{"url_path":"/sec/sqns/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 Operating and Financial Review and Prospects","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":16245,"has_tables":true,"body_markdown":"Item 5. Operating and Financial Review and Prospects\n\nSummary\n\nWe are a fabless designer, developer and supplier of semiconductor solutions for broadband, critical “Internet of Things” (IoT) and massive IoT applications. Our solutions incorporate baseband processor and radio frequency, or RF, transceiver integrated circuits, or ICs, along with a front end subsystem and our proprietary signal processing techniques, algorithms and software stacks. Our high performance ICs deliver high throughput, low power consumption and high reliability in a small form factor and at a competitive price.\n\nOur total revenue was $26.3 million in 2025, $36.8 million in 2024, and $33.6 million in 2023.\n\nWe currently have more than 90 end customers worldwide, consisting primarily of OEMs and ODMs for modules, telematics devices, tracking devices, security devices, CPE, home routers, mobile routers, embedded devices and other data devices. We derive a significant portion of our revenue from a small number of end customers, and we anticipate that we will continue to do so for the foreseeable future. We do not have long-term purchase agreements with any of our end customers, and\n\n47\n\nsubstantially all of our sales are made on a purchase order basis. We expect that the percentage of revenue derived from each end customer may vary significantly due to the order patterns of our end customers, the timing of new product releases by our end customers, and consumer demand for the products of our end customers. Customers representing more than 10% of total revenue in any of the years 2023, 2024 or 2025 and their locations are as follows:\n\nCustomerCustomer Location% of total revenue for the year ended\nDecember 31,\n\n 202320242025\n\nAAmerica—%53%33%\n\nBChinaLess than 10%15%13%\n\nCChina56%12%Less than 10%\n\nD Japan16%Less than 10%—%\n\nOur Consolidated Financial Statements for 2023, 2024 and 2025 have been prepared in accordance with IFRS as issued by the IASB.\n\nRecent Developments\n\nACP\n\nOn January 16, 2025, we acquired 100% of the share capital and voting rights of ACP Advanced Circuit Pursuit AG (\"ACP\"), a Swiss corporation with wholly-owned subsidiaries in China, Hong Kong and France. The subsidiaries in China and Hong Kong were subsequently closed, incurring restructuring costs of approximately $350,000. The French subsidiary was merged into Sequans Communications S.A. in August 2025.\n\nWe initially entered into negotiations with ACP in 2024 to license RF technology to be used in our 5G eRedCap development, but then we decided to acquire ACP both for the technical expertise of the team and for the portfolio of intellectual property ACP had developed, including primarily radio transceiver products and technology components.\n\nThe purchase price is a combination of fixed and contingent consideration. Fixed consideration was $3,084,000, of which $2,709,000 was paid in cash directly to selling shareholders in the first half of 2025 and $375,000 paid to an escrow agent in July 2025, to be released absent any claims by the Company on July 16, 2026. Contingent consideration is an earn-out payment (calculated as gross margin achieved from sales to the customers that ACP had as of the acquisition date, recognized through December 31, 2026). The amount of the earn-out has been valuated at the acquisition date at $566,000 and recorded at December 31, 2025 as $984,000.\n\nThe acquisition resulted in $3.7 million of goodwill.\n\nLaunch of Bitcoin Treasury Initiative Financed by Issuance of Equity, Convertible Debt and Warrants in Private Placements\n\nOn June 22, 2025, we entered into agreements with institutional and accredited investors to raise capital through private placements. Under the Equity Purchase Agreement, we issued 1,171,987,620 ordinary shares (represented by 11,719,876 ADS at the current ratio), pre-funded warrants for 222,458,520 shares, and common warrants (the \"2025 warrants\") for 209,166,800 shares, raising $195 million. Simultaneously, under the Debenture Purchase Agreement, we issued $189 million in secured convertible debentures and 2025 warrants for 202,499,970 shares. The transactions closed on July 7, 2025, generating total gross proceeds of approximately $384 million, which were used to purchase 3,234 Bitcoin for $377.2 million at an average price of $116,643 per Bitcoin, all pledged as collateral for the debentures.\n\nOn October 27, 2025, the Debenture Purchase Agreement was amended to allow us to repurchase 50% of the debentures at face value plus a 6.5% premium, releasing 50% of the Bitcoin collateral. This repurchase, completed on November 10, 2025 for $100.6 million, was funded by selling 970 Bitcoin, and 647 Bitcoin were released from collateral. On February 10, 2026, the Debenture Purchase Agreement was further amended to allow repurchase of the remaining debentures, funded by selling Bitcoin from the collateral account by June 1, 2026. Any outstanding amounts after all Bitcoin is released cannot be repurchased until January 7, 2027, unless otherwise specified.\n\n48\n\nSince executing the second amendment of the Debenture Purchase Agreement, through April 23, 2026, the Company has sold 700 Bitcoin to fund redemption of $50.8 million of the debentures.\n\nAs of April 23, 2026, the Company held 1,214 Bitcoin, of which 917 Bitcoin remain pledged to secure the remaining portion of the debentures. We expect to redeem the balance of the debentures in the second quarter of 2026. Based on the current price of Bitcoin, we expect to have approximately 600 Bitcoin remaining after repurchase of all the debentures, which Bitcoin will be unencumbered. Going forward, we do not intend to further pursue our Bitcoin treasury strategy. Instead, our objective will be to monetize our Bitcoin holdings over time, extracting value in a disciplined manner while balancing market conditions with our broader capital needs\n\nThe Bitcoin are held for investment purposes and are classified as intangible assets under IAS 38. A decrease in value below historical cost results in the recording of a provision for impairment of value that is only reversed upon the sale of the Bitcoin.\n\nSale of intellectual property to Qualcomm\n\nOn August 22, 2024, we entered into an Asset Purchase Agreement (APA) with Qualcomm Technologies, Inc. that closed on September 30, 2024. At closing, a number of other agreements were also signed.\n\nPursuant to the transaction with Qualcomm, we received consideration of $200 million in cash plus up to $700,000 in the assumption of certain employee liabilities, Qualcomm acquired the IP for our two main 4G products (Monarch2 and Calliope2) and certain physical assets, as well as a license to our entire patent portfolio and a license to tour partially developed 5G broadband platform.\n\nWe received a license back of the Monarch2 and Calliope2 IP meaning that we will continue to have the right to manufacture and sell the products to serve our customers as usual. The value of the license was added to the cash paid and liabilities assumed by Qualcomm in determining the total deal consideration.\n\nWith respect to the cash consideration:\n\n•$15 million was paid in June 2024 in the form of a license payment for Monarch2 manufacturing rights which was terminated upon deal closing, although certain clauses related to product liability and indemnity survive the termination.\n\n•A bridge loan of $3 million provided in September 2024 plus accrued interest ($12,000) was deducted from the proceeds.\n\n•$10 million was paid directly into an escrow account, which was released in full in October 2025.\n\nAs a result of the above, $172 million was received in cash on September 30, 2024. The proceeds from this sale were used to repay our matured debts (convertible debts - see Note 17.1 of the Consolidated Financial Statements, unsecured related party loans - see Note 17.2 of the Consolidated Financial Statements and related accrued interest) and to pay all overdue payables to suppliers.\n\nThe transaction resulted in a net gain of $153.1 million on the sale of the 4G assets, which is included in operating income for the year ended December 31, 2024. The assets sold had a net book value of $18.4 million at the time of the sale. In addition, we recognized license revenue from licenses of the 5G broadband platform, the Monarch2 manufacturing rights and the patent portfolio in 2024 and in 2025.\n\nA.\nOperating Results\n\nRevenue\n\nOur total revenue consists of product revenue and other revenue. Revenue from contracts with customers is recognized when control of the goods or services is transferred to the customer at an amount that reflects the fair value of the consideration to which the Company is entitled, excluding sales taxes or duties.\n\nThe Company applies a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the performance obligation is satisfied.\n\n49\n\nWhen a contract includes multiple promised goods and services, the Company evaluates each component to determine whether they represent separate performance obligations and determines the appropriate allocation of the contract consideration to each identified performance obligation based on estimated relative stand-alone selling prices.\n\nProduct Revenue\n\nWe derive the large majority of our revenue from the sale of semiconductor solutions and modules for 4G wireless broadband and narrowband applications. Our solutions are sold both directly to our end customers and indirectly through distributors.\n\nOur sales cycles typically take 12 months or more to complete and our solutions are generally incorporated into our end customers’ products at the design stage. The design stage generally takes between 12 and 18 months but can last several years. Prior to an end customer’s selection and purchase of our solutions, our sales force and applications engineers provide our end customers with technical assistance in the use of our solutions in their products. Once our solution is designed into an end customer’s product offering, it becomes more difficult for a competitor to sell its semiconductor solutions to that end customer for that particular product offering given the significant cost, time, effort and risk involved in changing suppliers. In addition, once we win a particular design with an end customer, we believe our ability to penetrate other product families at that end customer increases significantly.\n\nOur product revenue is also affected by changes in the unit volume and average selling prices, or ASPs, of our semiconductor solutions. The ASP of the module is much higher than the ASP of our semiconductor solutions as many other components are added in order to provide a complete 4G- LTE solution. Our products are typically characterized by a life cycle that begins with higher ASPs and lower volumes as our new products use more advanced designs or technology and are usually incorporated into new devices that consumers adopt over a period of time. This is followed by broader market adoption with higher volumes and ASPs that are lower than initial levels, due to the maturity of the technology, greater availability of competing products or less demand as our end customers’ products reach the end of their life cycle.\n\nThe proportion of our product revenue that is generated from the sale of various products, also referred to as product mix, affects our overall ASP, product revenue and profitability. Given the varying ASPs of our solutions, any material change in our product mix may affect our gross margins and operating results from period to period. We expect to continue to broaden our product portfolio by introducing new solutions.\n\nLicense, Royalty and Services Revenue\n\nLicense, royalty and services revenue consists of the sale of licenses to use our technology solutions, royalties earned from royalty-bearing sales of customer products using our licensed technology, and service revenue from associated annual software maintenance and support agreements, technical support services and development services. Development services include advanced technology development services for technology partners and software development and integration services for customers, and wireless operators.\n\nWe license the right to use our solutions, including embedded software that enables our end customers to customize our solutions for use in their products. The license generally is perpetual and covers unlimited product designs by the end customer. We expect that we will continue to sign new license agreements as we begin working with new customers, but the amount may vary significantly from year to year. In some cases, the license agreements call for the payment of royalties when the customer sells its end product incorporating the licensed technology.