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What changed in Karman Holdings Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Karman Holdings Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+317 added−352 removedSource: 10-K (2026-04-03) vs 10-K (2025-04-10)

Top changes in Karman Holdings Inc.'s 2025 10-K

317 paragraphs added · 352 removed · 241 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

83 edited+7 added−3 removed24 unchanged
Biggest changeWe believe our leadership team possesses the industry, leadership, operational, business development, and finance experience necessary to successfully navigate industry dynamics and drive continued, profitable growth: • Tony Koblinski, our Chief Executive Officer, has spent 25+ years leading businesses focused on integrated systems and processes, most recently as the President and CEO of Madison-Kipp Corporation where he partnered with Trive Capital on its buyout of the Madison-Kipp Corporation in order to pursue a new phase of growth for the company and focus on adding value to Tier I and OEM customers. • Jonathan Beaudoin, our Chief Operating Officer, has 18+ years of aerospace engineering, most recently as the Regional President of the Northwest Region at Karman where he led programs and product development of Karman’s technologies across space and emerging missile platforms. • Stephanie Sawhill, our Chief Growth Officer, has 20+ years of aerospace industry experience and most recently served as VP of Strategy and Business Development at Systima Technologies prior to Karman’s acquisition of the company in September 2021.
Biggest changeOn March 12, 2026, we announced a transition in leadership to drive the next phase of growth, with Tony Koblinski, our Chief Executive Officer and a member of our Board retiring from his role as Chief Executive Officer and Jonathan “Jon” Rambeau assuming the role of Chief Executive Officer effective March 23, 2026. • Jon Rambeau, our Chief Executive Officer, has over 30 years of defense industry experience most recently serving as president of the Communications & Spectrum Dominance segment for L3Harris Technologies, where he led an extensive portfolio that included electronic warfare, advanced communications, threat sensing and targeting, and integrated vision systems. • Jonathan Beaudoin, our Chief Operating Officer, has over 18 years of aerospace engineering, most recently as the Regional President of the Northwest Region at Karman where he led programs and product development of Karman’s technologies across space and emerging missile platforms. • Stephanie Sawhill, our Chief Growth Officer, has over 20 years of aerospace industry experience and most recently served as VP of Strategy and Business Development at Systima Technologies prior to Karman’s acquisition of the company in September 2021.
With an expected continued emergence of new launch providers, an increased commercial launch cadence, deeper governmental focus and spend on the space sector, and the introduction of new space applications, we believe this end-market will continue to benefit from robust growth.
With the expected continued emergence of new launch providers, an increased commercial launch cadence, deeper governmental focus and spend on the space sector, and the introduction of new space applications, we believe this end-market will continue to benefit from robust growth.
Additionally, we continue to educate and demonstrate the value of our full scope of solutions across payload protection and deployment, propulsion, and aerodynamic and interstage systems with prime integrators on existing programs and believe that there is significant growth potential from the continued execution of these efforts.
Additionally, we continue to educate and demonstrate the value of our full scope of solutions across payload protection and deployment, aerodynamic and interstage and propulsion systems with prime integrators on existing programs and believe that there is significant growth potential from the continued execution of these efforts.
Given what is typically a lengthy and costly requalification process, we believe that once a quality supplier has been included as part of the specification, it is unlikely that prime integrator will seek an alternative solution.
Given what is typically a lengthy and costly requalification process, we believe that once a quality supplier has been included as part of the specification, it is unlikely that a prime integrator will seek an alternative solution.
We are able to keep capital expenditure levels low since we do not constantly need new state-of-the-art equipment, which contributes to our lean entrepreneurial structure and helps us drive continuous improvement. Raw Materials We require the use of a variety of raw materials and manufactured component parts in our manufacturing processes, and we purchase these from various suppliers.
We are able to keep capital expenditure levels low, since we do not constantly require new, state-of-the-art equipment, which contributes to our lean entrepreneurial structure and helps us drive continuous improvement. Raw Materials We require the use of a variety of raw materials and manufactured component parts in our manufacturing processes, and we purchase these from various suppliers.
The primary raw materials used to produce our products include composites (including Epoxy, BMI, and Phenolic), metals and alloys (including aluminum, copper, and various alloys of each), specialty chemicals, and energetic materials. We believe most of our raw materials and component parts are generally available from multiple suppliers at competitive prices.
The primary raw materials used to produce our products include composites (including Epoxy, BMI, and Phenolic), metals and alloys (including aluminum, copper, and various alloys of each), specialty chemicals, and energetic materials. We believe that most of our raw materials and component parts are generally available from multiple suppliers at competitive prices.
In pursuing acquisitions, we target companies with: • Highly engineered products • Significant intellectual property and/or proprietary processes • Capabilities which enable the next or deeper integrated system solution capabilities • Capabilities which can be leveraged across multiple programs and end markets Management’s experience in driving financial performance from our defined model, which remains focused on profitable growth and our customer’s mission success, and integration with and Karman operating systems has led to a targeted goal of meaningfully improving an acquired business’ Adjusted EBITDA over a three-year time frame post-acquisition.
In pursuing acquisitions, we target companies with: • Highly engineered products • Significant intellectual property and/or proprietary processes • Capabilities that enable the next or deeper integrated system solution capabilities • Capabilities that can be leveraged across multiple programs and end markets 10 Management’s experience in driving financial performance from our defined model, which remains focused on profitable growth and our customer’s mission success, and integration with our Karman operating systems has led to a targeted goal of meaningfully improving an acquired business’ Adjusted EBITDA over a three-year time frame, post-acquisition.
The public may read and copy the materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The public may read and copy the materials we file with the SEC at the SEC’s 12 Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
We believe that our regimented focus on customer relationship development via a differentiated technical solution 9 and track record of mission success on existing programs creates an opportunity to drive further shipset expansion.
We believe that our regimented focus on customer relationship development via a differentiated technical solution and track record of mission success on existing programs creates an opportunity to drive further shipset expansion.
Sawhill is a named inventor on multiple patents and has co-authored papers in JANNAF, AIAA, IEEE, Ceramics International and other publications. • Mike Willis, our Chief Financial Officer, is a Certified Management Accountant and spent 17+ years in finance and operations management, most recently as the Director of Finance within the Forgings Division at Precision Castparts Corp where he was responsible for 14 business units across five countries.
Sawhill is a named inventor on multiple patents and has co-authored papers in JANNAF, AIAA, IEEE, Ceramics International and other publications. 9 • Mike Willis, our Chief Financial Officer, is a Certified Management Accountant and spent over 17 years in finance and operations management, most recently as the Director of Finance within the Forgings Division at Precision Castparts Corp where he was responsible for 14 business units across five countries.
Given what we believe to be multiple avenues for continued organic and inorganic growth and a well-diversified business across programs, customers, markets, and product families, we believe we are well-positioned for continued profitable growth.
Given what we believe to be multiple avenues for continued organic and inorganic growth and a well-diversified business across programs, customers, markets, and product families, we believe we are well-positioned to deliver continued profitable growth.
Continue to Provide Increasingly Integrated Systems We believe that our integrated system solutions provide significant value to our prime customers who seek to streamline their supply chains and increase their speed to market.
Continue to Provide Increasingly Integrated Systems We believe that our integrated system solutions provide significant value to our prime contractor customers who seek to streamline their supply chains and increase their speed to market.
We believe that our design capabilities enable us to begin work with customers on next-generation platforms much earlier in the development cycle, providing an opportunity for increased revenue capture at each program stage from technology maturation to production. • Our Proprietary IP consists of unique Karman technologies that are often deployed across our offerings.
We believe that our design capabilities enable us to begin work with customers on next-generation platforms much earlier in the development cycle, providing an opportunity for increased revenue capture at each program stage, from technology maturation to production. • Our Proprietary IP consists of unique Karman technologies that are often deployed across our solutions.
See “Risk Factors—Risks Related to Our Operations—If critical components or raw materials used to manufacture our products or used in our development programs become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products and in completing our development programs, which could damage our business.” Seasonality We do not believe our net sales are subject to significant seasonal variation.
See “Risk Factors—Risks Related to Our Operations—If critical components or raw materials used to manufacture our products or used in our development programs become scarce or unavailable, then we may incur delays in the manufacturing and delivery of our products and in completing our development programs, which could damage our business.” 11 Seasonality We do not believe our net sales are subject to significant seasonal variation.
For a discussion of the use of Adjusted EBITDA and Adjusted EBITDA Margin, and a reconciliation to the most directly comparable GAAP measures, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Financial and Non-GAAP Operating Measures.” Our Industry End Markets We primarily compete across three core end markets including: Hypersonics & Strategic Missile Defense, Tactical Missile & Integrated Defense Systems, and Space & Launch.
For a discussion of the use of Adjusted EBITDA and Adjusted EBITDA Margin, and a reconciliation to the most directly comparable GAAP measures, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Financial and Non-GAAP Operating Measures.” Our Industry End Markets We primarily compete across three core end markets: Hypersonics & Strategic Missile Defense, Tactical Missiles & Integrated Defense Systems, and Space & Launch.
Examples of Process IP include Karman’s manufacturing methods deployed to create solid rocket motor nozzles, spun form shrouds, and solid propellant driven actuators. In many instances, the solutions that we provide to our customers combines all three categories of IP, creating a unique offering which we believe creates high barriers to entry for our competitors.
Examples of Process IP include Karman’s manufacturing methods deployed to create solid rocket motor nozzles, spun form shrouds, and solid propellant driven actuators. In many instances, the solutions that we provide to our customers combine all three categories of IP, creating a unique offering, which we believe creates high barriers to entry for our competitors.
Additionally, we are subject to data protection laws, including but not limited to the California Consumer Privacy Act and the European Union General Data Protection Regulation. There has been no material adverse effect to our consolidated financial statements nor competitive positions as a result of these governmental regulations.
Additionally, we are subject to data protection laws, including but not limited to the California Consumer Privacy Act and the European Union General Data Protection Regulation. There has been no material adverse effect to our consolidated financial statements nor competitive positions as a result of these government regulations.
The lingering supply chain disruptions stemming from the COVID-19 pandemic has disrupted to a certain extent the availability of raw materials. These disruptions in raw material supply could temporarily impair our ability to manufacture our products for our customers or require us to pay higher prices to obtain these raw materials from other sources.
The lingering supply chain disruptions stemming from the COVID-19 pandemic have disrupted the availability of raw materials to a certain extent. These disruptions in raw material supply could temporarily impair our ability to manufacture our products for our customers or require us to pay higher prices to obtain these raw materials from other sources.
We believe that our set of integrated capabilities provides a valuable service to the marketplace, by consolidating steps in the manufacturing lifecycle in an integrated manner to meet complex customer needs. Furthermore, we believe that our positioning and integrated business model provides our customers a key advantage.
We believe that our set of integrated capabilities provides a valuable service to the marketplace, by consolidating steps in the manufacturing lifecycle in an integrated manner to meet complex customer needs. Furthermore, we believe that our positioning and integrated business model provide our customers with a key advantage.
Additionally, the SEC maintains an internet site that contains reports, proxy and information statements and other information. The address of the SEC’s website is www.sec.gov. The information contained in the SEC’s website is not intended to be a part of this filing. 12
Additionally, the SEC maintains an internet site that contains reports, proxy and information statements and other information. The address of the SEC’s website is www.sec.gov. The information contained in the SEC’s website is not intended to be a part of this filing. 13
Government Contracts A material portion of our revenue is derived from defense contracts, directly or indirectly, with the U.S. military that are subject to U.S. government contracting rules and regulations and therefore are subject to the business risks specific to the defense industry, including the ability of the U.S. government to unilaterally: (1) suspend us from receiving new contracts; (2) terminate existing contracts at its convenience and without significant notice; (3) reduce the value of existing contracts; (4) audit our contract-related costs and fees, including allocated indirect costs; and (5) revoke required security clearances.
Government Contracts A material portion of our revenue is derived from direct and indirect defense contracts with the U.S. military that are subject to U.S. government contracting rules and regulations, and therefore are subject to the business risks specific to the defense industry, including the ability of the U.S. government to unilaterally: (1) suspend us from receiving new contracts; (2) terminate existing contracts at its convenience and without significant notice; (3) reduce the value of existing contracts; (4) audit our contract-related costs and fees, including allocated indirect costs; and (5) revoke required security clearances.
In alignment with our customer’s needs, we intend to develop increasingly integrated system solutions through the development or acquisition of new, complementary capabilities to bolster the breadth and depth of our current integrated offerings.
In alignment with our customers’ needs, we intend to develop increasingly integrated system solutions through the development or acquisition of new, complementary capabilities to bolster the breadth and depth of our current integrated offerings.
This end market encompasses the application of our key integrated solutions across Payload Protection and Deployment Systems, Aerodynamic Interstage Systems, and Propulsion Systems to a wide variety of traditional and new launch providers.
This end market encompasses the application of our key integrated solutions across Payload Protection and Deployment Systems, Aerodynamic Interstage Systems, and Propulsion Systems to a wide variety of traditional and emerging launch providers.
Examples of proprietary IP technologies include patented components relating to our core competencies of energetics, safe and arm, and advanced materials. • Our Process IP consists of engineered, and often times complex, production methods that leverage our decades long experience in manufacturing to enable production of various advanced materials into designs that require precision and quality.
Examples of proprietary IP technologies include patented components relating to our core competencies of energetics, safe and arm, and advanced materials. • Our Process IP consists of engineered, and often complex, production methods that leverage our decades-long experience in manufacturing to enable the production of various advanced materials into designs that require high precision and quality.
We believe that our business model with technical-led, integrated capabilities, attractive production and emerging program exposure, significant sole/single source contract exposure, and a culture-focused operational excellence will continue to provide the elements necessary to drive strong financial performance.
We believe that our business model with technical-led, integrated capabilities, attractive production and emerging program exposure, significant sole/single source contract exposure, and a culture focused on operational excellence will continue to provide the elements necessary to drive strong financial performance in the future.
Our growth strategy is focused on both organic and inorganic growth initiatives, with a cohesive go-to-market strategy across each of our three core end markets: Expand Content on Existing Programs, Leaning on Track Record of Mission Success We are focused on providing quality integrated system solutions to prime customers and have built decades long partnerships with our customers.
Our growth strategy is focused on both organic and inorganic growth initiatives, with a cohesive go-to-market strategy across each of our three core end markets: Expand Content on Existing Programs, Leaning on Track Record of Mission Success We are focused on providing high quality, integrated system solutions to prime contractor customers and have built decades-long partnerships with many of them.
(“AAE”) (December 2020), a manufacturer of high-temperature composites, and Systima Technologies (“Systima”) (September 2021), a specialist in design and integration of energetic and mechanical systems into the structural design of mission-critical space and hypersonic systems. Since inception, we have completed three additional, complementary acquisitions focused on further expanding our capability set.
(“AAE”) (December 2020), a manufacturer of high-temperature composites, and Systima Technologies (“Systima”) (September 2021), a specialist in the design and integration of energetic and mechanical systems into the structural design of mission-critical space and hypersonic systems. Since IPO, we have completed three additional, complementary acquisitions focused on further expanding our capability set and further differentiating our offering.
Examples of our design IP include the responsibility of the full system design and selection of components for integrated systems such as shrouds or solid rocket motors.
Examples of our design IP include the full system design authority and components selection for integrated systems, such as shrouds or solid rocket motors.
Our strategy remains focused on designing and producing the optimal, engineered system solution for our customers given their specified performance requirements. Seek Value-Added Acquisitions Complementary to our Existing Capability Set We have a rigorous approach to acquisitions, as demonstrated by the successful integration of seven acquisitions since formation.
Our strategy remains focused on designing and producing the optimal, engineered system solution for our customers based on their specified performance requirements. Seek Value-Added Acquisitions Complementary to our Existing Capability Set We have a rigorous approach to acquisitions, as demonstrated by the successful integration of nine acquisitions since formation.
ITEM 1. BUSIN ESS Our Company We specialize in the upfront design, testing, manufacturing, and sale of mission-critical systems for existing and emerging missile and defense, and space programs. Our integrated payload protection, propulsion, and interstage system solutions are deployed across a wide variety of existing and emerging programs supporting important Department of Defense (“DoD”) and space sector initiatives.
ITEM 1. BUSIN ESS Our Company We specialize in the upfront design, testing, manufacturing, and sale of mission-critical systems for existing and emerging, high-priority missile and defense, and space programs. Our integrated payload protection, interstage and propulsion system solutions are deployed across a wide variety of existing and emerging programs supporting important Department of War (“DoW”) and space sector initiatives.
As a result, when customers choose to outsource integrated system design and manufacturing to us as a single supplier, they generally benefit from increased speed to market and reduced costs. As the technical nature of design for next- generation weapon systems continues to increase, we believe that our integrated concept-to-production capabilities will provide increased value to our customers.
As a result, when customers choose to outsource integrated system design and manufacturing to us as a single supplier, they generally benefit from increased speed to market and reduced costs. As the technical nature of design for next-generation weapon systems grows more complex, we believe that our integrated concept-to-production capabilities will provide increased value to our customers.
Competition The competition we face in our core end markets is characterized by a fragmented supplier base of piece part and subsystems providers, with fewer integrated system providers.
Competition The competition we face in our core end markets is characterized by a large, fragmented supplier base of piece part and subsystems providers, with few integrated system providers.
We believe these competitors are characterized by less differentiated intellectual property with a core focus on manufacturing and “build-to-print” capabilities. We compete mainly on the basis of technical differentiation and our ability to deliver highly complex solutions to customers in a timely manner.
We believe these competitors are characterized by less differentiated intellectual property with a core focus on manufacturing and “build-to-print” capabilities. We compete mainly on the basis of technical differentiation and our ability to deliver highly complex solutions, suited for extreme operating environments, to customers in a timely manner.
We are focused on delivering innovative and customized solutions for our customers, with about 180 multidiscipline engineers supporting our comprehensive in-house design and manufacturing capabilities. We believe we have a unique set of capabilities, which are supported by decades of experience across advanced material design, proprietary digital models, material science and testing, and manufacturing expertise.
We are focused on delivering innovative and customized solutions for our customers, with approximately 300 multidisciplinary engineers supporting our comprehensive in-house design and manufacturing capabilities. We believe we have a unique set of capabilities, which are supported by decades of experience across advanced material design, proprietary digital models, material science and testing, and manufacturing expertise.
Karman Space and Defense is defined by four core acquisitions that have been fully integrated into our business to create a synergistic platform with complementary capabilities and robust intellectual property (“IP”).
Karman Space and Defense began with four core acquisitions that have been fully integrated into our business to create a synergistic platform with complementary capabilities and robust intellectual property (“IP”).
We believe that our double-digit growth and Adjusted EBITDA Margins are a testament to the fundamentals of our strong underlying end-markets and the compelling value proposition that we offer our prime customers.
We believe that our double-digit revenue growth and Adjusted EBITDA margin are a testament to the fundamentals of our strong underlying end-markets and the compelling value proposition that we offer to our prime contractor customers.
We believe that this collection of vertically integrated capabilities provides a strong value proposition for our customers who seek to simplify their supply chains, increase their speed to market, and reduce costs – all while benefitting from quality, integrated system solutions. Our differentiated market offering is supported by significant sole and single source contract positions.
We believe that this collection of vertically integrated capabilities delivers a strong value proposition for our customers, who seek to simplify their supply chains, increase their speed to market, and reduce costs – all while benefiting from effective, high quality, integrated system solutions. Our differentiated market offering is supported by a high percentage significant sole and single source contract positions.
Like our Hypersonics & Strategic Missile Defense end-market, this market has continued to benefit from a shift in defense spending posture as current conflicts demonstrate the strategic importance of these missile platforms and technologies, many of which can be rapidly deployed with high effectiveness in a modern warfare context.
Similar to our Hypersonics & Strategic Missile Defense end-market, this market has continued to benefit from a shift in defense spending posture as current conflicts demonstrate the strategic importance of these missile platforms and technologies, many of which can be deployed rapidly with high effectiveness in the modern threat environment.
The contents of, or information accessible through, our website are not part of this Annual Report on Form 10-K, and our website address is included in this document as an inactive textual reference only.
Available Information Our website address is https://karman-sd.com/ . The contents of, or information accessible through, our website are not part of this Annual Report on Form 10-K, and our website address is included in this document as an inactive textual reference only.
As of December 31, 2024, we own 13 issued patents, which will expire between December 2030 and June 2044. We currently have 7 pending or published patent applications, for which the rights and duration are dependent on the grant of the patent by the U.S. Patent and Trademark Office or other applicable national or regional patent authority.
As of December 31, 2025, we own 23 issued patents, which will expire between July 2027 and June 2044. We currently have 7 pending or published patent applications, for which the rights and duration are dependent on the grant of the patent by the U.S. Patent and Trademark Office or other applicable national or regional patent authority.
We believe that exposure to these end markets provides an attractive market backdrop, with current tailwinds supported by: • Heightened global geopolitical uncertainty amidst ongoing conflicts leading to an increased focus on defense as nations seek to prioritize security and military readiness; and • Continued emergence of near-peer threats to the U.S. and its allies, including the advancement of next- generation weapon systems technologies (i.e., hypersonic) resulting in an increased focus on developing new technologies to deter such threats.
We believe that exposure to these end markets provides an attractive market backdrop, with current tailwinds supported by: • Heightened global geopolitical uncertainty amidst ongoing conflicts leading to an increased focus on defense as nations seek to prioritize security and military readiness. • Continued emergence of near-peer threats to the U.S. and its allies, including the advancement of next-generation weapon systems technologies (e.g., hypersonic) resulting in an increased focus on developing new technologies to deter such threats. • Accelerating innovation in space launch capabilities and technologies to exploit space for scientific, defense and commercial benefits.
For the fiscal year ended December 31, 2024, we experienced 23.3% revenue growth, a 3.7% Net Income margin, and a 30.6% Adjusted EBITDA margin compared to fiscal year ended December 31, 2023.
For the fiscal year ended December 31, 2025, we experienced 36.6% revenue growth, a 3.7% Net Income margin, and a 30.8% Adjusted EBITDA margin compared to fiscal year ended December 31, 2024.
Altogether, these acquisitions have: • United complementary capabilities that are critical to Karman’s “concept-to-production capabilities” offering to blue chip missile and space primes • Provided a storied heritage of trusted, mission success encompassing 40+ years, which we deem vital to success in our industry • Created a platform and strategic basis to continue to seek accretive, complementary acquisitions Today, Karman operates approximately 730,000 square feet of design, engineering, and manufacturing space, supporting a single Karman go-to-market strategy.
Collectively, these acquisitions have: • United highly complementary capabilities that are critical to Karman’s “concept-to-production capabilities” offering to blue chip missile and space primes • Delivered a storied heritage of trusted, mission success encompassing more than 40 years, which we deem vital to success in our industry • Created a platform and strategic basis to continue to seek accretive, complementary acquisitions Today, Karman operates approximately 808,000 square feet of design, engineering, testing and manufacturing space, supporting a unified go-to-market strategy.
We serve a diverse customer base within these end-markets where we maintain long-standing relationships and engineering partnerships. We believe that our differentiated technical design, expertise, intellectual property, and heritage of mission success provides us with a value proposition that would be difficult to replicate by our current and potential future competitors.
We serve a diverse customer base within these end-markets, where we maintain long-standing relationships and engineering partnerships. We believe that our differentiated technical design, expertise, intellectual property, high degree of vertical integration and heritage of mission success combine to represent a value proposition that would be difficult to replicate by our current and potential future competitors.
We expect this, along with the call for the ongoing replenishment, the need for larger strategic stockpiles by both the U.S. and its allies, and development of next-generation weapon systems to drive strong future demand. Space & Launch: Space and Launch, represented 33.3% of our revenue in 2024.
We expect this spending shift, along with the call for the ongoing replenishment, the need for larger strategic stockpiles by both the U.S. and its allies, and development of next-generation weapon systems, to drive strong future demand. Space & Launch: Space and Launch represented 36.9% of our revenue in 2025.
Tactical Missile & Integrated Defense Systems: The Tactical Missile & Integrated Defense end-market, defined by smaller diameter rocket, missile technologies, and launcher systems that support the successful deployment of missiles, represented 33.5% of our revenue in 2024. This end-market is comprised of applications across multiple uses cases including anti-armor, air-to-air, anti-ship, air-to-surface, surface-to-air, and naval-surface to air.
Tactical Missiles & Integrated Defense Systems: The Tactical Missiles & Integrated Defense end-market, defined by smaller diameter rocket, missile technologies, and launcher systems that support the successful deployment of missiles, represented 31.5% of our revenue in 2025. This end-market comprises applications across multiple use cases, including anti-armor, air-to-air, anti-ship, air-to-surface, surface-to-air, and naval-surface to air.
Our business model is focused on providing innovative and reliable integrated system solutions, utilizing our concept-to-production capabilities which include comprehensive in-house design, analysis, testing and qualification, and production services. We believe this strategy and these capabilities have provided what we believe to be a competitive advantage and market-leading position.
Our business model is focused on providing innovative and reliable integrated system solutions, based on our concept-to-production capabilities, which include comprehensive in-house design, analysis, testing and qualification, and production services. We believe this strategy and these capabilities provide a competitive advantage that results in a market-leading position.
Our IP is developed based on our differentiated technical design expertise, which affords us the ability to work collaboratively with customers earlier in a program’s lifecycle to develop mission critical solutions. Such early participation often results in Karman solutions becoming part of the future production specification.
Our Intellectual Property (“IP”) is developed based on our differentiated technical design expertise, which enables us to work collaboratively with customers earlier in a program’s lifecycle to develop highly integrated, mission critical solutions. Such early participation often results in Karman solutions becoming part of the future production specification.
Competitive Strengths Mission-Critical, Concept-to-Production, Integrated Systems Provider As a system-level provider, we offer a full suite of capabilities capable of taking a design through to full production. We are equipped with upfront engineering and design, testing and qualification capabilities, and a scaled manufacturing footprint.
Competitive Strengths Mission-Critical, Concept-to-Production, Integrated Systems Provider As a system-level provider, we offer a full suite of capabilities necessary to support the full program lifecycle, from design through production. We are equipped with upfront engineering and design, testing and qualification capabilities, and a scaled manufacturing footprint.
Our technical capability is supported by our IP, which is comprised of three key categories: Design IP, Proprietary IP, and Process IP. • Our Design IP is utilized in partnership with the prime and end-customers to create complex system designs that often meet stringent and custom performance specifications.
Our technical capability is supported by our IP, which comprises three key categories: Design IP, Proprietary IP, and Process IP. • Our Design IP is applied in partnership with the prime contractor and end-customers to create complex system designs that typically meet stringent and custom performance specifications.
Given our technical design capability and requisite component and piece part expertise as an integrated solutions provider, we believe we occupy a differentiated part of our customers’ supply chain and face few direct competitors. These direct competitors are characterized by their vertically integrated design-to-production capabilities and ability to offer customers integrated system solutions.
Given our technical design capability and requisite component and piece part expertise as an integrated solutions provider, we believe we occupy a differentiated position within our customers’ supply chain and face few direct competitors. These direct competitors offer vertically integrated, design-to-production capabilities and possess the ability to offer customers integrated system solutions.
Hypersonics & Strategic Missile Defense: Defined by large diameter hypersonic and intercontinental missiles and interceptors, this end-market represented 33.2% of revenue in 2024. This market continues to evolve, focused in part on the development of hypersonic missiles and capable hypersonic deterrents as well as the continued production of critical legacy platforms.
Hypersonics & Strategic Missile Defense: Defined by large diameter hypersonic and intercontinental missiles and interceptors, this end-market represented 31.7% of revenue in 2025. This market continues to evolve, driven in part by the development of hypersonic missiles, capable hypersonic deterrents, strategic missiles as well as the continued production of critical legacy platforms.
Our highly engineered solutions are organized into three key families: Payload Protection and Deployment Systems, Aerodynamic Interstage Systems, and Propulsion Systems: • Payload Protection and Deployment Systems : full design and manufacturing of the top section of a booster, launch vehicle, payload, or missile system • Aerodynamic Interstage Systems : supporting metallic and composite subsystems designed for aerodynamics and interstage separation • Propulsion Systems : offering of integrated solid rocket motors and supporting subsystems, launch systems, and ablative composites Our solutions are deployed across three growing, core end markets: Hypersonics & Strategic Missile Defense, Tactical Missile and Integrated Defense Systems, and Space and Launch.
We organize our highly engineered solutions in three key families: Payload Protection and Deployment Systems, Aerodynamic Interstage Systems, and Propulsion Systems: • Payload Protection and Deployment Systems : full design and manufacturing of the top section of a booster, launch vehicle, payload, or missile system • Aerodynamic Interstage Systems : supporting metallic and composite subsystems designed to enhance aerodynamics and enable different modes of interstage separation • Propulsion Systems : integrated solid rocket motors and supporting subsystems, critical subsystems for liquid fueled rocket motors, launch systems, and ablative composites We supply our solutions across three growing, core end markets: Hypersonics & Strategic Missile Defense, Tactical Missiles and Integrated Defense Systems, and Space and Launch.
We have no registrations for marks or copyrights. 11 Environmental Matters Our operations and facilities are subject to an extensive regulatory framework of federal, state, local and foreign environmental laws and regulations that govern, among other things, discharges of pollutants into the air and water, the generation, handling, storage and disposal of hazardous materials and wastes, and the investigation and remediation of certain materials, substances, and wastes.
Environmental Matters Our operations and facilities are subject to an extensive regulatory framework of federal, state and local environmental laws and regulations that govern, among other things, the discharge of pollutants into the air and water, the generation, handling, storage and disposal of hazardous materials and waste, and the investigation and remediation of certain materials, substances, and waste.
By utilizing our vertically integrated and concept-to-production capabilities along with a highly targeted acquisition strategy, we have created a business model aimed at creating long-term, sustainable value for our customers, the programs we support, and the warfighter. Our business approach combines both strong organic growth and our proven buy, build, and integrate acquisition strategy.
By deploying our vertically integrated, concept-to-production capabilities and our highly focused acquisition strategy, we have developed a business model designed to create long-term, sustainable value for our customers, the programs we support, the warfighter and our stockholders. Our business approach combines both strong organic growth and our proven buy, build, and integrate acquisition strategy.
We also have registered domain names for websites that we use in our business.
We also have registered domain names for websites that we use in our business. We have no registrations for marks or copyrights.
Strong, Long-standing Customer Relationships in Attractive End-markets Given the mission-critical nature of our products, we believe experience to be a pre-requisite for fostering long-standing relationships as our customers seek trusted suppliers with a heritage of technical quality and success to deliver on current and next-generation weapons systems.
The life of these programs can often exceed 20 years with lengthy production lifecycles, providing us with a long, recurring, and visible tail of revenue. 8 Strong, Long-standing Customer Relationships in Attractive End-markets Given the mission-critical nature of our products, we believe experience to be a pre-requisite for fostering long-standing relationships as our customers seek trusted suppliers with a heritage of technical quality and success to deliver on current and next-generation weapons systems.
Highly Attractive Financial Profile Our purpose-built Karman platform is powered by a single go-to-market strategy and cohesive design, engineering, and manufacturing expertise. We believe that this collection of capabilities and our value proposition offered in the marketplace has led to an attractive financial profile underpinned by strong top-line growth and robust Adjusted EBITDA.
Highly Attractive Financial Profile Our purpose-built Karman platform is powered by a single go-to-market strategy and cohesive design, engineering, and manufacturing expertise. We believe that this integrated set of capabilities enables us to deliver a value proposition to our end markets that has produced an attractive financial profile underpinned by strong revenue growth and robust Adjusted EBITDA.
Strategically Aligned with Priority Production and Emerging Missile & Defense Programs We were a supplier to over 100 funded missile and space programs in 2024, covering a multitude of high priority production programs with key content provided to both production and early stage, next-generation programs. We provided content on a wide variety of U.S. high-priority missile programs across the U.S.
Strategically Aligned with Priority Production and Emerging Missile & Defense Programs, including Golden Dome We were a supplier to over 130 funded missile and space programs in 2025, covering a multitude of high priority programs with key content provided to both production and early stage, next-generation programs.
It is our belief that once a supplier has been qualified on a particular program and is delivering on the basis of quality, it is unlikely that a customer would pursue re-qualification given a relatively lengthy and costly process.
The multi-decade experience from our integrated companies indicates that once a supplier has been qualified on a particular program and is delivering on the basis of quality, it is unlikely that a customer would pursue re-qualification, given its typically lengthy and costly nature.
Contracting in the defense industry also makes us subject to rules related to bidding, billing, and accounting, as well as prohibitions related to kickbacks and false claims.
Since we sell defense products, we can be subject to various laws and regulations governing pricing and other factors. Contracting in the defense industry also makes us subject to rules related to bidding, billing, and accounting, as well as prohibitions related to kickbacks and false claims.
Alongside Trive Capital, we have invested in talent and have elevated key industry and operating partners from our four legacy businesses to Karman leadership roles to lead the next phase of growth for the combined platform.
We have invested in talent and have elevated key industry and operating partners from our four legacy businesses to Karman leadership roles to lead the next phase of growth for the combined platform. We believe our leadership team possesses the industry, leadership, operational, business development, and finance experience necessary to successfully navigate industry dynamics and drive continued, profitable growth.
We also characterize our competition for these integrated system solutions as our prime customer’s choice to “make or buy” the solution. Despite different positioning, we do compete with piece part and subsystem suppliers across each of our product categories at the sub-integrated system supply level.
Other competitors for these integrated system solutions include our prime contractor customers’ ability and decision to insource as part of their “make vs. buy” determination. Despite different positioning, we do compete with piece part and subsystem providers across each of our product categories at the sub-integrated system supply level.
Therefore, it is crucial that we continue to attract, retain and motivate exceptional and high-performing employees by providing opportunities available for all our employees to not only contribute to Karman, but also grow and develop in their careers. We offer training and development programs encouraging advancement from within in order to support the advancement of our employees.
Our employees are critical to our long-term success and are essential to helping us meet our goals. Therefore, it is crucial that we continue to attract, retain and motivate exceptional and high-performing employees by providing opportunities available for all our employees to not only contribute to Karman, but also grow and develop in their careers.
Our ability to offer tailored solutions that meet complex design requirements has allowed us to successfully cultivate lasting customer relationships and a reputation founded in innovation. We believe our track record and focus on customer and mission success positions us as a trusted supplier and affords us the opportunity to continue to capture market share on existing and next-generation programs.
We believe our track record and focus on customer and mission success positions us as a trusted supplier and affords us the opportunity to continue to capture market share on existing and next-generation programs.
For further information on environmental- related risks, including climate change, see “Risk Factors.” Human Capital Resources As of December 31, 2024, we had approximately 1,113 full-time, part-time and temporary employees. None of our full-time and part-time employees are represented by labor unions. Our employees are critical to our long-term success and are essential to helping us meet our goals.
For further information on environmental- related risks, including climate change, see “Risk Factors.” Human Capital Resources As of December 31, 2025, we had approximately 1,400 full-time, part-time and temporary employees, including 300 multi-discipline engineers supporting our comprehensive in-house design and manufacturing capabilities. None of our full-time and part-time employees are represented by labor unions.
Army, Navy, Airforce, Missile Defense Agency, and a variety of commercial space and NASA sponsored programs. Our technical capability and strategic focus on early partnership on next-generation programs has also enabled us to capture multiple positions on key hypersonic development programs integral to the future defense of the United States and its allies.
Our technical capabilities and strategic focus on early partnership for next-generation programs have also enabled us to capture multiple positions on key hypersonic development programs integral to the future defense of the U.S. and its allies.
For the years ending December 31, 2024 and 2023, we estimate that no single program accounted for more than 10% of revenue on average for those twelve month periods, with revenue from over 100 active programs supporting current production and next-generation space, missile, hypersonics, and defense applications.
For the years ending December 31, 2025 and 2024, we estimate that no single program out of the more than 130 active programs in production and development that we support accounted for more than 12% of our revenue, on average, for those twelve month periods.
We believe our diverse and aligned programmatic exposure provides an important tailwind for the business and will continue to drive long-term growth as we continue to support important DoD initiatives. Diversified Business Model with Balanced Revenue Mix, Offering Both Stability and Growth Our mission-critical solutions are deployed across a diverse set of end markets, products, customers, and programs.
Diversified Business Model with Balanced Revenue Mix, Offering Both Stability and Growth Our mission-critical solutions are deployed across a diverse set of end markets, products, customers, and programs and phases of the product lifecycle within programs.
This diversification reduces the reliance on any one program, end market, customer, or product offering and positions us well for future growth amidst a variety of potential market backdrops. • End-markets: Our revenue for the fiscal year ended December 31, 2024 was nearly equally distributed across our 3 core end markets with 33.2% from Hypersonics & Strategic Missile Defense, 33.5% from Tactical Missile and Integrated Defense Systems, and 33.3% from Space and Launch. • Programs: Our solutions are utilized across a diverse set of DoD missile and private space programs, with over 100 programs contributing to revenue. • Customers: We were a supplier to over 70 customers in 2024 across established and emerging customers.
This diversification reduces the reliance on any one program, end market, customer, or product offering and positions us well for future secular growth amidst a variety of potential market backdrops. • End-markets: Our revenue for the fiscal year ended December 31, 2025 was nearly equally distributed across our 3 core end markets with 32% from Hypersonics & Strategic Missile Defense, 36% from Tactical Missiles and Integrated Defense Systems, and 32% from Space and Launch. • Products: Our payload protection systems, aerodynamic and interstage separation systems and propulsion systems deliver critical capabilities to the highest priority missile, missile defense, hypersonic and space launch programs. • Customers: We supplied more than 80 customers in 2025, including both established and emerging enterprises. • Programs: Our solutions are qualified content across a diverse set of DoW missile, UAS, counter-UAS and private space programs, with over 130 programs contributing to revenue. • Phases of product lifecycle: We support programs in early development, testing, low rate and full rate production, increasing the probability that production revenue will increase over time as more development programs mature.
We continue to evaluate opportunities to support anticipated growth and have recently invested to outfit a new 30,000 square foot facility in Decatur, AL to primarily service a new customer. 5 Our Platform The relentless pursuit of mission success, no matter the challenge, underscores our ability to design and produce technical, mission-critical systems for prime integrators.
We continue to evaluate opportunities to support anticipated growth and add flexible and dedicated capacity to support emerging and mature production programs. 5 Our Platform The relentless pursuit of mission success, no matter the challenge, underscores our ability to design and produce [highly?] technical, mission-critical systems for prime contractor integrators.
We leverage both formal and informal programs to identify, foster, and retain top talent at both the corporate and operating unit level. We believe we offer competitive compensation programs to our employees to help attract and retain our employees. Available Information Our website address is https://karman-sd.com/ .
We leverage both formal and informal programs to identify, foster, and retain top talent at both the corporate and operating unit level. We believe we offer competitive compensation programs to our employees to help attract and retain our employees. Additionally, we maintain recruiting relationships with universities and technical institutions and support early-career hiring through internship and graduate programs.
Differentiated Technical Design Focus with IP Creates High Barriers to Entry With about 180 multi-discipline engineers and decades of combined experience, we believe we are differentiated by our technical capabilities and our IP, which is comprised of patents, trade secrets and proprietary know-how.
Differentiated Technical Design Focus with IP Creates High Barriers to Entry With approximately 300 multi-discipline engineers and decades of combined experience, we believe we offer a high degree of differentiation as a result of our technical capabilities and our IP, which consists of patents, trade secrets and proprietary know-how. 7 We believe that our customers have come to expect and trust us to effectively design, test, and field mission-critical system solutions.
With an extensive track record spanning decades, we believe we have established ourselves as a trusted partner known for technical design and quality.
With an extensive track record spanning decades, we believe we have established ourselves as a trusted partner known for advanced technical design capabilities and high quality products. Through consistent delivery of on-time, manufacturable, high-quality solutions, we have fostered enduring partnerships of more than 15 years, in many cases.
As near-peer threats, namely China and Russia, continue to expand anti-ballistic missile capabilities and progress hypersonic capabilities and platforms, funding and support for viable, domestic hypersonic programs has continued to mount to combat these threats. 6 Additionally, with the development of continued geopolitical uncertainty and a focus on global defense spending, we believe the support to develop and produce such missiles will continue to provide this end-market with a critical tailwind.
Additionally, with the development of continued geopolitical uncertainty and a focus on global defense spending, we believe the funding to develop and produce such missiles will continue to drive this end-market into the future.
We often occupy a single or sole source position on key strategic missile and space programs. The life of these programs can often exceed 20 years with lengthy production lifecycles, providing us with a long, recurring, and visible tail of revenue.
We often occupy a single or sole source position on key strategic missile and space programs.
Through consistent delivery of on-time, manufacturable, high-quality solutions, we have fostered enduring partnerships dating more than 15 years in many cases. 8 We primarily serve these customers across three key end markets: Hypersonics & Strategic Missile Defense, Tactical Missile & Integrated Defense Systems, and Space & Launch.
We primarily serve these customers across three key end markets: Hypersonics & Strategic Missile Defense, Tactical Missiles & Integrated Defense Systems, and Space & Launch.
Violations of government procurement laws could result in civil or criminal penalties. Services to our U.S. military end-users accounted for approximately $268 million, or approximately 77.7%, of our revenue for the year ended December 31, 2024. 10 Governmental Regulation Many of the components we manufacture are required to be certified by one or more governmental agencies.
Violations of government procurement laws could result in civil or criminal penalties. Government Regulation Many of the components we manufacture are required to be certified by one or more government agencies. We must also satisfy the requirements of our customers, including OEMs, and provide these customers with products and services that comply with government regulations.
Furthermore, our key design philosophy is centered around providing an optimal solution for the customer’s mission given a specified set of performance requirements. With deep advanced materials expertise and design capabilities, Karman maintains an agnostic approach to system design and material selection, crafting solutions that best meet the customer specification.
With deep advanced materials expertise and design capabilities, Karman maintains an agnostic approach to system design and material selection, crafting solutions that best meet the customer specification. These optimal solutions often incorporate our patented materials, subcomponents, and proprietary manufacturing processes that have been developed over more than 40 years of experience.
Additionally, we generated net income of $12.7 million on a GAAP basis and $106.1 million of Adjusted EBITDA in 2024, representing a 3.7% and 30.7% net income and Adjusted EBITDA margin, respectively.
For the year ended December 31, 2025, we generated $471.5 million in revenue, representing 36.6% year over year growth from the year ended December 31, 2024. Additionally, we generated net income of $17.4 million and $145.3 million of non-GAAP Adjusted EBITDA in 2025, representing a 3.7% and 30.8% net income and Adjusted EBITDA margin, respectively.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWith respect to the directors that Trive Capital is entitled to nominate pursuant to the immediately preceding sentence, for purposes of calculating the number of such directors, any fractional amounts shall automatically be rounded up to the nearest whole number, e.g., 1.25 directors shall equate to 2 directors; • the ability of our board of directors to establish the number of directors and fill vacancies and newly created directorships, subject to the rights granted to Trive Capital pursuant to our certificate of incorporation and the stockholders agreement; • a classified board of directors, as a result of which our Board is divided into three classes, with each class serving for staggered three-year terms; • the designation of Delaware as the sole forum for certain litigation against us; • limitations on stockholder action by written consent; • certain limitations on convening special stockholder meetings; • advance notice requirements for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; • the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% of the shares of common stock entitled to vote generally in the election of directors; • limitations on cumulative voting; • the ability of our Board to issue one or more series of preferred stock; • certain limitations on business combinations with interested stockholders; and • the required approval of at least 66 2/3% of the voting power of the outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, to adopt, amend, or repeal certain provisions of our certificate of incorporation.
Biggest changeThese provisions provide for, among other things: • a classified board of directors, as a result of which our Board is divided into three classes, with each class serving for staggered three-year terms; • the designation of Delaware as the sole forum for certain litigation against us; • limitations on stockholder action by written consent; • certain limitations on convening special stockholder meetings; • advance notice requirements for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; • the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% of the shares of common stock entitled to vote generally in the election of directors; • limitations on cumulative voting; • the ability of our Board to issue one or more series of preferred stock; • certain limitations on business combinations with interested stockholders; and • the required approval of at least 66 2/3% of the voting power of the outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, to adopt, amend, or repeal certain provisions of our certificate of incorporation.
Risks Related to Financial Matters Tariffs on certain imports to the United States, other potential changes to U.S. tariff and import/export regulations, and other changes to macroeconomic conditions could have a material adverse effect on global economic conditions and our business, results of operations, prospects and financial condition. We are subject to tariffs on certain imports into the United States.
Risks Related to Financial Matters Tariffs on certain imports to the United States, other potential changes to U.S. tariff and import/export regulations, and other changes to macroeconomic conditions could have a material adverse effect on global economic conditions and our business, results of operations, prospects and financial condition. We are subject to tariffs on certain imports into the U.S..
For example, it could: • increase our vulnerability to general economic downturns and adverse competitive and industry conditions; • increase the risk we are subjected to downgrade or put on a negative watch by the ratings agencies; • require us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital requirements, capital expenditures, acquisitions, research and development efforts and other general corporate requirements; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • place us at a competitive disadvantage compared to competitors that have less debt; • negatively impact investors’ perception of us; • impact our ability to pay dividends and make other distributions or to purchase, redeem or retire capital stock; and • limit, along with the financial and other restrictive covenants contained in the documents governing our indebtedness, among other things, our ability to borrow additional funds, make investments and incur liens.
For example, it could: • increase our vulnerability to general economic downturns and adverse competitive and industry conditions; • increase the risk we are subjected to downgrade or put on a negative watch by the ratings agencies; • require us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital requirements, capital expenditures, acquisitions, research and development efforts and other general corporate requirements; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • place us at a competitive disadvantage compared to competitors that have less debt; • negatively impact investors’ perception of us; 33 • impact our ability to pay dividends and make other distributions or to purchase, redeem or retire capital stock; and • limit, along with the financial and other restrictive covenants contained in the documents governing our indebtedness, among other things, our ability to borrow additional funds, make investments and incur liens.
Our future operating results and liquidity are expected to be impacted by changes in general economic and political conditions that may affect, among other things, the following: • The availability of credit and our ability to obtain additional or renewed bank financing, the lack of which could have a material adverse impact on our business, results of operations, prospects and financial condition and may limit our ability to invest in capital projects and planned expansions or to fully execute our business strategy; • Market rates of interest, any increase in which would increase the interest payable on some of our borrowings and adversely impact our cash flow; • Inflation, which has caused our suppliers to raise prices that we may not be able to pass on to our customers, which could materially adversely impact our business, including competitive position, market share and margins; • The relationship between the U.S. dollar and other currencies, any adverse changes in which could materially adversely affect our financial results; • The ability of our customers to pay for products and services on a timely basis, any adverse change in which could materially adversely affect sales and cash flows and require us to increase our bad debt reserves; • The volume of orders we receive from our customers, any adverse change in which could result in lower operating profits as well as less absorption of fixed costs due to a decreased business base; • The ability of our suppliers to meet our demand requirements, maintain the pricing of their products or continue operations, any of which may require us to find and qualify new suppliers; • The issuance and timely receipt of necessary export approvals, licenses and authorizations from the U.S. government, the lack or untimely receipt of which could have a material adverse effect on our business or results of operations, prospects and financial condition; 23 • The political stability and leadership of countries where our customers and suppliers reside, including military activity, training and threat levels, any adverse changes in which could negatively impact our financial results, which include adverse impacts on energy availability and prices, natural materials availability and pricing, sanctions, loss of company markets and financial market impacts; and • The volatility in equity capital markets that may continue to adversely affect the market price of our common shares, which may affect our ability to fund our business through the sale of equity securities and retain key employees through our equity compensation plans.
Our future operating results and liquidity are expected to be impacted by changes in general economic and political conditions that may affect, among other things, the following: • The availability of credit and our ability to obtain additional or renewed bank financing, the lack of which could have a material adverse impact on our business, results of operations, prospects and financial condition and may limit our ability to invest in capital projects and planned expansions or to fully execute our business strategy; • Market rates of interest, any increase in which would increase the interest payable on some of our borrowings and adversely impact our cash flow; • Inflation, which has caused our suppliers to raise prices that we may not be able to pass on to our customers, which could materially adversely impact our business, including competitive position, market share and margins; • The relationship between the U.S. dollar and other currencies, any adverse changes in which could materially adversely affect our financial results; • The ability of our customers to pay for products and services on a timely basis, any adverse change in which could materially adversely affect sales and cash flows and require us to increase our bad debt reserves; • The volume of orders we receive from our customers, any adverse change in which could result in lower operating profits as well as less absorption of fixed costs due to a decreased business base; • The ability of our suppliers to meet our demand requirements, maintain the pricing of their products or continue operations, any of which may require us to find and qualify new suppliers; • The issuance and timely receipt of necessary export approvals, licenses and authorizations from the U.S. government, the lack or untimely receipt of which could have a material adverse effect on our business or results of operations, prospects and financial condition; 24 • The political stability and leadership of countries where our customers and suppliers reside, including military activity, training and threat levels, any adverse changes in which could negatively impact our financial results, which include adverse impacts on energy availability and prices, natural materials availability and pricing, sanctions, loss of company markets and financial market impacts; and • The volatility in equity capital markets that may continue to adversely affect the market price of our common shares, which may affect our ability to fund our business through the sale of equity securities and retain key employees through our equity compensation plans.
Stricter or different remediation standards or enforcement of existing laws and regulations; new requirements, including regulation of new substances; discovery of previously unknown contamination or new contaminants; imposition of fines, penalties, or damages (including natural resource damages); a determination that certain remediation or other costs are unallowable; rulings on allocation or insurance coverage; and/or the insolvency, inability or unwillingness of other parties to pay their share, could require us to incur material additional costs in excess of those anticipated.
Stricter or different remediation standards or enforcement of existing laws and regulations; new requirements, including regulation of new substances; discovery of previously unknown contamination or new contaminants; imposition of fines, penalties, or damages (including natural resource damages); a determination that certain remediation or other costs are unallowable; rulings on allocation or insurance coverage; and/or the insolvency, inability or unwillingness of other parties to pay 28 their share, could require us to incur material additional costs in excess of those anticipated.
We may become a party to legal proceedings and disputes involving government and private parties (including individual and class actions) relating to alleged impacts from pollutants released into the environment, including bodily injury and property damage. These matters could result in material 27 compensatory or other damages, remediation costs, penalties, non-monetary relief, and adverse allowability or insurance coverage determinations.
We may become a party to legal proceedings and disputes involving government and private parties (including individual and class actions) relating to alleged impacts from pollutants released into the environment, including bodily injury and property damage. These matters could result in material compensatory or other damages, remediation costs, penalties, non-monetary relief, and adverse allowability or insurance coverage determinations.
Our certificate of incorporation authorizes our Board, without the approval of our stockholders, to issue 100,000,000 million shares of our preferred stock, subject to limitations prescribed by applicable law, rules and regulations and the provisions of our 37 certificate of incorporation, as shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series, and the qualifications, limitations, or restrictions thereof.
Our certificate of incorporation authorizes our Board, without the approval of our stockholders, to issue 100,000,000 million shares of our preferred stock, subject to limitations prescribed by applicable law, rules and regulations and the provisions of our certificate of incorporation, as shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series, and the qualifications, limitations, or restrictions thereof.
Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition. Item 1B. Unresolv ed Staff Comments None.
Alternatively, if a court 38 were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition. Item 1B. Unresolv ed Staff Comments None.
In addition, the amount of income taxes paid by the Company may be subject to ongoing audits by U.S. federal, state and local tax authorities. If these audits result in assessments different from amounts reserved, future financial results may include unfavorable adjustments to the Company’s tax liabilities, which could have a material adverse effect on the Company’s results of operations.
In addition, the amount of income taxes paid by the Company may be subject to audits by U.S. federal, state and local tax authorities. If these audits result in assessments different from amounts reserved, future financial results may include unfavorable adjustments to the Company’s tax liabilities, which could have a material adverse effect on the Company’s results of operations.
If we are unable to maintain effective 30 internal controls, the accuracy and timeliness of our financial reporting may be materially adversely affected, which could cause the market price of our common stock to decline, lessen investor confidence and harm our business.” Our financial results of operations could be materially adversely affected by impairment of our goodwill or other intangible assets.
If we are unable to maintain effective internal controls, the accuracy and timeliness of our financial reporting may be materially adversely affected, which could cause the market price of our common stock to decline, lessen investor confidence and harm our business.” Our financial results of operations could be materially adversely affected by impairment of our goodwill or other intangible assets.
The powers, preferences and rights of these additional series of preferred stock may be senior to or on parity with our common stock, which may reduce its value. As a public reporting company, we are subject to rules and regulations established from time to time by the SEC regarding our internal control over financial reporting.
The powers, preferences and rights of these additional series of preferred stock may be senior to or on parity with our common stock, which may reduce its value. 37 As a public reporting company, we are subject to rules and regulations established from time to time by the SEC regarding our internal control over financial reporting.
Any weaknesses or deficiencies or any failure to implement new or improved controls, or difficulties encountered in the implementation or operation of these controls, could harm our operating results 32 and cause us to fail to meet our financial reporting obligations, or result in material misstatements in our consolidated financial statements, which could adversely affect our business and reduce the price of our common stock.
Any weaknesses or deficiencies or any failure to implement new or improved controls, or difficulties encountered in the implementation or operation of these controls, could harm our operating results and cause us to fail to meet our financial reporting obligations, or result in material misstatements in our consolidated financial statements, which could adversely affect our business and reduce the price of our common stock.
Additionally, shortages of components may result in increased inventory of unfinished products and significant quantities of other unused components remaining in inventory, which could expose us to increased risks of obsolescence and losses which may not be fully covered by insurance. 15 Our operations depend on our manufacturing facilities, which are subject to physical and other risks that could disrupt production.
Additionally, shortages of components may result in increased inventory of unfinished products and significant quantities of other unused components remaining in inventory, which could expose us to increased risks of obsolescence and losses which may not be fully covered by insurance. Our operations depend on our manufacturing facilities, which are subject to physical and other risks that could disrupt production.
For further information on International Traffic in Arms Regulations, see “Governmental Regulation.” Failure to obtain approval to export, or a determination by the U.S. government or similar agencies elsewhere in the world from which we failed to receive required approvals or licenses, could eliminate or restrict our ability to sell our products outside the United States or another country of origin, and the penalties that could be imposed by the U.S. government or other applicable government for failure to comply with these laws could be significant. 17 Because our operations are conducted through our subsidiaries, we are dependent on the receipt of distributions and dividends or other payments from our subsidiaries for cash to fund our operations and expenses and future dividend payments, if any.
For further information on International Traffic in Arms Regulations, see “Governmental Regulation.” Failure to obtain approval to export, or a determination by the U.S. government or similar agencies elsewhere in the world from which we failed to receive required approvals or licenses, could eliminate or restrict our ability to sell our products outside the United States or another country of origin, and the penalties that could be imposed by the U.S. government or other applicable government for failure to comply with these laws could be significant. 18 Because our operations are conducted through our subsidiaries, we are dependent on the receipt of distributions and dividends or other payments from our subsidiaries for cash to fund our operations and expenses and future dividend payments, if any.
We may not be able to obtain the necessary licenses on acceptable terms, or at all, or be 26 able to reengineer our products successfully or at an acceptable cost. Moreover, if we are sued for infringement and lose the suit, we could be required to pay substantial damages and/or be enjoined from using or selling the infringing products.
We may not be able to obtain the necessary licenses on acceptable terms, or at all, or be able to reengineer our products successfully or at an acceptable cost. Moreover, if we are sued for infringement and lose the suit, we could be required to pay substantial damages and/or be enjoined from using or selling the infringing products.
Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our 33 financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.
Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.
As a result, we are subject to the evolving and increasingly complex data protection laws and regulatory frameworks of the jurisdictions in which we operate or conduct our business, including to state comprehensive privacy laws, such as the California Consumer Privacy Act, as amended (“CCPA”), (collectively, “Data Protection Laws”).
As a result, we are subject to the evolving and increasingly complex data protection laws and regulatory frameworks of the jurisdictions in which we operate or conduct our business, including to state comprehensive privacy laws, such as 19 the California Consumer Privacy Act, as amended (“CCPA”), (collectively, “Data Protection Laws”).
We also have incurred and will continue to incur costs associated with the Sarbanes-Oxley Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act, and related rules implemented by the SEC and the NYSE. The expenses incurred by public companies for reporting and corporate governance purposes have been increasing.
We also have incurred and will continue to incur costs associated with the Sarbanes-Oxley Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act, and related rules implemented by the SEC and the NYSE. The expenses incurred by public companies for reporting and corporate governance 35 purposes have been increasing.
Since a substantial majority of our revenue is dependent on the procurement, 21 performance and payment under our U.S. government contracts, the termination of one or more critical government contracts could have a material adverse effect on our business, results of operations, prospects and financial condition.
Since a substantial majority of our revenue is dependent on the procurement, performance and payment under our U.S. government contracts, the termination of one or more critical government contracts could have a material adverse effect on our business, results of operations, prospects and financial condition.
Even if we identify alternate suppliers, we may experience significant delays in manufacturing and shipping our products to customers and incur additional development, manufacturing and other costs to establish such alternative sources, be required to redesign our products and to complete additional quality control procedures.
Even if we identify alternate suppliers, we may experience significant delays in manufacturing and shipping our products to customers and incur additional development, 16 manufacturing and other costs to establish such alternative sources, be required to redesign our products and to complete additional quality control procedures.
Compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require additional expenditures by us or our suppliers, in which case, the costs of raw materials and component parts could increase. 28 New sustainability and climate-related disclosure obligations, including those resulting from US SEC rule amendments and the State of California’s Climate Corporate Data Accountability Act and Climate-Related Financial Risk Act, among others, could result in unforeseen costs associated with compliance, government and third-party claims, operations, and increased reputational and litigation risk.
Compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require additional expenditures by us or our suppliers, in which case, the costs of raw materials and component parts could increase. 29 New sustainability and climate-related disclosure obligations, including those resulting from US SEC rule amendments and the State of California’s Climate Corporate Data Accountability Act and Climate-Related Financial Risk Act, among others, could result in unforeseen costs associated with compliance, government and third-party claims, operations, and increased reputational and litigation risk.
We cannot assure you that the necessary acquisition financing would be available to us on acceptable terms if and when required. 31 We have identified material weaknesses in our internal control over financial reporting.
We cannot assure you that the necessary acquisition financing would be available to us on acceptable terms if and when required. We have identified material weaknesses in our internal control over financial reporting.
DoD budgets could be negatively impacted by several factors, including, but not limited to, a change in defense spending policy as a result of the presidential election or otherwise, the U.S. government’s budget deficits, spending priorities, the cost of sustaining the U.S. military presence internationally, possible political pressure to reduce U.S. government military spending and the ability of the U.S. government to enact appropriations bills and other relevant legislation, each of which could cause the DoD budget to remain unchanged or to decline.
DoW budgets could be negatively impacted by several factors, including, but not limited to, a change in defense spending policy as a result of the presidential election or otherwise, the U.S. government’s budget deficits, spending priorities, the cost of sustaining the U.S. military presence internationally, possible political pressure to reduce U.S. government military spending and the ability of the U.S. government to enact appropriations bills and other relevant legislation, each of which could cause the DoW budget to remain unchanged or to decline.
These laws impose obligations in relation to the collection, use and disclosure of personal information, including providing consumers with certain rights to access, 18 correct, delete, and restrict the processing of their personal information.
These laws impose obligations in relation to the collection, use and disclosure of personal information, including providing consumers with certain rights to access, correct, delete, and restrict the processing of their personal information.
The actual receipt of revenue on awards included in backlog may never occur or may change because a program schedule could change or the program could be canceled, or a contract could be reduced, modified or terminated early.
The actual receipt of revenue on awards included in backlog may never occur or may change 22 because a program schedule could change or the program could be canceled, or a contract could be reduced, modified or terminated early.
If we are unable to manage our growth while maintaining our quality of service, or if new systems that we implement to assist in managing our growth do not produce the expected benefits, then our business, results of operations, prospects, and financial condition could be materially adversely affected. 13 We have in the past consummated acquisitions and intend to continue to pursue acquisitions as a part of our growth plan.
If we are unable to manage our growth while maintaining our quality of service, or if new systems that we implement to assist in managing our growth do not produce the expected benefits, then our business, results of operations, prospects, and financial condition could be materially adversely affected. 14 We have in the past consummated acquisitions and intend to continue to pursue acquisitions as a part of our growth plan.
Intellectual property litigation is expensive and time-consuming, regardless of the merits of any claim, and could divert the attention of our management and technical personnel away from operating our business.
Intellectual property litigation is expensive and time-consuming, regardless of the merits of any claim, and could divert the attention of our management 27 and technical personnel away from operating our business.
Any shares held by our affiliates, as that term is defined under Rule 144 of the Securities Act (“Rule 144”), including our directors, executive officers, and other affiliates, may be sold only in compliance with the limitations described in the section of our Prospectus called “Shares Eligible for Future Sale.” 35 In addition, we, our executive officers, directors, and holders of substantially all of our capital stock and securities convertible into our capital stock outstanding prior to the IPO, including the selling stockholders, have signed lock-up agreements with the underwriters that, subject to certain customary exceptions, restrict the sale of the shares of our common stock and certain other securities held by them for 180 days following the IPO.
Any shares held by our affiliates, as that term is defined under Rule 144 of the Securities Act (“Rule 144”), including our directors, executive officers, and other affiliates, may be sold only in compliance with the limitations described in the section of our Prospectus called “Shares Eligible for Future Sale.” In addition, we, our executive officers, directors, and holders of substantially all of our capital stock and securities convertible into our capital stock outstanding prior to the IPO, have signed lock-up agreements with the underwriters that, subject to certain customary exceptions, restrict the sale of the shares of our common stock and certain other securities held by them for 180 days following the IPO.
We are an “emerging growth company,” as defined in Section 2(a)(19) of the Securities Act, and we may take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” In particular, while we are an “emerging growth company,” among other exemptions, we will: • not be required to engage an independent registered public accounting firm to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; • not be required to comply with the requirement in the Public Company Accounting Oversight Board Auditing Standard 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, to communicate critical audit matters in the auditor’s report; • be permitted to present only two years of audited financial statements and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our periodic reports and registration statements, including in our Prospectus; not be required to disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation; or • not be required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency,” and “say-on-golden parachutes.” In addition, the JOBS Act also permits an emerging growth company such as ours to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies, meaning that we can delay the adoption of 34 certain accounting standards until those standards would otherwise apply to private companies.
We are an “emerging growth company,” as defined in Section 2(a)(19) of the Securities Act, and we may take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” In particular, while we are an “emerging growth company,” among other exemptions, we will: • not be required to engage an independent registered public accounting firm to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; • not be required to comply with the requirement in the PCAOB Auditing Standard 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, to communicate critical audit matters in the auditor’s report; • be permitted to present only two years of audited financial statements and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our periodic reports and registration statements; not be required to disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation; or • not be required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency,” and “say-on-golden parachutes.” In addition, the JOBS Act also permits an emerging growth company such as ours to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies, meaning that we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
Any significant claim may have a material adverse 25 effect on our industry and market reputation, leading to a substantial decrease in demand for our products and services and reduced revenues, making it more difficult for us to compete effectively, and could affect the cost and availability of insurance coverage at adequate levels in the future.
Any significant claim may have a material adverse 26 effect on our industry and market reputation, leading to a substantial decrease in demand for our products and services and reduced revenues, making it more difficult for us to compete effectively, and could affect the cost and availability of insurance coverage at adequate levels in the future.
To the extent we are unable to achieve certification in advance of contract awards, or we fail to achieve or maintain certification at the level required for a particular contract award, we will be unable to bid on such contract awards or follow-on awards for existing work with the DoD, which could materially adversely impact our revenue, profitability and cash flows.
To the extent we are unable to achieve certification in advance of contract awards, or we fail to achieve or maintain certification at the level required for a particular contract award, we will be unable to bid on such contract awards or follow-on awards for existing work with the DoW, which could materially adversely impact our revenue, profitability and cash flows.
These risks include the ability of the U.S. government to unilaterally: • suspend us from receiving new contracts based on alleged violations of procurement laws or regulations; • terminate existing contracts; • revoke required security clearances; 19 • reduce the value of existing contracts; and • audit our contract-related costs and fees, including allocated indirect costs.
These risks include the ability of the U.S. government to unilaterally: • suspend us from receiving new contracts based on alleged violations of procurement laws or regulations; • terminate existing contracts; 20 • revoke required security clearances; • reduce the value of existing contracts; and • audit our contract-related costs and fees, including allocated indirect costs.
As a result, investors have less insight into our classified business or our business overall. However, historically the business risks associated with our work on classified programs have not differed materially from those of our other government contracts. 22 We face significant competition. We operate in a highly competitive global industry.
As a result, investors have less insight into our classified business or our business overall. However, historically the business risks associated with our work on classified programs have not differed materially from those of our other government contracts. 23 We face significant competition. We operate in a highly competitive global industry.
Increased regulations, customer requirements or industry standards, including around climate change concerns, could subject us to additional costs and restrictions and require us to make certain changes 29 to our manufacturing practices and/or product designs, which could materially adversely affect our business, results of operations, prospects and financial condition.
Increased regulations, customer requirements or industry standards, including around climate change concerns, could subject us to additional costs and restrictions and require us to make certain changes 30 to our manufacturing practices and/or product designs, which could materially adversely affect our business, results of operations, prospects and financial condition.
In addition, because of the highly technical nature of our products, the loss of any significant number of our existing engineering personnel could have a material adverse effect on our business and operating results. Our business may be adversely affected by changes in budgetary priorities of the U.S. government.
In addition, because of the highly technical nature of our products, the loss of any significant number of our existing engineering personnel could have a material adverse effect on our business and operating results. Our business may be adversely affected by changes in budgetary priorities of the U.S. government and disruptions in U.S. government operations.
As a result of our recent IPO, as a public company, we will incur significant legal, regulatory, finance, accounting, investor relations, insurance and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements and costs of recruiting and retaining non-executive directors.
As a result of our recent IPO, as a public company, we will incur significant legal, regulatory, finance, accounting, investor relations, insurance and other expenses that we had not incurred as a private company, including costs associated with public company reporting requirements and costs of recruiting and retaining non-executive directors.
Such laws and regulations prohibit or restrict certain operations, investment decisions, and sales activities, including dealings with certain countries or territories, and with certain governments and designated persons. Our global operations expose us to risks of violating, or being accused of 24 violating, these laws and regulations.
Such laws and regulations prohibit or restrict certain operations, investment decisions, and sales activities, including dealings with certain countries or territories, and with certain governments and designated persons. Our global operations expose us to risks of violating, or being accused of 25 violating, these laws and regulations.
However, existing or emerging threats involving changing attack techniques and tools (including artificial intelligence) may circumvent our existing security controls and evade detection. As a result, we may be unable to anticipate or implement sufficient control measures to successfully defend against these techniques, or to detect, investigate, remediate or recover from an identified incident in a timely manner.
However, existing or emerging threats involving changing attack techniques and tools (including AI) may circumvent our existing security controls and evade detection. As a result, we may be unable to anticipate or implement sufficient control measures to successfully defend against these techniques, or to detect, investigate, remediate or recover from an identified incident in a timely manner.
See also “ We have identified material weaknesses in our internal control over financial reporting.
See 31 also “ We have identified material weaknesses in our internal control over financial reporting.
U.S. military spending is dependent upon the U.S. defense budget. A significant portion of our net sales is generated from the military defense market. The military and defense market is significantly dependent upon government budget trends, particularly the DoD budget.
U.S. military spending is dependent upon the U.S. defense budget. A significant portion of our net sales is generated from the military defense market. The military and defense market is significantly dependent upon government budget trends, particularly the DoW budget.
The passage of a new federal law in December 2022 requires the Federal Acquisition Regulation (“FAR”) council to provide and update definitions of each of the above types of conflicts of interest and provide illustrative examples of various relationships that contractors could have that would give rise to potential conflicts of interest.
The passage of a federal law in December 2023 requires the Federal Acquisition Regulation (“FAR”) council to provide and update definitions of each of the above types of conflicts of interest and provide illustrative examples of various relationships that contractors could have that would give rise to potential conflicts of interest.
Our reputation and relationship with the U.S. government, and in particular with the agencies of the DoD and the U.S. intelligence community, are key factors in maintaining and developing new business opportunities.
Our reputation and relationship with the U.S. government, and in particular with the agencies of the DoW and the U.S. intelligence community, are key factors in maintaining and developing new business opportunities.
Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets. Refer to Item 9A.
For further discussion of funded backlog and the other non-GAAP financial measures described in this report, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Financial and Non-GAAP Operating Measures.” 16 Our quarterly operating results may vary widely.
For further discussion of backlog and the other non-GAAP financial measures described in this report, 17 see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Financial and Non-GAAP Operating Measures.” Our quarterly operating results may vary widely.
These risks may increase as more employees work from home or as we integrate new technology systems that may be subject to cybersecurity vulnerabilities. To date, we have not experienced any information- or cyber-security incident resulting in a material adverse impact to our business or operations.
These risks may increase as more employees work from home, as we integrate new technology systems that may be subject to cybersecurity vulnerabilities and as AI capabilities improve. To date, we have not experienced any information- or cyber-security incident resulting in a material adverse impact to our business or operations.
Deteriorating macroeconomic conditions, including slower growth or a recession, inflation, changes in the U.S. presidential administration, bank failures, supply chain disruption, increases in interest rates, increases to fuel and other energy costs or vehicle costs, a potential U.S. federal government shutdown, geopolitical events, including escalating tariff and non-tariff trade measures imposed by the U.S., Mexico, China, Canada and other countries, the potential for new or unforeseen conflicts such as the impact of the Russia and Ukraine conflict and Hamas and Israel conflict, changes in the labor market, downturns that could result in store closures, or decreases in government spending power, could in the future result in a decline in customer spending, which could materially adversely affect our business, results of operations, prospects and financial condition.
Deteriorating macroeconomic conditions, including slower growth or a recession, inflation, changes in the U.S. presidential administration, bank failures, supply chain disruption, increases in interest rates, increases to fuel and other energy costs or vehicle costs, a potential U.S. federal government shutdown, geopolitical events, including escalating tariff and non-tariff trade measures imposed by the U.S., Mexico, China, Canada and other countries, the potential for new or unforeseen conflicts, changes in the labor market, downturns that could result in store closures, or decreases in government spending power, could in the future result in a decline in customer spending, which could materially adversely affect our business, results of operations, prospects and financial condition.
We depend on our executive officers, senior management team and highly trained employees, and any work stoppage, difficulty hiring similar employees, or ineffective succession planning could materially adversely affect our business. Because our products are highly engineered, we depend on an educated and trained workforce.
We depend on our executive officers, senior management team and highly trained employees, and any work stoppage, difficulty hiring similar employees, or ineffective succession planning could materially adversely affect our business. Because our products are highly engineered, we depend on identifying, attracting and retaining an educated, trained and highly skilled workforce.
These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States.
These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S..
The DoD expects that nearly all new contracts will be required to comply with the CMMC by 2026.
The DoW expects that nearly all new contracts will be required to comply with the CMMC by 2026.
Our business may be materially adversely affected if we were to lose our government or industry approvals, if more stringent government regulations were enacted or if industry oversight were to increase. The industry we do business in is highly regulated in the United States and in other countries.
Our business may be materially adversely affected if we were to lose our government or industry approvals, if more stringent government regulations were enacted or if industry oversight were to increase. The industry we do business in is highly regulated in the U.S. and in other countries.
We will also be subject to the Department of Defense (“DoD”) Cybersecurity Maturity Model Certification (“CMMC”) requirements, which will require companies that do business with the DoD to, depending on the level of security required, meet or exceed certain specified cybersecurity standards to be eligible for new contract awards.
We will also be subject to the Department of War (“DoW”) Cybersecurity Maturity Model Certification (“CMMC”) requirements, which will require companies that do business with the DoW to, depending on the level of security required, meet or exceed certain specified cybersecurity standards to be eligible for new contract awards.
These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. As of March 31, 2025, we have a total of 132,174,593 shares of our common stock outstanding.
These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. As of March 20, 2026, we have a total of 132,526,299 shares of our common stock outstanding.
In addition, the relationships and reputation that many members of our senior management team have established and maintain with U.S. government personnel contribute to our ability to maintain strong customer relationships and to identify new business opportunities.
We rely on our senior management to generate business and execute programs successfully. In addition, the relationships and reputation that many members of our senior management team have established and maintain with U.S. government personnel contribute to our ability to maintain strong customer relationships and to identify new business opportunities.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may decline and/or become more volatile.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may decline and/or become more volatile. Our stock price may be volatile, and an investment in our common stock could suffer a decline in value.
However, if we are unsuccessful in our efforts, our business could decline. Our success will depend in part upon the ability of our senior management to manage our increased complexity and expected growth effectively. To do so, we must continue to hire, train, manage and integrate a significant number of qualified managers and engineers.
Our success will depend in part upon the ability of our senior management to manage our increased complexity and expected growth effectively. To do so, we must continue to hire, train, manage and integrate a significant number of qualified managers and engineers.
We depend on our research and development activities to develop the core technologies used in our products and for the development of our future products. A portion of our research and development activities depends on funding by commercial companies and the U.S. government.
Shortfalls in available external research and development funding could adversely affect us. We depend on our research and development activities to develop the core technologies used in our products and for the development of our future products. A portion of our research and development activities depends on funding by commercial companies and the U.S. government.
If we are unable to maintain effective internal controls, the accuracy and timeliness of our financial reporting may be materially adversely affected, which could cause the market price of our common stock to decline, lessen investor confidence and harm our business.
If we are unable to maintain effective internal controls, the accuracy and timeliness of our financial reporting may be materially adversely affected, which could cause the market price of our common stock to decline, lessen investor confidence and harm our business. As a public company, we are subject to significant requirements for enhanced financial reporting and internal controls.
A significant decline in government expenditures, a shift of expenditures away from programs that we support or a change in federal government contracting policies could cause federal government agencies to reduce their purchases under contracts, to exercise their right to terminate contracts at any time without penalty or not to exercise options to renew contracts, any of which could result in decreased sales of our products. 14 Shortfalls in available external research and development funding could adversely affect us.
A significant decline in government expenditures, a shift of expenditures away from programs that we support or a change in federal government contracting policies 15 could cause federal government agencies to reduce their purchases under contracts, to exercise their right to terminate contracts at any time without penalty or not to exercise options to renew contracts, any of which could result in decreased sales of our products.
Risks Related to Our Strategy We rely heavily on certain customers and suppliers for a significant portion of our sales. Our three largest customers accounted for approximately 50.7% of revenue during the year ended December 31, 2024. In addition, one supplier accounted for approximately 19.6% of accounts payable as of December 31, 2024.
Risks Related to Our Strategy We rely heavily on certain customers and suppliers for a significant portion of our sales. Our three largest customers accounted for approximately 51.5% of revenue during the year ended December 31, 2025. In addition, one supplier accounted for approximately 23.8% of accounts payable as of December 31, 2025.
Mergers and acquisitions have resulted in significant increases in identifiable intangible assets and goodwill. Identifiable intangible assets, which primarily include customer relationships, contract backlog, tradename, and technology, were approximately $209.0 million as of December 31, 2024, net of accumulated amortization. Goodwill recognized in accounting for the mergers and acquisitions was approximately $225.1 million as of December 31, 2024.
Mergers and acquisitions have resulted in significant increases in identifiable intangible assets and goodwill. Identifiable intangible assets, which primarily include customer relationships, contract backlog, tradename, and technology, were approximately $285.9 million as of December 31, 2025, net of accumulated amortization. Goodwill recognized in accounting for the mergers and acquisitions was approximately $353.5 million as of December 31, 2025.
As described below, this provision will not apply to suits brought to enforce any duty or liability created by the Securities Act or Exchange Act, or rules and regulations thereunder. 38 To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
As a result, we may be unable to successfully maintain our relationships with government agencies or prime contractors, and any failure to do so could materially adversely affect our ability to maintain our existing business and compete successfully for new business. 20 The loss of any member of our senior management could impair our relationships with U.S. government customers and disrupt the management of our business.
As a result, we may be unable to successfully maintain our 21 relationships with government agencies or prime contractors, and any failure to do so could materially adversely affect our ability to maintain our existing business and compete successfully for new business.
As permitted under the U.S. securities laws, neither we nor our independent registered public accounting firm have performed or are required to perform an evaluation of the effectiveness of our internal control over financial reporting. In the future, we may identify additional material weaknesses or significant deficiencies in our internal control over financial reporting.
As permitted under the U.S. securities laws, neither we nor our independent registered public accounting firm have performed or are required to perform an evaluation of the effectiveness of our internal control over financial reporting for the year ended December 31, 2025.
As of December 31, 2024, our total funded backlog was $579,787,162. Funded backlog represents the invoiceable value of existing purchase orders for products under contracts for which funding is appropriated or otherwise authorized, less amounts previously invoiced.
As of December 31, 2025, our total backlog was $801.1 million. Backlog Represents the total value or current estimated value of existing contracts for products under contracts for which funding is appropriated or otherwise authorized, less amounts previously invoiced.
Accordingly, shares registered under such registration statements will be available for sale in the open market following the expiration of the lock-up agreements and arrangements described above, except that shares held by affiliates will still be subject to the public information, volume limitation, manner of sale and notice requirements of Rule 144 unless otherwise resalable under Rule 701 under the Securities Act.
Accordingly, shares registered under such registration statements will be available for sale in the open market following the expiration of the lock-up agreements and arrangements described above, except that shares held by affiliates will still be subject to the public information, volume limitation, manner of sale and notice requirements of Rule 144 unless otherwise resalable under Rule 701 under the Securities Act. 36 As restrictions on resale end, or if the existing stockholders exercise their registration rights, the market price of our shares of common stock could drop significantly if the holders of these restricted shares sell them or are perceived by the market as intending to sell them.
In addition, once we are no longer an “Emerging Growth Company” we will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting.
In 2026, we expect to no longer qualify as an “Emerging Growth Company” and, as a result, will be subject to the requirements of Section 404 of the Sarbanes-Oxley Act, including the obligation to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting.
Our unfunded backlog, in particular, contains management’s estimate of amounts expected to be realized on unfunded contract work that may never be realized as revenues. If we fail to realize as revenues amounts included in our backlog, our future revenues, profitability and growth prospects could be materially adversely affected.
If we fail to realize as revenues amounts included in our backlog, our future revenues, profitability and growth prospects could be materially adversely affected.
In addition, if we were to undertake a substantial acquisition for cash, the acquisition would likely need to be financed in part through additional financing from banks, through offerings of debt or equity securities or through other arrangements.
Any inability by us to obtain financing in the future could have a material adverse effect on our business, financial position, results of operations and cash flows. 32 In addition, if we were to undertake a substantial acquisition for cash, the acquisition would likely need to be financed in part through additional financing from banks, through offerings of debt or equity securities or through other arrangements.
Risks Related to Ownership of Our Common Stock We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies” will make our common stock less attractive to investors.
In addition, the terms of any future indebtedness may be more onerous, including restrictions on our ability to acquire additional businesses or assets, or limit the size of such acquisitions. 34 Risks Related to Ownership of Our Common Stock We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies” will make our common stock less attractive to investors.
We believe that the success of our business and our ability to operate profitably depends on the continued contributions of the members of our senior management. We rely on our senior management to generate business and execute programs successfully.
The loss of any member of our senior management could impair our relationships with U.S. government customers and disrupt the management of our business. We believe that the success of our business and our ability to operate profitably depends on the continued contributions of the members of our senior management.
This increased complexity and our expected growth has placed, and will continue to place, a strain on our management and our administrative, operational and financial infrastructure. We anticipate that a further growth of headcount and facilities will be required to address expansion in our product and service offerings and the geographic scope of our customer base.
We anticipate that a further growth of headcount and facilities will be required to address expansion in our product and service offerings and the geographic scope of our customer base. However, if we are unsuccessful in our efforts, our business could decline.
These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities. Trive Capital controls us, and its interests may conflict with ours or other stockholders’ in the future.
These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities. Anti-takeover provisions in our organizational documents, Stockholders Agreement and under Delaware law could delay or prevent a change of control.
Risks Related to Our Indebtedness Our indebtedness, which is subject to variable interest rates, could adversely affect our financial health and could harm our ability to react to changes to our business.
Controls and Procedures included in this Annual Report on Form 10-K for details of the material weaknesses exist as of December 31, 2025. Risks Related to Our Indebtedness Our indebtedness, which is subject to variable interest rates, could adversely affect our financial health and could harm our ability to react to changes to our business.
We may not be able to obtain financing on terms and at interest rates that are favorable to us or at all. Any inability by us to obtain financing in the future could have a material adverse effect on our business, financial position, results of operations and cash flows.
We may not be able to obtain financing on terms and at interest rates that are favorable to us or at all.
If the debt under the Citi Credit Agreement were to be accelerated, our assets may not be sufficient to repay in full our debt. In addition, the terms of any future indebtedness may be more onerous, including restrictions on our ability to acquire additional businesses or assets, or limit the size of such acquisitions.
If the debt under the Citi Credit Agreement were to be accelerated, our assets may not be sufficient to repay in full our debt.
As of December 31, 2024, our total indebtedness, excluding approximately $3.1 million of unamortized debt issuance costs, was approximately $362.1 million, consisting of borrowings under our Financing Agreement with TCW Asset Management Company LLC, as amended (the “TCW Credit Agreement”).
As of December 31, 2025, our total indebtedness, excluding approximately $7.6 million of unamortized debt issuance costs, was approximately $499.1 million, consisting of borrowings under our Financing Agreement with Citibank N.A.(the “Citi Credit Agreement”). See Note 6 in the Notes to the Consolidated Financial Statements for details. Our indebtedness could have important consequences.
Removed
As of the date of this Annual Report on Form 10-K, discussions remain ongoing in respect of certain trade restrictions and tariffs on imports from Canada, China, and Mexico, as well as retaliatory tariffs enacted in response to such actions.
Added
This increased complexity and our expected growth has placed, and will continue to place, a strain on our management and our administrative, operational and financial infrastructure.
Removed
As a privately-held company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes- Oxley Act (“Section 404”). As a public company, we are subject to significant requirements for enhanced financial reporting and internal controls.
Added
Artificial intelligence (“AI”) technologies have rapidly developed and our business may be adversely affected if we cannot successfully integrate the technology into our internal business processes and product and service offerings in a timely, cost-effective, compliant and responsible manner.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+1 added−1 removed6 unchanged
Biggest changeWe maintain cybersecurity insurance coverage in amounts that we believe are adequate to address any incidents such as data destruction, extortion, theft, hacking, denial of service attacks and other such incidents. 39 See “Risk Factors— Technology failures or cybersecurity breaches or other unauthorized access to or use of our information technology systems or sensitive or proprietary information could have a material adverse effect on the Company’s business and operations.”
Biggest changeAny cyber incidents are systematically monitored, assessed and reported for potential operational and financial impact . We maintain cybersecurity insurance coverage in amounts that we believe are adequate to address any incidents such as data destruction, extortion, theft, hacking, denial of service attacks and other such incidents. See Item 1A. “Risk Factors” for a discussion of cybersecurity risks.
We continue to invest in the cybersecurity and resiliency of our networks and to enhance our internal controls and processes, which are designed to help protect our systems and infrastructure, and the information contained therein.
We continue to invest in the cybersecurity and resiliency of our networks and to enhance our internal controls and processes, which are designed to help protect our systems and infrastructure, and the information contained therein . We engage third-party cybersecurity experts to conduct security assessment.
Removed
Management of the Company is responsible for overseeing our enterprise risk management. In that regard, management receives periodic updates, as appropriate (and no less frequently than annually), regarding the Company’s cybersecurity risk management processes and the risk trends related to cybersecurity.
Added
Management of the Company is responsible for overseeing our enterprise risk management (ER M). Our Chief Information Officer leads this process as it relates to information security and reports to the CEO and our Board of Directors.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeChico Avenue & 1489 Amro Way South El Monte, CA 91733 1490 Adelia Street, South El Monte, CA 91733 1503 & 1505 Adelia Avenue, South EL Monte, CA 91733 2465 Loma Avenue, South El Monte, CA 91733 Corona, CA ~75,000 220 Klug Circle, City of Corona, California 92878 Santa Ana, CA ~22,000 2141-2143 South Standard, Santa Ana, CA 92707 Brea, CA ~85,000 2632 Saturn Street, Brea, CA 92821 2664 Saturn Street, Unit B, Brea, CA 92821 2700 Saturn Street, Unit B, Brea, CA 92821 Mukilteo, WA ~195,000 6500 Harbour Heights Parkway SW, Mukilteo, WA 98275 Skagit, WA ~30,000 11941 Farm to Market Road, Mount Vernon, WA 98273 9800 29th Avenue W, Hangar E-105, Everett, WA 98204 Portland, OR ~15,000 25749 SW Canyon Creek Road, Suite 400/500, Wilsonville, Oregon 97070 Huntsville, AL ~30,000 3401-O Alabama Highway 20 West, Decatur, AL 35601
Biggest changeChico Avenue & 1489 Amro Way South El Monte, CA 91733 1490 Adelia Street, South El Monte, CA 91733 1503 & 1505 Adelia Avenue, South EL Monte, CA 91733 2465 Loma Avenue, South El Monte, CA 91733 Corona, CA ~75,000 220 Klug Circle, City of Corona, California 92878 Santa Ana, CA ~22,000 2141-2143 South Standard, Santa Ana, CA 92707 Brea, CA ~124,000 2632 Saturn Street, Brea, CA 92821 2664 Saturn Street, Unit B, Brea, CA 92821 2700 Saturn Street, Unit B, Brea, CA 92821 Mukilteo, WA ~195,000 6500 Harbour Heights Parkway SW, Mukilteo, WA 98275 Skagit, WA ~30,000 11941 Farm to Market Road, Mount Vernon, WA 98273 9800 29th Avenue W, Hangar E-105, Everett, WA 98204 Portland, OR ~15,000 25749 SW Canyon Creek Road, Suite 400/500, Wilsonville, Oregon 97070 Huntsville, AL ~30,000 3401-O Alabama Highway 20 West, Decatur, AL 35601 Arlington, WA ~19,000 3705 166th Place NE Arlington, WA 98232 Ogden, UT ~23,000 2902 South American Way Ogden, Utah 84401 Huntington Beach, CA ~3,600 5252 Argosy Ave Huntington Beach, CA 92649 Cedar City, UT ~21,000 2113 W. 850 N.
Campus Location Square Footage Leased Properties Huntington Beach, CA ~125,000 5382-5386 Argosy Avenue, Huntington Beach, CA 92649 5351 Argosy Avenue, Huntington Beach, CA 92649 5340 Argosy Avenue, Huntington Beach, CA 92649 5331 Business Drive, Huntington Beach, CA 92649 South El Monte, CA ~175,000 1430 & 1440 Amro Way, South El Monte, CA 91733 1452-1456 N.
Campus Location Square Footage Leased Properties Huntington Beach, CA ~125,000 5382-5386 Argosy Avenue, Huntington Beach, CA 92649 5351 Argosy Avenue, Huntington Beach, CA 92649 5340 Argosy Avenue, Huntington Beach, CA 92649 5331 Business Drive, Huntington Beach, CA 92649 39 South El Monte, CA ~100,000 1430 & 1440 Amro Way, South El Monte, CA 91733 1452-1456 N.
Item 2. Proper ties We maintain nine campuses consisting of a total of 20 properties, all of which are manufacturing, warehousing or processing facilities. Between all of our campuses, we have over 730,000 square feet dedicated to design and manufacturing. All our properties are leased and are located in the United States, predominately on the west coast.
Item 2. Proper ties We maintain nine campuses consisting of a total of 20 properties, all of which are manufacturing, warehousing or processing facilities. Between all of our campuses, we have approximately 808,000 square feet dedicated to design and manufacturing. All our properties are leased and are located in the United States, predominately on the West Coast.
Added
Cedar City, Utah 84721 Albany, OR ~26,000 173 SW Queen Ave, Albany, OR 97322

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−4 removed2 unchanged
Biggest changeThe number of shares of common stock available for issuance under the 2025 Plan is subject to adjustment as provided therein.
Biggest changeThe 2025 Plan became effective immediately upon adoption, although no awards were made under the 2025 Plan as of December 31, 2025. The 2025 Plan has the features described below. The total number of shares of our common stock available for issuance pursuant to awards under the 2025 Plan is 11,493,500.
Any decision to declare any pay dividends in the future will be made at the sole discretion of our Board and will depend on, among other things, our results of operations, cash requirements, financial condition, legal, tax, regulatory, and contractual restrictions, including restrictions under the Citi Credit Agreement and other indebtedness we may incur and other factors that our Board may deem relevant.
Any decision to declare any dividends in the future will be made at the sole discretion of our Board and will depend on, among other things, our results of operations, cash requirements, financial condition, legal, tax, regulatory, and contractual restrictions, including restrictions under the Citi Credit Agreement and other indebtedness we may incur and other factors that our Board may deem relevant.
Item 5. Mar ket for Registrant’s Common EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock has been publicly traded on New York Stock Exchange under the symbol “KRMN” since our initial public offering on February 13, 2025. Prior to that time, there was no public market for our common stock.
Item 5. Mar ket for Registrant’s Common EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock has been publicly traded on New York Stock Exchange under the symbol “KRMN” since our initial public offering on February 13, 2025.
Stockholders As of March 31, 2025, our common stock was held by approximately 98 stockholders of record. The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or held by other nominees.
The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or held by other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
The 2025 Plan has the features described below. The total number of shares of our common stock available for issuance pursuant to awards under the 2025 Plan is 11,493,500. The total number of shares of our common stock that may be issued in respect of incentive share options is 34,480,500 shares.
The total number of shares of our common stock that may be issued in respect of incentive stock options is 34,480,500 shares. The number of shares of common stock available for issuance under the 2025 Plan is subject to adjustment as provided therein.
Each award will be set forth in a separate grant notice or agreement and will indicate the type and terms and conditions of the award.
Each award will be set forth in a separate grant notice or agreement and will indicate the type and terms and conditions of the award. Use of Proceeds None. Issuer Purchases of Equity Securities None. Item 6. [R eserved] 41
This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. Dividend Policy We currently expect to retain all future earnings for use in the operation and expansion of our business and have no current plans to pay dividends on our common stock.
Dividend Policy We currently expect to retain all future earnings for use in the operation and expansion of our business and have no current plans to pay dividends on our common stock.
If we elect to pay such dividends in the future, we may reduce or discontinue entirely the payment of such dividends at any time.
If we elect to pay such dividends in the future, we may reduce or discontinue entirely the payment of such dividends at any time. Securities Authorized for Issuance Under Equity Compensation Plans The 2025 Stock Incentive Plan, or the 2025 Plan, was adopted by our Board on February 12, 2025 and approved by our shareholders on February 12, 2025.
Removed
Securities Authorized for Issuance Under Equity Compensation Plans The 2025 Stock Incentive Plan, or the 2025 Plan, was adopted by our board of directors on February 12, 2025 and approved by our shareholders on February 12, 2025. The 2025 Plan became effective immediately upon adoption, although no awards were made before the effective date of the Prospectus.
Added
Given that our common stock has been publicly traded for fewer than five fiscal years, a meaningful five-year cumulative total shareholder return graph is not yet available and therefore not included in this Annual Report on Form 10-K. Stockholders As of March 20, 2026, our common stock was held by approximately 157 stockholders of record.
Removed
Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters is incorporated herein by reference. 41 Use of Proceeds In February 2025 we completed an IPO, in which we issued and sold 8,421,053 shares of our Common Stock at a public offering price of $22.00 per share.
Removed
The offer and sale was pursuant to the Prospectus, which was declared effective by the SEC on February 12, 2025. We received approximately $147.3 million in net proceeds, after deducting the underwriting discounts and commissions, payments to Phantom Unit holders and offering expenses payable by us.
Removed
Upon the closing of the IPO, we used the net proceeds from the offering, together with our existing cash, cash equivalents and short-term investments, for general corporate purposes, including additional development efforts, working capital and operating expenses. Issuer Purchases of Equity Securities None. Item 6. [R eserved] 42

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

65 edited+53 added−74 removed55 unchanged
Biggest changeThe reconciliation of EBITDA and Adjusted EBITDA to net income (loss) is provided below: 52 EBITDA and Adjusted EBITDA Reconciliation: Years ended December 31, (unaudited) 2024 2023 2022 Net income (loss) $ 12,701,039 $ 4,359,405 $ (14,098,619 ) Income tax provision (benefit) 1,627,963 (3,168,821 ) (3,172,913 ) Depreciation and amortization 1 32,959,115 27,179,214 34,981,834 Interest expense, net 50,732,903 47,867,005 37,500,758 EBITDA 98,021,020 76,236,803 55,211,060 Acquisition related expenses 2 4,775,662 356,414 251,319 Integration expenses and non-recurring restructuring costs 3 2,254,758 2,739,438 3,506,716 Lender and administrative agent fees 4 100,000 500,000 — Other non-recurring costs (gains) 5 — 739,444 (281,227 ) Share-based Compensation 6 993,143 1,291,244 1,603,000 Adjusted EBITDA $ 106,144,583 $ 81,863,342 $ 60,290,868 Revenues 345,251,064 280,705,570 226,310,299 Net income (loss) margin 3.7 % 1.6 % (6.2 %) Adjusted EBITDA Margin 30.7 % 29.2 % 26.6 % 1.
Biggest changeThe reconciliation of GAAP to non-GAAP financial measures is provided below. 49 EBITDA and Adjusted EBITDA Reconciliation: Year Ended December 31, (in thousands, except percent) 2025 2024 2023 Net income $ 17,366 $ 12,701 $ 4,359 Income tax provision 15,156 1,628 (3,169 ) Depreciation and amortization 1 42,737 32,958 27,179 Interest expense, net 44,567 50,733 47,867 EBITDA 119,826 98,020 76,236 Transaction related expenses 2 12,741 4,776 356 Integration expenses and non-recurring restructuring costs 3 2,279 2,255 2,740 Lender and administrative agent fees 4 1,572 100 500 Share-based Compensation 5 8,084 993 1,291 Other non-recurring costs 6 800 — 739 Adjusted EBITDA $ 145,302 $ 106,144 $ 81,862 Revenue $ 471,500 $ 345,251 $ 280,705 Net income margin 3.7 % 3.7 % 1.6 % Adjusted EBITDA Margin 30.8 % 30.7 % 29.2 % Year Ended December 31, 2025 2024 2023 GAAP net income per share and unit, respectively $ 0.13 $ 0.08 $ 0.03 Transaction-related expenses 2 0.10 0.03 - Integration expenses and non-recurring restructuring costs 3 0.02 0.01 0.02 Lender and administrative agent fees 4 0.01 — - Share-based compensation 5 0.06 0.01 0.01 Other non-recurring costs 7 0.05 — - Adjusted EPS 8 $ 0.37 $ 0.13 $ 0.06 1.
Some of these limitations are: • EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin do not reflect the significant interest expense, or the cash requirements, necessary to service interest payments on our indebtedness; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and the cash requirements for such replacements are not reflected in EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin; • EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin exclude the cash expense we have incurred to integrate acquired businesses into our operations, which is a necessary element of certain of our acquisitions; • the omission of the substantial amortization expense associated with our intangible assets further limits the usefulness of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin; and • EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin do not include the payment of taxes, which is a necessary element of our operations.
Some of these limitations are: • EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin do not reflect the significant interest expense, or the cash requirements, necessary to service interest payments on our indebtedness; 50 • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and the cash requirements for such replacements are not reflected in EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin; • EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin exclude the cash expense we have incurred to integrate acquired businesses into our operations, which is a necessary element of certain of our acquisitions; • the omission of the substantial amortization expense associated with our intangible assets further limits the usefulness of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin; and • EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin do not include the payment of taxes, which is a necessary element of our operations.
GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as a tool to help make financial, operational and planning decisions. We may use non-GAAP financial metrics in certain Management 51 compensation plans, debt covenants, internal budgetary decision making, and other resource allocation decisions.
GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as a tool to help make financial, operational and planning decisions. We may use non-GAAP financial metrics in certain Management compensation plans, debt covenants, internal budgetary decision making, and other resource allocation decisions.
These valuation approaches consider a number of factors that include, but are not limited to, prospective financial information, growth rates, terminal value, discount rates, and comparable multiples from publicly traded companies in our industry and require us to make certain assumptions and estimates regarding industry economic factors and future profitability of its business.
These valuation approaches consider a number of factors that include, but are not limited to, prospective financial information, growth rates, terminal value, discount rates, and comparable multiples from publicly traded companies in our industry and require us to make certain assumptions and estimates regarding industry economic factors and future profitability of our business.
Key Financial and Non-GAAP Operating Measures We measure our business using both key financial and operating data including key performance indicators (“KPIs”) and non-GAAP financial measures and use the following metrics to manage our business, monitor results of operations and ensure proper allocation of capital: (i) Revenue, (ii) Funded Backlog, (iii) EBITDA, (iv) Adjusted EBITDA and (v) Adjusted EBITDA Margin.
Key Financial and Non-GAAP Operating Measures We measure our business using both key financial and operating data including key performance indicators (“KPIs”) and non-GAAP financial measures and use the following metrics to manage our business, monitor results of operations and ensure proper allocation of capital: (i) Revenue, (ii) Backlog, (iii) EBITDA, (iv) Adjusted EBITDA and (v) Adjusted EBITDA Margin.
GAAP measures, such 53 as net sales and operating profit, to measure our operating performance. EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are not measurements of financial performance under U.S. GAAP, and they should not be considered as alternatives to net income/(loss) or cash flow from operations determined in accordance with U.S. GAAP.
GAAP measures, such as net sales and operating profit, to measure our operating performance. EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are not measurements of financial performance under U.S. GAAP, and they should not be considered as alternatives to net income/(loss) or cash flow from operations determined in accordance with U.S. GAAP.
Such changes in contract estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in a prior period. Changes in contract estimates may also result in the reversal of previously recognized revenue if the current estimate differs from the previous estimate.
Such changes in contract estimates can result in the recognition of revenue in a current period for performance obligations which were 51 satisfied or partially satisfied in a prior period. Changes in contract estimates may also result in the reversal of previously recognized revenue if the current estimate differs from the previous estimate.
We believe that this collection of vertically integrated capabilities provides a strong value proposition for our customers who seek to simplify their supply chains, increase their speed to market, and reduce costs – all while benefitting from quality integrated system solutions. Our differentiated market offering is supported by significant sole- and single-source contract positions.
We believe that this collection of vertically integrated capabilities provides a strong value proposition for our customers who seek to simplify their supply chains, increase their speed to market, and reduce costs – all while benefiting from quality integrated system solutions. Our differentiated market offering is supported by significant sole- and single-source contract positions.
Further, our independent registered public accounting firm is not yet required to formally attest to the effectiveness of our internal controls over financial reporting and will not be required to do so for as long as we are an “emerging growth company” pursuant to the provisions of the JOBS Act. See “Summary—JOBS Act Election.” 59
Further, our independent registered public accounting firm is not yet required to formally attest to the effectiveness of our internal controls over financial reporting and will not be required to do so for as long as we are an “emerging growth company” pursuant to the provisions of the JOBS Act. See “Summary—JOBS Act Election.” 55
Our Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations reflect estimates and assumptions made by management. Events and changes in circumstances arising after December 31, 2024, including those resulting from the continuing impacts of the current unfavorable macroeconomic climate, will be reflected in management’s estimates for future periods.
Our Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations reflect estimates and assumptions made by management. Events and changes in circumstances arising after December 31, 2025, including those resulting from the continuing impacts of the current unfavorable macroeconomic climate, will be reflected in management’s estimates for future periods.
We are focused on delivering innovative and customized solutions for our customers, with more than 204 multi-discipline engineers supporting our comprehensive in-house design and manufacturing capabilities. Our unique set of capabilities is supported by decades of experience across advanced material design, proprietary digital models, material science and testing, and manufacturing expertise.
We are focused on delivering innovative and customized solutions for our customers, with more than 300 multi-discipline engineers supporting our comprehensive in-house design and manufacturing capabilities. Our unique set of capabilities is supported by decades of experience across advanced material design, proprietary digital models, material science and testing, and manufacturing expertise.
Overview We specialize in the upfront design, testing, manufacturing, and sale of mission-critical systems for existing and emerging missile, missile and defense, and space programs. Our integrated payload protection, propulsion, and interstage system solutions are deployed across a wide variety of existing and emerging programs supporting important Department of Defense and space sector initiatives.
Overview We specialize in the upfront design, testing, manufacturing, and sale of mission-critical systems for existing and emerging missile, missile and defense, and space programs. Our integrated payload protection, propulsion, and interstage system solutions are deployed across a wide variety of existing and emerging programs supporting important Department of War (“DOW”) and space sector initiatives.
Determining fair value requires management to make estimates and judgments based on various factors, including projected revenues and associated earnings. We did not recognize any impairment losses in the year ended December 31, 2024, 2023 or 2022.
Determining fair value requires management to make estimates and judgments based on various factors, including projected revenues and associated earnings. We did not recognize any impairment losses in the year ended December 31, 2025, 2024 or 2023.
It is our belief that once a supplier has been qualified as a supplier on a particular program and delivers on the basis of quality, it is typically unlikely that a 43 prime integrator would pursue re-qualification given a relatively lengthy and costly process.
It is our belief that once a 42 supplier has been qualified as a supplier on a particular program and delivers on the basis of quality, it is typically unlikely that a prime integrator would pursue re-qualification given a relatively lengthy and costly process.
We believe that these financial performance metrics represent the primary drivers of value enhancement, balancing both short and long-term indicators of increased shareholder value. These are the metrics we use to measure our results and evaluate our business and related contract performance.
We believe that these financial performance metrics represent the primary drivers of value enhancement, balancing both short and long-term indicators of increased stockholder value. These are the metrics we use to measure our results and evaluate our business and related contract performance.
National Security related budget and the National Defense Authorization Act (“NDAA”), and also the related Future Years Defense Program or five- year projection of the forces, resources and programs needed to support the DoD’s strategy and operations.
National Security related budget and the National Defense Authorization Act (“NDAA”), and also the related Future Years Defense Program or five- year projection of the forces, resources and programs needed to support the DoW’s strategy and operations.
You should read the sections of this prospectus titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
You should read the sections of this Annual Report titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
General and Administrative Expenses Our general and administrative expenses (“G&A”) include salaries, fringe benefits (such as health insurance, retirement plans, vacation and sick days), and other expenses related to selling, marketing and proposal activities, certain administrative costs, operational overhead expenses, share-based compensation expenses and amortization of acquired intangible assets.
Indirect costs include overhead expenses, fringe benefits and depreciation. 45 General and Administrative Expenses Our general and administrative expenses (“G&A”) include salaries, fringe benefits (such as health insurance, retirement plans, vacation and sick days), and other expenses related to selling, marketing and proposal activities, certain administrative costs, operational overhead expenses, share-based compensation expenses and amortization of acquired intangible assets.
These projections and estimates assess: • the productivity and availability of labor; 44 • the allocation of indirect costs to labor and material costs incurred; • the complexity of the work to be performed; • the cost and availability of materials and components; and • schedule requirements.
These projections and estimates assess: • the productivity and availability of labor; 43 • the allocation of indirect costs to labor and material costs incurred; • the complexity of the work to be performed; • the cost and availability of materials and components; and • schedule requirements.
Note on non-GAAP financial measures: Throughout the discussion of our results of operations we use non-GAAP financial measures EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, as measures of our overall performance. Definitions and reconciliations of these measures to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP are included below.
Note on non-GAAP financial measures: Throughout the discussion of our results of operations we use non-GAAP financial measures EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, as measures of our overall performance. Definitions and reconciliations of these measures to the most directly comparable financial measure calculated and presented in accordance with U.S.
We estimate that no single program accounted for more than 12% of sales in the twelve months ended December 31, 2024 or the twelve months ended December 31, 2023, with revenue from over 100 active programs supporting current production and next-generation space, missile, hypersonics, and defense applications.
We estimate that no single program accounted for more than 12% of sales in the twelve months ended December 31, 2025 or the twelve months ended December 31, 2024, with revenue from over 130 active programs supporting current production and next-generation space, missile, hypersonics, and defense applications.
Corporate Conversion We currently operate as a corporation under the name Karman Holdings Inc. Prior to our initial public offering, we converted from a Delaware limited liability company named TCFIII Spaceco Holdings LLC. In the conversion, all of our outstanding equity interests were converted into shares of common stock of Karman Holdings Inc.
Corporate Conversion We currently operate as a corporation under the name Karman Holdings Inc. Prior to our IPO, we converted from a Delaware limited liability company named TCFIII Spaceco Holdings LLC. In the conversion, all of our outstanding equity interests were converted into shares of common stock of Karman Holdings Inc.
Upon becoming a public company, we will be required to comply with the SEC’s rules implementing Section 302 of the Sarbanes-Oxley Act, which will require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting.
Since becoming a public company, we are required to comply with the SEC’s rules implementing Section 302 of the Sarbanes-Oxley Act, which require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting.
Though we will be required to disclose material changes made to our internal controls and procedures on a quarterly basis, we will not be required to make our first assessment of the effectiveness of our internal control over financial reporting under Section 404 until our second annual report on Form 10-K after we become a public company.
Though we are required to disclose material changes made to our internal controls and procedures on a quarterly basis, we are not required to make our first assessment of the effectiveness of our internal control over financial reporting under Section 404 until our second annual report on Form 10-K after becoming a public company.
Negative publicity and increased scrutiny of government contractors in general, including us, relating to government expenditures for contractor services and incidents involving the mishandling of sensitive or classified information as well as the increasingly complex requirements of the DoD and the United States intelligence community, including those related to cybersecurity, could impact our ability to perform in the markets we serve.
Negative publicity and increased scrutiny of government contractors in general, including us, relating to government expenditures for contractor services and incidents involving the mishandling of sensitive or classified information as well as the increasingly complex requirements of the DoW and the U.S. intelligence community, including those related to cybersecurity, could impact our ability to perform in the markets we serve.
Adjusted EBITDA and Adjusted EBITDA Margin are not measures calculated in accordance with U.S. GAAP, and they should not be considered an alternative to any financial measures that were calculated under U.S. GAAP.
Adjusted EBITDA Margin - Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenue. Adjusted EBITDA and Adjusted EBITDA Margin are not measures calculated in accordance with U.S. GAAP, and they should not be considered an alternative to any financial measures that were calculated under U.S. GAAP.
Non-GAAP Financial Measures We believe the non-GAAP financial measures will help investors understand our financial condition and operating results and assess our future prospects.
GAAP are included below. 48 Non-GAAP Financial Measures We believe the non-GAAP financial measures will help investors understand our financial condition and operating results and assess our future prospects.
Acquired intangible assets include: customer relationships, customer production backlog, patents and know-how. Finite-lived intangible assets are amortized over their estimated useful lives using the straight-line method which approximates the pattern in which the economic benefits of such assets are consumed. We assess amortized intangible assets for impairment when events or circumstances suggest that the carrying values may not be recoverable.
Finite-lived intangible assets are amortized over their estimated useful lives using the straight-line method which approximates the pattern in which the economic benefits of such assets are consumed. We assess amortized intangible assets for impairment when events or circumstances suggest that the carrying values may not be recoverable.
Additionally, Adjusted EBITDA excludes certain nonrecurring costs that management excludes in contemplation of budget decisions and are not costs of operating the business such as entity wide re-branding initiatives or acquisition integration costs.
Additionally, Adjusted EBITDA excludes certain nonrecurring costs that management excludes in contemplation of budget decisions and are not costs of operating the business, such as entity wide re-branding initiatives or acquisition integration costs, and lender and administrative agent fees associated with discrete amendments.
Depreciation and amortization expense includes $8,828,596, $6,747,180 and $4,506,464 of allocated depreciation and amortization from cost of goods sold for the years ended December 31, 2024, 2023 and 2022, respectively. 2. Represents legal and due diligence fees incurred in connection with planned and completed acquisitions, which are required to be expensed as incurred.
Depreciation and amortization expense includes $11.3 million, $8.8 million and $6.7 million of allocated depreciation and amortization from cost of goods sold for the years ended December 31, 2025, 2024 and 2023, respectively. 2. Represents legal and due diligence fees incurred in connection with planned and completed acquisitions, which are required to be expensed as incurred.
Components of Operations Revenues We generate our revenue primarily from the design, development and deployment of systems and subsystems (Propulsion Systems, Aerodynamic Interstage Systems, and Payload Protection and Deployment Systems) across three end markets (Hypersonics and Strategic Missile Defense, Missile and Integrated Defense Systems, and Space and Launch). We do not believe our revenues are subject to significant seasonal variations.
Components of Operations Revenues We generate our revenue primarily from the design, development and deployment of systems and subsystems (Propulsion Systems, Aerodynamic Interstage Systems, and Payload Protection and Deployment Systems) across three end markets (Hypersonics and Strategic Missile Defense, Tactical Missiles and Integrated Defense Systems, and Space and Launch).
Goodwill and Intangible Assets Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets. We test goodwill for impairment annually during the fourth quarter of our fiscal year or when events or circumstances change in a manner that indicates goodwill might be impaired.
Goodwill and Intangible Assets Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets. We test goodwill for impairment annually as of October 1 of our fiscal year, or when events or circumstances indicates goodwill might be impaired.
Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies—Recent Accounting Pronouncements, of the Notes to the Consolidated Financial Statements for additional information. JOBS Act Election We are currently an “emerging growth company,” as defined in the JOBS Act.
Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies —Recent Accounting Pronouncements, of the Notes to the Consolidated Financial Statements for additional information. JOBS Act Election In 2026, we expect to no longer qualify as an ‘emerging growth company’ as defined in the JOBS Act.
The purpose of the Corporate Conversion was to reorganize our structure so that the entity that is offering our common stock to the public in this offering is a corporation rather than a limited liability company and so that our existing investors and new investors in this offering will own our common stock rather than equity interests in a limited liability company.
The purpose of the Corporate Conversion was to reorganize our structure so that the entity that offered our common stock to the public in our IPO was a corporation rather than a limited liability company and so that investors in the IPO owned our common stock rather than equity interests in a limited liability company.
Department of Defense (“DoD”) budget and spending levels, changes in demand, changes in policy positions or priorities, the domestic and global political and economic environment, and the evolving nature of the global and national security threat environment.
Industry Background Our defense operations are affected by DoW budget and spending levels, changes in demand, changes in policy positions or priorities, the domestic and global political and economic environment, and the evolving nature of the global and national security threat environment.
Revenue represents sales from our existing businesses over comparable periods. The increase in revenues for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was primarily attributable to organic growth across all end-markets, Tactical Missile and Integrated Defense Systems, followed by Space and Launch and Missile and Hypersonics and Strategic Missile Defense.
The increase in revenues for the year ended December 31, 2025 as compared to the year ended December 31, 2024 was primarily attributable to growth across all end-markets, Tactical Missiles and Integrated Defense Systems, followed by Hypersonics and Strategic Missile Defense and Space and Launch and Missile.
We also may explore the divestiture of businesses that no longer meet our needs or strategy or that could perform better outside of our organization. Industry Background Our defense operations are affected by U.S.
We also may explore the divestiture of businesses that no longer meet our needs or strategy or that could perform better outside of our organization.
Funded Backlog - