0001558370-24-015341 | 10-Q | XBRL Viewer

Property, Plant and Equipment, Net

9 Months Ended

Sep. 30, 2024

8.Property, Plant and Equipment, Net

Property, plant, and equipment, which include assets recorded under finance leases, are stated at cost less accumulated depreciation, and amortization, and consist of the following:


	Expected Useful Lives	September 30,		December 31,
(dollars in thousands)	(in Years)	2024		2023
Buildings and improvements	7 – 40	$	9,397	$	9,115
Leasehold improvements	Shorter of life of improvement or lease term		649		686
Machinery and equipment	5 – 15		7,438		7,033
Computer equipment and software	3 – 8		27,394		26,324
Furniture and Fixtures	5 – 15		8,327		7,765
Finance lease right-of use assets	Shorter of life of the asset or lease term		1,786		1,764
			54,991		52,687
Less: Accumulated depreciation and amortization			(42,707)		(39,876)
Total property, plant and equipment, net		$	12,284	$	12,811

Depreciation expense related to property, plant and equipment was $0.6 million and $0.6 million for the three months ended September 30, 2024 and 2023, respectively, and $1.8 million and $2.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Stockholders' Deficit	9 Months Ended
Sep. 30, 2024
Stockholders' Deficit
Stockholders' Deficit	17.Stockholders’ Deficit Preferred Stock — The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.0001 per share. As of September 30, 2024, there were no shares of preferred stock issued or outstanding. Common Stock — The Company is authorized to issue 200,000,000 shares of common stock with a par value of $0.0001 per share. Each holder of Common Stock will be entitled to one (1) vote in person or by proxy for each share of the Common Stock. The holders of shares of Common Stock will not have cumulative voting rights. As of September 30, 2024, there were 30,166,102 shares of Common stock issued and outstanding, respectively.

Stockholders' Deficit

9 Months Ended

Sep. 30, 2024

Stockholders' Deficit

Stockholders' Deficit

17.Stockholders’ Deficit

Preferred Stock — The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.0001 per share. As of September 30, 2024, there were no shares of preferred stock issued or outstanding.

Common Stock — The Company is authorized to issue 200,000,000 shares of common stock with a par value of $0.0001 per share. Each holder of Common Stock will be entitled to one (1) vote in person or by proxy for each share of the Common Stock. The holders of shares of Common Stock will not have cumulative voting rights. As of September 30, 2024, there were 30,166,102 shares of Common stock issued and outstanding, respectively.

- Definition

The entire disclosure for equity.

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+ Details

Accounts Receivable - Allowance for expected credit losses (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Changes in allowance for expected credit losses:
Balance at January 1, 2024 of the allowance for expected credit losses	$ 1,183
Change in the provision for expected credit losses for the period	252
Balance at September 30, 2024 of the allowance for expected credit losses	$ 1,435

Debt - Debt Outstanding (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Debt
Total debt	$ 31,453	$ 16,626
Less: Current portion of long-term debt	5,047	3,863
Long-term debt, net of current maturities	26,406	12,763
2024 Facilities Agreement \| Secured Term Loan A
Debt
Total debt	3,602
Debt issuance costs	200
2024 Facilities Agreement \| Secured Term Loan B
Debt
Total debt	10,511
Debt issuance costs	600
Term loan
Debt
Total debt		3,785
2024 Revolving Credit Facility
Debt
Available for additional borrowings	15,217
Debt issuance costs	600
Working capital loan
Debt
Total debt	2,100	1,300
Revolvers
Debt
Total debt	$ 2,123	12,767
Secured borrowings under Securitization Facility
Debt
Total debt		$ 74

Condensed Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands	Common Stock	Additional Paid in Capital	Net Parent Investment	Foreign Currency Translation Adjustment	Unrealized Pension Actuarial Losses, net of tax	Accumulated Deficit	Total
Beginning balance, value at Dec. 31, 2022			$ (5,845)	$ (17,789)	$ (3,298)		$ (26,932)
Condensed Consolidated Statements of Stockholders' Deficit
Net loss			(2,506)				(2,506)
Foreign currency translation adjustment				(194)			(194)
Net unrealized pension actuarial gains (losses), net of tax					(90)		(90)
Ending balance at Mar. 31, 2023			(8,351)	(17,983)	(3,388)		(29,722)
Beginning balance, value at Dec. 31, 2022			(5,845)	(17,789)	(3,298)		(26,932)
Condensed Consolidated Statements of Stockholders' Deficit
Net loss							(5,951)
Ending balance at Sep. 30, 2023			(30,783)	1,352	(3,354)		(32,785)
Beginning balance, value at Mar. 31, 2023			(8,351)	(17,983)	(3,388)		(29,722)
Condensed Consolidated Statements of Stockholders' Deficit
Net loss			(558)				(558)
Classification adjustment			(18,987)	18,987
Foreign currency translation adjustment				(505)			(505)
Net unrealized pension actuarial gains (losses), net of tax					(113)		(113)
Ending balance at Jun. 30, 2023			(27,896)	499	(3,501)		(30,898)
Condensed Consolidated Statements of Stockholders' Deficit
Net loss			(2,887)				(2,887)
Foreign currency translation adjustment				853			853
Net unrealized pension actuarial gains (losses), net of tax					147		147
Ending balance at Sep. 30, 2023			$ (30,783)	1,352	(3,354)		(32,785)
Beginning balance, value at Dec. 31, 2023	$ 30			(1,416)	157	$ (11,339)	$ (12,568)
Beginning balance (in shares) at Dec. 31, 2023	30,166,102						30,166,102
Condensed Consolidated Statements of Stockholders' Deficit
Net loss						(2,208)	$ (2,208)
Foreign currency translation adjustment				278			278
Net unrealized pension actuarial gains (losses), net of tax					290		290
Ending balance at Mar. 31, 2024	$ 30			(1,138)	447	(13,547)	(14,208)
Ending balance (in shares) at Mar. 31, 2024	30,166,102
Beginning balance, value at Dec. 31, 2023	$ 30			(1,416)	157	(11,339)	$ (12,568)
Beginning balance (in shares) at Dec. 31, 2023	30,166,102						30,166,102
Condensed Consolidated Statements of Stockholders' Deficit
Net loss							$ (9,700)
Ending balance at Sep. 30, 2024	$ 30	$ 885		(1,609)	972	(21,039)	$ (20,761)
Ending balance (in shares) at Sep. 30, 2024	30,166,102						30,166,102
Beginning balance, value at Mar. 31, 2024	$ 30			(1,138)	447	(13,547)	$ (14,208)
Beginning balance (in shares) at Mar. 31, 2024	30,166,102
Condensed Consolidated Statements of Stockholders' Deficit
Net loss						(4,723)	(4,723)
Equity-based compensation		160					160
Foreign currency translation adjustment				144			144
Net unrealized pension actuarial gains (losses), net of tax					247		247
Ending balance at Jun. 30, 2024	$ 30	160		(994)	694	(18,270)	(18,380)
Ending balance (in shares) at Jun. 30, 2024	30,166,102
Condensed Consolidated Statements of Stockholders' Deficit
Net loss						(2,769)	(2,769)
Equity-based compensation		725					725
Foreign currency translation adjustment				(615)			(615)
Net unrealized pension actuarial gains (losses), net of tax					278		278
Ending balance at Sep. 30, 2024	$ 30	$ 885		$ (1,609)	$ 972	$ (21,039)	$ (20,761)
Ending balance (in shares) at Sep. 30, 2024	30,166,102						30,166,102

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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-URI https://asc.fasb.org/1943274/2147478524/942-220-S99-1

+ Details

- Definition

Amount of equity (deficit) attributable to parent. Excludes temporary equity and equity attributable to noncontrolling interest.

+ References

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+ Details

Fair Value Measurement

9 Months Ended

Sep. 30, 2024

Fair Value Measurement

Fair Value Measurement

14.Fair Value Measurement

Fair Value of Financial Instruments

The carrying amount of assets and liabilities including cash and cash equivalents, accounts receivable, accounts payable and current portion of long-term debt approximated their fair value as of September 30, 2024 and December 31, 2023, due to the relative short maturity of these instruments. The fair values of the Company’s loans and receivables under the factoring arrangement entered into by subsidiaries of the Company are equal to the carrying values. Property and equipment, intangible assets, capital lease obligations, and goodwill are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the respective asset is written down to its fair value.

As of September 30, 2024 and December 31, 2023, the Company determined the fair value of Private Warrants’ liability as $0.0 million and less than $0.1 million, respectively, included in the other long-term liabilities in the

condensed consolidated balance sheets under Level 3 fair value measurement using the Black-Scholes option pricing model.

The significant unobservable inputs used in the fair value of the Private Warrants liability are assumptions related to the inputs of exercise price, fair value of the underlying common stock, risk-free interest rate, expected term, expected volatility, and expected dividend yield. Significant increases (decreases) in the discount rate would have resulted in a lower (higher) fair value measurement. Significant increases (decreases) in the forecasted financial information would have resulted in a higher (lower) fair value measurement. For all significant unobservable inputs used in the fair value measurement of the Level 3 liabilities, a change in one of the inputs would not necessarily result in a directionally similar change in the fair value.

The following table reconciles the beginning and ending balances of net assets and liabilities classified as Level 3:


	September 30,
(dollars in thousands)	2024
Balance at beginning of period	$	50
Change in the fair value of the private warrants liability		(45)
Balance at end of period	$	5

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

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+ Details

Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Property, Plant and Equipment, Net
Finance lease right-of use assets	$ 1,786		$ 1,786		$ 1,764
Property, plant and equipment including finance lease right-of use assets, gross	54,991		54,991		52,687
Less: Accumulated depreciation and amortization	(42,707)		(42,707)		(39,876)
Total property, plant and equipment, net	12,284		12,284		12,811
Depreciation expense	600	$ 600	1,800	$ 2,000
Buildings and improvements
Property, Plant and Equipment, Net
Property, plant and equipment, gross	$ 9,397		$ 9,397		9,115
Buildings and improvements \| Minimum
Property, Plant and Equipment, Net
Expected Useful Lives (in Years)	7 years		7 years
Buildings and improvements \| Maximum
Property, Plant and Equipment, Net
Expected Useful Lives (in Years)	40 years		40 years
Leasehold improvements
Property, Plant and Equipment, Net
Property, plant and equipment, gross	$ 649		$ 649		686
Machinery and equipment
Property, Plant and Equipment, Net
Property, plant and equipment, gross	$ 7,438		$ 7,438		7,033
Machinery and equipment \| Minimum
Property, Plant and Equipment, Net
Expected Useful Lives (in Years)	5 years		5 years
Machinery and equipment \| Maximum
Property, Plant and Equipment, Net
Expected Useful Lives (in Years)	15 years		15 years
Computer equipment and software
Property, Plant and Equipment, Net
Property, plant and equipment, gross	$ 27,394		$ 27,394		26,324
Computer equipment and software \| Minimum
Property, Plant and Equipment, Net
Expected Useful Lives (in Years)	3 years		3 years
Computer equipment and software \| Maximum
Property, Plant and Equipment, Net
Expected Useful Lives (in Years)	8 years		8 years
Furniture and Fixtures
Property, Plant and Equipment, Net
Property, plant and equipment, gross	$ 8,327		$ 8,327		$ 7,765
Furniture and Fixtures \| Minimum
Property, Plant and Equipment, Net
Expected Useful Lives (in Years)	5 years		5 years
Furniture and Fixtures \| Maximum
Property, Plant and Equipment, Net
Expected Useful Lives (in Years)	15 years		15 years

Accounts Receivable (Tables)

9 Months Ended

Sep. 30, 2024

Accounts Receivable

Schedule of accounts receivable


	September 30,		December 31,
(dollars in thousands)	2024		2023
Billed receivables	$	15,446	$	20,584
Unbilled receivables		10,565		10,837
Less: Allowance for credit losses		(1,435)		(1,183)
Total accounts receivable, net	$	24,576	$	30,238

Schedule of changes in allowance for expected credit losses

The following table describes the changes in the allowance for expected credit losses for the nine months ended September 30, 2024 (all related to accounts receivables):


(dollars in thousands)
Balance at January 1, 2024 of the allowance for expected credit losses	$	1,183
Change in the provision for expected credit losses for the period		252
Balance at September 30, 2024 of the allowance for expected credit losses	$	1,435

Stock-Based Compensation - Restricted Stock Unit (Details) - Restricted Stock Units	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Number of Units
Granted \| shares	3,325,329
Outstanding Balance as of September 30, 2024 \| shares	3,325,329
Weighted Average Grant Date Fair Value
Granted \| $ / shares	$ 1.24
Outstanding Balance as of September 30, 2024 \| $ / shares	$ 1.24
Average Remaining Contractual Life (Years)
Outstanding Balance as of September 30, 2024	2 years 5 months 8 days
Maximum
Stock-Based Compensation
Vesting period (in years)	3 years

Commitments and Contingencies - Company Subsidiary Litigation (Details) - Claim brought by former employees for their dismissal $ in Millions			1 Months Ended		9 Months Ended
	Nov. 10, 2023 USD ($)	May 09, 2023 USD ($)	Mar. 31, 2023 USD ($) claim	Apr. 30, 2020 location employee	Sep. 30, 2024 USD ($)	Dec. 31, 2023 USD ($)
Commitments and Contingencies
Number of plaintiff employees \| employee				71
Number Of Production Sites Closed \| location				2
Number of claimants who filed an application for summary proceedings \| claim			67
Principle settlement \| claim			4
Amount claimed by the claimants who filed an application for summary proceedings			$ 1.1
Settlement value decided by the court		$ 1.1			$ 1.2
Settlement paid by the company	$ 1.1				1.8
Settlement amount remain unpaid					1.0
Accrued Liabilities					$ 1.1	$ 2.2

Income Taxes

9 Months Ended

Sep. 30, 2024

Income Taxes

Income Taxes

11.Income Taxes

The Company applies an estimated annual effective tax rate (“ETR”) approach for calculating tax provision for interim periods, as required under GAAP. The Company recorded an income tax expense of $1.7 million and $1.0 million for the three months ended September 30, 2024 and 2023, respectively, and $2.7 million and $1.5 million for the nine months ended September 30, 2024 and 2023, respectively, from continuing operations.

The Company’s ETR from continuing operations of 380.6% and (89.8)% for three and nine months ended September 30, 2024, respectively, differed from the expected U.S. statutory tax rate of 21.0% and was primarily

impacted by uncertain tax benefits, permanent tax adjustments, foreign tax rates that differ from the U.S. federal statutory rate, valuation allowances on a portion of the Company’s foreign deferred tax assets that are not more likely than not to be realized and remeasurement of existing uncertain tax positions.

For the three and nine months ended September 30, 2023, the Company’s ETR from continuing operations of (604.6)% and 1,450.5%, respectively, differed from the expected U.S. statutory tax rate of 21.0%, and was primarily impacted by permanent tax adjustments, foreign tax rates that differ from the U.S. federal statutory rate, and valuation allowances on a portion of the Company’s foreign deferred tax assets that are not more likely than not to be realized.

During the nine months ended September 30, 2024, the Company's liability for unrecognized tax benefits (including interest and penalties) increased by $0.7 million. This increase is primarily due to remeasurement of existing uncertain tax positions in Germany. The Company believes that adequate provision has been made for any adjustments that may result from the ongoing tax examination in Germany. However, the outcome of such tax examinations cannot be predicted with certainty. If any issues addressed in the Company’s tax examinations are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. Any significant change in the amount of the Company’s liability for unrecognized tax benefits would most likely result from additional information or settlements relating to the examination of the Company’s tax returns in Germany.

As of September 30, 2024, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for the year ended December 31, 2023.

- Definition

The entire disclosure for income tax.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
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-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12

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-Section 50
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482603/740-30-50-2

+ Details

Warrants (Tables)

9 Months Ended

Sep. 30, 2024

Warrants

Schedule of common stock warrants outstanding


	Warrants	Exercise Price	Issuance Date	Expiration
Private Placement Warrants	135,000	11.50	3/11/2021	11/29/2028
Forward Purchase Warrants	250,000	11.50	3/11/2021	11/29/2028
Public Warrants	6,249,980	11.50	3/11/2021	11/29/2028
Total	6,634,980

Fair Value Measurement (Details) - USD ($) $ in Millions	Sep. 30, 2024	Dec. 31, 2023
Level 3 \| Private Warrants
Fair Value Measurement
Value of private warrants	$ 0.0	$ 0.1

Accounts Receivable

9 Months Ended

Sep. 30, 2024

Accounts Receivable

Accounts Receivable

7.Accounts Receivable

Accounts receivable, net consist of the following:


	September 30,		December 31,
(dollars in thousands)	2024		2023
Billed receivables	$	15,446	$	20,584
Unbilled receivables		10,565		10,837
Less: Allowance for credit losses		(1,435)		(1,183)
Total accounts receivable, net	$	24,576	$	30,238

Unbilled receivables represent balances recognized as revenue that have not been billed to the customer. The Company allowance for doubtful accounts is based on a policy developed by historical experience and management judgment. Adjustments to the allowance for credit losses may occur based on market conditions or specific client circumstances.