\n\nDevelopment services agreements typically call for a number of milestones to be delivered over several quarters, with revenue generally recognized on the percentage of completion method as the contract progresses, but occasionally recognized as each milestone is delivered. The amount of development services can vary over time depending on the timing of when new contracts are won and the length of the contract period.\n\nLicense, royalty and services revenue reflects primarily the licensing transactions with a Chinese strategic partner in 2023 and 2024, with Qualcomm in 2024 and 2025 and with a Chinese ODM in 2025. There was a peak in licensing revenue recognized in 2022 following the execution of a large 5G license with the Chinese strategic partner and recognition of delivery of all technology blocks developed through 2023. This contract resulted again in significant revenues in 2023, but declined in 2024 as the contract was terminated early in the year. The decline in revenues from this contract was compensated nearly entirely by licensing revenues recognized from the strategic transaction with Qualcomm.\n\n50\n\nWe expect license, royalty and services revenue to continue to be a significant, but lesser, part of the total revenue mix in the short term as we enter into smaller new agreements.\n\nCost of Revenue\n\nOur cost of revenue includes cost of product revenue and cost of services and license revenue.\n\nA significant portion of our cost of semiconductor product revenue consists of the cost of wafers manufactured by third-party foundries and costs associated with assembly and test services. Cost of product revenue is impacted by manufacturing variances such as cost and yield for wafer, assembly and test operations and package cost. To a lesser extent, cost of product revenue includes expenses relating to depreciation of production mask sets, the cost of shipping and logistics, royalties, personnel costs, including share-based compensation expense, valuation provisions for excess inventory and warranty costs.\n\nFor our module products, the cost of product revenue includes not only the cost of the semiconductor solution but also other components such as power amplifiers and filters, as well as greater packaging costs.\n\nEarly in the life cycle of our products, we typically experience lower yields and higher associated costs. Over the life cycle of a particular product, our experience has been that the cost of product revenue has typically declined as volumes increase and test operations mature, while ASPs generally decline.\n\nWe use third-party foundry, assembly and test subcontractors, which are primarily located in Asia, to manufacture, package and test our semiconductor solutions. We purchase processed wafers from our fabrication suppliers, currently mainly TSMC, but also from SMIC since 2025. We also rely on third-party assembly and test subcontractors to assemble, package and test our products, and on third-party logistics specialists for logistics and storage. We generally do not have long-term agreements with our suppliers. Our obligations with our vendors for manufacturing, assembly and testing are generally negotiated on a purchase order basis.\n\nAs most of the costs related to services and license revenue are incurred as part of our normal research and development efforts, we allocate to cost of services and license revenue only the incremental costs related to service contract obligations and specific direct costs related to providing maintenance and technical support and generating development services revenue.\n\nConcerning the mask set services we introduced in 2025, the related costs, primarily the amortization of the mask set acquisition costs, are recognized in cost of revenue as wafers are delivered, based on the expected total production volume of these wafers. The related revenues these were not significant in 2025, but we expect them to increase in 2026 and beyond as order volumes rise.\n\nGross Profit\n\nOur gross profit is affected by a variety of factors, including our product and revenue mix, the ASPs of our products, the volumes sold, the purchase price of fabricated wafers, assembly and test service costs and royalties, provision for inventory valuation charges, and changes in wafer, assembly and test yields. We expect our gross profit will fluctuate over time depending upon competitive pricing pressures, the timing of the introduction of new products, product and revenue mix, volume pricing, variances in manufacturing costs and the level of royalty payments to third parties possessing intellectual property necessary for our products.\n\nOperating Expenses\n\nResearch and Development\n\nWe engage in substantial research and development efforts to develop new products and integrate additional capabilities into our core products. Research and development expense consists primarily of personnel costs, including share-based compensation, for our engineers engaged in design and development of our products and technologies. These expenses also include the amortization cost of intellectual property licensed from others for use in our products and of capitalized internal development costs, if any, and directly expensed product development costs, which include external engineering services, cost of development software and hardware tools, cost of fabrication of mask sets for prototype products, external laboratory costs for certification procedures, equipment depreciation and facilities expenses.\n\nUnder IFRS, research and development expense is required to be capitalized if certain criteria are met and then amortized over the life of the product. In 2023 and 2024, we capitalized costs for the 5G broadband product, certification costs and costs\n\n51\n\nfor the LTE Category 1 (Calliope 2) for a total amount of $22.3 million (net of research tax credit for $2.1 million) in 2023 and $15.5 million (net of research tax credit for $1.4 million) in 2024. In 2024, we discontinued the development of our 5G broadband platform, and in the third quarter recognized an impairment loss for the full $56.6 million on the balance sheet. Costs related to the development of Calliope 2 were capitalized through September 30, 2024, the date of sale of this asset to Qualcomm. In 2025 we reoriented our development priority on the lower-end eRedCap variant of 5G. We expect that we will begin to capitalize 5G eRedCap development costs at some point in 2026 if the relevant accounting criteria are met.\n\nResearch and Development Incentives\n\nIn France and the United Kingdom, we receive certain tax incentives based on the qualifying research and development expense incurred in those jurisdictions. The incentive is accounted for as a government grant with the benefit recorded as a reduction of research and development expense. We expect to be able to continue to qualify for such tax incentives in these jurisdictions in future periods. We expect the tax incentives, which are based on a percentage of qualifying research and development expense, to decline in the short term in line with cost reductions. For 2025, we recorded a net amount of $1.7 million in tax incentives compared with $3.8 million in 2024, and $5.4 million in 2023.\n\nIn France and in Switzerland, we also receive incentives in the form of grants from agencies of the French government, the Swiss government and the European Union, based on qualifying research and development expense incurred pursuant to collaborative programs carried out with other companies and universities. These incentives are recorded as a reduction of research and development expense and are recognized when there is a reasonable assurance that the grant will be received, and all relevant conditions will be complied with. For 2025, we recorded $4.1 million in grants compared with $1.9 million in 2024 and $1.8 million in 2023.\n\nIn 2019, we received the final $2.1 million payment of grants and debt financing related to a large research project funded by the French government, called FELIN. The total value of the project funding for the Company was €7.0 million ($9.0 million). Of the €7.0 million, €3.0 million was in the form of a grant and €4.0 million was in the form of interest-bearing debt to be repaid beginning in 2019 and through January 2, 2025. The Company made principal and interest payments on the FELIN debt of €1,130,000 ($1,250,000) in 2024 and €679,000 ($712,000) in 2025. The debt had been fully repaid by January 2, 2025.\n\nIn 2021, we received a new grant, called CRIIoT, to finance 5G developments with a total value of €5,615,000 ($6,793,000 using exchange rate at the grant date). The funding was paid in three installments: €1,404,000 ($1,670,000 using exchange rate at the funding date) after the signature of the contract, received in April 2021; €2,808,000 ($2,966,000 using exchange rate at the funding date) received in July 2022 based on achievement of milestones and the remaining amount of €1,403,000 ($1,550,000 using exchange rate at the funding date) after final claims were received in 2024.\n\nIn March 2024, we were awarded a new financing, called eRedCap, to support our low-power 5G developments with a total value of €10,888,000 ($11,838,000 using the exchange rate at the grant date), of which €7,451,000 ($8,101,000) is in the form of a grant and €3,437,000 ($3,737,000) in forgivable loan that is to be repaid from September 2028 and through July 2032. The funding is to be paid in four installments. €1,863,000 ($2,025,000 using exchange rate at the funding date) as grant and €859,000 ($934,000 using the exchange rate of the payment date) as forgivable loan, were received in April 2024 after the signature of the contract. In June 2025 we received €2,718,000 ($3,066,000 using exchange rate at the funding date) as grant and €1,001,000 ($1,129,000 using the exchange rate of the payment date) as forgivable loan. We expect to receive the balance of the funding in two instalments from the end of 2026 until 2027 based on achievement of milestones.\n\nWe also receive EU and Swiss state funding through the newly acquired entity ACP for R&D activities in Switzerland.\n\nSales and Marketing\n\nSales and marketing expense consists primarily of personnel costs, including sales commissions, and share-based compensation for our business development, sales, customer support and marketing personnel, commissions paid to independent sales agents, marketing fees paid to industrial partners, the costs of advertising and participation in trade shows.\n\nGeneral and Administrative\n\nGeneral and administrative expense consists primarily of personnel costs and share-based compensation for our finance, human resources, purchasing, quality and administrative personnel; professional services costs related to recruiting, accounting, tax and legal services; bad debt expense, investor relations costs; insurance; and costs related to the NYSE listing and American Depositary Share program. Information technology and facilities expenses are accounted for as overhead and allocated across all departments of the Company based on a pro rata basis. Legal expenses were unusually high in 2023 due to the tender offer\n\n52\n\nfrom Renesas, which was terminated in February 2024, in 2024 due to the Qualcomm transaction and in 2025 due to the implementation of the Bitcoin treasury strategy.\n\nInterest Income (Expense), Net\n\nInterest income consists of interest earned on cash and cash equivalent balances. We have historically invested our cash primarily in commercial bank accounts, short term deposits and money market funds.\n\nInterest expense relates primarily to our convertible debt issued in 2019 and 2021 and repaid in October 2024, and convertible debt issued in July 2025 of which half was redeemed in early November 2025. Interest expense also relates to lease contracts; upfront payments from customers with deliverables due in over 12 months; French government debt financing received in 2020; our accounts receivable financing facility put in place in 2014 and tax credit receivable financing put in place in 2022, both of which were terminated in March 2025; research project loans received from 2014 to 2025; and unsecured loans received from Renesas in November and December 2023 and in February 2024, which were repaid in October 2024.\n\nDebt Issuances and Amendments\n\nOn April 9, 2021, we entered into a convertible note agreement with Lynrock Lake Master Fund LP in the principal amount of $40.0 million (the Lynrock 2021 Note). The convertible note contractually matured in April 2024 and was convertible, at the holder’s option, into the Company’s shares at a conversion rate of $1.915 per share (representing $191.50 per ADS at the current ratio), subject to a 9.9% ownership limit for Lynrock Lake. The convertible debt paid interest annually at an interest rate of 5.0625% for cash payments or 6% for payment in kind accruals.