,038 Related party receivables and prepaid expenses ​ ​ 736 ​ ​ — ​ ​ (8,329) ​ ​ 9,065 Inventories, net ​ ​ 11,365 ​ ​ 4,198 ​ ​ — ​ ​ 7,167 Prepaid expenses and other current assets ​ ​ 28,699 ​ ​ 5,955 ​ ​ — ​ ​ 22,744 Total current assets ​ 239,747 ​ 45,493 ​ (8,329) ​ 202,583 Property, plant and equipment, net ​ ​ 82,956 ​ ​ 13,971 ​ ​ — ​ ​ 68,985 Operating lease right-of-use assets, net ​ ​ 30,339 ​ ​ 5,104 ​ ​ — ​ ​ 25,235 Goodwill ​ ​ 189,881 ​ ​ 55,955 ​ ​ — ​ ​ 133,926 Intangible assets, net ​ ​ 344,080 ​ ​ 36,990 ​ ​ — ​ ​ 307,090 Other noncurrent assets ​ 15,094 ​ 32,983 ​ (32,000) ​ 14,111 Total assets ​ $ 902,097 ​ $ 190,496 ​ $ (40,329) ​ $ 751,930 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and Stockholders' Equity (Deficit) ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current portion of long-term debt ​ $ 34,334 ​ $ 5,917 ​ $ — ​ $ 28,417 Accounts payable ​ ​ 55,700 ​ ​ 23,613 ​ ​ — ​ ​ 32,087 Related party payables ​ ​ 5,343 ​ ​ 12,727 ​ ​ (7,911) ​ ​ 527 Income tax payable (receivable) ​ ​ 6,158 ​ ​ 1,943 ​ ​ — ​ ​ 4,215 Accrued liabilities ​ ​ 47,101 ​ ​ 18,035 ​ ​ — ​ ​ 29,066 Accrued compensation and benefits ​ ​ 56,314 ​ ​ 23,317 ​ ​ — ​ ​ 32,997 Accrued interest ​ ​ 13,685 ​ ​ 192 ​ ​ (418) ​ ​ 13,911 Customer deposits ​ ​ 21,691 ​ ​ 148 ​ ​ — ​ ​ 21,543 Deferred revenue ​ ​ 11,881 ​ ​ 6,009 ​ ​ — ​ ​ 5,872 Obligation for claim payment ​ ​ 55,632 ​ ​ — ​ ​ — ​ ​ 55,632 Current portion of finance lease liabilities ​ ​ 4,390 ​ ​ — ​ ​ — ​ ​ 4,390 Current portion of operating lease liabilities ​ ​ 9,814 ​ ​ 1,689 ​ ​ — ​ ​ 8,125 Total current liabilities ​ 322,043 ​ 93,590 ​ (8,329) ​ 236,782 Long-term debt, net of current maturities ​ ​ 353,267 ​ ​ 61,384 ​ ​ (32,475) ​ ​ 324,358 Finance lease liabilities, net of current portion ​ ​ 6,857 ​ ​ — ​ ​ — ​ ​ 6,857 Net defined benefit liability ​ ​ 6,241 ​ ​ 5,657 ​ ​ — ​ ​ 584 Deferred income tax liabilities ​ ​ 52,595 ​ ​ 2,240 ​ ​ — ​ ​ 50,355 Long-term income tax liabilities ​ ​ 10,554 ​ ​ — ​ ​ — ​ ​ 10,554 Operating lease liabilities, net of current portion ​ ​ 22,530 ​ ​ 3,555 ​ ​ — ​ ​ 18,975 Other long-term liabilities ​ ​ 40,671 ​ ​ 1,561 ​ ​ — ​ ​ 39,110 Total liabilities ​ ​ 814,758 ​ ​ 167,987 ​ ​ (40,804) ​ ​ 687,575 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total stockholder's equity ​ 87,339 ​ 22,509 ​ 475 ​ 64,355 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities and stockholder's equity (deficit) ​ $ 902,097 ​ $ 190,496 ​ $ (40,329) ​ $ 751,930 ​ ​ 58 Table of Contents Consolidated and Combined Income Statements for the year ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Successor (1) ​ Predecessor (2) ​ Total ((3)=(1)+(2)) ​ Non-Super Senior Term Loan Borrower Subsidiaries (4) ​ Eliminations (5) ​ Super Senior Term Loan Borrowers ((6)=(3)-(4)-(5)) ​ ​ Consolidated ​ Consolidated and Combined ​ Non-GAAP ​ Non-GAAP ​ Non-GAAP ​ Non-GAAP ​ ​ ​ ​ Period from August 1, 2025 through December 31, ​ ​ ​ Period from January 1, 2025 through July 31, ​ ​ ​ For the Year Ended December, ​ ​ ​ For the Year Ended December, ​ ​ ​ For the Year Ended December, ​ ​ ​ For the Year Ended December, ​ ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2025 Revenue ​ $ 358,821 ​ $ 429,187 ​ $ 788,008 ​ $ 60,900 ​ $ — ​ $ 727,108 Related party revenue ​ ​ 560 ​ ​ 2,474 ​ ​ 3,034 ​ ​ 188 ​ ​ (1,360) ​ ​ 4,206 Cost of revenue (exclusive of depreciation and amortization) ​ 279,391 ​ 339,981 ​ 619,372 ​ 44,888 ​ — ​ 574,484 Selling, general and administrative expenses (exclusive of depreciation and amortization) ​ 49,669 ​ 53,946 ​ 103,615 ​ 15,292 ​ — ​ 88,323 Depreciation and amortization ​ 26,225 ​ 22,313 ​ 48,538 ​ 2,547 ​ — ​ 45,991 Impairment of goodwill ​ 320,292 ​ — ​ 320,292 ​ — ​ — ​ 320,292 Related party expense, net ​ 5,386 ​ 5,750 ​ 11,136 ​ 3,621 ​ (1,360) ​ 8,875 Operating loss ​ (321,582) ​ 9,671 ​ (311,911) ​ (5,260) ​ — ​ (306,651) Other expense (income), net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense, net ​ 24,237 ​ 75,226 ​ 99,463 ​ 2,805 ​ 5 ​ 96,653 Debt modification and