The following table describes the changes in the allowance for expected credit losses for the nine months ended September 30, 2024 (all related to accounts receivables):


(dollars in thousands)
Balance at January 1, 2024 of the allowance for expected credit losses	$	1,183
Change in the provision for expected credit losses for the period		252
Balance at September 30, 2024 of the allowance for expected credit losses	$	1,435

Accounts Receivable (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Accounts Receivable
Less: Allowance for credit losses	$ (1,435)	$ (1,183)
Total accounts receivable, net	24,576	30,238
Billed receivables
Accounts Receivable
Accounts receivable, gross	15,446	20,584
Unbilled receivables
Accounts Receivable
Accounts receivable, gross	$ 10,565	$ 10,837

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2024

Summary of Significant Accounting Policies

Stock-Based Compensation

Stock-Based Compensation

The Company accounts for all equity-classified awards under stock-based compensation plans at their “fair value.” This fair value is measured at the fair value of the awards at the grant date and recognized as compensation expense on a straight-line basis over the vesting period. The fair value of the awards on the grant date is determined using the stock price on the respective grant date in the case of restricted stock units and using an option pricing model in the case of stock options. The Company accounts for forfeitures as they occur. The expense resulting from share-based payments is recorded in selling, general and administrative expense in the condensed consolidated statements of operations.

Revenue Recognition

Revenue Recognition

The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. Revenue is measured as the amount of consideration that is expected to receive in exchange for transferring goods or providing services. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. All of the Company’s material sources of revenue are derived from contracts with customers, primarily relating to the provision of business and transaction processing services and sales of recurring software licenses and professional services within each of the Company’s segments. The Company does not have any significant extended payment terms, as payment for invoices issued is received shortly after goods are delivered or services are provided.

Nature of Services

The primary performance obligations are to stand ready to provide various forms of business processing services, consisting of a series of distinct services that are substantially the same and have the same pattern of transfer over time, and accordingly are combined into a single performance obligation. The Company’s promise to its customers is typically to perform an unknown or unspecified quantity of tasks and the consideration received is contingent upon the customers’ use (i.e., number of transactions processed, requests fulfilled, etc.); as such, the total transaction price is variable. The variable fees are allocated to the single performance obligation charged to the distinct service period in which the Company performs the service.

Revenue from the sale of recurring software licenses is recognized ratably over the contractual term, unless perpetual licenses are granted or a noncancelable license is granted for a nonrefundable fee, which are recognized at a point in time. Professional services revenue consists of implementation services for new customers, or implementations of new products for existing customers. Professional services are typically sold on a time-and-materials basis and billed monthly based on actual hours incurred.

Revenue from the sale of hardware solutions is recognized on a point in time basis and related maintenance are recognized ratably over the contractual term.

Disaggregation of Revenues

The following tables disaggregate revenue from contracts by geographic region for the three and nine months ended September 30, 2024 and 2023:


	Three months ended				Nine months ended
	September 30,				September 30,
(dollars in thousands)	2024		2023		2024		2023
France	$	11,694	$	12,659	$	38,694	$	44,564
Germany		9,158		11,124		27,824		23,890
United Kingdom		9,601		7,482		24,339		26,903
Sweden		2,947		3,409		10,031		13,392
Other		1,930		2,755		5,882		7,499
Total Revenue, net	$	35,330	$	37,429	$	106,770	$	116,248

Contract Balances

The following table presents contract assets, contract liabilities and contract costs recognized at September 30, 2024 and December 31, 2023:


	September 30,		December 31,
(dollars in thousands)	2024		2023
Accounts receivable, net	$	24,576	$	30,238
Deferred revenues		6,500		6,004
Customer deposits		723		323
Costs to obtain and fulfill a contract	$	88	$	350

Accounts receivable, net includes $10.6 million and $10.8 million as of September 30, 2024 and December 31, 2023, respectively, representing amounts not billed to customers. Unbilled receivables are accrued and represent work performed in accordance with the terms of contracts with customers.

Deferred revenues relate to payments received in advance of performance under a contract. A significant portion of this balance relates to maintenance contracts or other service contracts where the Company received payments for upfront conversions or implementation activities which do not transfer a service to the customer but rather are used in fulfilling the related performance obligations that transfer over time. The advance consideration received from customers

is deferred over the contract term. The Company recognized revenue of $3.0 million and $6.4 million during the three and nine months ended September 30, 2024, respectively, that had been deferred as of December 31, 2023. The Company recognized revenue of $6.3 million during the year ended December 31, 2023 that had been deferred as of January 1, 2023.

Costs incurred to obtain and fulfill contracts are deferred and presented as part of intangible assets, net and expensed on a straight-line basis over the estimated benefit period. These costs represent incremental external costs or certain specific internal costs that are directly related to the contract acquisition or fulfillment and can be separated into two principal categories: contract commissions and fulfillment costs. Applying the practical expedient in ASC 340-40-25-4, the incremental costs of obtaining contracts are recognized as an expense when incurred if the amortization period would have been one year or less. These costs are included in selling, general and administrative expenses. The effect of applying this practical expedient was not material.

Customer deposits consist primarily of amounts received from customers in advance for postage. These advanced postage deposits are used to cover the costs associated with postage, with the corresponding postage revenue being recognized as services are performed.

Performance Obligations

At the inception of each contract, the Company assesses the goods and services promised in the Company’s contracts and identifies each distinct performance obligation. The majority of the Company’s contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts. For the majority of the Company’s business and transaction processing service contracts, revenues are recognized as services are provided based on an appropriate input or output method, typically based on the related labor or transactional volumes.

Certain of the Company’s contracts have multiple performance obligations, including contracts that combine software implementation services with post-implementation customer support. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which the Company estimates the expected costs of satisfying a performance obligation and adds an appropriate margin for that distinct good or service. The adjusted market approach is also used whereby the Company estimates the price that customers in the market would be willing to pay. In assessing whether to allocate variable consideration to a specific part of the contract, the Company considers the nature of the variable payment and whether it relates specifically to its efforts to satisfy a specific part of the contract. Certain of the Company’s software implementation performance obligations are satisfied at a point in time, typically when customer acceptance is obtained.

When evaluating the transaction price, the Company analyzes, on a contract-by-contract basis, all applicable variable considerations. The nature of the Company’s contracts gives rise to variable consideration, including volume discounts, contract penalties, and other similar items that generally decrease the transaction price. These amounts are estimated based on the expected amount to be provided to customers and reduce revenues recognized. The Company does not anticipate significant changes to its estimates of variable consideration.

Reimbursements from customers, such as postage costs, are included in revenue, while the related costs are included in cost of revenue.

Transaction Price Allocated to the Remaining Performance Obligations

In accordance with optional exemptions available under ASC 606, the Company did not disclose the value of unsatisfied performance obligations for (a) contracts with an original expected length of one year or less, and (b) contracts for which variable consideration relates entirely to an unsatisfied performance obligation, which comprise the majority of the Company’s contracts. The Company has certain non-cancellable contracts where a fixed monthly fee is received in exchange for a series of distinct services that are substantially the same and have the same pattern of transfer over time, with the corresponding remaining performance obligations as of September 30, 2024 in each of the future periods below:


(dollars in thousands)
Remainder of 2024	$	4,918
2025		1,379
2026		141
2027		62
Total	$	6,500

Net Loss per Share

Earnings per share (“EPS”) is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, using the more dilutive of the two-class method and if-converted method in the period of earnings. The two-class method is an earnings allocation method that determines earnings per share (when there are earnings) for common stock and participating securities. The if-converted method assumes all convertible securities are converted into common stock. Diluted EPS excludes all dilutive potential shares of common stock if their effect is anti-dilutive.

As the Company experienced net losses for the periods presented, the Company did not include the effect of 6,634,980 shares of common stock issuable upon exercise of 6,634,980 warrants sold in the IPO and Private Placement and issued in connection with completion of the Business Combination, or the effect of the aggregate number of shares issuable pursuant to outstanding restricted stock units and options (3,420,329 as of September 30, 2024) in the calculation of diluted loss per share for the three and nine months ended September 30, 2024 and 2023, because their effects were anti-dilutive.

The components of basic and diluted EPS are as follows:


	Three months ended				Nine months ended
	September 30,				September 30,
(dollars in thousands, except share and per share amounts)	2024		2023		2024		2023
Net loss from continuing operations attributable to common stockholders (A)	$	(1,226)	$	(1,219)	$	(5,637)	$	(1,418)
Net loss from discontinuing operations attributable to common stockholders (B)		(1,543)		(1,668)		(4,063)		(4,533)
Net loss attributable to common stockholders (C)	$	(2,769)	$	(2,887)	$	(9,700)	$	(5,951)

Weighted average common shares outstanding – basic and diluted (D)		30,166,102		21,802,689		30,166,102		21,802,689
Income (Loss) Per Share:
Basic and diluted - continuing operations (A/D)	$	(0.04)	$	(0.05)	$	(0.19)	$	(0.06)
Basic and diluted - discontinuing operations (B/D)		(0.05)		(0.08)		(0.13)		(0.21)
Basic and diluted (C/D)	$	(0.09)	$	(0.13)	$	(0.32)	$	(0.27)

Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Effective January 1, 2024, the Company adopted ASU No. 2023-01, Leases (Topic 842): Common Control Arrangements. The FASB-issued guidance clarifies the accounting for leasehold improvements associated with common control leases by requiring that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term), as long as the lessee controls the use of the underlying asset through a lease. Additionally, leasehold improvements

associated with common control leases should be accounted for as a transfer between entities under common control through an adjustment to equity, if, and when, the lessee no longer controls the use of the underlying asset. The adoption had no impact on the Company’s consolidated results of operations, cash flows, financial position or disclosures.

Recently Issued Accounting Pronouncements

In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements-Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which modifies the disclosure and presentation requirements of a variety of US GAAP codification topics by aligning them with the SEC Regulation S-X or S-K, which are rules about the form and content of financial reports. The provisions of this ASU are contingent upon when the SEC removes the related disclosure provisions from Regulation S-X and S-K. This guidance is effective for the Company no later than June 30, 2027 and is not expected to have a material impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires retrospective disclosure of significant segment expenses and other segment items on an annual and interim basis. Additionally, it requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”). This ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that adopting this standard will have on its consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires an annual tabular effective tax rate reconciliation disclosure including information for specified categories and jurisdiction levels, as well as, disclosure of income taxes paid, net of refunds received, disaggregated by federal, state/local, and significant foreign jurisdiction. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that adopting this standard will have on its consolidated financial statements.

- Definition

Disclosure of accounting policy for revenue from contract with customer.

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- Definition

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+ Details

Segment Information

9 Months Ended

Sep. 30, 2024

Segment Information

Segment Information

20.Segment Information

The Company’s operating segments are significant strategic business units that align its products and services with how it manages its business, approaches the markets and interacts with its clients. The Company is organized into two segments: Bills and Payments and Technology.

Bills and Payments

The Bills & Payments business unit primarily focuses on optimizing how bills and payments are processed by businesses of all sizes and industries. It offers automation of Accounts Payable (“AP”) and Accounts Receivables (“AR”) processes and through its platform, XBP, seeks to integrate buyers and suppliers across Europe. This business unit also includes our digital transformation revenue, which is both project based and recurring.

Technology

The Technology business unit primarily focuses on sales of recurring software licenses and related maintenance, hardware solutions and related maintenance and professional services.

The chief operating decision maker reviews segment profit to evaluate operating segment performance and determine how to allocate resources to operating segments. “Segment profit” is defined as revenue less cost of revenue (exclusive of depreciation and amortization). The Company does not allocate selling, general, and administrative expenses, depreciation and amortization, interest expense and foreign exchange losses, net. The Company manages assets on a total company basis, not by operating segment, and therefore asset information and capital expenditures by operating segments are not presented.

In accordance with applicable accounting guidance, the results of the disposable group are presented as discontinued operations in the condensed consolidated statements of operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. See Note 3 - Discontinued Operations of the notes to condensed consolidated financial statements.

A reconciliation of segment profit to net loss before income taxes is presented below.


	Three months ended September 30, 2024
(dollars in thousands)	Bills & Payments		Technology		Total
Revenue, net (including related party revenue of $0.1 million)	$	24,555	$	10,845	$	35,400
Cost of revenue (including related party cost of revenue of $0.0 million, exclusive of depreciation and amortization)		19,402		4,446		23,848
Segment profit		5,153		6,399		11,552
Selling, general and administrative expenses (exclusive of depreciation and amortization)						6,818
Related party expense						1,421
Depreciation and amortization						804
Interest expense, net						1,820
Related party interest expense, net						23
Foreign exchange losses, net						668
Changes in fair value of warrant liability						(5)
Pension income, net						(435)
Net income before income taxes					$	438


	Three months ended September 30, 2023
(dollars in thousands)	Bills & Payments		Technology		Total
Revenue, net (including related party revenue of $0.1 million)	$	25,344	$	12,152	$	37,496
Cost of revenue (including related party cost of revenue of $0.0 million, exclusive of depreciation and amortization)		22,604		5,637		28,241
Segment profit		2,740		6,515		9,255
Selling, general and administrative expenses (exclusive of depreciation and amortization)						6,846
Related party expense						1,316
Depreciation and amortization						745
Interest expense, net						1,246
Related party interest income, net						5
Foreign exchange gains, net						(530)
Pension income, net						(200)
Net loss before income taxes					$	(173)


	Nine months ended September 30, 2024
(dollars in thousands)	Bills & Payments		Technology		Total
Revenue, net (including related party revenue of $0.2 million)	$	75,860	$	31,127	$	106,987
Cost of revenue (including related party cost of revenue of $0.0 million, exclusive of depreciation and amortization)		64,854		13,950		78,804
Segment profit		11,006		17,177		28,183
Selling, general and administrative expenses (exclusive of depreciation and amortization)						19,785
Related party expense						3,527
Depreciation and amortization						2,387
Interest expense, net						4,698
Related party interest expense, net						64
Foreign exchange losses, net						2,016
Changes in fair value of warrant liability						(45)
Pension income, net						(1,278)
Net loss before income taxes					$	(2,971)


	Nine months ended September 30, 2023
(dollars in thousands)	Bills & Payments		Technology		Total
Revenue, net (including related party revenue of $0.2 million)	$	82,857	$	33,554	$	116,411
Cost of revenue (including related party cost of revenue of $0.1 million, exclusive of depreciation and amortization)		71,138		14,468		85,606
Segment profit		11,719		19,086		30,805
Selling, general and administrative expenses (exclusive of depreciation and amortization)						21,448
Related party expense						3,589
Depreciation and amortization						2,207
Interest expense, net						3,641
Related party interest income, net						(1)
Foreign exchange losses, net						405
Pension income, net						(589)
Net income before income taxes					$	105

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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+ Details

Reverse Recapitalization

9 Months Ended

Sep. 30, 2024

Reverse Recapitalization

Reverse Recapitalization

2.Reverse Recapitalization

As discussed in Note 1, on November 29, 2023, the Company consummated a business combination pursuant to the Merger Agreement. The Business Combination was accounted for as a Reverse Recapitalization, rather than a business combination, for financial accounting and reporting purposes. Accordingly, XBP Europe was deemed the accounting acquirer (and legal acquiree) and CF VIII was treated as the accounting acquiree (and legal acquirer). Under this method of accounting, the reverse recapitalization was treated as the equivalent of XBP Europe issuing stock for the net assets of CF VIII, accompanied by a recapitalization. XBP Europe has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

●

XBP Europe pre-combination stockholder has the majority of the voting power in the post-Business Combination company;

●

XBP Europe’s stockholder has the ability to appoint a majority of the Company’s board of directors (the “Board”);

●

XBP Europe’s management team is the management team of the post-Business Combination company;

●

XBP Europe’s prior operations is comprised of the ongoing operations of the post-Business Combination company;

●

XBP Europe is the larger entity based on historical revenues and business operations; and

●

The post-Business Combination company has assumed XBP Europe’s operating name.

The net assets of CF VIII are stated at historical cost, with no incremental goodwill or other intangible assets recorded for the effects of the Business Combination. The consolidated assets, liabilities, and results of operations prior to the Business Combination are those of XBP Europe. The shares and corresponding capital amounts and earnings per share available for common stockholders, prior to the Business Combination, have been retroactively restated.

Upon closing of the Business Combination, the Company received net proceeds of $5.2 million from the Business Combination.

Transaction costs consist of directors and officers liability insurance cost, legal and professional fees, and other fees relating to the consummation of the Business Combination. The Company incurred $3.3 million in transaction costs relating to the Merger for the year ended December 31, 2023, $0.3 million of which was recorded to additional paid-in capital and the remaining $3.0 million was expensed.

Immediately after giving effect to the Business Combination, there were 30,166,102 shares of common stock outstanding, 6,249,980 Public Warrants outstanding and 385,000 Private Warrants outstanding. See Note 16 – Warrants and Note 17 – Stockholders’ Deficit for more details.