\n\nIn August 2022, we exercised our option to extend the term of the Nokomis convertible notes issued in August 2019 by one year to August 2023 in exchange for an increase of the interest rate from 7.0% to 9.5% per annum effective August 15, 2022 and the issuance of 594,680 warrants (5,946 ADSs at the current ratio) at an exercise price of $1.03 per warrant ($103.00 per ADS at the current ratio). The conversion price of the debt was not changed as the existing conversion price was less than 120% of 20-day VWAP. The exercise of the option resulted in the extinguishment of the existing note and issuance of a new note for accounting purposes. The change in the liability component before and after the amendment was recorded as financial gain for an amount of $476,000.\n\nIn August 2023, we exercised our option to extend the term of the Nokomis convertible notes issued in August 2019 to April 2024 in exchange for an increase of the interest rate from 9.5% per annum to 13.5% per annum effective August 15, 2023 and the issuance of 1,244,820 warrants (12,448 ADSs at the current ratio) at an exercise price of $0.8082 per warrant ($80.82 per ADS at the current ratio). The conversion price of the debt was decreased from $1.03 per share ($103.00 per ADS at the current ratio) to $0.8082 per share ($80.82 per ADS at the current ratio). The exercise of the option resulted in the extinguishment of the existing note and issuance of a new note for accounting purposes. The change in the liability component before and after the amendment was recorded as financial gain for an amount of $247,000.\n\nIn April 2024, we entered into standstill agreements with the convertible debt holders while we negotiated our strategic agreement with Qualcomm. With the extension of the maturity of the Lynrock Lake 2021 Note in connection with the standstill agreement, the PIK rate of interest increased from 6% to 8% beginning April 10, 2024. The Company also secured standstill agreements from Renesas and the French government.\n\nIn early October 2024, we used a portion of the proceeds from the Qualcomm transaction to repay all convertible debt, bridge loans and accrued interest.\n\nOn June 22, 2025, we entered into a Secured Convertible Debenture Purchase Agreement with institutional and accredited investors, issuing $189 million in secured convertible debentures and warrants to purchase up to 202.5 million ordinary shares represented by 2.025 million ADS at the current ratio. Warrants were exercisable at $14.00 per ADS until December 31, 2025. The debentures are convertible into ordinary shares represented by ADS at $21.00 per ADS, accrue interest at 0% for the first year, 6% for the second year and 8% for the third year, and mature on July 7, 2028. The Company may redeem debentures under certain market conditions, and holders can convert or require repurchase in case of a Fundamental Change.\n\nGross proceeds from the issuance of convertible debt, as well as from an equity private placement, together totaling $384.2 million, were primarily used to acquire 3,234 Bitcoin for $377.2 million, all pledged as security for the debentures. The pledged Bitcoin amount adjusts only if at least 50% of the debentures are converted or repaid.\n\nOn October 27, 2025, we amended the agreement to repurchase 50% of the debentures at face value plus a 6.5% premium, releasing half the pledged Bitcoin. The repurchase was funded by selling 970 Bitcoin. On February 10, 2026, the secured convertible debenture purchase agreement was further amended to allow the Company to repurchase the remaining\n\n53\n\n50% of the secured convertible debenture at their face value by June 1, 2026. From February 2026 to April 23, 2026, the Company repurchased debentures for a total of $50.8 million by selling 700 Bitcoin. As of April 23, 2026, the Company held 1,214 Bitcoin, with 917 pledged as security.\n\nChange in Fair Value of Convertible Debt Embedded Derivative\n\nThe convertible notes and attached warrants issued in July 2025 to finance the Company's Bitcoin treasury strategy (the \"2025 convertible notes\" and the \"2025 warrants\") were accounted for as compound financial instruments with three components: (i) a liability component reflecting the Company’s contractual obligation to pay interest and redeem the notes in cash; (ii) an embedded derivative, which reflects the value of the conversion option, and (iii) an embedded derivative, which reflects the value of the 2025 warrants. The initial fair value of the notes was split between these three components. In addition, in July 2025, in connection with a private placement of equity, an additional 2025 warrants with the same terms were issued free of charge to the equity investors. An embedded derivative was calculated for the value of these 2025 warrants as well.\n\nThe fair value of the liability component on the issuance date of the 2025 Convertible Notes represented the fair value of a similar liability that does not have an associated equity conversion feature, calculated as the net present value of contractually determined future cash flows, discounted at the rate of interest applied by the market at the time of issue to instruments of comparable credit status and providing substantially the same cash flows, on the same terms, but without the conversion option. On July 7, 2025, the initial fair value of the embedded derivative related to the conversion option was calculated to be $67,000,000, and the embedded derivative related to all the 2025 warrants issued was calculated to be $6,200,000. The change in fair value is remeasured and recorded as financial income or loss at each statement of financial position date and at each repayment date. Fifty per cent of the 2025 Convertible Notes were redeemed in November 2025, and all the 2025 warrants expired on December 31, 2025. At December 31, 2025, the recalculated fair value of the remaining embedded derivative was $10,800,000, and the gain on the change of the fair value of $45,000,000 for the year ended December 31, 2025 was recorded in the Consolidated Statement of Operations.\n\nThe Lynrock 2021 Note was accounted for as compound financial instruments with two components: (i) a liability component reflecting the Company’s contractual obligation to pay interest and redeem the bonds in cash; and (ii) an embedded derivative, which reflects the value of the conversion option. The initial fair value of the notes was split between these two components. On April 9, 2021, the initial fair value of the embedded derivative of the Lynrock 2021 Note was calculated to be $12,713,000. The change in fair value is remeasured and recorded as financial income or loss at each statement of financial position date. At December 31, 2023, the recalculated fair value of the convertible debt instruments was nil and the gain in change of the fair value of $1,956,000 for the year ended December 31, 2023 was recorded in the Consolidated Statement of Operations. The Lynrock 2021 Note was repaid in October 2024.\n\nOn August 16, 2023, the accounting for the exercise of the option to extend the term of the Nokomis convertible note issued in August 2019 resulted in an embedded derivative. The initial fair value of the embedded derivative of the note was calculated to be $215,000, including the fair value of the warrants to be granted at the extension date for an amount of $82,000. After the issuance of the warrants (recorded in Other Capital reserves in shareholders' equity), the fair value of the embedded derivative of the note was $133,000. At December 31, 2023, the recalculated fair value of the convertible debt was $3,000 and the gain in change of the fair value of $1,244,000 for the year ended December 31, 2023, was recorded in the Consolidated Statement of Operations. At September 30, 2024, the Qualcomm closing date, the embedded derivative was reduced to zero, resulting in a gain of $3,000 recorded in the Consolidated Statement of Operations. The Nokomis convertible note was repaid in October 2024.\n\nForeign Exchange Gain (Loss), Net\n\nForeign exchange gain (loss) represents exchange gains and losses on our exposures to non-U.S. dollar denominated transactions, primarily associated with the changes in exchange rates between the U.S. dollar and the euro, and re-measurement of foreign currency balances at reporting date. As a result of our international operations, we are subject to risks associated with foreign currency fluctuations. Almost all of our revenues are in U.S. dollars and a portion of our expenses are also in U.S. dollars. However, a significant portion of our personnel costs is in euros and some long-term items on our statement of financial position are also denominated in euros. We use hedging instruments in order to reduce volatility in operating expenses related to exchange rate fluctuations. We classify foreign exchange gains and losses related to hedges of euro-based operating expenses as operating expenses.\n\nIncome Tax Expense (Benefit)\n\nWe are subject to income taxes in France, the United States and numerous other jurisdictions. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. As a result, we\n\n54\n\nrecognize tax liabilities based on estimates of whether additional taxes will be due. These tax liabilities are recognized when we believe that certain positions may not be fully sustained upon review by tax authorities, notwithstanding our belief that our tax return positions are supportable. Our effective tax rates differ from the statutory rate primarily due to any valuation allowance, the tax impact of local taxes, international operations, research and development tax credits, tax audit settlements, non-deductible compensation, transfer pricing adjustments and, in 2024, use of net operating loss carryforwards in France and taxation of a portion of our taxable income at the favorable IP Box regime rate in France. In respect of our subsidiaries outside of France, we operate primarily on a “cost plus” basis.\n\nIn the years ended December 31, 2023 and 2025, withholding tax was retained from license fees invoiced in China and from dividends received from the subsidiary in Israel. This withholding was only recoverable in the year of the invoicing and of the receipt of the dividends. As the Company was in a tax loss position in both years, the total amounts of $2,060,000 in 2023 and $235,000 in 2025, were not recoverable and were recorded in Income tax expense.\n\nIn the year ended December 31, 2024, we realized a taxable profit in France due to the gain recognized on the sale of certain 4G assets to Qualcomm. Under French tax regulations, we may opt to apply a special lower-tax regime to sales or licenses of qualifying intellectual property, commonly referred to as \"IP Box\". Taxable income from such qualifying transaction is taxed at a rate of 10%. We opted to apply the IP Box regime to the taxable income arising from the sale of the Monarch 2 eligible intellectual property, which is the trademarkable software element. The allocation of the gain on the sale of 4G assets was allocated between the assets sold and between the eligible versus ineligible intellectual property based on an analysis of the respective development costs. The gain associated with the sale of Monarch 2 eligible software was reduced by the value of related capital development costs that were on the balance sheet at the transaction date, as well as related research and development costs expensed in 2024 through the transaction date. Our use of the IP Box regime for this transaction received a favorable ruling in 2025 although the transaction itself remains subject to normal tax audit procedures. In the event of disqualification of any allocation of taxable income to the IP Box regime, that taxable income would be taxed at normal French rate of 25%. In the event that all allocation to the IP Box regime is disallowed, this would result in an increase of taxes due of $4,280,000.\n\nWe recognized total income tax expense in 2024 of $3,626,000, of which $2,893,000 is related to French taxable income. We were able to apply a portion of the net operating loss carryforwards to the taxable income, reducing 2024 tax expense.\n\nIn France, we have significant net deferred tax assets resulting from net operating loss carry forwards, tax credit carry forwards and deductible temporary differences that reduce our taxable income. Our ability to realize our deferred tax assets depends on our ability to generate sufficient taxable income within the carry back or carry forward periods provided for in the tax law for each applicable tax jurisdiction. Following the issuance of convertible debt and debt with warrants attached, we have deferred tax liabilities resulting from the bifurcation of the conversion feature and warrants from the debts. The deferred tax liabilities have allowed us to recognize deferred tax assets, subject to certain limitations on their use under French tax law. In the years ended December 31, 2023, 2024 and 2025, deferred tax assets of $9,000, $89,000 and $56,000, respectively, were recognized through income tax income on our Consolidated Statement of Operations. Over time, as we generate taxable income, we expect our tax rate to increase significantly.