extinguishment costs, net ​ — ​ 121 ​ 121 ​ 480 ​ (480) ​ 121 Sundry expense (income), net ​ 274 ​ 1,644 ​ 1,918 ​ 82 ​ — ​ 1,836 Other income, net ​ (1,596) ​ (28) ​ (1,624) ​ (884) ​ — ​ (740) Loss before reorganization items and income taxes ​ (344,497) ​ (67,292) ​ (411,789) ​ (7,743) ​ 475 ​ (404,521) Reorganization items ​ 1,615 ​ (1,557,825) ​ (1,556,210) ​ — ​ — ​ (1,556,210) Profit (loss) before income taxes ​ (346,112) ​ 1,490,533 ​ 1,144,421 ​ (7,743) ​ 475 ​ 1,151,689 Income tax expense ​ 5,011 ​ 35,875 ​ 40,886 ​ (138) ​ — ​ 41,024 Net profit (loss) ​ $ (351,123) ​ $ 1,454,658 ​ $ 1,103,535 ​ $ (7,605) ​ $ 475 ​ $ 1,110,665 ​ ​ ​ 59 Table of Contents Consolidated and Combined Cash Flow Statements for the year ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Successor (1) ​ Predecessor (2) ​ Total ((3)=(1)+(2)) ​ Non-Super Senior Term Loan Borrower Subsidiaries (4) ​ Eliminations (5) ​ Super Senior Term Loan Borrowers ((6)=(3)-(4)-(5)) ​ ​ Consolidated ​ Consolidated and Combined ​ Non-GAAP ​ Non-GAAP ​ Non-GAAP ​ Non-GAAP ​ ​ ​ ​ Period from August 1, 2025 through December 31, ​ ​ ​ Period from January 1, 2025 through July 31, ​ ​ ​ For the Year Ended December 31, ​ ​ ​ For the Year Ended December 31, ​ ​ ​ For the Year Ended December 31, ​ ​ ​ For the Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ 2025 Cash flows from operating activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net profit (loss) ​ $ (351,123) ​ $ 1,454,658 ​ $ 1,103,535 ​ $ (7,605) ​ $ 475 ​ $ 1,110,665 Adjustments to reconcile net profit (loss) to cash provided by (used in) operating activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 26,225 ​ ​ 22,313 ​ ​ 48,538 ​ ​ 2,547 ​ ​ — ​ ​ 45,991 Original issue discount, debt premium and debt issuance cost amortization ​ ​ 3,336 ​ ​ (14,595) ​ ​ (11,259) ​ ​ 136 ​ ​ 5 ​ ​ (11,400) Reorganization items ​ ​ (167) ​ ​ (1,626,790) ​ ​ (1,626,957) ​ ​ — ​ ​ — ​ ​ (1,626,957) Interest on BR Exar AR Facility ​ ​ — ​ ​ (2,399) ​ ​ (2,399) ​ ​ — ​ ​ — ​ ​ (2,399) Debt modification and extinguishment loss (gain), net ​ ​ — ​ ​ 121 ​ ​ 121 ​ ​ 480 ​ ​ (480) ​ ​ 121 Impairment of goodwill ​ ​ 320,292 ​ ​ — ​ ​ 320,292 ​ ​ — ​ ​ — ​ ​ 320,292 Provision for credit losses ​ ​ 2,007 ​ ​ (278) ​ ​ 1,729 ​ ​ 194 ​ ​ — ​ ​ 1,535 Deferred income tax provision ​ ​ 389 ​ ​ 36,396 ​ ​ 36,785 ​ ​ (612) ​ ​ — ​ ​ 37,397 Equity-based compensation expense ​ ​ 886 ​ ​ 204 ​ ​ 1,090 ​ ​ 886 ​ ​ — ​ ​ 204 Unrealized foreign currency (gain) loss ​ 849 ​ ​ (659) ​ 190 ​ (83) ​ — ​ 273 Loss (gain) on sale of assets ​ ​ 2,395 ​ ​ 1,967 ​ ​ 4,362 ​ ​ 135 ​ ​ — ​ ​ 4,227 Fair value adjustment for private warrants liability ​ ​ 6 ​ ​ — ​ ​ 6 ​ ​ 6 ​ ​ — ​ ​ — Paid-in-kind interest ​ ​ — ​ ​ 28,848 ​ ​ 28,848 ​ ​ — ​ ​ — ​ ​ 28,848 Change in operating assets and liabilities, net of effect from acquisitions ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ 12,053 ​ ​ (93,713) ​ (81,660) ​ 2,250 ​ — ​ (83,910) Prepaid expenses and other current assets ​ ​ 5,975 ​ ​ (2,203) ​ ​ 3,772 ​ ​ (1,632) ​ ​ — ​ ​ 5,404 Accounts payable and accrued liabilities ​ ​ (8,850) ​ ​ 30,172 ​ ​ 21,322 ​ ​ (2,974) ​ ​ — ​ ​ 24,296 Related party receivables (payables) ​ ​ 4,002 ​ ​ 6,134 ​ ​ 10,136 ​ ​ 9,952 ​ ​ — ​ ​ 184 Additions to outsourced contract costs ​ ​ (43) ​ ​ (118) ​ ​ (161) ​ ​ — ​ ​ — ​ ​ (161) Net cash provided by (used in) operating activities ​ 18,232 ​ (159,942) ​ (141,710) ​ 3,680 ​ — ​ (145,390) Cash flows from investing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash received from acquisition ​ ​ — ​ ​ 1,485 ​ ​ 1,485 ​ ​ — ​ ​ 1,485 ​ ​ — Purchase of property, plant and equipment ​ ​ (5,802) ​ ​ (3,081) ​ ​ (8,883) ​ ​ (1,342) ​ ​ — ​ ​ (7,541) Additions to internally developed software ​ ​ (1,451) ​ ​ (1,067) ​ ​ (2,518) ​ ​ (235) ​ ​ — ​ ​ (2,283) Proceeds from sale of assets ​ ​ 917 ​ ​ (27) ​ ​ 890 ​ ​ 533 ​ ​ — ​ ​ 357 Investment in July 2030 Notes ​ ​ — ​ ​ — ​ ​ — ​ ​ (18,000) ​ ​ 18,000 ​ ​ — Sale of July 2030 Notes ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,520 ​ ​ (3,520) ​ ​ — Net cash provided by (used in) investing activities ​ (6,336) ​ (2,690) ​ (9,026) ​ (15,524) ​ 15,965 ​ (9,467) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid for debt issuance costs ​ ​ (1,770) ​ ​ (3,719) ​ ​ (5,489) ​ ​ — ​ ​ — ​ ​ (5,489) Principal payments on finance lease obligations ​ ​ (1,670) ​ ​ (3,360) ​ ​ (5,030) ​ ​ — ​ ​ — ​ ​ (5,030) Borrowings from other loans ​ ​ 10,951 ​ ​ 3,785 ​ ​ 14,736 ​ ​ 326 ​ ​ — ​ ​ 14,410 Proceeds from Issuance of July 2030 Notes ​ ​ 3,520 ​ ​ — ​ ​ 3,520 ​ ​ — ​ ​ (14,480) ​ ​ 18,000 Proceeds from Revolving Credit Facility ​ ​ — ​ ​ 18,000 ​ ​ 18,000 ​ ​ 18,000 ​ ​ — ​ ​ — Proceeds from Super Senior Term Loan ​ ​ — ​ ​ 40,000 ​ ​ 40,000 ​ ​ — ​ ​ — ​ ​ 40,000 Proceeds from ABL Facility ​ ​ 46,900 ​ ​ 58,903 ​ ​ 105,803 ​ ​ — ​ ​ — ​ ​ 105,803 Repayments on ABL Facility ​ ​ (28,800) ​ ​ — ​ ​ (28,800) ​ ​ — ​ ​ — ​ ​ (28,800) Repayment of Second Lien Note ​ ​ (3,750) ​ ​ (5,975) ​ ​ (9,725) ​ ​ — ​ ​ — ​ ​ (9,725) Proceeds from DIP New Money Loans ​ ​ — ​ ​ 80,000 ​ ​ 80,000 ​ ​ — ​ ​ — ​ ​ 80,000 Borrowing under BR Exar AR Facility ​ ​ 17,000 ​ ​ 23,775 ​ ​ 40,775 ​ ​ — ​ ​ — ​ ​ 40,775 Repayments under BR Exar AR Facility ​ ​ (23,025) ​ ​ (23,397) ​ ​ (46,422) ​ ​ — ​ ​ — ​ ​ (46,422) Principal repayments on senior secured term loans and other loans ​ (6,247) ​ ​ (42,748) ​ (48,995) ​ (1,868) ​ — ​ (47,127) Net cash provided by (used in) financing activities ​ 13,109 ​ 145,264 ​ 158,373 ​ 16,458 ​ (14,480) ​ 156,395 Effect of exchange rates on cash, restricted cash and cash equivalents ​ ​ (234) ​ ​ (2,804) ​ ​ (3,038) ​ ​ (2) ​ ​ — ​ ​ (3,036) Net increase (decrease) in cash, restricted cash and cash equivalents ​ 24,771 ​ (20,172) ​ 4,599 ​ 4,612 ​ 1,485 ​ (1,498) Cash, restricted cash and cash equivalents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning of period ​ ​ 43,895 ​ ​ 64,067 ​ ​ 64,067 ​ ​ 1,485 ​ ​ (1,485) ​ ​ 64,067 End of period ​ $ 68,666 ​ $ 43,895 ​ $ 68,666 ​ $ 6,097 ​ $ — ​ $ 62,569 Supplemental cash flow data: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax payments, net of refunds received ​ $ 2,949 ​ $ 2,897 ​ $ 5,846 ​ $ 1,311 ​ $ — ​ $ 4,535 Interest paid ​ ​ 7,652 ​ ​ 10,077 ​ ​ 17,729 ​ ​ 1,825 ​ ​ — ​ ​ 15,904 Cash paid for reorganization items ​ ​ 1,782 ​ ​ 68,965 ​ ​ 70,747 ​ ​ — ​ ​ — ​ ​ 70,747 Noncash investing and financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets acquired through right-of-use arrangements ​ ​ 3,373 ​ ​ 11,444 ​ ​ 14,817 ​ ​ 963 ​ ​ — ​ ​ 13,854 Common stock issued for the Business Combination ​ ​ — ​ ​ 32,328 ​ ​ 32,328 ​ ​ — ​ ​ — ​ ​ 32,328 Common stock issued to settle liabilities subject to compromise ​ ​ — ​ ​ 407,363 ​ ​ 407,363 ​ ​ — ​ ​ — ​ ​ 407,363 Issuance of July 2030 Notes for settlement of the DIP Facility ​ ​ — ​ ​ 175,000 ​ ​ 175,000 ​ ​ — ​ ​ — ​ ​ 175,000 Conversion of DIP Facility into Super Senior Term Loan ​ ​ — ​ ​ 6,000 ​ ​ 6,000 ​ ​ — ​ ​ — ​ ​ 6,000 Accrued capital expenditures ​ ​ 105 ​ ​ 180 ​ ​ 285 ​ ​ — ​ ​ — ​ ​ 285 ​ Potential Future Transactions We may, from time to time, explore and evaluate possible strategic transactions, which may include joint ventures, as well as business combinations or the acquisition or disposition of assets. In order to pursue certain of these 60 Table of Contents opportunities, additional funds will likely be required. Subject to applicable contractual restrictions, to obtain such financing, we may seek to use cash on hand, or we may seek to raise additional debt or equity financing through private placements or through underwritten offerings. There can be no assurance that we will enter into additional strategic transactions or alliances, nor do we know if we will be able to obtain the necessary financing for transactions that require additional funds on favorable terms, if at all. In addition, pursuant to the Registration Rights Agreement that we entered into in connection with the closing of the Business Combination, certain of our stockholders have the right to demand underwritten offerings of our Common