Segment Information (Tables)

9 Months Ended

Sep. 30, 2024

Segment Information

Reconciliation of segment profit to net loss before income taxes


	Three months ended September 30, 2024
(dollars in thousands)	Bills & Payments		Technology		Total
Revenue, net (including related party revenue of $0.1 million)	$	24,555	$	10,845	$	35,400
Cost of revenue (including related party cost of revenue of $0.0 million, exclusive of depreciation and amortization)		19,402		4,446		23,848
Segment profit		5,153		6,399		11,552
Selling, general and administrative expenses (exclusive of depreciation and amortization)						6,818
Related party expense						1,421
Depreciation and amortization						804
Interest expense, net						1,820
Related party interest expense, net						23
Foreign exchange losses, net						668
Changes in fair value of warrant liability						(5)
Pension income, net						(435)
Net income before income taxes					$	438


	Three months ended September 30, 2023
(dollars in thousands)	Bills & Payments		Technology		Total
Revenue, net (including related party revenue of $0.1 million)	$	25,344	$	12,152	$	37,496
Cost of revenue (including related party cost of revenue of $0.0 million, exclusive of depreciation and amortization)		22,604		5,637		28,241
Segment profit		2,740		6,515		9,255
Selling, general and administrative expenses (exclusive of depreciation and amortization)						6,846
Related party expense						1,316
Depreciation and amortization						745
Interest expense, net						1,246
Related party interest income, net						5
Foreign exchange gains, net						(530)
Pension income, net						(200)
Net loss before income taxes					$	(173)


	Nine months ended September 30, 2024
(dollars in thousands)	Bills & Payments		Technology		Total
Revenue, net (including related party revenue of $0.2 million)	$	75,860	$	31,127	$	106,987
Cost of revenue (including related party cost of revenue of $0.0 million, exclusive of depreciation and amortization)		64,854		13,950		78,804
Segment profit		11,006		17,177		28,183
Selling, general and administrative expenses (exclusive of depreciation and amortization)						19,785
Related party expense						3,527
Depreciation and amortization						2,387
Interest expense, net						4,698
Related party interest expense, net						64
Foreign exchange losses, net						2,016
Changes in fair value of warrant liability						(45)
Pension income, net						(1,278)
Net loss before income taxes					$	(2,971)


	Nine months ended September 30, 2023
(dollars in thousands)	Bills & Payments		Technology		Total
Revenue, net (including related party revenue of $0.2 million)	$	82,857	$	33,554	$	116,411
Cost of revenue (including related party cost of revenue of $0.1 million, exclusive of depreciation and amortization)		71,138		14,468		85,606
Segment profit		11,719		19,086		30,805
Selling, general and administrative expenses (exclusive of depreciation and amortization)						21,448
Related party expense						3,589
Depreciation and amortization						2,207
Interest expense, net						3,641
Related party interest income, net						(1)
Foreign exchange losses, net						405
Pension income, net						(589)
Net income before income taxes					$	105

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Taxes
Income tax expense	$ 1,664	$ 1,046	$ 2,666	$ 1,523
Effective tax rate	380.60%	(604.60%)	(89.80%)	1450.50%
Statutory income tax rate	21.00%	21.00%	21.00%	21.00%
Increase in liability for unrecognized tax benefits			$ 700

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Property, Plant and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment, Net

Schedule of property, plant and equipment, net


	Expected Useful Lives	September 30,		December 31,
(dollars in thousands)	(in Years)	2024		2023
Buildings and improvements	7 – 40	$	9,397	$	9,115
Leasehold improvements	Shorter of life of improvement or lease term		649		686
Machinery and equipment	5 – 15		7,438		7,033
Computer equipment and software	3 – 8		27,394		26,324
Furniture and Fixtures	5 – 15		8,327		7,765
Finance lease right-of use assets	Shorter of life of the asset or lease term		1,786		1,764
			54,991		52,687
Less: Accumulated depreciation and amortization			(42,707)		(39,876)
Total property, plant and equipment, net		$	12,284	$	12,811

Restructuring (Tables)

9 Months Ended

Sep. 30, 2024

Restructuring

Schedule of restructuring activity and balance of restructuring liability


	September 30,		December 31,
(dollars in thousands)	2024		2023
Balance at beginning of the period	$	5,267	$	2,036
Restructuring charges		558		4,297
Payment of benefits		(4,303)		(1,066)
Balance at end of the period	$	1,522	$	5,267

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (2,769)	$ (4,723)	$ (2,208)	$ (2,887)	$ (558)	$ (2,506)	$ (9,700)	$ (5,951)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2024

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

5.Summary of Significant Accounting Policies

The information presented below supplements the Significant Accounting Policies information presented in the 2023 Form 10-K.

Stock-Based Compensation

Revenue Recognition

Nature of Services

Revenue from the sale of hardware solutions is recognized on a point in time basis and related maintenance are recognized ratably over the contractual term.

Disaggregation of Revenues

The following tables disaggregate revenue from contracts by geographic region for the three and nine months ended September 30, 2024 and 2023:


	Three months ended				Nine months ended
	September 30,				September 30,
(dollars in thousands)	2024		2023		2024		2023
France	$	11,694	$	12,659	$	38,694	$	44,564
Germany		9,158		11,124		27,824		23,890
United Kingdom		9,601		7,482		24,339		26,903
Sweden		2,947		3,409		10,031		13,392
Other		1,930		2,755		5,882		7,499
Total Revenue, net	$	35,330	$	37,429	$	106,770	$	116,248

Contract Balances

The following table presents contract assets, contract liabilities and contract costs recognized at September 30, 2024 and December 31, 2023:


	September 30,		December 31,
(dollars in thousands)	2024		2023
Accounts receivable, net	$	24,576	$	30,238
Deferred revenues		6,500		6,004
Customer deposits		723		323
Costs to obtain and fulfill a contract	$	88	$	350

Performance Obligations

Reimbursements from customers, such as postage costs, are included in revenue, while the related costs are included in cost of revenue.

Transaction Price Allocated to the Remaining Performance Obligations


(dollars in thousands)
Remainder of 2024	$	4,918
2025		1,379
2026		141
2027		62
Total	$	6,500

Net Loss per Share

The components of basic and diluted EPS are as follows:


	Three months ended				Nine months ended
	September 30,				September 30,
(dollars in thousands, except share and per share amounts)	2024		2023		2024		2023
Net loss from continuing operations attributable to common stockholders (A)	$	(1,226)	$	(1,219)	$	(5,637)	$	(1,418)
Net loss from discontinuing operations attributable to common stockholders (B)		(1,543)		(1,668)		(4,063)		(4,533)
Net loss attributable to common stockholders (C)	$	(2,769)	$	(2,887)	$	(9,700)	$	(5,951)

Weighted average common shares outstanding – basic and diluted (D)		30,166,102		21,802,689		30,166,102		21,802,689
Income (Loss) Per Share:
Basic and diluted - continuing operations (A/D)	$	(0.04)	$	(0.05)	$	(0.19)	$	(0.06)
Basic and diluted - discontinuing operations (B/D)		(0.05)		(0.08)		(0.13)		(0.21)
Basic and diluted (C/D)	$	(0.09)	$	(0.13)	$	(0.32)	$	(0.27)

Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2024

Discontinued Operations

Schedule of major components of financial results


	Three months ended September 30,				Nine months ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Revenue, net	$	1,898	$	2,749	$	6,773	$	9,002
Cost of revenue (exclusive of depreciation and amortization)		2,069		3,139		7,009		9,795
Selling, general and administrative expenses (exclusive of depreciation and amortization)		1,015		895		2,899		2,888
Related party expense		58		13		129		38
Depreciation and amortization		135		350		432		744
Impairment of goodwill ⁽¹⁾		87		—		87		—
Operating loss		(1,466)		(1,648)		(3,783)		(4,463)
Other expense, net
Interest expense, net		3		19		18		64
Foreign exchange losses, net		2		1		190		6
Net loss from discontinuing operations before income taxes		(1,471)		(1,668)		(3,991)		(4,533)
Income tax expense		72		—		72		—
Net loss from discontinuing operations, net of income taxes	$	(1,543)	$	(1,668)	$	(4,063)	$	(4,533)


	September 30,
(dollars in thousands)	2024
ASSETS
Current assets
Cash and cash equivalents	$	190
Accounts receivable, net of allowance for credit losses of $86		481
Inventories, net		582
Prepaid expenses and other current assets		697
Property, plant and equipment, net of accumulated depreciation of $3,593		855
Operating lease right-of-use assets, net		1,392
Total current assets held for sale	$	4,197

LIABILITIES
Current liabilities
Accounts payable	$	802
Accrued liabilities		1,463
Accrued compensation and benefits		356
Customer deposits		162
Current portion of finance lease liabilities		353
Current portion of operating lease liabilities		1,393
Total current liabilities held for sale	$	4,529


	December 31,
(dollars in thousands)	2023
ASSETS
Current assets
Cash and cash equivalents	$	368
Accounts receivable, net of allowance for credit losses of $89		557
Inventories, net		695
Prepaid expenses and other current assets		877
Total current assets held for sale	$	2,497

Property, plant and equipment, net of accumulated depreciation of $3,114	$	1,188
Operating lease right-of-use assets, net		1,659
Goodwill		87
Deferred income tax assets		50
Other noncurrent assets		34
Total noncurrent assets held for sale	$	3,018

LIABILITIES
Current liabilities
Accounts payable	$	1,133
Accrued liabilities		892
Accrued compensation and benefits		315
Customer deposits		213
Current portion of finance lease liabilities		547
Current portion of operating lease liabilities		379
Total current liabilities held for sale	$	3,479

Operating lease liabilities, net of current portion		1,280
Total noncurrent liabilities held for sale	$	1,280


	Nine months ended September 30,
(dollars in thousands)	2024		2023

Depreciation	$	432	$	744
Impairment of goodwill		87		—
Credit loss expense (income)		7		(9)
Unrealized foreign currency losses		184		—
Purchase of property, plant and equipment	$	(94)	$	(174)

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

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+ Details

Summary of Significant Accounting Policies - Disaggregation of Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Non-related party
Disaggregation of Revenue
Total Revenue, net	$ 35,330	$ 37,429	$ 106,770	$ 116,248
France
Disaggregation of Revenue
Total Revenue, net	11,694	12,659	38,694	44,564
Germany
Disaggregation of Revenue
Total Revenue, net	9,158	11,124	27,824	23,890
United Kingdom
Disaggregation of Revenue
Total Revenue, net	9,601	7,482	24,339	26,903
Sweden
Disaggregation of Revenue
Total Revenue, net	2,947	3,409	10,031	13,392
Other
Disaggregation of Revenue
Total Revenue, net	$ 1,930	$ 2,755	$ 5,882	$ 7,499

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-41

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 270
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482964/270-10-50-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (ee)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-32

Reference 4: http://fasb.org/us-gaap/role/ref/otherTransitionRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-32

Reference 5: http://fasb.org/us-gaap/role/ref/otherTransitionRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-32

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 924
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479941/924-10-S99-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479806/606-10-50-5

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-30

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-42

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-22

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-40

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482810/280-10-50-22

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479806/606-10-50-4

+ Details

Debt (Details) £ in Thousands, $ in Thousands, € in Millions					1 Months Ended				3 Months Ended		9 Months Ended
	Mar. 31, 2023	Dec. 31, 2021	Oct. 29, 2021	Aug. 25, 2020 EUR (€)	Jun. 30, 2024 GBP (£) item	May 31, 2022 GBP (£)	Jun. 30, 2020 GBP (£)	Oct. 31, 2019 GBP (£)	Sep. 30, 2024 USD ($) installment	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) installment	Sep. 30, 2024 GBP (£)	Sep. 30, 2023 USD ($)	Jun. 30, 2024 EUR (€)	Dec. 31, 2023 USD ($)	Sep. 15, 2023 EUR (€)
Debt
Outstanding balances payable under the Secured Borrowing Facility									$ 0		$ 0				$ 100
Secured Term Loan A
Debt
Repayments of credit facility											192
Proceeds from credit facility											3,830
Secured Term Loan B
Debt
Repayments of credit facility											571
Proceeds from credit facility											11,413
2024 Revolving Credit Facility
Debt
Proceeds from credit facility											15,425
Secured borrowing facility
Debt
Maximum borrowing facility amount \| €				€ 31.0
Cost of secured borrowing facility (in percent)				0.10%
Interest expenses									0	$ 100	0		$ 400
Outstanding balances payable under the Secured Borrowing Facility									0		0				0
Secured borrowing facility \| Minimum
Debt
Annual fee \| €				€ 0.1
Secured borrowing facility \| Euro dollar
Debt
Spread on variable rate				0.70%
Amended factoring agreement
Debt
Maximum amount of accounts receivables under factoring \| €																€ 15.0
Amount of account receivables factored											9,200
Loss on sale of accounts receivables									300		700
2019 credit agreement
Debt
Repayments of credit facility											8,200
2019 credit agreement \| Secured borrowings under Securitization Facility
Debt
Maximum borrowing facility amount \| £								£ 9,000
2019 credit agreement \| Secured Term loan A debt
Debt
Aggregate principal amount \| £								2,000
Repayments of credit facility											1,700
Outstanding balance of credit facility amount															1,900
2019 credit agreement \| Secured Term loan B debt
Debt
Aggregate principal amount \| £								2,000
Repayments of credit facility											200
Outstanding balance of credit facility amount															400
2019 credit agreement \| Revolvers
Debt
Aggregate principal amount \| £								£ 5,000
Repayments of credit facility											6,300
Outstanding balance of credit facility amount															6,400
2019 credit agreement \| Maximum
Debt
Debt issuance cost											100
2019 credit agreement \| LIBOR \| Secured Term loan A debt
Debt
Spread on variable rate								2.00%
2019 credit agreement \| LIBOR \| Secured Term loan B debt
Debt
Spread on variable rate								2.50%
2019 credit agreement \| LIBOR \| Revolvers
Debt
Spread on variable rate								3.00%
2019 credit agreement \| SONIA \| Secured Term loan A debt
Debt
Spread on variable rate		2.00%
2019 credit agreement \| SONIA \| Secured Term loan B debt
Debt
Spread on variable rate		2.50%
2019 credit agreement \| SONIA \| Revolvers
Debt
Spread on variable rate			3.00%
2020 Credit Agreement
Debt
Repayments of credit facility											5,100
2020 Credit Agreement \| Revolving working capital loan facility
Debt
Aggregate principal amount \| £							£ 4,000
Repayments of credit facility											5,100
Outstanding balance of credit facility amount															5,100
2020 Credit Agreement \| Maximum \| Revolving working capital loan facility
Debt
Debt issuance cost											100
2020 Credit Agreement \| LIBOR \| Revolving working capital loan facility
Debt
Spread on variable rate							3.50%
2020 Credit Agreement \| SONIA \| Revolving working capital loan facility
Debt
Spread on variable rate	3.50%
Credit Agreement 2019 and 2020 Credit Agreement \| Maximum
Debt
Debt issuance cost											100
2022 committed facility agreement
Debt
Repayments of credit facility											1,400
Outstanding balance of credit facility amount															$ 1,500
2022 committed facility agreement \| Term loan
Debt
Maximum borrowing facility amount \| £						£ 1,400
Repayments of credit facility											1,400
2022 committed facility agreement \| Base Rate of Bank of England \| Term loan
Debt
Spread on variable rate						3.50%
2024 Facilities Agreement
Debt
Debt issuance costs									1,600		1,600
2024 Facilities Agreement \| Secured Term A Loan And Revolving Credit Facility
Debt
Maximum borrowing facility amount \| £					£ 15,000
2024 Facilities Agreement \| Secured Term Loan A
Debt
Maximum borrowing facility amount \| £					3,000
Repayments of credit facility											200
Proceeds from credit facility											3,900
Available for additional borrowings									$ 3,800		$ 3,800
Number of installments \| installment									15		15
Outstanding principal, repaid by quarterly instalments \| £												£ 150
Remaining outstanding principal amount \| £												750
2024 Facilities Agreement \| Secured Term Loan B
Debt
Maximum borrowing facility amount \| €														€ 10.5
Repayments of credit facility											$ 600
Proceeds from credit facility											11,400
Available for additional borrowings									$ 11,100		$ 11,100
Number of installments \| installment									15		15
Outstanding principal, repaid by quarterly instalments \| £												525
Remaining outstanding principal amount \| £												2,625
2024 Facilities Agreement \| 2024 Revolving Credit Facility
Debt
Maximum borrowing facility amount \| £					12,000
Outstanding balance of credit facility amount									$ 15,800		$ 15,800
Additional borrowing capacity \| £					£ 14,000
Proceeds from credit facility \| £												£ 12,000
Voluntary prepayments \| item					4
2024 Facilities Agreement \| Minimum
Debt
Cash flow coverage ratio					0.0110									0.0110
Interest coverage ratio					0.0400									0.0400
2024 Facilities Agreement \| Maximum
Debt
Consolidated total leverage ratio					0.0250									0.0250
Consolidated total leverage ratio starting from January 2025					0.0225									0.0225
Consolidated total leverage ratio starting from January 2026					0.0200									0.0200
2024 Facilities Agreement \| SONIA \| Secured Term Loan A
Debt
Spread on variable rate					3.25%
2024 Facilities Agreement \| EURIBOR \| Secured Term Loan B
Debt
Spread on variable rate					3.25%
2024 Facilities Agreement \| Reference Rate \| 2024 Revolving Credit Facility
Debt
Spread on variable rate					3.25%

Stock-Based Compensation

9 Months Ended

Sep. 30, 2024

Stock-Based Compensation

Stock-Based Compensation

15.Stock-Based Compensation

XBP Europe 2024 Stock Incentive Plan

On June 13, 2024, the stockholders of XBP Europe approved and adopted XBP Europe’s 2024 Stock Incentive Plan (the “XBP 2024 Equity Plan”) at XBP Europe’s 2024 Annual Meeting of Stockholders. Under the XBP 2024 Equity Plan, subject to adjustment for certain changes in capitalization or other corporate events, XBP Europe is authorized to issue up to 5,520,270 shares of common stock pursuant to equity-based awards, which may be granted to eligible participants in furtherance of XBP Europe’s broader compensation strategy and philosophy. Awards granted under the 2024 Equity Plan will be granted upon terms approved by XBP Europe’s Compensation Committee and set forth in an award agreement or other evidence of an award. As of September 30, 2024, there were no shares of XBP Europe’s common stock issued under the XBP 2024 Equity Plan. However, restricted stock unit and stock options were issued under the XBP 2024 Equity Plan.

Restricted Stock Unit

Restricted stock unit awards generally vest ratably over a less than a year to three (3) year period. Restricted stock units are subject to forfeiture if employment or service terminates prior to vesting and are expensed ratably over the vesting period.

A summary of restricted stock unit activities under the XBP 2024 Equity Plan for the nine months ended September 30, 2024 is summarized in the following table:


				Average
		Weighted		Remaining
	Number	Average Grant		Contractual Life
	of Units	Date Fair Value		(Years)
Granted	3,325,329	$	1.24
Forfeited	—		—
Vested	—		—
Outstanding Balance as of September 30, 2024	3,325,329	$	1.24	2.44

Options

Under the XBP 2024 Equity Plan, stock options are granted at a price per share not less than 100% of the fair market value per share of the underlying stock at the grant date. The vesting period for each option award is established on the grant date, and the options generally expire ten (10) years from the grant date. Stock options granted under the 2024 Plan generally require no less than a four (4) year ratable vesting period. Stock option activity for the nine months ended September 30, 2024 is summarized in the following table:


						Average
		Weighted		Weighted		Remaining
		Average Grant		Average		Vesting Period
	Outstanding	Date Fair Value		Exercise Price		(Years)
Granted	95,000	$	0.58	$
Exercised	—		—
Forfeited	—		—
Expired	—		—
Outstanding Balance as of September 30, 2024⁽¹⁾	95,000	$	0.58	$	1.31	3.58

(1)	None of the outstanding options are exercisable as of September 30, 2024. Exercise prices of all of the outstanding options as of September 30, 2024 were higher than the market price of the shares of the Company. Therefore, aggregate intrinsic value was zero.

As of September 30, 2024, there was $3.3 million of total unrecognized compensation expense related to non-vested restricted stock unit awards and stock option awards under the XBP 2024 Equity Plan, which will be recognized over the respective service period. Stock-based compensation expense is recorded within selling, general, and administrative expenses. The Company incurred total compensation expense of $0.7 million and $0.9 million related to restricted stock unit awards and stock option awards under the XBP 2024 Equity Plan for the three and nine months ended September 30, 2024, respectively.

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Condensed Consolidated Balance Sheets
Allowance for credit losses	$ 1,435	$ 1,183
Accumulated Depreciation	$ 42,707	$ 39,876
Preferred stock par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock Authorized	10,000,000	10,000,000
Preferred stock Issued	0	0
Preferred stock Outstanding	0	0
Common stock par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock Authorized	200,000,000	200,000,000
Common stock Issued	30,166,102	30,166,102
Common stock Outstanding	30,166,102	30,166,102

Summary of Significant Accounting Policies - Net loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common Stock excluded in calculation of diluted net-loss per share (in shares)	6,634,980		6,634,980
Net loss from continuing operations attributable to common stockholders	$ (1,226)	$ (1,219)	$ (5,637)	$ (1,418)
Net loss from discontinuing operations attributable to common stockholders	(1,543)	(1,668)	(4,063)	(4,533)
Net loss attributable to common stockholders	$ (2,769)	$ (2,887)	$ (9,700)	$ (5,951)
Weighted average common shares outstanding - basic (in shares)	30,166,102	21,802,689	30,166,102	21,802,689
Weighted average common shares outstanding - diluted (in shares)	30,166,102	21,802,689	30,166,102	21,802,689
Basic - continuing operations (in dollars per share)	$ (0.04)	$ (0.05)	$ (0.19)	$ (0.06)
Diluted - continuing operations (in dollars per share)	(0.04)	(0.05)	(0.19)	(0.06)
Basic - discontinuing operations (in dollars per share)	(0.05)	(0.08)	(0.13)	(0.21)
Diluted - discontinuing operations (in dollars per share)	(0.05)	(0.08)	(0.13)	(0.21)
Basic (in dollars per share)	(0.09)	(0.13)	(0.32)	(0.27)
Diluted (in dollars per share)	$ (0.09)	$ (0.13)	$ (0.32)	$ (0.27)
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common Stock excluded in calculation of diluted net-loss per share (in shares)	6,634,980		6,634,980
Restricted stock units and options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common Stock excluded in calculation of diluted net-loss per share (in shares)			3,420,329

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Selling, general and administrative expenses (exclusive of depreciation and amortization)	$ 6,818	$ 6,846	$ 19,785	$ 21,448
Depreciation and amortization	804	745	2,387	2,207
Operating profit (loss)	2,509	348	2,484	3,561
Other expense (income), net
Foreign exchange losses (gains), net	668	(530)	2,016	405
Changes in fair value of warrant liability	(5)		(45)
Pension income, net	(435)	(200)	(1,278)	(589)
Net income (loss) before income taxes	438	(173)	(2,971)	105
Income tax expense	1,664	1,046	2,666	1,523
Net income (loss) from continuing operations	(1,226)	(1,219)	(5,637)	(1,418)
Net loss from discontinuing operations, net of income taxes	(1,543)	(1,668)	(4,063)	(4,533)
Net loss	$ (2,769)	$ (2,887)	$ (9,700)	$ (5,951)
Loss per share:
Basic - continuing operations (in dollars per share)	$ (0.04)	$ (0.05)	$ (0.19)	$ (0.06)
Diluted - continuing operations (in dollars per share)	(0.04)	(0.05)	(0.19)	(0.06)
Basic - discontinuing operations (in dollars per share)	(0.05)	(0.08)	(0.13)	(0.21)
Diluted - discontinuing operations (in dollars per share	(0.05)	(0.08)	(0.13)	(0.21)
Basic (in dollars per share)	(0.09)	(0.13)	(0.32)	(0.27)
Diluted (in dollars per share)	$ (0.09)	$ (0.13)	$ (0.32)	$ (0.27)
Related Party
Revenue, net	$ 70	$ 67	$ 217	$ 163
Cost of revenue (exclusive of depreciation and amortization)	7	12	35	75
Related party expense	1,421	1,316	3,527	3,589
Other expense (income), net
Interest expense, net	23	5	64	(1)
Non-related party
Revenue, net	35,330	37,429	106,770	116,248
Cost of revenue (exclusive of depreciation and amortization)	23,841	28,229	78,769	85,531
Other expense (income), net
Interest expense, net	$ 1,820	$ 1,246	$ 4,698	$ 3,641

Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Discontinued Operations (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Major components of financial results
Impairment			$ 100
Net loss from discontinuing operations, net of income taxes	$ (1,543)	$ (1,668)	(4,063)	$ (4,533)
Current assets
Total current assets held for sale	4,197		4,197		$ 2,497
Total noncurrent assets held for sale					3,018
Current liabilities
Total current liabilities held for sale	4,529		4,529		3,479
Total noncurrent liabilities held for sale					1,280
Drescher Group \| Discontinued Operations, Held-for-Sale
Major components of financial results
Selling, general and administrative expenses (exclusive of depreciation and amortization)	1,015	895	2,899	2,888
Depreciation and amortization	135	350	432	744
Impairment of goodwill	87		87
Operating profit (loss)	(1,466)	(1,648)	(3,783)	(4,463)
Interest expense, net	3	19	18	64
Foreign exchange losses, net	2	1	190	6
Net loss from discontinuting operations before income taxes	(1,471)	(1,668)	(3,991)	(4,533)
Income tax expense	72		72
Net loss from discontinuing operations, net of income taxes	(1,543)	(1,668)	(4,063)	(4,533)
Current assets
Cash and cash equivalents	190		190		368
Accounts receivable, net of allowance for credit losses	481		481		557
Allowance for credit losses	86		86		89
Inventories, net	582		582		695
Prepaid expenses and other current assets	697		697		877
Property, plant and equipment, net of accumulated depreciation of $3,593	855		855
Operating lease right-of-use assets, net	1,392		1,392
Total current assets held for sale	4,197		4,197		2,497
Property, plant and equipment, net of accumulated depreciation of $3,114					1,188
Property, plant and equipment, accumulated depreciation	3,593		3,593		3,114
Operating lease right-of-use assets, net					1,659
Goodwill					87
Deferred income tax assets					50
Other noncurrent assets					34
Total noncurrent assets held for sale					3,018
Current liabilities
Accounts payable	802		802
Accrued liabilities	1,463		1,463		892
Accrued compensation and benefits	356		356		315
Customer deposits	162		162		213
Current portion of finance lease liabilities	353		353		547
Current portion of operating lease liabilities					379
Total current liabilities held for sale	4,529		4,529		3,479
Operating lease liabilities, net of current portion	1,393		1,393		1,280
Total noncurrent liabilities held for sale					1,280
Significant non-cash items and capital expenditures
Depreciation			432	744
Impairment of goodwill			87
Credit loss expense			7	(9)
Unrealized foreign currency losses			184
Purchase of property, plant and equipment			(94)	(174)
Drescher Group \| Discontinued Operations, Held-for-Sale \| Related Party
Major components of financial results
Related party expense	58	13	129	38
Drescher Group \| Discontinued Operations, Held-for-Sale \| Non-related party
Major components of financial results
Revenue, net	1,898	2,749	6,773	9,002
Cost of revenue (exclusive of depreciation and amortization)	$ 2,069	$ 3,139	$ 7,009	$ 9,795
Current liabilities
Accounts payable					$ 1,133

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2024

Summary of Significant Accounting Policies

Schedule of disaggregation of revenue


	Three months ended				Nine months ended
	September 30,				September 30,
(dollars in thousands)	2024		2023		2024		2023
France	$	11,694	$	12,659	$	38,694	$	44,564
Germany		9,158		11,124		27,824		23,890
United Kingdom		9,601		7,482		24,339		26,903
Sweden		2,947		3,409		10,031		13,392
Other		1,930		2,755		5,882		7,499
Total Revenue, net	$	35,330	$	37,429	$	106,770	$	116,248

Schedule of contract balances


	September 30,		December 31,
(dollars in thousands)	2024		2023
Accounts receivable, net	$	24,576	$	30,238
Deferred revenues		6,500		6,004
Customer deposits		723		323
Costs to obtain and fulfill a contract	$	88	$	350

Schedule of remaining performance obligations to be satisfied in future periods


(dollars in thousands)
Remainder of 2024	$	4,918
2025		1,379
2026		141
2027		62
Total	$	6,500

Schedule of components of basic and diluted earnings per share


	Three months ended				Nine months ended
	September 30,				September 30,
(dollars in thousands, except share and per share amounts)	2024		2023		2024		2023
Net loss from continuing operations attributable to common stockholders (A)	$	(1,226)	$	(1,219)	$	(5,637)	$	(1,418)
Net loss from discontinuing operations attributable to common stockholders (B)		(1,543)		(1,668)		(4,063)		(4,533)
Net loss attributable to common stockholders (C)	$	(2,769)	$	(2,887)	$	(9,700)	$	(5,951)

Weighted average common shares outstanding – basic and diluted (D)		30,166,102		21,802,689		30,166,102		21,802,689
Income (Loss) Per Share:
Basic and diluted - continuing operations (A/D)	$	(0.04)	$	(0.05)	$	(0.19)	$	(0.06)
Basic and diluted - discontinuing operations (B/D)		(0.05)		(0.08)		(0.13)		(0.21)
Basic and diluted (C/D)	$	(0.09)	$	(0.13)	$	(0.32)	$	(0.27)

Employee Benefit Plans - Net periodic benefit cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Net periodic benefit cost
Service cost	$ 9	$ 10	$ 28	$ 30
Interest cost	$ 761	$ 779	$ 2,243	$ 2,298
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Interest Cost, Statement of Income or Comprehensive Income [Extensible Enumeration]	Interest Income (Expense), Nonoperating	Interest Income (Expense), Nonoperating	Interest Income (Expense), Nonoperating	Interest Income (Expense), Nonoperating
Expected return on plan assets	$ (748)	$ (693)	$ (2,203)	$ (2,045)
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Expected Return (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss)	Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss)	Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss)	Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss)
Amortization of prior service cost		$ 90		$ 268
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Amortization of Prior Service Cost (Credit), Statement of Income or Comprehensive Income [Extensible Enumeration]	Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss)	Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss)	Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss)	Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss)
Amortization of net loss	$ 313	$ 403	$ 925	$ 1,186
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Amortization of Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss)	Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss)	Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss)	Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss)
Net periodic benefit cost	$ 335	$ 589	$ 993	$ 1,737

Debt (Tables)

9 Months Ended

Sep. 30, 2024

Debt

Schedule of debt instruments outstanding


	September 30,		December 31,
(dollars in thousands)	2024		2023
2024 Term Loan A Facility⁽¹⁾	$	3,602	$	—
2024 Term Loan B Facility⁽²⁾		10,511		—
Term loan		—		3,785
2024 Revolving Credit Facility⁽³⁾		15,217		—
Revolvers⁽⁴⁾		2,123		12,767
Secured borrowings under Securitization Facility		—		74
Total debt		31,453		16,626
Less: Current portion of long-term debt		5,047		3,863
Long-term debt, net of current maturities	$	26,406	$	12,763

(1)	Net of unamortized debt issuance costs of $0.2 million as of September 30, 2024.

(2)	Net of unamortized debt issuance costs of $0.6 million as of September 30, 2024.

(3)	Net of unamortized debt issuance costs of $0.6 million as of September 30, 2024.

(4)	Includes $2.1 million and $1.3 million of outstanding balance under working capital loan as of September 30, 2024 and December 31, 2023, respectively.

Stock-Based Compensation - Unrecognized compensation expense (Details) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2024 USD ($)	Sep. 30, 2024 USD ($)
Stock-Based Compensation
Total unrecognized compensation expense	$ 3.3	$ 3.3
Stock-based compensation expense	$ 0.7	$ 0.9

Restructuring - Schedule of restructuring activity and balance of restructuring liability (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Restructuring
Balance at beginning of the period	$ 5,267	$ 2,036
Restructuring charges	$ 558	$ 4,297
Restructuring Charges, Statement of Income or Comprehensive Income [Extensible Enumeration]	Selling General And Administrative Expense, Excluding Depreciation, Depletion and Amortization	Selling General And Administrative Expense, Excluding Depreciation, Depletion and Amortization
Payment of benefits	$ (4,303)	$ (1,066)
Balance at end of the period	1,522	5,267
Current portion of the restructuring liability included in Accrued compensation and benefits	$ 1,500	$ 5,300

Summary of Significant Accounting Policies - Remaining Performance Obligations (Details) $ in Thousands	Sep. 30, 2024 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Total	$ 6,500
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation - Period of satisfaction (in years)	3 months
Total	$ 4,918
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation - Period of satisfaction (in years)	1 year
Total	$ 1,379
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation - Period of satisfaction (in years)	1 year
Total	$ 141
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation - Period of satisfaction (in years)	1 year
Total	$ 62

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2024	Nov. 06, 2024
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Securities Act File Number	001-40206
Entity Registrant Name	XBP Europe Holdings, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	85-2002883
Entity Address, Address Line One	2701 East Grauwyler Road
Entity Address, City or Town	Irving
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75061
City Area Code	844
Local Phone Number	935-2832
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	true
Entity Common Stock, Shares Outstanding		30,166,102
Entity Central Index Key	0001839530
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false
Common Stock, Par Value $0.0001 per share
Title of 12(b) Security	Common Stock, Par Value $0.0001 per share
Trading Symbol	XBP
Security Exchange Name	NASDAQ
Redeemable warrants, each whole warrant exercisable for one share of common stock at an exercise price of $11.50
Title of 12(b) Security	Redeemable warrants, each whole warrant exercisable for oneshare of common stock at an exercise price of $11.50
Trading Symbol	XBPEW
Security Exchange Name	NASDAQ

Commitments and Contingencies

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies

Commitments and Contingencies

13.Commitments and Contingencies

Litigation

The Company is, from time to time, involved in certain legal proceedings, inquiries, claims and disputes, which arise in the ordinary course of business. Although management cannot predict the outcomes of these matters, management does not believe these actions will have a material, adverse effect on our condensed consolidated balance sheets, condensed consolidated statements of operations or condensed consolidated statements of cash flows.

Company Subsidiary Litigation

A group of 71 former employees brought a claim against a subsidiary of XBP Europe related to their dismissal resulting from the closure of two production sites in France in 2020. The employees filed complaints with the Labor Court on June 9, 2022. Conciliation hearings at the Labor Court were held on September 27, 2022, December 13, 2022, March 7, 2023, September 5, 2023 and November 14, 2023.