\n\nCritical Accounting Policies and Estimates\n\nThe discussion and analysis of our financial condition and results of operations is based on our Consolidated Financial Statements contained elsewhere in this annual report, which are prepared in accordance with IFRS as described in Note 2 to our Consolidated Financial Statements.\n\nSome of the accounting methods and policies used in preparing our Consolidated Financial Statements under IFRS are based on complex and subjective assessments by our management or on estimates based on past experience and assumptions deemed realistic and reasonable based on the circumstances concerned. The actual value of our assets, liabilities and shareholders’ equity and of our earnings could differ from the value derived from these estimates if conditions changed and these changes had an impact on the assumptions adopted. We believe that the most significant management judgments and assumptions in the preparation of our financial statements are described below.\n\nAccounting for the Acquisition of ACP Advanced Circuit Pursuit AG in 2025\n\nOn January 16, 2025, we acquired 100% of the share capital and voting rights of ACP Advanced Circuit Pursuit AG (\"ACP\"), a Swiss technology corporation.\n\nIn accounting for this business combination, we allocated the purchase price to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The purchase price for the acquisition of ACP consisted of both fixed and contingent consideration. Fixed consideration totaled $3,084,000, with $2,709,000 paid in cash to\n\n55\n\nthe selling shareholders during the first half of 2025 and $375,000 deposited with an escrow agent in July 2025. The escrowed amount will be released to the sellers on July 16, 2026, unless claims are made by the Company.\n\nContingent consideration is in the form of an earn-out, calculated based on gross margin generated from sales to ACP’s existing customers through December 31, 2026. The fair value of the earn-out was estimated at $566,000 at the acquisition date and subsequently remeasured to $984,000 as of December 31, 2025, reflecting updated expectations of future performance.\n\nThe determination of the fair value of contingent consideration involves significant judgment and estimates, including projections of future sales and gross margins. Changes in these estimates are recognized in earnings in the period of the change.\n\nThis policy requires management to make significant estimates and assumptions, and changes in these estimates could materially affect the amounts recognized in the financial statements.\n\nAccounting for the Qualcomm Transaction in 2024\n\nOn August 22, 2024, we entered into an Asset Purchase Agreement (\"APA\") with Qualcomm Technologies, Inc. At closing on September 30, 2024, a number of other agreements were also signed. We consider that all of the agreements executed together constitute one transaction and must be evaluated as such for accounting purposes.\n\nPursuant to the transaction with Qualcomm, we received consideration of $200 million in cash plus up to $700,000 in the assumption of certain employee liabilities, Qualcomm acquired the intellectual property (\"IP\") for our two main 4G products (Monarch2 and Calliope2) and certain physical assets, as well as a license to our entire patent portfolio and a license to our partially developed 5G broadband platform. We received a license back of the Monarch2 and Calliope2 IP meaning that we will continue to have the right to manufacture and sell the products to serve our customers as usual. The value of the license back was added to the cash paid and vacation liabilities assumed by Qualcomm in determining the total deal consideration.\n\nAccounting for this highly complex transaction required us to estimate the value of the various components sold to Qualcomm and the value of the license back to us of the 4G IP based on comparison of estimated future cash flows, market data and internal estimates, as well as benchmarking from comparable transactions.\n\nThe transaction resulted in a net gain of $153.1 million on the sale of the 4G assets, which is included in operating income for the year ended December 31, 2024. The assets sold had a net book value of $18.4 million at the time of the sale. In addition, we recognized license revenue from licenses of the 5G broadband platform, the Monarch2 manufacturing rights and the patent portfolio. The value of the 4G IP licensed back to the Company was recorded as an asset and is being amortized over its estimated useful life.\n\nRevenue Recognition\n\nArrangements with customers are considered contracts if all the following criteria are met: (a) parties have approved the contract and are committed to perform their respective obligations; (b) each party’s rights regarding the goods or services to be transferred can be identified; (c) payment terms related to the goods or services to be transferred can be identified; (d) the contract has commercial substance and (e) collectability of substantially all of the consideration is probable.\n\nRevenue is recognized when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. We follow a five-step model to: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the separate performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation.\n\nOur contracts with customers often include promises to transfer multiple products and/or services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is also required to determine the stand-alone selling price (“SSP\") for each distinct performance obligation. In instances where SSP is not directly observable, such as when we do not sell the product or service separately, for example in the case of the 5G license to Qualcomm which was part of the overall $200 million asset sale transaction, we determine the SSP using information that may include market conditions and other observable inputs.\n\nIf the consideration in a contract includes a variable amount, we use our judgment to estimate the amount of consideration to which we will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in comparison to the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.\n\n56\n\nWe sometimes receive advance payments from customers for the provision of goods and services. We determine if there is a significant financing component for these contracts considering the length of time between the customers’ payment and the transfer of control of the goods and services. When a significant financing component has been identified, the transaction price for these contracts is discounted, using the rate that we estimate would be reflected in a separate financing transaction at contract inception.\n\nWe recognize revenue when we satisfy the performance obligation by transferring the control over a product or service to the customer. Judgment is required to assess the pattern of transfer of control, in particular with regards to products’ sales to distributors and the rendering of services. Where we render services to the customers, they usually correspond to performance obligations which are satisfied over time, which are accounted for using the percentage-of-completion method, electing an input method of estimated costs as a measure of performance completed. When the transfer of control occurs only upon the delivery of milestones, revenue is recognized at the milestone dates.\n\nWe rely on estimates in determining the total estimated costs to complete the contract (“Estimated Costs at Completion”). Total Estimated Costs at Completion include direct labor, material and subcontracting costs. Due to the nature of the efforts required to be performed to meet the underlying performance obligation, determining Estimated Costs at Completion is subject to many variables. Management reviews the progress and performance of open contracts on a quarterly basis in order to determine the best estimate of Estimated Costs at Completion. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion, the project schedule, identified risks and opportunities, and the related changes in estimates of costs. The risks and opportunities include management’s judgment about the ability and cost to achieve the project schedule, technical requirements, and other contract obligations.\n\nIn 2025, we began providing services to maintain the availability of specific masksets for a small number of long-term customers, supporting their ongoing wafer manufacturing needs. These services include maskset creation, storage, and readiness for production. Revenue from these services is recognized as wafers are delivered, with amounts allocated on a pro-rata basis according to the expected total production volume under each arrangement, meaning that we rely on estimates of total volumes over the life of the contract to recognize revenue on a per unit basis. Management reviews the total estimated volumes on a quarterly basis. As part of this process, management reviews information including, but not limited to, any progress to date versus prior volume estimates and customer forecasts. The risks and opportunities include management’s judgment about the level of customer demand and the Company's ability to ship\n\nTrade Receivables\n\nWe maintain an allowance for doubtful accounts for potential estimated losses resulting from our customers’ inability to make required payments. Impairment losses on trade accounts receivable are estimated using the expected loss method, in order to take into account the risk of payment default throughout the lifetime of the receivables. Based on an analysis of historical credit losses, we have not applied any expected credit losses to our outstanding receivables as of the reporting date beyond specific provisions for doubtful accounts. If we receive information that the financial condition of our customers has deteriorated, resulting in an impairment of their ability to make payments, or there are indicators that amounts receivable will become uncollectible, additional allowances could be required. We record an allowance for any specific account we consider as doubtful based on the particular circumstances of the account. The carrying amount of the receivable is thus reduced through the use of an allowance account, and the amount of the charge is recognized in the Consolidated Statement of Operations. Subsequent recoveries, if any, of amounts previously provided for are credited against the same line in the Consolidated Statement of Operations. When a trade accounts receivable is uncollectible, it is written-off against the allowance account for trade accounts receivable.\n\nInventories\n\nInventories consist primarily of the cost of semiconductors, including wafer fabrication, assembly, testing and packaging; components; and modules purchased from subcontractors. We write down the carrying value of our inventories to the lower of cost (determined using the moving average method) or net realizable value (estimated market value less estimated costs of completion and the estimated costs necessary to make the sale). We write down the carrying value of our inventory for estimated amounts related to lower of cost or net realizable value, obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated net realizable value. The estimated net realizable value of the inventory is based on historical usage and assumptions about future demand, future product purchase commitments, estimated manufacturing yield levels and market conditions on a product-by-product basis. Once established, inventory reserves are not reversed until the related inventory has been sold or scrapped. Actual demand may differ from forecasted demand and these differences may have a material effect on recorded inventory values and cost of revenue.\n\n57\n\nWhen we consider future demand for a product, there are a number of factors that we take into consideration, including purchase orders and forecasts from customers, which in normal market conditions give us visibility for the next three months and some view on the following three months, our own internal projections based on customer inputs and new business opportunities, and estimates of market potential based on reports from industry analysts. The time horizon considered for future demand varies depending on the nature of the product, meaning we consider if the product is newly-introduced or approaching end-of-life, if the product is in finished good form or in component form, and if the product is incorporated in a large or small number of different end-user products from few or many customers.\n\nWe evaluate the realizability of our inventory at each balance sheet date. In doing so, we consider, among other things, demand indicated by our customers, overall market potential based on input from operators and analysts, and the remaining estimated commercial life of our products.\n\nAt December 31, 2023, 2024, and 2025, we had provisions for slow-moving LTE inventory totaling $2.9 million, $3.3 million, and $3.6 million, respectively.\n\nShare-Based Compensation\n\nWe have various share-based compensation plans for employees. The expense recorded in our statement of operations for equity awards under these plans is affected by changes in valuation assumptions. For example, the fair value of stock options is estimated by using the binomial model on the date of grant based on certain assumptions, including, among others, expected volatility, the expected option term and the expected dividend payout rate.\n\nFor the year ended December 31, 2023, 2024 and 2025, the assumption for expected volatility was the six-year volatility of the Company.\n\nWe recognize compensation expense only for the portion of share options that are expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from our estimates.\n\nFor 2023, 2024 and 2025, we recorded employee share-based compensation expense of $7.1 million, $4.1 million and $3.0 million, respectively. Share-based compensation expense related to non-employees was not material for 2023, 2024 and 2025.\n\nFair Value of Financial Instruments\n\nThe Company determined that the fair values of cash, trade receivables and trade payables approximate their carrying amounts largely due to the short-term maturities of these instruments.\n\nWhere no active market exists, the Company establishes fair value by using a valuation technique determined to be the most appropriate in the circumstances.\n\nRegarding compound debt instruments, the fair value of the debt component was determined at the date of issuance using a valuation model that requires judgment, including estimating the change in value of the Company at different dates and market yields applicable to the Company’s straight debt (without the conversion option(s)). The assumptions used in calculating the value of the conversion option(s), the expected volatility of the Company’s underlying stock price which has experienced fluctuations, and the market discount rate, represent the Company’s best estimates based on management’s judgment and subjective future expectations. The fair value of the debt component was supported by work performed by an independent valuation specialist engaged by the Company.\n\nDeferred Tax Assets and Liabilities\n\nDeferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Management makes assumptions, judgments and estimates to determine our deferred tax assets and liabilities, including whether deferred tax assets are likely to be realized.\n\nResearch and Development Costs\n\nCosts incurred internally in research and development activities are charged to expense until technological feasibility and commercial viability has been established for the project. Once technological feasibility and commercial viability are established, development costs are capitalized until the product is available for general release to customers. Judgment is required in determining when technological feasibility and commercial viability of a product is established. We have\n\n58\n\ndetermined that technological feasibility for our software products is reached after all high-risk development issues have been resolved. Generally, this occurs when the preliminary design review has been completed.\n\nInvestment in Digital Assets\n\nThe Company holds digital assets (which are comprised solely of Bitcoin) which are classified as intangible assets in accordance with IAS 38- Intangible assets. Digital assets are initially recognized at cost which includes the purchase price and any directly attributable transaction fees. The assets are considered to have an indefinite useful life and are not amortized, but are subject to impairment testing at each closing date. If the fair value of a digital asset decreases below its carrying value, an impairment loss is recognized in the Consolidated Statements of Operations. Gains are not recognized until realized upon sale. The Company determines the fair value of its digital assets based on quoted market prices on active exchanges at the closing date.\n\n59\n\nResults of Operations\n\nThe following tables set forth a summary of our consolidated results of operations for the periods indicated. This information should be read together with our Consolidated Financial Statements and related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of the results that may be expected for any future period.\n\nComparison of Years Ended December 31, 2024 and 2025\n\n Year ended December 31,Change\n\n 20242025%\n\n (in thousands) \n\nRevenue:\n\nProduct revenue$12,007 $15,489 29 %\n\nLicense, royalty and services revenue24,824 10,262 (59)\n\nTotal revenue36,831 26,325 (29)\n\nCost of revenue(9,092)(12,213)34 \n\nGross profit27,739 14,112 (49)\n\nOperating income (expenses):\n\nGain on sale of 4G intangible and tangible assets, net153,129 — 100 \n\nResearch and development(28,527)(31,183)9 \n\nSales and marketing(11,773)(8,598)(27)\n\nGeneral and administrative(14,402)(12,008)(17)\n\nDigital asset impairment losses— (67,375)100 \n\nDigital asset losses on sales, net— (6,102)100 \n\nImpairment of 5G broadband platform intangible and tangible assets(56,633)— (100)\n\nOther operating income (expenses), net— (738)\n\nTotal operating income (expenses)41,794 (126,004)(401)\n\nOperating income (loss)69,533 (111,892)(261)\n\nFinancial income (expense):\n\nInterest income (expense), net(22,878)(11,097)(51)\n\nGain (loss) on debt extinguishment13,952 (29,348)(310)\n\nChange in fair value of derivative financial instruments3 45,000 \n\nForeign exchange gain (loss)494 (1,110)(325)\n\nProfit (Loss) before income taxes61,104 (108,447)\n\nIncome tax benefit (expense)(3,537)(832)(76)\n\nProfit (Loss)$57,567 $(109,279)\n\n60\n\nThe following table sets forth a summary of our statements of operations as a percentage of total revenue:\n\n Year ended\nDecember 31,\n\n 20242025\n\n (% of total revenue)\n\nRevenue:\n\nProduct revenue33 59 \n\nLicense, royalty and services revenue67 39 \n\nTotal revenue100 100 \n\nCost of revenue(25)(46)\n\nGross profit75 54 \n\nOperating income (expenses):\n\nGain on sale of 4G intangible and tangible assets, net416 — \n\nResearch and development(77)(118)\n\nSales and marketing(32)(33)\n\nGeneral and administrative(39)(46)\n\nDigital asset impairment losses— (256)\n\nDigital asset losses on sales, net— (23)\n\nImpairment of 5G broadband platform intangible and tangible assets(154)— \n\nOther operating income (expenses), net— (3)\n\nTotal operating income (expenses)114 (479)\n\nOperating income189 (425)\n\nFinancial income (expense):\n\nInterest income (expense), net(62)(42)\n\nGain (loss) on debt extinguishment38 (111)\n\nChange in fair value of derivative financial instruments— 171 \n\nForeign exchange gain (loss)1 (4)\n\nProfit (Loss) before income taxes166 (411)\n\nIncome tax expense (benefit)(10)(3)\n\nProfit (Loss)156 (414)\n\nRevenue\n\nProduct Revenue\n\nProduct revenue increased 29% from $12.0 million in 2024 to $15.5 million in 2025. The increase was mainly due to the increase in our Cat M product category shipments, particularly modules, as customers began moving design wins to production.\n\nIn 2025, we shipped 3.0 million units of 4G products and RF transceivers compared to 3.1 million units of 4G products in 2024 with the unit decline due to a product mix more focused on modules. We expect product revenue growth in 2026, supported by a strong ramp-up of customer design wins going into production.\n\nRoyalties Revenue\n\nWe recognized royalties revenue for the first time in 2025 related to customer relationships of the acquired entity, ACP Advanced Circuit Pursuit AG. Royalties revenue totaled $574,000 in 2025.\n\n61\n\nLicense and Services Revenue\n\nLicense and services revenue decreased 59% from $24.8 million in 2024 to $10.3 million in 2025. License revenue decreased 181% from $22.6 million in 2024 to $8.0 million in 2025, primarily due to the 2024 license revenues from the Qualcomm transaction. We recognized $19.0 million in license revenue in 2024 from the Qualcomm strategic transaction compared with $7.9 million in 2025. Development services revenue remained stable at $2.2 million in 2024 and 2025. License and services revenues can vary quite significantly from one period to another.\n\nSales to external customers disclosed below are based on the geographical location of the customers to which the Company invoices. The following table sets forth the Company’s total revenue by region for the periods indicated.\n\nYear ended December 31,\n\n20242025\n\nAsia :\n\n  China (including Hong Kong)$11,458 $7,261 \n\n  Taiwan468 893 \n\n  Japan 696 1,960 \n\n  Rest of Asia47 436 \n\n     Total Asia12,669 10,550 \n\nGermany687 629 \n\nFrance1,405 2,957 \n\nUnited States of America20,368 9,248 \n\nRest of world (no single country representing more than 10%)1,702 2,941 \n\nTotal revenue$36,831 $26,325 \n\nThe Company categorizes its total revenue based on technology.\n\nYear ended December 31,\n\n20242025\n\nCellular IoT systems$36,831 $22,709 \n\nRadio transceivers for all wireless systems— 3,616 \n\nTotal revenue$36,831 $26,325 \n\nAdditionally, the Company categorizes its total revenue based on product, license and services revenue.\n\nYear ended December 31,\n\n20242025\n\nProduct revenue, transferred at a point of time$12,007 $15,489 \n\nLicense revenue, transferred at a point of time19,353 8,036 \n\nLicense revenue, transferred over time3,230 — \n\nDevelopment and other services transferred at a point of time— 1,164 \n\nDevelopment and other services transferred over time2,241 1,062 \n\nRoyalties— 574 \n\nTotal revenue$36,831 $26,325 \n\n62\n\nCost of Revenue\n\nCost of product revenue increased 42% from $7.9 million in 2024 to $11.2 million in 2025 mainly due to the increase in shipments of modules and an increase in the provision for slow-moving inventory of $1.1 million in 2025 compared to $817,000 in 2024. Cost of services and license revenue decreased 16% from $1.2 million in 2024 to $1.0 million in 2025.\n\nGross Profit\n\nGross profit decreased 49% from $27.7 million in 2024 to $14.1 million in 2025, and gross margin percentage decreased from 75% in 2024 to 54% in 2025. Product gross margin percentage decreased from 34% in 2024 to 28% in 2025 due to the revenue mix including a higher percentage of module sales, and an increase in the provision for slow-moving inventory. License and services revenue gross margin decreased from 95% in 2024 to 91% in 2025 due to the lower proportion of license revenue in the mix in 2025.\n\nResearch and Development\n\nResearch and development expense increased 9% from $28.5 million in 2024 to $31.2 million in 2025 reflecting the absence of any net impact from the capitalization of development costs in 2025 compared to a net reduction of research and development costs in 2024 of $13.3 million due to capitalization of development costs. This impact was offset to a great extent by reductions in external spending.\n\nThe total amount of capitalized costs, mainly related to operator certifications, was $0.1 million in 2025, offset by amortization of these capitalized costs of $0.1 million. By comparison, in 2024, we continued capitalizing 5G development in the first half of the year and Calliope 2 costs through September 30, 2024, the date of sale of this asset to Qualcomm amounting in total to $15.5 million, net of research tax credit of $1.4 million offset by amortization of previously capitalized costs of $2.2 million. In 2025, and our intention in 2026, is to focus on the lower-end eRedCap variant of 5G. We expect that we will begin to capitalize 5G eRedCap development costs at some point in 2026 if the relevant accounting criteria continue to be met.\n\nResearch and development incentives increased from $3.8 million in 2024 to $5.8 million in 2025.\n\nResearch and development costs associated with product development (including normal customer support which generates product improvements) are recorded in operating expense. In some cases, we have negotiated agreements with customers and partners whereby we provide certain development services beyond our normal practices or planned product roadmap. Amounts received from these agreements are recorded in services and license revenue. Direct costs, including both internal resources and out-of-pocket expenses, that we incur as a result of the commitments in the agreements are recorded in cost of services and license revenue, rather than in research and development expense. Other research and development costs related to the projects covered by the agreements, but which we would have incurred without the existence of such agreements, are recorded in research and development expense.\n\nThere were 157 employees and independent contractors in research and development at December 31, 2025 compared to 145 at December 31, 2024.\n\nSales and Marketing\n\nSales and marketing expense decreased 27% from $11.8 million in 2024 to $8.6 million in 2025. The decrease primarily reflects lower average headcount and related expenses. There were 40 employees and independent contractors in sales and marketing at December 31, 2025 compared to 46 employees at December 31, 2024.\n\n63\n\nGeneral and Administrative\n\nGeneral and administrative expense decreased 17% to $12.0 million in 2025 compared to $14.4 million in 2024. Legal fees and other expenses decreased primarily due to lower costs compared to the costs associated with the Qualcomm transaction in 2024. There were 23 employees and independent contractors in general and administrative functions at December 31, 2025 compared to 20 at December 31, 2024.\n\nDigital assets impairment and realized loss\n\nDuring the year ended December 31, 2025, the Company issued equity and convertible debt in private placements. The Company used the net proceeds of approximately $384 million for the purchase of digital assets (which are comprised solely of Bitcoin). As of December 31, 2025, the carrying value of our digital assets was $141.5 million. The change in value reflects both market price fluctuations and our ongoing portfolio management activities, including the sale of 1,095 Bitcoin primarily to fund $100.6 million for the redemption of $94.5 million nominal value of convertible debt in November 2025. The digital assets are measured at the lower of cost or market, and as such, we recognized impairment charges of $67.4 million during the year, due to declines in market prices below our carrying values. Additionally, we realized net losses of $6.1 million on the sale and disposition of digital assets, reflecting the difference between the carrying value and the proceeds received. Given the inherent volatility of digital asset markets, we continue to monitor our exposure and have implemented robust internal controls over the custody, valuation, and reporting of these assets.\n\nThe following table presents a roll-forward of our Bitcoin holdings:\n\nNumber of Bitcoins (1)\nCarrying Value (in thousands of $)\n\nBalance at January 1, 20250$— \n\nAcquisitions3,233.8038 377,200 \n\nDisposals(1,095.0001)(116,532)\n\nImpairment losses— (67,375)\n\nRealized net losses— (6,102)\n\nBalance at December 31, 20252,138.8037 $187,191 \n\n(1) Amounts for the number of Bitcoins are rounded to four decimal places to reflect transaction precision.\n\nInterest Income (Expense), Net\n\nNet interest expense decreased to $12.5 million in 2025 compared to $23.7 million in 2024. The decrease in interest expense in 2025 primarily reflects the fact that debt was outstanding for less than half the year in 2025 (after issuance in July 2025 and partial redemption in October 2025) compared with over nine months in 2024, as outstanding debt was repaid in October 2024. In addition, there was an increase in interest income from short-term investments and term deposits in 2025 compared to 2024, as excess cash was invested all the year in 2025 versus only the fourth quarter of 2024.\n\nGain (loss) on debt extinguishment\n\nOn November 10, 2025, the Company repurchased fifty percent of the secured convertible debentures issued in July 7, 2025 for $100.6 million. The change in the liability component before and after the repurchase was recorded for a loss of $29,348,000 in the Consolidated Statement of Operations in \"Gain (loss) on debt extinguishment\".\n\nIn 2025, the Company reached an agreement with Bpifrance to reschedule repayments of a long-term research project (5G eRedCap project) from September 30, 2028 to June 30, 2032. The change in the liability before and after the extension was recorded for a gain of $46,000 in the Consolidated Statement of Operations in \"Gain (loss) on debt extinguishment\".\n\nOn April 9, 2024, the Company secured standstill agreements from both convertible debt holders with respect to the convertible debt maturing in April 2024. The agreements granted an initial standstill period until April 26, 2024 that was extended until September 30, 2024. This resulted in the extinguishment of the existing notes and issuance of new notes for accounting purposes, and the change in the liability component was recorded for a total gain of $13,260,000 in the Consolidated Statement of Operations in “Gain (loss) on debt extinguishment\". The Company also secured standstill agreements from Renesas and the French government. The agreements granted a standstill period until September 30, 2024. The change in the liability before and after the extension was recorded for a gain of $294,000 and $38,000, respectively, in the Consolidated Statement of Operations in \"Gain (loss) on debt extinguishment\".\n\n64\n\nChange in fair value of convertible debt embedded derivative\n\nOn July 7, 2025, we entered into a financing arrangement whereby we issued secured convertible debt and equity, each with warrants attached. The value of the conversion option and the warrants issued to shareholders and debt holders has been recorded as an embedded derivative at fair value. The value of the initial embedded derivative of the debenture and the warrants was calculated to be $73.2 million. On November 10, 2025, the Company repurchased fifty percent of the secured convertible debentures, and the change in fair value of $36.0 million was recorded as financial income in the Consolidated Statement of Operations. At December 31, 2025, the recalculated fair value of the remaining convertible debenture was $10.8 million and the warrants expired at December 31, 2025, resulting in a further change of the fair value of $9.0 million in 2025, recorded as a gain in the Consolidated Statement of Operations.\n\nAt September 30, 2024, the extinguishment date of the notes repaid with the proceeds of the Qualcomm transaction, the fair value of the embedded derivative of the notes was calculated and the change in fair value of $3,000 was recorded as financial income in the Consolidated Statement of Operations.\n\nForeign Exchange Gain (Loss), Net\n\nWe had a net foreign exchange loss of $1.1 million in 2025 compared to a net foreign exchange gain of $0.5 million in 2024 primarily due to movements in the U.S. dollar versus the euro and the Swiss franc, particularly in the revaluation of euro-denominated net debt on the balance sheet.\n\nIncome Tax Expense (Benefit)\n\nIn 2025, we recorded current tax expense of $888,000 arising from taxable income incurred at certain subsidiaries (including withholding taxes of $235,000 retained from royalties and services invoiced in China and from dividends received from the subsidiary in Israel) and a deferred income tax amounting to $56,000, related to origination and reversal of timing differences.\n\nIn 2024, we recorded current tax expense of $3.6 million, representing a worldwide effective tax rate of 5.9% compared to the statutory French tax rate of 25%. The lower effective tax rate is due to both the application of net operating loss carryforwards to a portion of the taxable income, to the extent permitted by French law, and the taxation of a portion of the gain on the sale of 4G assets at a favorable rate due to the nature of the transaction. Deferred income tax recorded in 2024 amounted to $89,000 and related to origination and reversal of timing differences.\n\nComparison of Years Ended December 31, 2023 and 2024\n\nThe Comparison of the years ended December 31, 2023 and 2024 is hereby incorporated by reference from the Company's Annual Report on Form 20-F filed April 30, 2025.\n\nB.Liquidity and Capital Resources\n\nSources of Liquidity\n\nOur cash and cash equivalents and short-term investments were $13.4 million at December 31, 2025.\n\nSince inception, we have financed our operations primarily through proceeds from the issues of our shares, convertible notes and venture debt, which totaled $73.1 million from 2004 to the end of 2010; from $59.1 million in net proceeds from our initial public offering on the New York Stock Exchange in April 2011 and from $377 million in net proceeds from our follow-on public offerings and equity private placements.\n\nIn June 2014, we entered into a factoring agreement with a French financial institution whereby a line of credit was made available equal to 80-90% of the face value of accounts receivable from qualifying customers. We transfer to the finance company all invoices issued to qualifying customers and the customers are instructed to settle the invoices directly with the finance company. In May 2020, we entered into an agreement to finance the 2020 research tax credit receivable as it is earned over the year, which was renewed for the 2021, 2022, 2023 and 2024 research tax credits. We terminated both of these agreements in 2025, and no amounts were outstanding at December 31, 2025.\n\n65\n\nIn October 2014, Bpifrance, a financial agency of the French government, provided funding to the Company in the context of a long-term research project, estimated to be completed over a three-year period. The total funding was €7.0 million ($9.0 million), a portion in the form of a grant (€3.0 million or $3.8 million) and a portion in the form of a loan (€4.0 million or $5.2 million). The funding, with a fixed contractual rate of 1.53%, was paid in installments after milestones defined in the contract, the last of which was received in 2019. The advance was repaid from March 31, 2019 to January 2, 2025.\n\nOn February 18, 2019, a new strategic investor subscribed for warrants for a total subscription price of $8.4 million in support of accelerating Sequans’ 5G product roadmap. Upon the closing of this transaction, the Company issued to the investor pre-funded warrants to purchase 93,929 ADSs at the current ratio. The warrants are exercisable upon 61 days’ notice to Sequans at an exercise price of €0.02 per share (€2.00 per ADS at the current ratio). The warrants expire February 18, 2034.\n\nOn August 16, 2019, the Company entered into a convertible note agreement with Nokomis in the principal amount of $5.0 million. In March 2020, the 2019 convertible notes were amended to grant the Company two options to extend the term of such note by one year and with a reset the conversion price to a 20% premium above the 20-day volume weighted average price (VWAP) if it is lower than the existing conversion price. On the first option exercise, the PIK would be adjusted to 9.5% and the holder would be granted warrants for 15% of the value of the note with a three-year term, at an exercise price of 20% premium above 20-day VWAP. On the second option exercise, the PIK would be adjusted to 13.5%, and the holder would be granted additional warrants for 20% of the value of the note with a three-year term, at an exercise price of 20% premium above 20-day VWAP.\n\nOn April 30, 2020, the Company finalized €5 million of French government debt financing that was received in May 2020 as part of the French COVID-19 economic support plan. The French loan is unsecured, bears interest at 1.75% and is repayable over five years from August 2022 to May 2026. €1,250,000 ($1,402,000) in principal and interest was reimbursed in 2025 (€1,622,000 ($1,766,000) in 2024).\n\nOn March 5, 2021, the Company executed an agreement with Bpifrance that provides funding to the Company in the context of a long-term research project named CRIIOT, estimated to be completed over a 33-month period. The total value of the project is €5,615,000 ($6,890,000) in the form of a grant. The funding was paid in three installments: €1,404,000 ($1,670,000) after the signature of the contract, received in March 2021; €2,808,000 ($2,966,000) received in July 2022 based on achievement of milestones and the remaining amount of €1,404,000 ($1,506,000) received in May 2024.\n\nOn April 9, 2021, the Company entered into a convertible note agreement with Lynrock Lake Master Fund LP in the principal amount of $40.0 million. The convertible note matured in April 2024 and was convertible, at the holder’s option, into the company’s shares at a conversion rate of $1.915 per share (representing $191.50 per ADS at the current ratio), subject to a 9.9% ownership limit for Lynrock Lake. The convertible debt paid interest annually at an interest rate of 6% for payment in kind accruals.