GoPro will restate more than a year of results over debt accounting errors found during its sale process

GoPro said Friday that its financial statements for 2025 and the first half of 2026 should no longer be relied on and will be restated, after it found errors in how it accounted for warrants and convertible debt while preparing for its pending sale to Action Acquisitions.

Four sets of books to be redone

GoPro Inc. said investors should no longer rely on its audited financial statements for 2025 or on its quarterly statements for the third quarter of 2025 and the first two quarters of 2026, and that it will restate all of them. The camera maker disclosed the decision in a Form 8-K filed with the Securities and Exchange Commission after the market closed on Friday. Its audit committee reached the conclusion on Oct. 9.

GoPro said it found the problems while preparing the proxy statement for its pending sale to Action Acquisitions LLC and closing its books for the third quarter. It plans to file an amended 2025 annual report and amended reports for the first and second quarters of 2026 "as soon as reasonably practicable," but did not give a date.

Warrants and convertible debt

The errors involve how GoPro valued financing instruments, not its sales or cash. Warrants issued to lender Mateo Financing LLC in August 2025 were valued using an expected term shorter than their contractual life, which runs to Aug. 1, 2035, and with an illiquidity discount that should not have been applied. As a result, the warrant liability was understated, and long-term debt overstated, by $8.1 million when the warrants were issued. A separate error involved convertible debentures sold in 2026 to YA II PN Ltd., where the company split out the conversion feature using the wrong valuation method.

GoPro said the corrections do not change revenue, gross margin, operating loss, cash, operating cash flow or EBITDA in any period. They do change net loss, and not always in the same direction. The 2025 net loss becomes $92.6 million, compared with $93.5 million as first reported. The third-quarter 2025 loss widens to $27.4 million from $21.3 million, while the first-quarter 2026 loss narrows to $76.3 million from $80.8 million. The second-quarter 2026 loss edges up to $51.2 million from $51.0 million.

A control weakness and lender waivers

GoPro said the errors stem from a material weakness in its internal control over financial reporting: it lacked effective controls to evaluate the accounting for and valuation of embedded features in financing arrangements. Management concluded that its disclosure controls were not effective at each quarter-end from Sept. 30, 2025, through June 30, 2026. The company said the misstatements were unintentional and not the result of fraud, and that no executive pay has to be clawed back because the measures used to set it were not affected.

The restatements also count as a default or event of default under GoPro's Wells Fargo revolving credit facility, its term loan with Farallon Capital Management, the YA II PN convertible debentures and senior secured notes held by affiliates of Nicholas Woodman. GoPro said it has requested and obtained waivers, and that on Oct. 16 its term-loan lenders waived its failure to meet a minimum asset coverage ratio at Sept. 30 and Dec. 31, 2025. It added that it "cannot assure" it will obtain the remaining waivers on acceptable terms or at all.

The pending sale

Under the merger agreement signed Sept. 1, each GoPro share would be converted into $1.14 in cash, which can be reduced if net working capital falls below a set threshold, plus 0.1 share of the company that survives the merger. The deal needs approval from holders of a majority of GoPro's shares and antitrust clearance, and either side can walk away if it has not closed by Dec. 31, 2026. GoPro would owe a $10 million termination fee in certain cases. Friday's filing does not say whether the restatement affects the deal's timing or terms.

GoPro shares closed at $1.05 on Friday on the Nasdaq, down 8.7% from Thursday's close and below the $1.14 cash portion of the offer, according to market data. That trading took place before the filing was made public.