In March 2023, 67 claimants (after the in principle settlement was agreed with the first 4 claimants) filed an application for summary proceedings in respect of part of the claim for a total claim of $1.1 million. The summary proceedings hearing was held on April 11, 2023 and the court issued its decision on May 9, 2023 upholding all of the plaintiffs’ claims for a total amount of $1.1 million, however the court’s decision does not increase the Company’s anticipated exposure for the overall claim.

The Company has appealed against the decision (and paid the amount of $1.1 million on November 10, 2023 pending the appeal), the appeal hearing was scheduled for September 9, 2024 and was held on November 4, 2024. The next hearing, pertaining only to 15 remaining claimants who have not concluded settlement agreements with the Company, is scheduled for January 13, 2025.

The substantive hearing was held on February 16, 2024 and a decision was made at the end of June 2024.

The Company reached a number of settlements with a certain number of claimants prior to the decision of the court and approximately $1.8 million was paid to such claimants in addition to the amounts paid as part of the summary proceedings. The court awarded $1.2 million to the claimants who had not settled before the court’s decision and, after the deduction of the amounts already paid to such claimants, $1.0 million remain to be paid by the Company. The Company will also be responsible for up to three months’ unemployment allowance paid to these claimants by the unemployment fund, which is not expected to significantly increase the Company’s total costs. The Company has appealed the decision. The Company accrued $1.1 million and $2.2 million in accrued liabilities on the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively, based on the estimate of the range of possible losses.

Contract-Related Contingencies

The Company has certain contingent obligations that arise in the ordinary course of providing services to its customers. These contingencies are generally the result of contracts that require the Company to comply with certain performance measurements or the delivery of certain services to customers by a specified deadline. The Company believes the adjustments to the transaction price, if any, under these contract provisions will not result in a significant revenue reversal or have a material adverse effect on the Company’s condensed consolidated balance sheets, condensed consolidated statements of operations, condensed consolidated statement of comprehensive loss or condensed consolidated statements of cash flows.

Warrants - Common stock warrants outstanding (Details)	Sep. 30, 2024 $ / shares shares
Warrants
Warrants	6,634,980
Private Placement Warrants
Warrants
Warrants	135,000
Exercise price of warrants \| $ / shares	$ 11.50
Forward Purchase Warrants
Warrants
Warrants	250,000
Exercise price of warrants \| $ / shares	$ 11.50
Public Warrants
Warrants
Warrants	6,249,980
Exercise price of warrants \| $ / shares	$ 11.50

Intangible Assets and Goodwill

9 Months Ended

Sep. 30, 2024

Intangible Assets and Goodwill

Intangible Assets and Goodwill

9.Intangible Assets and Goodwill

Intangible Assets

Intangible assets are stated at cost or acquisition-date fair value less accumulated amortization and consists of the following:


	Weighted
	Average	September 30, 2024
	Remaining	Gross
	Useful Life	Carrying		Accumulated		Intangible Asset,
(dollars in thousands)	(in Years)	Amount (a)		Amortization		net
Customer relationships	2.3	$	3,180	$	(2,311)	$	869
Internally developed software	5.0		329		(12)		317
Outsource contract costs	0.3		773		(685)		88
Total intangibles, net		$	4,282	$	(3,008)	$	1,274


	Weighted
	Average	December 31, 2023
	Remaining	Gross
	Useful Life	Carrying		Accumulated		Intangible Asset,
(dollars in thousands)	(in Years)	Amount (a)		Amortization		net
Customer relationships	3.0	$	3,145	$	(1,997)	$	1,148
Outsource contract costs	1.0		768		(418)		350
Total intangibles, net		$	3,913	$	(2,415)	$	1,498

(a)	Amounts include intangibles acquired in business combinations and asset acquisitions

Aggregate amortization expense related to intangibles was $0.2 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively, and $0.6 million and $0.3 million for the nine months ended September 30, 2024 and 2023, respectively.

Estimated intangibles amortization expense for the next five years consists of the following:


	Estimated
	Amortization
(dollars in thousands)	Expenses
Remainder of 2024	$	201
2025		452
2026		446
2027		63
2028 and thereafter		112
Total	$	1,274

Goodwill

The Company’s operating segments are significant strategic business units that align its products and services with how it manages its business, approach the markets and interacts with customers. The Company is organized into two segments: Bills and Payments and Technology (See Note 20 – Segment Information).

Goodwill by reporting segment consists of the following:


	Balances at								Currency		Balances at
	January 1,								Translation		September 30,
(dollars in thousands)	2024		Additions		Disposals		Impairments		Adjustments		2024
Bills and Payments	$	9,971	$	—	$	—	$	—	$	176	$	10,147
Technology		12,852		—		—		—		282		13,134
Total	$	22,823	$	—	$	—	$	—	$	458	$	23,281


	Balances at								Currency		Balances at
	January 1,								Translation		December 31,
(dollars in thousands)	2023		Additions		Disposals		Impairments		Adjustments		2023
Bills and Payments	$	9,602	$	—	$	—	$	—	$	369	$	9,971
Technology		12,373		—		—		—		479		12,852
Total	$	21,975	$	—	$	—	$	—	$	848	$	22,823

Warrants

9 Months Ended

Sep. 30, 2024

Warrants

Warrants

16.Warrants

As of September 30, 2024, the Company had the following common stock warrants outstanding:


	Warrants	Exercise Price	Issuance Date	Expiration
Private Placement Warrants	135,000	11.50	3/11/2021	11/29/2028
Forward Purchase Warrants	250,000	11.50	3/11/2021	11/29/2028
Public Warrants	6,249,980	11.50	3/11/2021	11/29/2028
Total	6,634,980

Public Warrants

The Public Warrants qualify for the derivative scope exception under ASC 815 and are therefore classified as equity on the condensed consolidated balance sheets. They may only be exercised for a whole number of shares at a price of $11.50. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants are currently exercisable and will expire five years from the completion of the Business Combination or earlier upon redemption or liquidation.

The Company may redeem the outstanding Public Warrants if the price per share of common stock equals or exceeds $18.00 (except as described with respect to the Private Placement Warrants and Forward Purchase Warrants):

●

in whole and not in part;

●

at a price of $0.01 per Warrant;

●

upon not less than 30 days’ prior written notice of redemption to each warrantholder; and

●

if, and only if, the closing price of the Common stock equals or exceeds $18.00 per share (as adjusted) for any of 20 trading days within a 30-trading day period commencing once the Warrants become exercisable and ending three trading days before the Company sends the notice of redemption to the warrantholders.

If and when the Public Warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares of Common Stock upon exercise of the Public Warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification.

Private Warrants

The Private Warrants meet the definition of a derivative, however they don’t meet the equity scope exception in ASC 815 and are therefore classified as a liability. The Private Warrants are identical to the Public Warrants, except that so long as they are held by Cantor or any Permitted Transferees, as applicable, the Private Warrants (i) may be exercised for cash or on a cashless basis, (ii) may not be transferred, assigned or sold until thirty (30) days after the completion by the Company of an initial Business Combination, and (iii) shall not be redeemable by the Company,

Upon exercise of each of the Public Warrants and Private Warrants, the exercise price and number of shares of Common Stock issuable may be adjusted in certain circumstances including in the event of a stock dividend, a consolidation, combination, reverse stock split or reclassification of shares of Common Stock.

Segment Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
Segment Information (Details) $ in Thousands	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) segment	Sep. 30, 2023 USD ($)
Segment Information
Number of segments \| segment			2
Segment profit	$ 11,552	$ 9,255	$ 28,183	$ 30,805
Selling, general and administrative expenses (exclusive of depreciation and amortization)	6,818	6,846	19,785	21,448
Depreciation and amortization	804	745	2,387	2,207
Foreign exchange losses (gains), net	668	(530)	2,016	405
Changes in fair value of warrant liability	(5)		(45)
Pension income, net	(435)	(200)	(1,278)	(589)
Net loss before income taxes	438	(173)	(2,971)	105
Related and Nonrelated Parties
Segment Information
Revenue, net (including related party revenue)	35,400	37,496	106,987	116,411
Cost of revenue (including related party cost of revenue, exclusive of depreciation and amortization)	23,848	28,241	78,804	85,606
Related Party
Segment Information
Revenue, net (including related party revenue)	100	100	200	200
Cost of revenue (including related party cost of revenue, exclusive of depreciation and amortization)	7	12	35	75
Related party expense	$ 1,421	$ 1,316	$ 3,527	$ 3,589
Operating Cost and Expense, Related Party, Type [Extensible Enumeration]	Related Party	Related Party	Related Party	Related Party
Interest expense, net	$ 23	$ 5	$ 64	$ (1)
Non-related party
Segment Information
Cost of revenue (including related party cost of revenue, exclusive of depreciation and amortization)	23,841	28,229	78,769	85,531
Interest expense, net	1,820	1,246	4,698	3,641
Operating segment \| Bills & Payments
Segment Information
Segment profit	5,153	2,740	11,006	11,719
Operating segment \| Bills & Payments \| Related and Nonrelated Parties
Segment Information
Revenue, net (including related party revenue)	24,555	25,344	75,860	82,857
Cost of revenue (including related party cost of revenue, exclusive of depreciation and amortization)	19,402	22,604	64,854	71,138
Operating segment \| Technology
Segment Information
Segment profit	6,399	6,515	17,177	19,086
Operating segment \| Technology \| Related and Nonrelated Parties
Segment Information
Revenue, net (including related party revenue)	10,845	12,152	31,127	33,554
Cost of revenue (including related party cost of revenue, exclusive of depreciation and amortization)	$ 4,446	$ 5,637	$ 13,950	$ 14,468

Intangible Assets and Goodwill - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Intangible Asset, net
Gross Carrying Amount	$ 4,282		$ 4,282		$ 3,913
Accumulated Amortization	(3,008)		(3,008)		(2,415)
Intangible Asset, net	1,274		1,274		$ 1,498
Amortization of intangible assets	$ 200	$ 100	$ 554	$ 289
Customer relationships
Intangible Assets and Goodwill
Weighted Average Remaining Useful Life (in Years)	2 years 3 months 18 days		2 years 3 months 18 days		3 years
Intangible Asset, net
Gross Carrying Amount	$ 3,180		$ 3,180		$ 3,145
Accumulated Amortization	(2,311)		(2,311)		(1,997)
Intangible Asset, net	$ 869		$ 869		$ 1,148
Internally developed software
Intangible Assets and Goodwill
Weighted Average Remaining Useful Life (in Years)	5 years		5 years
Intangible Asset, net
Gross Carrying Amount	$ 329		$ 329
Accumulated Amortization	(12)		(12)
Intangible Asset, net	$ 317		$ 317
Outsource contract costs
Intangible Assets and Goodwill
Weighted Average Remaining Useful Life (in Years)	3 months 18 days		3 months 18 days		1 year
Intangible Asset, net
Gross Carrying Amount	$ 773		$ 773		$ 768
Accumulated Amortization	(685)		(685)		(418)
Intangible Asset, net	$ 88		$ 88		$ 350

Fair Value Measurement - Schedule of Beginning And Ending Balances of Net Assets And Liabilities (Details) - Private Warrants $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Fair Value Measurement
Balance at beginning of period	$ 50
Change in the fair value of the private warrants liability	$ (45)
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Fair Value Adjustment of Warrants
Balance at end of period	$ 5

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities
Net loss	$ (9,700)	$ (5,951)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	2,265	2,662
Amortization of intangible assets	554	289
Imapirment of goodwill	87
Credit loss expense	249	271
Changes in fair value of warrant liability	(45)
Stock-based compensation expense	885
Unrealized foreign currency losses	1,976	215
Change in deferred income taxes	(761)	(357)
Change in operating assets and liabilities
Accounts receivable	5,741	2,874
Inventories	163	326
Prepaid expense and other assets	(855)	1,125
Accounts payable	(2,555)	(2,599)
Related parties payable	(8,350)	(2,246)
Accrued expenses and other liabilities	(1,428)	4,758
Deferred revenue	280	790
Customer deposits	340	(414)
Net cash provided by (used in) operating activities	(11,154)	1,743
Cash flows from investing activities
Purchase of property, plant and equipment	(1,124)	(2,254)
Additions to internally developed software	(317)
Net cash used in investing activities	(1,441)	(2,254)
Cash flows from financing activities
Borrowings under secured borrowing facility		87,769
Principal repayment on borrowings under secured borrowing facility	(79)	(90,357)
Cash paid for debt issuance costs	(734)
Principal payments on long-term obligations	(15,256)	(690)
Proceeds from Secured Credit Facility	679
Principal payments on finance leases	(282)	(660)
Net cash provided by (used in) financing activities	14,233	(3,938)
Effect of exchange rates on cash and cash equivalents	(583)	(205)
Net increase (decrease) in cash and cash equivalents	1,055	(4,654)
Cash and equivalents, beginning of period, including cash from discontinued operations	6,905	7,473
Cash and equivalents, end of period, including cash from discontinued operations	7,960	2,819
Supplemental cash flow data:
Income tax payments, net of refunds received	424	1,112
Interest paid	1,869	$ 1,309
Term Loan A Facility
Cash flows from financing activities
Borrowings under 2024 Revolving Credit Facility	3,830
Principal payments on 2024 Term Loan Facility	(192)
Term Loan B Facility
Cash flows from financing activities
Borrowings under 2024 Revolving Credit Facility	11,413
Principal payments on 2024 Term Loan Facility	(571)
2024 Revolving Credit Facility
Cash flows from financing activities
Borrowings under 2024 Revolving Credit Facility	$ 15,425

Related Parties - Transaction Details (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Shared Services
Related Parties
Related party expense	$ 858	$ 984	$ 2,441	$ 2,760
Royalty
Related Parties
Related party expense		209		432
Service Fee
Related Parties
Related party expense	563	123	1,086	397
Related Party
Related Parties
Revenue, net	100	100	200	200
Purchases	100	0	100	1,000
Related party expense	1,421	1,316	3,527	3,589
Related Party \| Maximum
Related Parties
Revenue, net	100
Related Party \| Shared Services
Related Parties
Related party expense	800	1,000	2,400	2,800
Related Party \| Royalty
Related Parties
Related party expense	0	200	0	400
Related Party \| Service Fee
Related Parties
Related party expense	$ 600	$ 100	$ 1,100	$ 400

- Definition

Amount, including tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value-added and excise.

+ References

+ Details

Summary of Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Sep. 30, 2024	Dec. 31, 2023
Summary of Significant Accounting Policies
Accounts receivable, net	$ 24,576	$ 24,576	$ 30,238
Deferred revenues	6,500	6,500	6,004
Customer deposits	723	723	323
Costs to obtain and fulfill a contract	88	88	350
Amounts not billed to customers (included in Accounts receivable)	10,600	10,600	10,800
Deferred revenue recognized during the period	$ 3,000	$ 6,400	$ 6,300

Intangible Assets and Goodwill - Estimated intangibles amortization expense (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Estimated Amortization Expenses
Remainder of 2024	$ 201
2025	452
2026	446
2027	63
2028 and thereafter	112
Intangible Asset, net	$ 1,274	$ 1,498

General (Details)	Sep. 30, 2024 client location country
General
Number of clients served \| client	2,000
Number of Countries \| country	15
Number of Locations \| location	32

Intangible Assets and Goodwill (Tables)

9 Months Ended

Sep. 30, 2024

Intangible Assets and Goodwill

Schedule of intangible assets


	Weighted
	Average	September 30, 2024
	Remaining	Gross
	Useful Life	Carrying		Accumulated		Intangible Asset,
(dollars in thousands)	(in Years)	Amount (a)		Amortization		net
Customer relationships	2.3	$	3,180	$	(2,311)	$	869
Internally developed software	5.0		329		(12)		317
Outsource contract costs	0.3		773		(685)		88
Total intangibles, net		$	4,282	$	(3,008)	$	1,274


	Weighted
	Average	December 31, 2023
	Remaining	Gross
	Useful Life	Carrying		Accumulated		Intangible Asset,
(dollars in thousands)	(in Years)	Amount (a)		Amortization		net
Customer relationships	3.0	$	3,145	$	(1,997)	$	1,148
Outsource contract costs	1.0		768		(418)		350
Total intangibles, net		$	3,913	$	(2,415)	$	1,498

(a)	Amounts include intangibles acquired in business combinations and asset acquisitions

Schedule of estimated intangibles amortization expense


	Estimated
	Amortization
(dollars in thousands)	Expenses
Remainder of 2024	$	201
2025		452
2026		446
2027		63
2028 and thereafter		112
Total	$	1,274

Schedule of goodwill by reporting segment


	Balances at								Currency		Balances at
	January 1,								Translation		September 30,
(dollars in thousands)	2024		Additions		Disposals		Impairments		Adjustments		2024
Bills and Payments	$	9,971	$	—	$	—	$	—	$	176	$	10,147
Technology		12,852		—		—		—		282		13,134
Total	$	22,823	$	—	$	—	$	—	$	458	$	23,281