Stock. We may from time to time in the future explore, with certain of those stockholders, the possibility of an underwritten public offering of our Common Stock held by those stockholders. There can be no assurance as to whether or when an offering may be commenced or completed, or as to the actual size or terms of the offering. Critical Accounting Policies and Estimates The most significant accounting estimates, each of which involves a high degree of uncertainty and could materially affect reported results if assumptions change, are fresh-start and business combination fair value measurements, goodwill impairment, revenue recognition under ASC 606, benefit plan accrual, and the income tax valuation allowance. The preparation of financial statements requires the use of judgments and estimates. The critical accounting policies are described below to provide a better understanding of how the Company develops its assumptions and judgments about future events and related estimations and how they can impact the Company’s financial statements. A critical accounting estimate is one that requires subjective or complex estimates and assessments and is fundamental to the Company’s results of operations. The Company bases its estimates on historical experience and on various other assumptions it believes to be reasonable according to the current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The Company believes the current assumptions, judgments and estimates used to determine amounts reflected in the consolidated and combined financial statements are appropriate; however, actual results may differ under different conditions. This discussion and analysis should be read in conjunction with the Company’s financial statements and related notes included elsewhere in this Annual Report. During 2025, the Company’s accounting estimates were significantly impacted by the adoption of fresh-start accounting in connection with its emergence from Chapter 11 Cases and the completion of the Business Combination. These events required management to apply fair value measurements to substantially all of the Company’s assets and liabilities, including tangible assets, identifiable intangible assets and goodwill. The fair value determinations incorporated updated assumptions regarding discount rates, market multiples, and projected cash flows, which represented material changes from historical estimates. As a result, these changes have affected the comparability of the Company’s results of operations for the periods presented, including changes in amortization expense related to identifiable intangible assets and changes in depreciation expense for certain tangible assets, and revised deferred tax balances based on new fair values. Management will continue to evaluate these estimates on an ongoing basis as additional information becomes available or as market conditions evolve. Fresh Start Accounting: Upon emergence from the Restructuring, the Predecessor met the criteria and was required to adopt fresh start accounting in accordance with ASC 852, Reorganizations , which on the Emergence Date resulted in a new entity, the Successor, for financial reporting purposes, with no beginning retained earnings or deficit as of the fresh start reporting date. The criteria requiring fresh start accounting are: (1) the holders of the then-existing common shares of the Predecessor received less than 50 percent of the new common shares of the Successor outstanding upon emergence from bankruptcy and (2) the reorganization value of the entity’s assets immediately prior to confirmation of the Plan was less than the total of all post-petition liabilities and allowed claims. The Company applied fresh start accounting effective the Convenience Date (July 31, 2025, as discussed above). Under the principles of fresh start accounting, a new reporting entity was considered to have been created, and, as a result, the Company allocated the reorganization value to its individual assets based on their estimated fair values. To facilitate discussion and analysis of