{"url_path":"/sec/sqns/10-k/2026/item-11","section_key":"item-11","section_title":"Item 11 Quantitative and Qualitative Disclosures About Market Risk","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-11","source_url":"https://www.sec.gov/Archives/edgar/data/1383395/0001383395-26-000082-index.html","accession_number":"0001383395-26-000082","cik":"0001383395","ticker":"SQNS","issuer_name":"SEQUANS COMMUNICATIONS","edgar_url":"https://www.sec.gov/Archives/edgar/data/1383395/0001383395-26-000082-index.html","primary_entity_key":"0001383395","primary_entity_name":"SEQUANS COMMUNICATIONS"},"word_count":603,"has_tables":true,"body_markdown":"Item 11. Quantitative and Qualitative Disclosures About Market Risk\n\nInterest Rate Risk\n\nWe had cash and cash equivalents and short-term investments totaling $5.7 million, $62.1 million and $13.4 million, at December 31, 2023, 2024 and 2025, respectively. Our cash and cash equivalents consist of cash in commercial bank accounts and investments in money market funds. Short-term investments are investments in term deposits with terms of 90 days or less. The primary objectives of our investment activities are to preserve principal and provide liquidity without significantly\n\n95\n\nincreasing risk. Our cash and cash equivalents are held for working capital purposes. We do not enter into investments for trading or speculative purposes.\n\nOur exposure to interest rate risk primarily relates to the interest income generated by excess cash invested in term deposits. Due to the short-term and highly liquid nature of our portfolio, a movement in interest rates of 100 basis points during 2025 would have an effect of approximately $214,000 on interest income.\n\nForeign Currency Risk\n\nWe use the U.S. dollar as the functional currency of Sequans Communications S.A. Substantially all of our sales are denominated in U.S. dollars. Therefore, we have very limited foreign currency risk associated with our revenue. The payment terms of our significant supply chain vendors are also denominated in U.S. dollars. We incur operating expenses and hold assets and liabilities denominated in currencies other than the U.S. dollar, principally the euro. In addition, we have limited exposure to the British pound sterling, the New Israeli shekel, the Taiwan dollar, the Chinese yuan and the Japanese yen. As a result, our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, primarily the U.S. dollar to euro exchange rate. As we grow our operations, our exposure to foreign currency risk could become more significant. If there had been a 10% increase or decrease in the exchange rate of the U.S. dollar to the euro, based on the weighted average rate of exchange in our financial statements for the year ending December 31, 2025, we estimate the impact, in absolute terms, on operating expenses and on financial liabilities for 2025, would have been $2.5 million.\n\nFrom time to time, we have entered into foreign currency hedging contracts primarily to reduce the impact of variations in the U.S. dollar to euro exchange rate on our operating expenses denominated in euros. Currently, we do not expect to enter into foreign currency exchange contracts for trading or speculative purposes.\n\nDigital assets value risk\n\nAs of December 31, 2025, the Company held 2,139 Bitcoin as digital assets with a market value of $187.1 million, of which 1,617 Bitcoin ($141.4 million) was pledged as security for $94.5 million of convertible debt.\n\nA 10% decrease in the market price of Bitcoin as of the reporting date would result in an impairment loss of approximately $18.7 million.\n\nOn February 10, 2026, the Company entered into a second amendment to the Secured Convertible Debenture Purchase Agreement, dated as of June 22, 2025. Pursuant to the second Amendment, the Company will redeem in full the remaining $94.5 million aggregate principal amount of outstanding Debentures at a cash price equal to one hundred percent of the principal amount being redeemed, plus any accrued and unpaid interest. Subject to certain restrictions set forth in the Debentures, the redemption will be funded by the sale of Bitcoin held in a securities account to secure the Debentures. As of April 23, 2026 the Company has redeemed $50.8 million and held 1,114 Bitcoin of which 917 Bitcoin are pledged as Security to the remaining $43.7 million debt."}