	Balances at								Currency		Balances at
	January 1,								Translation		December 31,
(dollars in thousands)	2023		Additions		Disposals		Impairments		Adjustments		2023
Bills and Payments	$	9,602	$	—	$	—	$	—	$	369	$	9,971
Technology		12,373		—		—		—		479		12,852
Total	$	21,975	$	—	$	—	$	—	$	848	$	22,823

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

+ References

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+ Details

Inventories (Tables)

9 Months Ended

Sep. 30, 2024

Inventories

Schedule of inventories, net


	September 30,		December 31,
(dollars in thousands)	2024		2023
Finished goods	$	5,946	$	5,892
Allowance for obsolescence		(1,890)		(1,847)
Total inventories, net	$	4,056	$	4,045

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets
Cash and cash equivalents	$ 7,770	$ 6,537
Accounts receivable, net of allowance for credit losses of $1,435 and $1,183, respectively	24,576	30,238
Inventories, net	4,056	4,045
Prepaid expenses and other current assets	6,912	6,550
Current assets held for sale	4,197	2,497
Total current assets	47,511	49,867
Property, plant and equipment, net of accumulated depreciation of $42,707 and $39,876, respectively	12,284	12,811
Operating lease right-of-use assets, net	6,726	5,206
Goodwill	23,281	22,823
Intangible assets, net	1,274	1,498
Deferred income tax assets	7,689	6,811
Other noncurrent assets	882	705
Noncurrent assets held for sale		3,018
Total assets	99,647	102,739
Current liabilities
Accounts payable	11,271	13,281
Related party payables	$ 5,523	$ 13,350
Related party payables	Related Party	Related Party
Accrued liabilities	$ 22,152	$ 23,850
Accrued compensation and benefits	16,623	16,268
Customer deposits	723	323
Deferred revenue	6,500	6,004
Current portion of finance lease liabilities	26	91
Current portion of operating lease liabilities	2,118	1,562
Current portion of long-term debts	5,047	3,863
Current liabilities held for sale	4,529	3,479
Total current liabilities	74,512	82,071
Related party notes payable	1,559	1,542
Long-term debt, net of current maturities	26,406	12,763
Finance lease liabilities, net of current portion		23
Pension liabilities	11,430	12,208
Operating lease liabilities, net of current portion	4,781	3,785
Other long-term liabilities	1,720	1,635
Noncurrent liabilities held for sale		1,280
Total liabilities	120,408	115,307
Commitments and Contingencies (Note 13)
STOCKHOLDERS' DEFICIT
Common Stock, par value of $0.0001 per share; 200,000,000 shares authorized; [30,166,102] shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	30	30
Additional paid in capital	885
Accumulated deficit	(21,039)	(11,339)
Accumulated other comprehensive loss:
Foreign currency translation adjustment	(1,609)	(1,416)
Unrealized pension actuarial gains, net of tax	972	157
Total accumulated other comprehensive loss	(637)	(1,259)
Total stockholders' deficit	(20,761)	(12,568)
Total liabilities and stockholders' deficit	$ 99,647	$ 102,739

Related Parties (Tables)

9 Months Ended

Sep. 30, 2024


	Three months ended				Nine months ended
	September 30,				September 30,
(dollars in thousands)	2024		2023		2024		2023
Related party shared services	$	858	$	984	$	2,441	$	2,760
Related party royalty		—		209		—		432
Related party service fee		563		123		1,086		397
Total related party expense	$	1,421	$	1,316	$	3,527	$	3,589

Employee Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2024

Employee Benefit Plans

Schedule of components of net periodic benefit cost


	Three months ended September 30,				Nine months ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Service cost	$	9	$	10	$	28	$	30
Interest cost		761		779		2,243		2,298
Expected return on plan assets		(748)		(693)		(2,203)		(2,045)
Amortization
Amortization of prior service cost		—		90		—		268
Amortization of net loss		313		403		925		1,186
Net periodic benefit cost	$	335	$	589	$	993	$	1,737

Stock-Based Compensation - 2024 Stock Incentive Plan (Details)	Jun. 13, 2024 shares
2024 Plan
Stock-Based Compensation
Number of shares authorized for issuance (in shares)	5,520,270

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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+ Details

Reverse Recapitalization (Details) - USD ($) $ in Millions		12 Months Ended
Reverse Recapitalization (Details) - USD ($) $ in Millions	Nov. 29, 2023	Dec. 31, 2023	Sep. 30, 2024
Reverse Recapitalization
Common stock Outstanding		30,166,102	30,166,102
Warrants			6,634,980
Private Warrants
Reverse Recapitalization
Warrants			385,000
Public Warrants
Reverse Recapitalization
Warrants			6,249,980
CF Acquisition Corp. VIII
Reverse Recapitalization
Proceeds from Business Combination, net of transaction expenses	$ 5.2
Transaction costs		$ 3.3
Transaction costs related to the Merger		0.3
Additional paid-in capital and remaining expense		$ 3.0

Inventories

9 Months Ended

Sep. 30, 2024

Inventories

Inventories

6.Inventories

Inventories, net consist of the following:


	September 30,		December 31,
(dollars in thousands)	2024		2023
Finished goods	$	5,946	$	5,892
Allowance for obsolescence		(1,890)		(1,847)
Total inventories, net	$	4,056	$	4,045

Finished goods inventory includes $1.9 million and $1.8 million of allowance for obsolescence as of September 30, 2024 and December 31, 2023, respectively. The Company allowance for obsolescence is based on a policy developed by historical experience and management judgment.

Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Inventories
Finished goods	$ 5,946	$ 5,892
Allowance for obsolescence	(1,890)	(1,847)
Total inventories, net	4,056	4,045
Allowance for obsolescence finished goods	$ 1,900	$ 1,800

Intangible Assets and Goodwill - Schedule of goodwill (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2024 USD ($) segment	Dec. 31, 2023 USD ($)
Goodwill
Number of operating segments \| segment	2
Goodwill
Beginning balance	$ 22,823	$ 21,975
Impairments	87
Currency Translation Adjustments	458	848
Ending balance	23,281	22,823
Bills and Payments
Goodwill
Beginning balance	9,971	9,602
Currency Translation Adjustments	176	369
Ending balance	10,147	9,971
Technology
Goodwill
Beginning balance	12,852	12,373
Currency Translation Adjustments	282	479
Ending balance	$ 13,134	$ 12,852

- Definition

Amount, after accumulated impairment loss, of asset representing future economic benefit arising from other asset acquired in business combination or from joint venture formation or both, that is not individually identified and separately recognized.

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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1A
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1A

+ Details

Related Parties

9 Months Ended

Sep. 30, 2024

Related Parties

Related Parties

19.Related Parties

The components of related party expense in the condensed consolidated statements of operations are summarized as follows:


	Three months ended				Nine months ended
	September 30,				September 30,
(dollars in thousands)	2024		2023		2024		2023
Related party shared services	$	858	$	984	$	2,441	$	2,760
Related party royalty		—		209		—		432
Related party service fee		563		123		1,086		397
Total related party expense	$	1,421	$	1,316	$	3,527	$	3,589

Historically, the Company has been managed and operated in the ordinary course of business with other affiliates of ETI. Accordingly, certain shared costs have been allocated to the Company and reflected as expenses in the condensed consolidated financial statements.

Sales of Products and Services

During the historical periods presented, the Company sold products and services to non-XBP Europe subsidiaries of ETI. Revenue, net in the condensed consolidated statements of operations include sales to affiliates of ETI of less than $0.1 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively, and $0.2 million and $0.2 million for the nine months ended September 30, 2024 and 2023, respectively.

Purchases

During the historical periods presented, the Company purchased high-speed scanners and related products from non-XBP Europe subsidiaries of ETI. These purchases totaled $0.1 million and $0.0 million for the three months ended September 30, 2024 and 2023, respectively, and $0.1 million and $1.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Shared Service Center Costs

The historical costs and expenses reflected in our financial statements include costs for certain shared service functions historically provided by the non-XBP Europe subsidiaries of the Company’s parent, ETI, including, but not limited to accounting and finance, IT and business process operations. Where possible, these charges were allocated based on full-time equivalents (FTE’s), formal agreements between XBP Europe and subsidiaries of ETI, or other allocation methodologies that Management determined to be a reasonable reflection of the utilization of services provided or the benefit received by XBP Europe and all costs of operating XBP Europe during the periods presented.

The allocated shared service expenses and general corporate expenses incurred pursuant to the Services Agreement for the three months ended September 30, 2024 and 2023 were $0.8 million and $1.0 million, respectively, and $2.4 million and $2.8 million for the nine months ended September 30, 2024 and 2023, respectively, and are included in the related party expenses in the condensed consolidated statements of operations.

In the opinion of management of ETI and the Company, the expense and cost allocations have been determined on a basis considered to be a reasonable reflection of the utilization of services provided or the benefit received by the Company during 2024 and 2023. The amounts that would have been, or will be incurred, on a stand-alone basis could differ from the amounts allocated due to economies of scale, difference in management judgment, a requirement for more or fewer employees or other factors. Management does not believe, however, that it is practicable to estimate what

these expenses would have been had the Company operated as an independent entity, including any expenses associated with obtaining any of these services from unaffiliated entities. In addition, the future results of operations, financial position and cash flows could differ materially from the historical results presented herein.

Royalty Expenses

During the historical periods presented, subsidiaries of the Company’s parent, ETI, charged royalty fees for allowing the Company to use tradenames and trademarks owned by subsidiaries of ETI. The Company incurred royalty expense of $0 and $0.2 million for the three months ended September 30, 2024 and 2023, respectively, and $0 and $0.4 million for the nine months ended September 30, 2024 and 2023, respectively, included in related party expense within the condensed consolidated statements of operations.

Service Fee

During the historical periods presented, subsidiaries of ETI provided management services to the Company in exchange for a management fee. These management services included provision of legal, human resources, corporate finance, and marketing support. The management fee was calculated based on a weighted average of total external revenue, headcount and total assets attributable to the Company. On October 9, 2022 the management fee was terminated when the Merger Agreement was entered into and was replaced by the related party service fee pursuant to the Services Agreement, which reduced the fee and modified the services provided. Services provided under Annex A of the Services Agreement include sales of certain hardware, operations delivery, finance, accounting, human resource and technology support services. The Company incurred total fees of $0.6 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively, and $1.1 million and $0.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Note Receivable

The Company entered into an Intercompany Loan Agreement with an affiliate of ETI on January 1, 2016, where the Company agreed to lend up to €20 million to the affiliate. The related party note receivable had a six year term with the option to extend for an additional one year term and bore annual interest of 9.5%, due at the end of the term. On January 1, 2023, the Company amended its Intercompany Loan Agreement, extending the maturity of the Intercompany Loan Agreement to December 31, 2023. In accordance with the Ultimate Parent Support Agreement, related party note receivable was eliminated at Closing against related party payables with a residual amount recorded to additional paid-in capital. No related party note receivable was recorded in the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023. The condensed consolidated statements of operations included $0 and $0.3 million of related party interest income for the three months ended September 30, 2024 and 2023, respectively, and $0 and $1.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Notes Payable

The Company entered into three Intercompany Loan Agreements with an affiliate of ETI, in September 2009 and May 2010, whereby the affiliate of ETI agreed to lend up to £9.3 million to the Company (“related party notes payable”). The related party notes payable which were denominated in Great British pounds accrued interest daily at the one-month LIBOR rate for United States dollar deposits in the London interbank market plus four percentage points. These notes had an original maturity date of one year (which was extended by the lender for one additional year on each anniversary of the notes) and were assigned by the lender to another affiliate of ETI and amended with an effective date of December 1, 2012. The amendment amended (a) the interest rate to a fixed rate of 4% plus LIBOR for the remainder of 2012, 12% for 2013 and 13.5% thereafter, (b) extended the term of the agreement to December 31, 2024, and (c) denominated the notes in United States dollars. In accordance with the Ultimate Parent Support Agreement, related party notes payable were eliminated at closing with a corresponding impact to additional paid-in capital. As a result, no related party notes payable was recorded in the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023. The condensed consolidated statements of operations included related party interest expense of $0 and $0.4 million for the three months ended September 30, 2024 and 2023, respectively, and $0 and $1.1 million for the nine months ended September 30, 2024 and 2023, respectively, in the related party interest expense (income), net.

Further, the Company entered into another four Intercompany Loan Agreements (“new related party notes payable”) with affiliates of ETI, three of the notes are dated September 4, 2023 (and subsequently amended on September 15, 2023) and one note is dated September 15, 2023. The new related party notes payable have a ten year term and bear annual interest of 6.0%, due at the end of the term. The condensed consolidated balance sheets included $1.6 million and $1.5 million new related party notes payable as of September 30, 2024 and December 31, 2023, respectively. The condensed consolidated statements of operations included less than $0.1 million and $0.1 million of related party interest expense for the three and nine months ended September 30, 2024, respectively, in the related party interest expense (income), net.

Related Party Payables and Related Party Notes Payables Balances with Affiliates

Related party payables and related party notes payables balances with affiliates as of September 30, 2024 and December 31, 2023 were as follows:


	September 30, 2024				December 31, 2023
(dollars in thousands)	Related party payables		Related party notes payable		Related party payables		Related party notes payable
ETI	$	5,523	$	1,559	$	13,350	$	1,542

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-6

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477968/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477968/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(g)(3))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479134/946-220-S99-1

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(c))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479134/946-220-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(e))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479134/946-220-S99-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/850/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-6

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-1

+ Details

Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2024

Fair Value Measurement

Schedule of beginning and ending balances of net assets and liabilities classified as Level 3


	September 30,
(dollars in thousands)	2024
Balance at beginning of period	$	50
Change in the fair value of the private warrants liability		(45)
Balance at end of period	$	5

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2024

Stock-Based Compensation

Schedule of restricted stock unit activities


				Average
		Weighted		Remaining
	Number	Average Grant		Contractual Life
	of Units	Date Fair Value		(Years)
Granted	3,325,329	$	1.24
Forfeited	—		—
Vested	—		—
Outstanding Balance as of September 30, 2024	3,325,329	$	1.24	2.44

Schedule of stock option activity


						Average
		Weighted		Weighted		Remaining
		Average Grant		Average		Vesting Period
	Outstanding	Date Fair Value		Exercise Price		(Years)
Granted	95,000	$	0.58	$
Exercised	—		—
Forfeited	—		—
Expired	—		—
Outstanding Balance as of September 30, 2024⁽¹⁾	95,000	$	0.58	$	1.31	3.58

(1)	None of the outstanding options are exercisable as of September 30, 2024. Exercise prices of all of the outstanding options as of September 30, 2024 were higher than the market price of the shares of the Company. Therefore, aggregate intrinsic value was zero.

General

9 Months Ended

Sep. 30, 2024

General

General

1.General

XBP Europe Holdings, Inc. (the “Company” or “XBP Europe”) is a pan-European integrator of bills, payments and related solutions and services seeking to enable digital transformation of businesses. The Company’s name — “XBP” — stands for “exchange for bills and payments” and reflects the Company’s strategy to facilitate connections between buyers and suppliers to optimize clients’ bills and payments and related digitization processes. XBP believes its business ultimately advances digital transformation, improves market-wide liquidity, and encourages sustainable business practices.

The Company provides business process management solutions with proprietary software suites and deep domain expertise, serving as a technology and operations partner for its clients’ strategic journeys and streamlining their complex, disconnected payment processes. The Company serves over 2,000 clients across Europe, the Middle East and Africa (“EMEA”). The Company’s client relationships span multiple industries, including banking, healthcare, insurance, and the public sector. The Company is able to deploy its solutions to clients in any EMEA market due to its cloud-based structure. Its physical footprint spans 15 countries with 32 locations.

These condensed consolidated financial statements should be read in conjunction with the below notes and the notes to the consolidated financial statements as of and for the year ended December 31, 2023 included in the XBP Europe annual report on Form 10-K for such period (the “2023 Form 10-K”), filed with the Securities and Exchange Commission (“SEC”) on April 1, 2024 and available at the SEC’s website at http://www.sec.gov.

The accompanying condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”), as they apply to interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These accounting principles require the Company to use estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from the Company’s estimates.

The condensed consolidated financial statements are unaudited, but include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim period. The interim financial results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year.

Merger/Business Combination with CF Acquisition Corp. VIII

The Company was a special purpose acquisition company called CF Acquisition Corp. VIII (“CF VIII”) prior to the closing of a business combination (the “Business Combination”) on November 29, 2023. Pursuant to that certain Agreement and Plan of Merger, dated October 9, 2022 (the “Merger Agreement”) whereby XBP Europe, Inc., a Delaware corporation, and an indirect subsidiary of Exela Technologies, Inc., a Delaware corporation (“ETI”), became a wholly owned subsidiary of CFV III. In connection with the consummation of the Business Combination, the Company changed its name from CF VIII to “XBP Europe Holdings, Inc.” The Business Combination was accounted for as a reverse capitalization in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). Under this method of accounting, CF VIII was treated as the “acquired” company for financial reporting purposes with XBP Europe surviving as a direct wholly-owned subsidiary of CF VIII.

Divesture

During the third quarter of fiscal year 2024, the Company determined that its certain on-demand printing operations met the criteria to be classified as a discontinued operation, and, as a result, disposable group’s historical financial results are reflected in the Company’s condensed consolidated financial statements as discontinued operations, and assets and liabilities were retrospectively reclassified as assets and liabilities held for sale. See Note 3 - Discontinued Operations of the notes to condensed consolidated financial statements.

Warrants - Public Warrants and Private Warrants (Details)	9 Months Ended
	Sep. 30, 2024 D $ / shares shares
Public Warrants
Warrants
Exercise price of warrants \| $ / shares	$ 11.50
Fractional shares issued upon exercise of warrants (in shares) \| shares	0
Term of warrants	5 years
Warrants redemption, stock price trigger \| $ / shares	$ 18.00
Warrants redemption price per warrant \| $ / shares	$ 0.01
Warrants redemption, minimum number of days of notice to be given to warrant holders	30
Warrants redemption, threshold trading days	20
Warrants redemption, threshold consecutive trading days	30
Warrants redemption, threshold trading days available before notice is sent to warrant holders	3
Private Warrants
Warrants
Threshold period for not to transfer, assign or sell any of their warrants after the completion of the initial business combination	30 days

Employee Benefit Plans - Additional Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) subsidiary employee	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)
Employee Benefit Plans
Actuarial gain \| $	$ 1,000		$ 1,000		$ 200
Deferred tax benefit \| $	1,300		1,300		$ 1,300
Pension Plan
Employee Benefit Plans
Employer contributions \| $	1,100	$ 600	$ 1,300	$ 1,900
Pension Plan \| U.K. Pension Plan
Employee Benefit Plans
Number of subsidiaries which provide pension benefits \| subsidiary			2
Qualifying period for employees to be eligible for pension plan prior to threshold retirement date			3 years
Number of new employees registered under plan \| employee			0
Pension Plan \| U.K. Pension Plan \| Maximum
Employee Benefit Plans
Period of historical performance achieved			20 years
Pension Plan \| U.K. Pension Plan \| Minimum
Employee Benefit Plans
Period of historical performance achieved			15 years
Pension Plan \| German Pension Plan
Employee Benefit Plans
Qualifying period for employees to be eligible for pension plan prior to threshold retirement date			10 years
Number of new employees registered under plan \| employee			0
Aggregate fair value of plan assets \| $	$ 0		$ 0
Pension Plan \| Norway Pension Plan
Employee Benefit Plans
Qualifying period for employees to be eligible for pension plan prior to threshold retirement date			3 years
Number of new employees registered under plan \| employee			0
Pension Plan \| Asterion Pension Plan
Employee Benefit Plans
Qualifying period for employees to be eligible for pension plan prior to threshold retirement date			3 years
Number of new employees registered under plan \| employee			0

Related Parties - Components of related party expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Shared Services
Related Parties
Related party expense	$ 858	$ 984	$ 2,441	$ 2,760
Royalty
Related Parties
Related party expense		209		432
Service Fee
Related Parties
Related party expense	563	123	1,086	397
Related Party
Related Parties
Related party expense	1,421	1,316	3,527	3,589
Related Party \| Shared Services
Related Parties
Related party expense	800	1,000	2,400	2,800
Related Party \| Royalty
Related Parties
Related party expense	0	200	0	400
Related Party \| Service Fee
Related Parties
Related party expense	$ 600	$ 100	$ 1,100	$ 400

Stock-Based Compensation - Options (Details) - Employee Stock Option	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Stock-Based Compensation
Expiration period (in years)	10 years
Outstanding
Granted \| shares	95,000
Outstanding Balance as of September 30, 2024 \| shares	95,000
Weighted Average Grant Date Fair Value
Granted \| $ / shares	$ 0.58
Outstanding Balance as of September 30, 2024 \| $ / shares	0.58
Weighted Average Exercise Price
Outstanding Balance as of September 30, 2024 \| $ / shares	$ 1.31
Average Remaining Vesting Period (Years)
Outstanding Balance as of September 30, 2024	3 years 6 months 29 days
Exercisable \| shares	0
Minimum
Stock-Based Compensation
Minimum percentage of grant price to the fair market value (in %)	100.00%
Vesting period (in years)	4 years

Restructuring

9 Months Ended

Sep. 30, 2024

Restructuring

Restructuring

18.Restructuring

The Company periodically takes actions to improve operating efficiencies, typically in connection with rationalizing the cost structure of the Company. The Company’s footprint and headcount reductions and organizational integration actions relate to discrete, unique restructuring events, primarily reflected in approved plans for reductions in force.

In the fourth quarter of 2023, the Company’s management approved a restructuring plan to realign the Company’s business and strategic priorities by rightsizing its workforce in certain regions.

The Company’s restructuring activity and balance of the restructuring liability is as follows:


	September 30,		December 31,
(dollars in thousands)	2024		2023
Balance at beginning of the period	$	5,267	$	2,036
Restructuring charges		558		4,297
Payment of benefits		(4,303)		(1,066)
Balance at end of the period	$	1,522	$	5,267

As of September 30, 2024 and December 31, 2023, the current portion of the restructuring liability was $1.5 million and $5.3 million respectively, and was included in accrued compensation and benefits in the condensed consolidated balance sheets.

Stockholders' Deficit - Narratives (Details)	9 Months Ended
Stockholders' Deficit - Narratives (Details)	Sep. 30, 2024 Vote $ / shares shares	Dec. 31, 2023 $ / shares shares
Stockholders' Deficit
Preferred stock Authorized	10,000,000	10,000,000
Preferred stock par value (in dollars per share) \| $ / shares	$ 0.0001	$ 0.0001
Preferred stock Issued	0	0
Preferred stock Outstanding	0	0
Common stock Authorized	200,000,000	200,000,000
Common stock par value (in dollars per share) \| $ / shares	$ 0.0001	$ 0.0001
Number of vote per share \| Vote	1
Common stock Issued	30,166,102	30,166,102
Common stock Outstanding	30,166,102	30,166,102

Related Parties - Notes receivable and payables (Details) € in Millions				3 Months Ended		9 Months Ended		12 Months Ended	129 Months Ended
	Sep. 15, 2023 loan	Sep. 04, 2023 loan	Jan. 01, 2016 EUR (€)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) loan	Sep. 30, 2023 USD ($)	Dec. 31, 2013	Sep. 30, 2024 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2012	May 31, 2010 EUR (€)	Sep. 30, 2009 EUR (€)
Related Parties
Related party notes payable				$ 1,559,000		$ 1,559,000			$ 1,559,000	$ 1,542,000
Related party payables				11,271,000		11,271,000			11,271,000	13,281,000
Related Party
Related Parties
Maximum amount agreed to be lent to related party \| €			€ 20.0
Term of Notes Receivables			6 years
Number of years extendable			1 year
Annual Interest rate of Notes Receivable			9.50%
Related party note receivable				0		0			0	0
Related party interest income				0	$ 300,000	0	$ 1,000,000.0
Related party notes payable				1,559,000		1,559,000			1,559,000	1,542,000
Related party payables				5,523,000		$ 5,523,000			$ 5,523,000	13,350,000
Related Party \| Related party notes payable
Related Parties
Number of intercompany loan agreements entered \| loan						3
Maximum amount agreed to be lent by related party \| €												€ 9.3	€ 9.3
Spread on variable rate						4.00%		12.00%	13.50%
Original Maturity Period						1 year
Additional maturity period						1 year
Fixed interest rate											4.00%
Related party interest expense				0	$ 400,000	$ 0	$ 1,100,000
Related Party \| New related party notes payable
Related Parties
Number of intercompany loan agreements entered \| loan	1	3				4
Spread on variable rate						6.00%
Original Maturity Period						10 years
Related party notes payable				1,600,000		$ 1,600,000			$ 1,600,000	$ 1,500,000
Related party interest expense				$ 100,000		$ 100,000

Employee Benefit Plans

9 Months Ended

Sep. 30, 2024

Employee Benefit Plans

Employee Benefit Plans

12.Employee Benefit Plans

U.K. Pension Plan

Two of the Company’s subsidiaries in the United Kingdom provide pension benefits to certain retirees and eligible dependents. Employees eligible for participation included all full-time regular employees who were more than three years from retirement prior to October 2001. A retirement pension or a lump-sum payment may be paid dependent upon length of service at the mandatory retirement age. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. No new employees are registered under this plan and the pension obligation for the existing participants of the plan is calculated based on actual salary of the participants at the earlier of two dates, the participants leaving the Company or March 31, 2015. The expected rate of return assumptions for plan assets relate solely to the UK plan and are based mainly on historical performance achieved over a long period of time (15 to 20 years) encompassing many business and economic cycles.

German Pension Plan

XBP Europe’s subsidiaries in Germany, Exela Technologies ECM Solutions GmbH, provides pension benefits to certain retirees. Employees eligible for participation include all employees who started working for the Company or its predecessors prior to September 30, 1987 and have finished a qualifying period of at least 10 years. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. The German pension plan is an unfunded plan and therefore has no plan assets. No new employees are registered under this plan and the participants who are already eligible to receive benefits under this plan are no longer employees of the Company.

Norway Pension Plan

The Company’s subsidiary in Norway provides pension benefits to eligible retirees and eligible dependents. Employees eligible for participation include all employees who were more than three years from retirement prior to March 2018. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. No new employees are

registered under this plan and the pension obligation for the existing participants of the plan is calculated based on actual salary of the participants at the earlier of two dates, the participants leaving the Company or April 30, 2018.

Asterion Pension Plan

In 2018, Exela Technologies Holding GmbH (through the Asterion Business Combination), acquired the obligation to provide pension benefits to eligible retirees and eligible dependents. Employees eligible for participation included all full-time regular employees who were more than three years from retirement prior to July 2003. A retirement pension or a lump-sum payment may be paid dependent upon length of service at the mandatory retirement age. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. No new employees are registered under this plan and the pension obligation for the existing participants of the plan is calculated based on actual salary of the participants at the earlier of two dates, the participants leaving the Company or April 10, 2018.

Tax Effect on Accumulated Other Comprehensive Loss

As of September 30, 2024, and December 31, 2023, the Company had actuarial gain of $1.0 million and $0.2 million, respectively, which is net of a deferred tax benefit of $1.3 million for each period.

Pension and Postretirement Expense

The components of the net periodic benefit cost are as follows:


	Three months ended September 30,				Nine months ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Service cost	$	9	$	10	$	28	$	30
Interest cost		761		779		2,243		2,298
Expected return on plan assets		(748)		(693)		(2,203)		(2,045)
Amortization
Amortization of prior service cost		—		90		—		268
Amortization of net loss		313		403		925		1,186
Net periodic benefit cost	$	335	$	589	$	993	$	1,737

The Company records pension interest cost within interest expense, net. Expected return on plan assets, amortization of prior service costs, and amortization of net losses are recorded within pension income, net. Service cost is recorded within cost of revenue.

Employer Contributions

XBP Europe’s funding of employer contributions is based on governmental requirements and differs from those methods used to recognize pension expense. The Company made contributions of $1.1 million and $0.6 million to its pension plans during the three months ended September 30, 2024 and 2023, respectively, and $1.3 million and $1.9 million for the nine months ended September 30, 2024 and 2023, respectively. The Company has plans to fund the pension plans with the required contributions for 2024 based on current plan provisions.

- Definition

The entire disclosure for retirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 70
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480794/715-70-50-1

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 17
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480482/715-20-55-17

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
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-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
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-Name Accounting Standards Codification
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-Paragraph 1
-Subparagraph (q)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
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-Paragraph 1
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-URI https://asc.fasb.org/1943274/2147480506/715-20-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
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-Section 50
-Paragraph 3
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480266/715-60-50-3

+ Details

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false	false	false
Non-Rule 10b5-1 Arrangement Adopted	false	false	false
Rule 10b5-1 Arrangement Terminated	false	false	false
Non-Rule 10b5-1 Arrangement Terminated	false	false	false

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Condensed Consolidated Statements of Comprehensive Loss
Net loss	$ (2,769)	$ (2,887)	$ (9,700)	$ (5,951)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	(615)	853	(193)	154
Unrealized pension actuarial gains (losses), net of tax	278	147	815	(56)
Total other comprehensive loss, net of tax	$ (3,106)	$ (1,887)	$ (9,078)	$ (5,853)

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income, attributable to parent entity. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Discontinued Operations

9 Months Ended

Sep. 30, 2024

Discontinued Operations

Discontinued Operations

3.Discontinued Operations

The Company classifies assets as held-for-sale (“disposal group”) in the period when all of the relevant criteria to be classified as held for sale are met. These criteria include management’s commitment to sell the disposal group in its present condition and the sale being deemed probable of being completed within one year. Assets held for sale are reported at the lower of their carrying value or fair value less cost to sell. The fair values of disposal groups are estimated using accepted valuation techniques, including indicative listing prices. The Company considers historical experience, guidance received from third parties, and all information available at the time the estimates are made to derive fair value. Any loss resulting from the measurement is recognized in the period when the held for sale criteria are met. The Company assesses the fair value of a disposal group, less any costs to sell, each reporting period it remains classified as held for sale and reports any subsequent changes as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the initial carrying value of the disposal group. Assets held-for-sale are not amortized or depreciated.

As of September 30, 2024, certain on-demand printing operations of the Company met the criteria for classification as held for sale and accordingly, was measured at the lower of their carrying value or its fair value less costs to sell. The Company recorded an impairment charge of $0.1 million relating to the disposal group in impairment of goodwill in the condensed consolidated statement of operations of the disposable group for the three and nine months ended September 30, 2024. The Company determined that the held for sale disposal group has met the criteria to be disclosed as discontinued operations as it represents a significant strategic shift that will have a major effect on the Company’s operations and financial results.

The results of the disposable group are presented as discontinued operations in the condensed consolidated statements of operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Impairment loss was recorded during the three and nine months ended September 30, 2024, in impairment of assets in the condensed consolidated statements of operations. Further, the Company has reclassified the assets and liabilities of the disposable group as assets and liabilities held for sale in the condensed consolidated statements of balance sheets for all periods presented. The condensed consolidated statements of cash flows are presented on a consolidated basis for both continuing operations and discontinued operations. Unless otherwise noted, reference within the notes to condensed consolidated financial statements relates to continuing operations.

The financial results of the disposable group are presented as loss from discontinued operations, net of income taxes on the Company’s condensed consolidated statements of operations. The following table presents the major components of financial results of the Company’s disposable group for the periods presented:


	Three months ended September 30,				Nine months ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Revenue, net	$	1,898	$	2,749	$	6,773	$	9,002
Cost of revenue (exclusive of depreciation and amortization)		2,069		3,139		7,009		9,795
Selling, general and administrative expenses (exclusive of depreciation and amortization)		1,015		895		2,899		2,888
Related party expense		58		13		129		38
Depreciation and amortization		135		350		432		744
Impairment of goodwill ⁽¹⁾		87		—		87		—
Operating loss		(1,466)		(1,648)		(3,783)		(4,463)
Other expense, net
Interest expense, net		3		19		18		64
Foreign exchange losses, net		2		1		190		6
Net loss from discontinuing operations before income taxes		(1,471)		(1,668)		(3,991)		(4,533)
Income tax expense		72		—		72		—
Net loss from discontinuing operations, net of income taxes	$	(1,543)	$	(1,668)	$	(4,063)	$	(4,533)

(1)	During the third quarter of 2024, the Company recorded $0.1 million impairment in goodwill for the three and nine months ended September 30, 2024, due to held for sale classification as discussed above.

As of September 30, 2024, the assets and liabilities of the disposable group are classified as current in the Company’s condensed consolidated balance sheets, as it is probable that the sale will occur within one year. The following table represents the aggregated carrying amounts of classes of assets and liabilities that are classified as discontinued operations on the condensed consolidated balance sheets for the periods presented:


	September 30,
(dollars in thousands)	2024
ASSETS
Current assets
Cash and cash equivalents	$	190
Accounts receivable, net of allowance for credit losses of $86		481
Inventories, net		582
Prepaid expenses and other current assets		697
Property, plant and equipment, net of accumulated depreciation of $3,593		855
Operating lease right-of-use assets, net		1,392
Total current assets held for sale	$	4,197

LIABILITIES
Current liabilities
Accounts payable	$	802
Accrued liabilities		1,463
Accrued compensation and benefits		356
Customer deposits		162
Current portion of finance lease liabilities		353
Current portion of operating lease liabilities		1,393
Total current liabilities held for sale	$	4,529


	December 31,
(dollars in thousands)	2023
ASSETS
Current assets
Cash and cash equivalents	$	368
Accounts receivable, net of allowance for credit losses of $89		557
Inventories, net		695
Prepaid expenses and other current assets		877
Total current assets held for sale	$	2,497

Property, plant and equipment, net of accumulated depreciation of $3,114	$	1,188
Operating lease right-of-use assets, net		1,659
Goodwill		87
Deferred income tax assets		50
Other noncurrent assets		34
Total noncurrent assets held for sale	$	3,018

LIABILITIES
Current liabilities
Accounts payable	$	1,133
Accrued liabilities		892
Accrued compensation and benefits		315
Customer deposits		213
Current portion of finance lease liabilities		547
Current portion of operating lease liabilities		379
Total current liabilities held for sale	$	3,479

Operating lease liabilities, net of current portion		1,280
Total noncurrent liabilities held for sale	$	1,280

The following table presents significant non-cash items and capital expenditures of discontinued operations for the periods presented:


	Nine months ended September 30,
(dollars in thousands)	2024		2023

Depreciation	$	432	$	744
Impairment of goodwill		87		—
Credit loss expense (income)		7		(9)
Unrealized foreign currency losses		184		—
Purchase of property, plant and equipment	$	(94)	$	(174)

Debt

9 Months Ended

Sep. 30, 2024

Debt

Debt

10.Debt

Secured Borrowing Facility

On August 25, 2020, certain entities entered into an agreement wherein amounts due from clients were pledged to a third party, in exchange for a borrowing facility in amounts up to a total of €31.0 million (the “Secured Borrowing Facility”). The proceeds from the Secured Borrowing Facility were determined by the amounts invoiced to the Company’s clients. The amounts due from clients were recorded in accounts receivable and the amount due to the third party as a liability, presented under current portion of long-term debt on the condensed consolidated balance sheets. The cost of the Secured Borrowing Facility was 0.10% of newly assigned receivables with minimum of €0.1 million in annual fees and the Secured Borrowing Facility bore interest at Euribor rate plus 0.70% on the unpaid principal amount. During the three months ended September 30, 2024 and 2023, the Company incurred interest expense of $0 and $0.1 million, respectively, and $0 and $0.4 million for the nine months ended September 30, 2024 and 2023, respectively, related to the Secured Borrowing Facility. As of September 30, 2024 and December 31, 2023, the outstanding balances payable under the Secured Borrowing Facility were $0 and $0.1 million, respectively.