our financial condition and results of operations herein, we refer to the reorganized Company as the Successor for periods subsequent to July 31, 2025, and as the Predecessor for periods on or prior to, and including, July 31, 2025. As a result of the adoption of fresh start accounting, our consolidated financial statements subsequent to July 31, 2025, are not 61 Table of Contents comparable to our consolidated and combined financial statements on or prior to July 31, 2025, and as such, “black-line” financial statements are presented to distinguish between the Predecessor and Successor periods. Refer to Note 4 , Fresh Start Accounting to our audited consolidated and combined financial statements as of and for the Successor/Predecessor period contained elsewhere in this Annual Report for additional information regarding the Company’s fresh start accounting. Business Combinations: The Company includes the results of operations of the businesses acquired as of the respective dates of acquisition. The Company allocates the fair value of the purchase price of acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill. Refer to Note 5 , Business Combination to our audited consolidated and combined financial statements as of and for the Successor/Predecessor period contained elsewhere in this Annual Report for additional information regarding the accounting for acquisition of XBP Europe Holdings, Inc. Goodwill and other intangible assets: Goodwill and other intangible assets are initially recorded at their fair values. Goodwill represents the excess of the purchase price of acquisitions over the fair value of the net assets acquired. Goodwill and other intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. Intangible assets with finite useful lives are amortized either on a straight-line basis over the asset’s estimated useful life or on a basis that reflects the pattern in which the economic benefits of the intangible assets are realized. Impairment of goodwill, long-lived and other intangible assets: Long lived assets, such as property and equipment and finite lived intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Recoverability is measured by a comparison of their carrying amount to the estimated undiscounted cash flows to be generated by those assets. If the undiscounted cash flows are less than the carrying amount, we record impairment losses for the excess of the carrying value over the estimated fair value. Fair value is determined, in part, by the estimated cash flows to be generated by those assets. Our cash flow estimates are based upon, among other things, historical results adjusted to reflect our best estimate of future market rates, and operating performance. Development of future cash flows also requires us to make assumptions and to apply judgment, including timing of future expected cash flows, using the appropriate discount rates, and determining salvage values. The estimate of fair value represents our best estimates of these factors and is subject to variability. Assets are generally grouped at the lowest level of identifiable cash flows, which is the reporting unit level for us. Changes to our key assumptions related to future performance and other economic factors could adversely affect our impairment valuation. We conduct our annual goodwill impairment tests on October 1st of each year, or more frequently if indicators of impairment exist. When performing the annual impairment test, we have the option of performing a qualitative or quantitative assessment to determine if an impairment has occurred. If a qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we would be required to perform a quantitative impairment test for goodwill. A quantitative test requires comparison of fair value of the reporting unit to its carrying value, including goodwill. We use a combination of the Guideline Public Company Method of the Market Approach and the Discounted Cash Flow Method of the Income Approach to determine the reporting unit fair value. For the Guideline Public Company Method, our annual