\n\nOn August 15, 2022, the Company exercised its option to extend the term of the remaining Nokomis Note outstanding, that had been issued in August 2019, with the interest rate increasing to 9.5% per year and a conversion rate of $103.00 per ADS at the current ratio. In connection with the extension of the debt, the Company issued to Nokomis warrants to acquire 594,680 ordinary shares (5,946 ADS at the current ratio) at an exercise price of $103.00 per ADS at the current ratio.\n\nOn April 12, 2023, the Company increased its capital in connection with a private offering to 272 Capital Master Fund Ltd, Lynrock Lake Master Fund LP and several other institutional investors by issuing 38,834,952 ordinary shares at $0.515 per ordinary share (or $51.50 per ADS at the current ratio). The total gross proceeds from the offering amounted to $20.0 million.\n\nOn August 4, 2023, the Company entered into a Memorandum of Understanding (the “MoU”) with Renesas Electronics Corporation, a Japanese corporation (“Renesas”). The MoU provided, among other things, that Renesas and the Company engage in a series of transactions pursuant to which, among other transactions, Renesas would seek to acquire (through an affiliate) all of the issued and outstanding ordinary shares for $0.7575 per ordinary share and $75.75 per ADS at the current ratio.\n\nOn August 15, 2023, the Company exercised its second option to extend the term of the remaining Nokomis 2019 Note outstanding. This convertible note maturity was extended to April 2024, bears interest at a rate of 13.5% per year, paid in kind, and is convertible, at the holder’s option, into the company’s ADSs at a conversion rate of $75.00 per ADS at the current ratio. In connection with the extension of the debt, the Company issued to Nokomis warrants to acquire 1,244,820 warrants (12,448 ADSs at the current ratio) at an exercise price of $80.82 per ADS at the current ratio.\n\n66\n\nOn September 26, 2023, the Company entered into a Securities Purchase Agreement with 272 Capital Master Fund, LTD, a fund affiliated with Wes Cummins, a director of the Company, to issue an aggregate of 84,805 American Depositary Shares at the current ratio at a price of $70.75 per ADS for a total capital increase of $5,999,999. The private placement closed on September 29, 2023, and we used proceeds of the private placement to partially fund operations.\n\nOn November 8, 2023, the Company entered into a Security Purchase Agreement (the “Purchase Agreement”) with Renesas Electronics America Inc., (“Renesas America”) a wholly owned subsidiary of Renesas, providing for the issuance of an unsecured subordinated note in an aggregate principal amount of $6 million. The transaction closed on November 8, 2023. On December 27, 2023, we entered into a second Security Purchase Agreement with Renesas America providing for the issuance of an additional unsecured subordinated note in an aggregate principal amount of $3 million. The transaction closed on December 27, 2023. On February 12, 2024, we entered into a third Security Purchase Agreement with Renesas America providing for the issuance of an additional unsecured subordinated note in an aggregate principal amount of $9 million. The transaction closed on February 12, 2024.\n\nOn February 22, 2024, Renesas notified us that Renesas was terminating the MoU due its receipt of an adverse Japanese tax ruling on February 15, 2024 from the National Tax Agency of Japan. We incurred a significant amount of debt to operate our business during the pending tender offer, and our business suffered due, in part, to uncertainty raised by the pending acquisition. The termination of the MoU has created significant liquidity concerns and raised substantial doubt about our ability to continue to operate absent a new strategic transaction or financing in the near term. We were not able to pay our outstanding convertible notes due on April 9, 2024. On April 9, 2024, we secured standstill agreements from our three main debt holders. The agreements granted an initial standstill period until April 26, 2024 that was subsequently extended until August 28, 2024, with the goal of providing sufficient time for the Company to effectively negotiate and finalize a new strategic transaction, thereby securing a long-term solution that aligns with the interests of all stakeholders.\n\nOn April 22, 2024, we issued an Unsecured Promissory Note with a principal amount of $5,000,000 to 272 Capital Master Fund, Ltd. The transaction closed on April 24, 2024. The Note bears paid-in kind interest at a rate of 12.0% per annum, compounded annually, with a guaranteed return of 40.0%. The Note was to mature on the earlier of April 22, 2025, or one day prior to the earliest extended maturity date of the Company’s existing convertible debt held by Lynrock Lake and Nokomis and subordinated notes held by Renesas.\n\nIn April 2024, we received an indication of interest from Qualcomm regarding the potential acquisition of the Company or its assets. This was followed by a term sheet received in May 2024 and signature of a letter of intent in June 2024. While due diligence and negotiations were ongoing, we negotiated the sale of a manufacturing license for $15 million paid in June 2024. After signature of the APA, Qualcomm provided a bridge loan in September 2024 in the amount of $3 million, bearing interest at 9.0%. This $3 million plus accrued interest of $12,000 were deducted from the $200 million gross proceeds of the APA.\n\nIn October 2024, after closing of the APA and receipt of net proceeds of $172 million in cash, we repaid the Nokomis and Lynrock Lake convertible notes and accrued interest, the Renesas bridge loans and accrued interest and the 272 Capital Note and accrued interest, totaling $83.5 million.\n\nOn June 22, 2025,we entered into a Securities Purchase Agreement (the “equity purchase agreement”) with certain institutional and accredited investors (the “equity purchasers”), pursuant to which we agreed to issue to the equity purchasers in a private placement (the “equity private placement”) an aggregate of (a) (i) 1,171,987,620 ordinary shares, nominal value €0.01 per share, of the Company (the “ordinary shares”), represented by 11,719,876 ADS at the current ADS ratio and (ii) pre-funded warrants (the “pre-funded warrants”) to purchase up to an aggregate of 222,458,520 ordinary shares (the “pre-funded warrant shares”) represented by ADSs and (b) warrants (the “2025 warrants”) to purchase up to an aggregate of 209,166,800 ordinary Shares (the “warrant shares”) represented by ADSs, at a combined purchase price of $14.00 per ADS and warrant, the equivalent of $0.14 per ordinary share and warrant at the current ratio, or $13.90 per pre-funded warrant and warrant, for a total of $195 million.\n\nIn addition, on June 22, 2025, we entered into a Secured Convertible Debenture Purchase Agreement (the “debenture purchase agreement” and, together with the Equity Purchase Agreement, the “purchase agreements”) with certain institutional and accredited investors (the “debenture purchasers”), pursuant to which we agreed to issue to the debenture purchasers in a private placement (the “debenture private placement” and, together with the Equity Private Placement, the “private placements”) (a) secured convertible debentures (the “secured convertible debentures”) in the aggregate principal amount of $189 million and (b) 2025 warrants to purchase up to an aggregate of 202,499,970 warrant Shares.\n\nThe pre-funded warrants are exercisable commencing upon issuance through the lifetime of the Company at a nominal exercise price of €0.01 per pre-funded warrants share. The 2025 warrants are exercisable commencing upon issuance for a period of 90 days with an exercise price equal to $14.00 for each warrant.\n\n67\n\nThe Secured Convertible Debentures are convertible into (i) Ordinary Shares (the “conversion shares”) or (ii) pre-funded warrants at the option of a Debenture Purchaser at any time at a conversion price of $21.00 per ADS at the current ratio. From and after the first anniversary date of the date the secured convertible debentures are issued (\"issuance date\") until, but not including, the second anniversary date of the Issuance Date, interest shall accrue on the outstanding principal balance of the secured convertible debentures at an annual rate equal to 6.0%, and from and after the second anniversary date of the Issuance Date, interest shall accrue on the outstanding principal balance of the secured convertible debenture at an annual rate equal to 8.0%.\n\nThe transactions were completed on July 7, 2025. The aggregate gross proceeds from the Private Placements were approximately $384 million. We used the net proceeds from the Private Placements for the purchase of the digital assets commonly referred to as “Bitcoin” in the cryptocurrency marketplace (“Bitcoin”). By October 3, 2025, we had acquired 3,234 Bitcoin for approximately $377.2 million at an average acquisition price inclusive of fees of $116,643 per Bitcoin, all of which were pledged as security for the Secured Convertible Debentures and are not available for sale.\n\nIn July 2025, 10,875,000 ordinary shares (108,750 ADS at the current ratio) were issued following exercise of 2025 warrants. In August and September 2025, 125,943,130 ordinary shares (1,259,431 ADSs at the current ratio) were issued following exercise of pre-funded warrants. In March 2026, a further 73,154,000 ordinary shares (731,540 ADSs at the current ratio) were issued following exercise of pre-funded warrants.\n\nOn August 25, 2025, we filed an automatic shelf registration statement on Form F-3 and established an “at the market” equity offering program (the “ATM Program”) under which we could offer and sell our ADSs for an aggregate offering amount of up to $200 million. No ADS were issued under this registration statement or ATM Program. Upon the filing of this annual report on Form 20-F, we no longer satisfy the requirements for using an automatic shelf, and therefore we can no longer issue equity under the August shelf registration or the ATM Program.\n\nOn October 1, 2025, the Company extended the expiration date of the remaining 2025 warrants from October 5, 2025 to December 31, 2025 at which time all 2025 warrants expired unexercised.\n\nOn October 27, 2025, the Secured Convertible Debenture Purchase Agreement was amended to allow the Company to repurchase 50% of the Secured Convertible Debentures at their face value plus a 6.5% premium and in connection with the repurchase, to release 50% of the Bitcoin held from the security and collateral agreements. The repurchase of the Secured Convertible Debentures for $100.6 million was completed on November 10, 2025 and was funded by the sale of 970 Bitcoin. Following the repurchase, another 647 Bitcoin were released from the security and collateral agreements.\n\nOn February 10, 2026, the Secured Convertible Debenture Purchase Agreement was further amended to allow the Company to repurchase the remaining 50% of the Secured Convertible Debentures at their face value. 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 (the “Bitcoin Collateral Account”) in increments such that, on or before June 1, 2026, either the Debentures will be fully redeemed or all 1,617 Bitcoin in the Bitcoin Collateral Account will have been sold to fund the redemption of the applicable portion of the principal amount of outstanding Debentures. To the extent that any principal amount or any accrued and unpaid interest thereon remains outstanding (the “Outstanding Amount”) following the release of all 1,617 Bitcoin from the Bitcoin Collateral Account, such Outstanding Amount shall not be subject to repurchase by the Company at the option of any holder of the Debentures until January 7, 2027 at the earliest, except as otherwise set forth in the Debentures.\n\nSince executing the second amendment of Secured Convertible Debenture Purchase Agreement through April 23, 2026, the Company has sold 700 Bitcoin and has redeemed $50.8 million of the convertible debt.\n\nAs of April 23, 2026, the Company held 1,214 Bitcoin of which 917 Bitcoin remain pledged to secure the remaining portion of the Secured Convertible Debentures. The Bitcoin are held for investment purposes and are classified as intangible assets under IAS 38. A decrease in value below historical cost results in the recording of a provision for impairment of value that is only reversed upon the sale of the Bitcoin.\n\nCash Flows\n\nThe following table summarizes our cash flows for the periods indicated:\n\n \n\n68\n\n Year ended December 31,\n\n 202320242025\n\n (in thousands)\n\nNet cash used in operating activities$(7,261)$(19,511)$(26,418)\n\nNet cash from (used in) investing activities$(24,437)$93,687 $(210,961)\n\nNet cash from (used in) financing activities$31,736 $(70,788)$241,535 \n\nNet increase (decrease) in cash and cash equivalents$38 $3,388 $4,156 \n\nCash Flows from Operating Activities\n\nNet cash used in operating activities during 2025 was $26.4 million, reflecting a net loss (before income tax) of $108.4 million, tax payments of $0.7 million, increases in research tax credit receivable of $2.0 million and inventories of $1.3 million, and a decrease in contract liabilities of $3.5 million, offset by a decrease in trade receivables and other receivables of $8.2 million and increases in trade payables and other liabilities of $4.2 million and in government grant advances of $2.1 million. In addition, there were several non-cash charges, including depreciation and amortization of $5.7 million, impairment of digital assets of $67.4 million and loss on sale of digital assets of $6.1 million, interest expense of $11.1 million, loss on debt extinguishment of $28.3 million and share-based compensation expense of $3.0 million during the period. There was a non-cash benefit of $45.0 million due to the reduction in the fair value of convertible debt embedded derivative.\n\nNet cash used in operating activities during 2024 was $19.5 million, reflecting a net profit (before income tax) of $61.1 million, an increase in research tax credit receivable of $2.1 million and a decrease in trade payables and other liabilities of $13.1 million offset by decreases in inventories of $3.1 million, in trade receivables and other receivables of $3.6 million and increases in contract liabilities of $6.0 million and in government grant advances of $2.4 million. In addition, there were several non-cash charges, including depreciation, amortization and impairment of $64.0 million, interest expense of $22.9 million, reduction in the fair value of convertible debt embedded derivative of $0.3 million, and share-based compensation expense of $4.1 million during the period. There was a non-cash benefit of $157.1 million related to the gain on disposal of assets and $14.0 million related to convertible debt amendment.\n\nNet cash from in operating activities during 2023 was $7.3 million, reflecting a net loss (before income tax) of $38.3 million, increases in research tax credit receivable of $3.2 million and in trade payables and other liabilities of $7.3 million, and decreases, contract liabilities of $0.2 million and in government grant advances of $1.1 million, offset by decreases in inventories of $3.1 million and in trade receivables and other receivables of $0.1 million. In addition, there were several non-cash charges, including depreciation and amortization of $11.9 million, interest expense of $11.2 million, reduction in the fair value of convertible debt embedded derivative of $3.2 million, and share-based compensation expense of $7.1 million during the period. There was a non-cash benefit of $0.2 million related to convertible debt amendment.\n\nCash Used in Investing Activities\n\nCash used in investing activities during 2025 included primarily the investment of $377.2 million in Bitcoin financed by the July 2025 financings described above, offset partially by the $116.5 million proceeds from the sale of Bitcoin in October to December 2025 to redeem convertible debt and finance the ADS buyback program. In 2025, we also invested $2.8 million in the acquisition of ACP Advanced Circuit Pursuit AG and $2.2 million in purchases of property and equipment. We also sold short-term deposits and other financial assets for $53.4 million and received interest payments of $1.4 million.\n\nCash from or used in investing activities during 2024 and 2023, consisted primarily of proceeds from sale to Qualcomm of intangible assets and property, plant and equipment of $165.6 million in 2024, purchases of property and equipment and intangible assets of $3.3 million and $5.5 million, respectively, of capitalized development expenditures of $16.4 million and $24.1 million, respectively, the purchase of short-term deposits for $53.0 million in 2024 ($5.0 million in 2023). In 2023 and 2024, the purchase of intangible assets included licenses purchased for the 5G product development.\n\nCash Flows from Financing Activities\n\nNet cash provided by financing activities was $241.5 million in 2025, reflecting $326.5 million in net proceeds of our July 2025 private placement of equity, warrants and convertible debt used to launch our Bitcoin treasury strategy, $32.5 million from the exercise of warrants issued in the July private placement and $1.1 million in proceeds of research project financings, offset by $100.6 million in repayment in October 2025 of convertible debt issued in July 2025, $4.2 million in repayment of loans, $1.4 million repayment of a government loan, $1.6 million payment of lease liabilities, $0.5 million repayment of research project financing, $1.0 million payment of interest and $9.4 million paid to buy back our own ADSs.\n\n69\n\nIn September 2025, the Board of Directors, considering that the market value of the Company was low compared to our net asset value, authorized the buyback of ADS representing ordinary shares up to 10% of the then outstanding capital. During November and December 2025, we purchased 1,516,973 ADS, representing 9.5% of issued ADS as of December 31, 2025, for a total of $9.4 million, financed by the sale of Bitcoin. The ADS and the underlying shares were cancelled in February 2026.\n\nNet cash used in financing activities was $70.8 million in 2024, reflecting net proceeds from loans of $14.0 million, $3.3 million in net proceeds drawn on interest-bearing receivables financing and $0.9 million in proceeds of research project financings, offset by $54.9 million in repayment of convertible debt and accrued interest, $23.0 million in repayment of loans, $1.7 million repayment of a government loan, $1.5 million payment of lease liabilities, $1.3 million repayment of research project financing and a $6.6 million payment of interest.\n\nNet cash provided by financing activities in 2023 was $31.7 million, reflecting $25.5 million in net proceeds from our follow-on private placements of equity in April and September 2023, net proceeds from loans of $9.0 million, $0.5 million in proceeds of research project financings and $1.5 million in net proceeds drawn on interest-bearing receivables financing, offset by $1.1 million repayment of a government loan, $1.3 million payment of lease liabilities, $0.9 million repayment of research project financing and a $1.4 million payment of interest.\n\nOperating and Investing Requirements\n\nWe expect our cash operating expenses will be lower than in 2025 as we have reduced headcount and adapted our strategy to focus on the lower cost development of our 5G eRedCap chipset targeting low-power massive IoT applications. We expect that investments in tangible and intangible assets in 2026 will be lower than in 2025.\n\nThe Company’s internal cash forecast, which is built from sales forecasts by product and by customer, assumes higher product revenues and lower licensing revenues, a decrease in the operating cost structure, sales of Bitcoin and ongoing and new government funding of research programs. Geopolitical uncertainties, including the imposition of tariffs and the Russian-Ukrainian conflict and Middle East conflicts, could have a negative impact on sales of our products or make it difficult or more expensive to produce and deliver products to our customers, or could reduce demand for our products.\n\nWhile management believes the assumptions underlying the forecasts are reasonable and that the Company has a credible plan to execute its strategy and that the sale of Bitcoin will provide an adequate source of financing, there remains significant uncertainty in relation to the achievement of forecasted operating cashflows, in particular if the Company is unable to achieve its revenue growth plans, the future market price of Bitcoin and the Company’s ability to realize planned digital asset sales.\n\nOur estimates of the period of time through which our financial resources will be adequate to support our operations and the costs to support research and development and our sales and marketing activities are forward-looking statements and involve risks and uncertainties, and actual results could vary materially and negatively as a result of a number of factors, including the factors discussed in “Item 3.D—Risk Factors”. We have based our estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.\n\nOur short and long-term capital requirements will depend on many factors, including the following:\n\n•our ability to sell unrestricted Bitcoin at favorable prices, and the number of unrestricted Bitcoin that will be available after repayment of the remaining convertible debt;\n\n•our ability to generate cash from operations or to minimize the cash used in operations;\n\n•our ability to control our costs;\n\n•the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights, or participating in litigation-related activities;\n\n•the impact of supply chain disruptions on our business;\n\n•the impact of the hostilities in the Middle East; and\n\n•the acquisition of products and technologies.\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. (See Note 23.2 for more information on our hedging arrangements).\n\n70\n\nC.\nResearch and Development, Patents and Licenses, etc.\n\nWe engage in substantial research and development efforts to develop new products and integrate additional capabilities into our core products. Our research and development team of 157 employees and independent contractors, at December 31, 2025, includes experienced semiconductor designers, software developers and test engineers. Key areas of expertise include wireless systems architecture, SoC architecture, digital and RF IC design, digital signal processing, embedded real-time and application software design, cellular protocol stack development, hardware and software integration, quality assurance test development and scripting and field testing. Our team has significant experience in the principal cellular wireless domains and other wireless communication technologies. Approximately 77% of our employee engineers have more than 10 years of experience in their specific domain, and 70% of our engineers hold masters degrees or above.\n\nThe ability to successfully integrate and mass-produce digital and/or RF functionality in advanced process technology with acceptable yields is a significant industry challenge. Due to the robustness of our silicon design and verification methodologies, we have demonstrated competency in repeatedly achieving production-capable products with the first version of our chip, reducing time to market and avoiding costs associated with additional design revisions. Our products in mass production use 65nm and 40nm silicon geometries (RF and baseband), and we are designing with denser process geometries for our 5G products.\n\nWe design our products with careful attention to quality, flexibility, cost-and power-efficiency requirements. Our 4G modem architecture, which has been refined through multiple generations of integrated circuit designs, is designed to optimize hardware and software partitioning to provide more flexibility and better cost without compromising performance. As a result, we achieve equivalent or higher throughput and lower power consumption in a smaller die size than other single-mode 4G chip competitors.\n\nSince February 2009, we have been certified as ISO 9001 compliant, an international standard set by the International Organization for Standardization, or ISO, that sets forth requirements for an organization’s quality management system. We believe this certification gives our customers confidence in our quality control procedures. We also participate in a number of organizations and standards bodies, including the 3rd Generation Partnership Project (3GPP), the PTS Type Certification Review Board (PTCRB), the Global Certification Forum (GCF), the GSMA, the Global mobile Supplier Alliance (GSA), Utility Broadband Alliance (UBBA) and the European Telecommunications Standards Institute (ETSI).\n\nWe participate in multiple European Union and French collaborative projects for advanced studies to benefit from cutting edge innovations from industry and academic partners in areas spanning from signal processing to end-to-end solutions. Recent activities focus on the defining of IoT for industrial needs, in line with the evolution of 5G.\n\nAt December 31, 2025, we had 61 patents issued.\n\nOur research and development expense was $26.1 million for 2023, $28.5 million for 2024 and $31.2 million for 2025.\n\nD.Trend Information\n\nOther than these items, or as disclosed elsewhere in this annual report, including in “Item 5. A. Operating Results” and in \"Item 3. D. Risk Factors\", we are not aware of any trends, uncertainties, demands, commitments or events that are reasonable likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.\n\nE.Critical Accounting Estimates\n\nSee footnote 2.4 to the Consolidated Financial Statements."}