On September 15, 2023, the relevant entities entered into an amendment to the Secured Borrowing Facility (the “Amended Factoring Agreement”) to convert the existing arrangement into a non-recourse factoring program wherein an unrelated third party (the “Factor”) shall provide financing to certain subsidiaries of the Company by purchase of certain approved and partially approved accounts receivables (as defined in the Amended Factoring Agreement) up to a maximum amount of €15.0 million while assuming the risk of non-payment on the purchased accounts receivables up to

the level of approval. The relevant entities shall have no continuing involvement in the transferred accounts receivable, other than collection and administrative responsibilities and, once sold, the accounts receivable shall no longer be available to satisfy creditors of the relevant entities.

The Company accounted for the transactions under the Amended Factoring Agreement as a sale under ASC 860, Transfers and Servicing, and treats it as an off-balance sheet arrangement. Net funds received from the transfers reflect the face value of the account less a fee, which is recorded as an increase to cash and a reduction to accounts receivable outstanding in the condensed consolidated balance sheets. The Company reports the cash flows attributable to the sale of account receivables to the Factor and the cash receipts from collections made on behalf of and paid to the Factor under the Amended Factoring Agreement, on a net basis as trade accounts receivables in cash flows from operating activities in the Company’s condensed consolidated statements of cash flows.

As of September 30, 2024, the Company’s outstanding factored accounts receivable amounted to $9.2 million pursuant to the Amended Factoring Agreement, representing the face value of the invoices. The Company recognizes factoring costs upon disbursement of funds. The Company incurred a loss on sale of accounts receivables including expenses pursuant to the Amended Factoring Agreement totaling approximately $0.3 million and $0.7 million for the three and nine months ended September 30, 2024, respectively, which is presented in selling, general and administrative expenses (exclusive of depreciation and amortization) on the condensed consolidated statements of operations.

2019 Credit Agreement

In October 2019, a wholly-owned UK subsidiary of XBP Europe (the “UK Subsidiary”) entered into a secured credit agreement (the “2019 Credit Agreement”) with HSBC UK Bank plc (“HSBC”) for a £9.0 million Secured Credit Facility (the “Secured Credit Facility”) consisting of (i) a secured Term Loan A facility in an aggregate principal amount of £2.0 million (the “Term Loan A Facility”), (ii) a secured Term Loan B facility in an aggregate principal amount of £2.0 million (the “Term Loan B Facility”), and (iii) a secured revolving credit facility in an aggregate principal amount of £5.0 million (the “Revolving Credit Facility”). On December 21, 2022, the UK Subsidiary amended its 2019 Credit Agreement, allowing the UK Subsidiary to affirm to extend the maturity of Term Loan A Facility and Term Loan B Facility to October 31, 2024 subject to compliance with financial covenants. On February 9, 2023, the UK Subsidiary amended its 2019 Credit Agreement, allowing the UK Subsidiary to extend the maturity of the Revolving Credit Facility to October 31, 2024 subject to compliance with financial covenants. The maturity of the Revolving Credit Facility has since been extended on various dates. On May 10, 2024, the maturity was further extended to August 31, 2025. During the nine months ended September 30, 2024, the Company has repaid outstanding amount of $1.7 million, $0.2 million, and $6.3 million under the Term Loan A Facility, the Term Loan B Facility, and the Revolving Credit Facility, respectively and accordingly wrote off the unamortized balance of less than $0.1 million of debt issuance cost related to the 2019 Credit Agreement. As of September 30, 2024, the Company had fully repaid the outstanding balance under the 2019 Credit Agreement. As of December 31, 2023, the outstanding balance of the Term Loan A Facility, the Term Loan B Facility, and the Revolving Credit Facility was $1.9 million, $0.4 million, and $6.4 million, respectively.

The 2019 Credit Agreement contains financial covenants including, but not limited to (a) a Combined Cashflow Coverage Ratio, which measures the ratio of (i) Combined Cashflow and (ii) Debt Service defined as finance charges in addition to mandatory repayments in respect to the 2019 Credit Agreement, (b) Combined Interest Coverage Ratio, which measures the ratio of (i) Combined EBITDA to (ii) Combined Finance Charges, (c) a Combined Total Net Leverage Ratio, which measures the ratio of (i) Combined Net Indebtedness in respect to the last day of the most recent period to (ii) EBITDA, (d) Guaranteed Intragroup Balances, (e) the Loan to Market Value defined as the Facility A Loan outstanding to the market value of the property in each case, as defined in the 2019 Credit Agreement. The term “Combined” refers to the UK Subsidiary and its wholly-owned subsidiaries.

The 2019 Credit Agreement and indenture governing the Secured Credit Facility contains limitations on the ability of the UK subsidiary to effect mergers and change of control events as well as certain other limitations, including limitations on: (i) the declaration and payment of dividends or other restricted payments (ii) substantial changes of the

general nature of the business, (iii) acquisition of a company, (iv) enter a joint venture, (v) or effect a dormant subsidiary to commence trading or cease to satisfy the criteria of a dormant subsidiary.

The UK Subsidiary’s obligations under the 2019 Credit Agreement are jointly and severally guaranteed by certain of its existing and future direct and indirectly wholly owned subsidiaries. The 2019 Credit Agreement and the 2022 Committed Facility Agreement (defined below) contain cross default provisions which relate to the UK Subsidiary and its subsidiaries, but not any other entities within the consolidated group.

At inception, borrowings under the Secured Credit Facility bore interest at a rate per annum equal to the LIBOR plus the applicable margin of 2%, 2.5%, and 3% per annum for the Term Loan A Facility, the Term Loan B Facility, and the Revolving Credit Facility respectively. Effective October 29, 2021, borrowings under the Revolving Credit Facility bore interest at a rate per annum equal to the Sterling Overnight Index Average (“SONIA”) plus the applicable margin of 3%. Effective December 31, 2021, borrowings under the Term Loan A Facility and the Term Loan B Facility bore interest at a rate per annum equal to the SONIA plus the applicable margin of 2% and 2.5%, respectively.

In June 2020, the UK Subsidiary entered into an amendment to the 2019 Credit Agreement, to provide an additional aggregate principal amount of £4.0 million under a credit agreement (the “Revolving Working Capital Loan Facility” or “2020 Credit Agreement”) together with Revolving Credit Facility (the “Revolving Credit Facilities”). At the inception of the Revolving Working Capital Loan Facility, the borrowing bore an interest rate per annum equal to the LIBOR plus the applicable margin of 3.5% per annum. Effective March 31, 2023, borrowings under the Revolving Working Capital Loan Facility bore interest at a rate per annum equal to the SONIA plus the applicable margin of 3.5%.

The maturity of the Revolving Working Capital Loan Facility has since been extended on various dates subject to compliance with financial covenants. On May 10, 2024 the maturity was further extended to August 31, 2025. During the nine months ended September 30, 2024, the Company has repaid outstanding amount of $5.1 million under the 2020 Credit Agreement and accordingly wrote off the unamortized balance of less than $0.1 million of debt issuance cost related to the 2020 Credit Agreement. As of September 30, 2024, the Company had fully repaid the outstanding balance under the 2020 Credit Agreement. As of December 31, 2023, the Revolving Working Capital Loan Facility had an outstanding principal balance of $5.1 million.

As of December 31, 2023, the UK Subsidiary was in compliance with all affirmative and negative covenants under the 2019 Credit Agreement, including any financial covenants, pertaining to its financing arrangements.

2022 Committed Facility Agreement

In May 2022, the UK Subsidiary entered into a committed facility agreement (the “2022 Committed Facility Agreement”) with HSBC, which includes a term loan for £1.4 million to be used in refinancing a property owned by XBP Europe in Dublin, Ireland (the “Property”). At inception of the 2022 Committed Facility Agreement, the borrowing bore an interest rate equal to 3.5% per annum in addition to the Bank of England Base Rate. The maturity of the 2022 Committed Facility Agreement is May 2027. During the nine months ended September 30, 2024, the Company has repaid outstanding amount of $1.4 million under the 2022 Committed Facility Agreement. As of September 30, 2024, the Company had fully repaid the outstanding balance under the 2022 Committed Facility Agreement. As of December 31, 2023, the 2022 Committed Facility Agreement had an outstanding balance of $1.5 million.

The 2022 Committed Facility Agreement contains financial covenants including, but not limited to (a) a Combined Debt Service Coverage Ratio, which measures the cashflow less dividends, net capital expenditure, and taxation relative to the debt service for that relevant period, (b) interest cover, which measures EBITDA relative to the aggregate of (i) interest charges and (ii) interest element of finance leases in any relevant period, (c) Total Net Debt to EBITDA, which measures the total net debt relative to EBITDA for any relevant period, and (d) loan to market value, which measures the loan as a percentage of the aggregate market value of the Property. The term “Combined” refers to the UK subsidiary and its wholly-owned subsidiaries.

As of December 31, 2023, the UK Subsidiary was in compliance with all affirmative and negative covenants under the 2022 Committed Facility Agreement, including any financial covenants pertaining to its financing arrangements.

2024 Facilities Agreement

In June 2024, XBP Europe, Inc. a wholly-owned subsidiary of the Company, together with certain other subsidiaries (the “XBP Group”), entered into a Facilities Agreement (the “2024 Facilities Agreement”) with HSBC for a £15.0 million and €10.5 million Secured Credit Facility consisting of (i) a single draw, secured Term Loan A facility in an aggregate principal amount of £3.0 million (the “2024 Term Loan A Facility”), (ii) a single draw, secured Term Loan B facility in an aggregate principal amount of €10.5 million (the “2024 Term Loan B Facility”, collectively with the 2024 Term Loan A Facility, the “2024 Term Loan Facilities”) and (iii) a multi-draw, multi-currency secured revolving credit facility in an aggregate principal amount of £12.0 million (the “2024 Revolving Credit Facility”), and, together with the 2024 Term Loan Facilities, (the “2024 Senior Credit Facilities”). The 2024 Term Loan Facilities mature on June 26, 2028 and the 2024 Revolving Credit Facility matures on June 26, 2027, with certain extension rights at the discretion of HSBC. An additional £14.0 million of credit under the 2024 Revolving Credit Facility may be made available at HSBC’s discretion for specific purposes as per the 2024 Facilities Agreement.

The Company used the 2024 Term Loan Facilities to repay in full all outstanding indebtedness under the 2019 Credit Agreement, 2020 Credit Agreement and 2022 Committed Facility Agreement. The Company incurred $1.6 million in debt issuance costs related to the 2024 Facilities Agreement.

The 2024 Facilities Agreement contains financial covenants including, but not limited to, (i) requiring the maintenance of a consolidated total leverage ratio of not greater than 2.50 to 1.00 (with step-downs to (a) 2.25 to 1.00 starting January 1, 2025 and (b) 2.00 to 1.00 starting January 1, 2026); (ii) a cash flow coverage ratio of at least 1.10:1.00; and (iii) a consolidated interest coverage ratio of not less than 4.00 to 1.00.

The 2024 Facilities Agreement and indenture governing the 2024 Secured Credit Facilities contains certain affirmative and negative covenants limiting on the ability of the XBP Group to effect mergers and change of control events as well as certain other limitations, including limitations on (i) incurrence of additional indebtedness or liens, (ii) dispositions of assets, (iii) substantial changes of the general nature of the business, (iv) entering into restrictive agreements, (v) making certain investments, loans, advances, guarantees and acquisitions, (vi) prepaying certain indebtedness, (vii) the declaration and payment of dividends or other restricted payments, (viii) engaging in transactions with affiliates, or (ix) amending certain material documents.

Except as otherwise provided by applicable law, all obligations under the 2024 Facilities Agreement are jointly and severally unconditionally guaranteed by each member of the XBP Group.

Borrowings under the 2024 Term Loan A Facility, the 2024 Term Loan B Facility and 2024 Revolving Credit Facility bear interest at a rate per annum equal to the SONIA plus the applicable margin of 3.25%, Euro Interbank Offered Rate (“EURIBOR”) plus the applicable margin of 3.25% and Reference Rate plus the applicable margin of 3.25%, respectively. “Reference Rate” for any period means (i) Secured Overnight Financing Rate (“SOFR”) for funds extended in U.S. Dollars; (ii) the EURIBOR, for funds extended in Euros; (iii) the SONIA, for funds extended in Pounds Sterling; and the Stockholm Interbank Offered Rate (“STIBOR”) for funds extended in Swedish Krona.

During the nine months ended September 30, 2024, the Company has drawn $3.9 million under 2024 Term Loan A Facility and $11.4 million under 2024 Term Loan B Facility, and repaid $8.2 million outstanding indebtedness under the 2019 Credit Agreement, $5.1 million outstanding indebtedness under the 2020 Credit Agreement and $1.4 million outstanding indebtedness under the 2022 Committed Facility Agreement. Accordingly, the Company wrote off the unamortized balance of less than $0.1 million of debt issuance costs related to the 2019 Credit Agreement and 2020 Credit Agreement.

During the three and nine months ended September 30, 2024, the Company repaid $0.2 million and $0.6 million of outstanding principal amount under the 2024 Term Loan A Facility and 2024 Term Loan B Facility, respectively. As

of September 30, 2024, the outstanding balance of the 2024 Term Loan A Facility and the 2024 Term Loan B Facility was $3.8 million and $11.1 million, respectively. The principal amount drawn under the 2024 Term Loan A Facility shall be repaid in fifteen (15) equal quarterly installments of £150 thousands with the remaining outstanding principal amount of £750 thousands payable at maturity along with accrued and unpaid interest. The principal amount drawn under the 2024 Term Loan B Facility shall be repaid in fifteen (15) equal quarterly installments of €525 thousands with the remaining outstanding principal amount of €2.625 million payable at maturity along with accrued and unpaid interest.

As of September 30, 2024, the Company has drawn £12.0 million under 2024 Revolving Credit Facility in Euros currency. As of September 30, 2024, the outstanding balance under the 2024 Revolving Credit Facility was $15.8 million.

The Company may, at any time, prepay the principal of the 2024 Senior Credit Facilities. Each prepayment shall be accompanied by the payment of accrued interest, without any premium or penalty. However, the Company is limited to a maximum of four voluntary prepayments of the 2024 Revolving Credit Facility within any consecutive twelve-month period.

As of September 30, 2024, the XBP Group was in compliance with all affirmative and negative covenants under the 2024 Facilities Agreement, including any financial covenants, pertaining to its financing arrangements. The Company continually monitors its compliance with such covenants. The Company believes it will remain in compliance with all such covenants for the next twelve months; however, due to the inherent uncertainty, management’s estimates of the achievement of its financial covenants may change in the future.

Debt Outstanding

As of September 30, 2024, and December 31, 2023, the following debt instruments were outstanding:


	September 30,		December 31,
(dollars in thousands)	2024		2023
2024 Term Loan A Facility⁽¹⁾	$	3,602	$	—
2024 Term Loan B Facility⁽²⁾		10,511		—
Term loan		—		3,785
2024 Revolving Credit Facility⁽³⁾		15,217		—
Revolvers⁽⁴⁾		2,123		12,767
Secured borrowings under Securitization Facility		—		74
Total debt		31,453		16,626
Less: Current portion of long-term debt		5,047		3,863
Long-term debt, net of current maturities	$	26,406	$	12,763

(1)	Net of unamortized debt issuance costs of $0.2 million as of September 30, 2024.

(2)	Net of unamortized debt issuance costs of $0.6 million as of September 30, 2024.

(3)	Net of unamortized debt issuance costs of $0.6 million as of September 30, 2024.

(4)	Includes $2.1 million and $1.3 million of outstanding balance under working capital loan as of September 30, 2024 and December 31, 2023, respectively.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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+ Details

New Accounting Pronouncements

9 Months Ended

Sep. 30, 2024

New Accounting Pronouncements

New Accounting Pronouncements

4.New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

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+ Details