impairment test utilizes valuation multiples of publicly traded peer companies. For the Discounted Cash Flow Method, our annual impairment test utilizes discounted cash flow projections using market participant weighted average cost of capital calculation. If the fair value of goodwill at the reporting unit level is less than its carrying value, an impairment loss is recorded for the amount by which a reporting unit’s carrying amount exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. During the period August 1, 2025 to September 30, 2025, the Company experienced a sustained and significant decline in its market capitalization causing the market capitalization to fall below the Company’s book value after the application of fresh start accounting at Emergence Date. We concluded that this sustained decline, combined with revised long-term projections compared to those used to compute enterprise value of the reconstituted Successor as set forth in the Disclosure Statement for Joint Plan of Reorganization approved by the Bankruptcy Court, represented a triggering event under ASC 350, Intangibles – Goodwill and Other . As a result, we performed an interim quantitative goodwill impairment assessment for all reporting units as of September 30, 2025 (Successor). Our interim impairment assessment as of September 30, 2025 (Successor) utilized the Discounted Cash Flow Method of the Income Approach and the 62 Table of Contents Guideline Public Company Method of the Market Approach to determine the reporting units’ fair values. For the Discounted Cash Flow Method, we utilized discounted cash flow projections using market participant weighted average cost of capital calculation. The Guideline Public Company Method utilized market data of similar publicly traded companies. In connection with the completion of the interim impairment test, we recorded an impairment charge of $215.8 million and $80.0 million to goodwill relating to the reporting units included in the Applied Workflow Automation segment and Technology segment, respectively, as of September 30, 2025 (Successor). The Company did not update its analysis for purposes of the annual impairment test as of October 1, 2025, as the measurement date of the interim impairment test performed as of September 30, 2025, was one day from the annual impairment test date. Additionally, later during the fourth quarter of 2025, the Company conducted its annual budgeting process along with an update to its long-range plan. Following the completion of that process, the Company made an evaluation based on changes in the Company’s long-term projections, concluding that a triggering event for an impairment analysis had occurred for certain reporting units reported under the Applied Workflow Automation segment. Revised long-term projections resulted in lower than previously projected long-term future cash flows for certain reporting units which reduced the estimated fair values to below their carrying values. Accordingly, the Company performed quantitative impairment test as of December 31, 2025 (Successor), resulting in an impairment charge of $24.5 million to goodwill relating to the reporting units reported under the Applied Workflow Automation segment. Therefore, as a result of these two interim impairment assessments performed on September 30, 2025 (Successor) and December 31, 2025 (Successor), impairment charges totalling $320.3 million, were recorded to goodwill for the period August 1, 2025 to December 31, 2025 (Successor). Application of the goodwill impairment test requires judgment, including the identification of reporting units, allocation of assets and liabilities to reporting units, and determination of fair value. The determination of reporting unit fair value is sensitive to the amount of Revenue and EBITDA generated by us, as well as the Revenue and EBITDA market multiples used in the calculation. Additionally, the fair value is sensitive to changes in the valuation assumptions such as expected income tax rate, risk-free rate, asset beta, and various risk premiums. Unanticipated changes, including immaterial revisions, to these assumptions could result in a provision for impairment in a future period. While exact quantification is not practicable due to the interrelationship of assumptions, reasonably possible changes in discount rates or growth rates would have had a material effect on the impairment amount. Revenue: The Company accounts for revenue in accordance with ASC 606. A performance obligation is a promise in a contract to transfer a distinct good or service to the client, and is the unit of account in ASC 606. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. All of the Company’s material sources of revenue are derived from contracts with clients, primarily relating to the provision of business and transaction processing services. The Company does not have any significant extended payment terms, as payment for invoices issued is received shortly after goods are delivered or services are provided. Refer to Note 2, Basis of Presentation and Summary of Significant Accounting Policies to our audited consolidated and combined financial statements as of and for the Successor/Predecessor period contained elsewhere in this Annual Report for additional information regarding the Company’s revenue recognition policy. Income Taxes: We account for income taxes by using the asset and liability method. We account for income taxes regarding uncertain tax positions and recognize interest and penalties related to uncertain tax positions in income tax benefit/(expense) in the consolidated statements of operations. Deferred income taxes are recognized on the tax consequences of temporary differences by applying enacted statutory tax rates applicable in future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities, as determined under tax laws and rates. A valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax assets will not be realized. In the event the Company determines that it would be able to realize deferred tax assets that have valuation allowances established, an adjustment to the net deferred tax assets would be recognized as a component of income tax expense through continuing operations. We engage in transactions (such as acquisitions) in which the tax consequences may be subject to uncertainty and examination by the varying taxing authorities. Significant judgment is required by us in assessing and estimating the 63 Table of Contents tax consequences of these transactions. While our tax returns are prepared and based on our interpretation of tax laws and regulations, in the normal course of business the tax returns are subject to examination by the various taxing authorities. Such examinations may result in future assessments of additional tax, interest and penalties. For purposes of our income tax provision, a tax benefit is not recognized if the tax position is not more likely than not to be sustained based solely on its technical merits. Considerable judgment is involved in determining which tax positions are more likely than not to be sustained. Benefit Plan Accruals: The Company has defined benefit plans in the UK, Germany, Norway and France under which participants earn a retirement benefit based upon a formula set forth in the respective plans. The Company records annual amounts relating to its pension plans based on calculations that incorporate various actuarial and other assumptions, including discount rates, mortality, assumed rates of return, and compensation increases. The Company reviews its assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when it is appropriate to do so. Refer to Note 15 , Employer Benefit Plans to our audited consolidated and combined financial statements as of and for the Successor/Predecessor period contained elsewhere in this Annual Report for additional information regarding the Company’s pension plan and related actuarial assumptions. Recently Adopted and Recently Issued Accounting Pronouncements See Note 3 , New Accounting Pronouncements to the consolidated financial statements included in Item 8 of this Annual Report. ​