GoPro told investors on Friday evening, Oct. 16, that its 2025 annual financial statements, its third-quarter 2025 statements and its first- and second-quarter 2026 statements “should no longer be relied upon.” The cause, the company said in a filing with the Securities and Exchange Commission, was mistakes in how it accounted for two financing arrangements, warrants and convertible debentures. The filing also says those mistakes are a default or event of default under GoPro’s credit facilities, debentures and notes; it says GoPro has obtained waivers from default under each of them, but that it cannot assure it will obtain the remaining waivers.
What the filing is and why companies file it
The document is a Form 8-K, the report a public company files to tell investors about a significant event between its regular reports. This one carries Items 2.02, 4.02 and 8.01. In general, Item 4.02 is the item companies use when they conclude that financial statements already published should no longer be relied upon.
GoPro’s filing says its Audit Committee reached that conclusion on Oct. 9, after consulting with management. The company said it plans to restate the numbers, meaning it intends to publish corrected versions.
What went wrong with the warrants
The first problem involves warrants issued to Mateo Financing, LLC on Aug. 4, 2025. In general, a warrant is a right to buy a company’s shares at a set price, and GoPro counted these as a liability, a number that has to be revalued each reporting period.
According to the filing, the valuation used an expected term shorter than the warrants’ remaining contractual term, which runs through Aug. 1, 2035, and it wrongly included an illiquidity discount. In general, the expected term is how long the warrant is assumed to remain outstanding, and an illiquidity discount lowers a value because an asset is hard to sell. As a result, GoPro said, the warrant liability was understated and long-term debt was overstated by $8.1 million when the warrants were first measured. Related errors included how changes in the warrants’ value were recorded each period, how a Nov. 5, 2025 repricing of the warrants (a cut in their exercise price) was recorded, and the amortization of a debt discount.
What went wrong with the convertible debentures
The second problem involves convertible debentures GoPro issued in 2026 to YA II PN, Ltd. A convertible debenture is a loan that the lender can, under set terms, convert into shares. In general, accounting rules can require the conversion feature to be valued and recorded separately from the loan itself.
The filing says GoPro used the fair value of the whole debenture as the value of the conversion feature, instead of a “with-and-without” approach. In general, that approach values the conversion feature as the gap between the whole instrument and the loan without that feature. GoPro recorded a $30.9 million conversion derivative in accrued expenses and other liabilities, and a $7.1 million loss. Under the corrected treatment, the filing says, the combined instrument is recorded as short-term debt of $23.8 million.
How the restated net losses compare
The filing says the errors do not affect revenue, gross margin, operating loss, cash, operating cash flows, EBITDA or non-GAAP operating income in any of the restated periods. They do change net loss. The filing says the corrections were non-cash and were offset in the cash-flow reconciliation, so net cash used in operating activities is unchanged.
Net loss, as restated versus as previously reported:
- Third quarter of 2025: $27.4 million versus $21.3 million, or $(0.17) per share versus $(0.13)
- First nine months of 2025: $90.5 million versus $84.4 million, or $(0.57) per share versus $(0.53)
- Fourth quarter of 2025: $2.1 million versus $9.1 million, or $(0.01) per share versus $(0.06)
- Full year 2025: $92.6 million versus $93.5 million, or $(0.58) per share versus $(0.59)
- First quarter of 2026: $76.3 million versus $80.8 million, or $(0.47) per share versus $(0.50)
- Second quarter of 2026: $51.2 million versus $51.0 million, with $(0.30) per share both ways
- First six months of 2026: $127.5 million versus $131.8 million, or $(0.76) per share versus $(0.79)
In some periods the restated net loss is larger, in others smaller. The filing also lists balance-sheet changes. At Sept. 30, 2025, long-term debt was $36.3 million as restated against $43.9 million as previously reported. At June 30, 2026, short-term debt was $81.6 million as restated against $72.7 million.
How it was found and what the company says about intent
The filing says GoPro found the errors while preparing the proxy statement for its merger agreement dated Sept. 1, 2026, and while finalizing its financial records for the quarter ended Sept. 30, 2026.
It states: “The Company’s management and Audit Committee have determined the misstatements were unintentional and were not the result of fraud or any other attempt to deceive.” That is the company’s own statement in its filing.
GoPro also said the errors resulted from a material weakness in internal control over financial reporting, because it did not design and maintain effective controls to evaluate the accounting for, and valuation of, embedded features within financing arrangements. In general, a material weakness is a serious gap in a company’s internal checks on how it records its results. GoPro concluded that its disclosure controls and internal control over financial reporting were not effective as of Sept. 30 and Dec. 31, 2025, and March 31 and June 30, 2026. The Audit Committee and management discussed the matters with PricewaterhouseCoopers LLP, the company’s independent auditor.
The company also reviewed whether any executive incentive pay needed to be recovered under its compensation-recovery policy and found none. It said the restatements did not affect the measures the pay was based on, including non-GAAP operating income and revenue, that no performance bonuses were earned under its 2025 executive bonus plan, and that the 2025 performance stock units were forfeited.
The default and the waivers
The default and waiver paragraph is in the filing’s Item 8.01 section. It says the accounting errors and the restatements “constitute a default or event of default” under four sets of obligations: the revolving credit facility with Wells Fargo Bank, the term loan with Farallon Capital Management, the convertible debentures held by YA II PN, and senior secured notes issued to affiliates of Nicholas Woodman. In general, a default means a borrower has broken the terms of a loan or note, which can let the lender demand repayment, and a waiver is a lender’s agreement not to act on that breach.
The same paragraph says GoPro “has requested and obtained waivers from default under each” of them. It adds that on Oct. 16 the term-loan lenders waived GoPro’s non-compliance with the minimum asset coverage ratio as of Sept. 30, 2025 and Dec. 31, 2025. Then it says: “The Company cannot assure that it will obtain the remaining waivers on acceptable terms or at all.”
Those statements sit side by side in the filing. One says waivers were obtained under each facility; the other refers to remaining waivers. The filing does not say which waivers are still outstanding.
The pending merger
The errors were found during work on the proxy statement for a pending merger. In a Sept. 1 filing, GoPro said a subsidiary of Action Acquisitions LLC would merge into GoPro, with GoPro surviving as a subsidiary of Action Acquisitions; each GoPro share (other than canceled and dissenting shares) would convert into 0.1 of a share of the surviving corporation plus $1.14 in cash, which can be adjusted downward if net working capital falls short of a threshold set in the agreement. The filing lists conditions including adoption of the agreement by holders of a majority of the outstanding shares entitled to vote and the expiration or termination of the Hart-Scott-Rodino waiting period (the U.S. antitrust review waiting period for large deals). The filing also says that, subject to the agreement’s terms, either party may terminate if the merger has not closed by Dec. 31, 2026, and the filing describes a $10 million termination fee payable by GoPro in specified circumstances.
The Oct. 16 filing says nothing about the merger’s status and does not say whether the restatement affects it. As of Friday, no proxy statement for the merger appeared in the list of GoPro’s SEC filings.
What is not known
The filing gives no date for the corrected reports. It does not say which waivers are outstanding or whether lenders will grant them. It does not give restated asset coverage ratios. The filing says the quarter ended Sept. 30, 2026 was still being finalized when the errors surfaced; it gives no date for those results.
What comes next
GoPro said it plans to file an amended 2025 annual report, known as a 10-K/A, along with amended quarterly reports, called 10-Q/As, for the first and second quarters of 2026. The 10-K/A will also restate the third quarter of 2025. It intends to file them “as soon as reasonably practicable,” without naming a date. The amended annual report will include an updated assessment of the company’s internal controls.
Beyond that, the filing leaves the remaining waivers and the timing of the corrected reports as open items, and it does not say how either will play out.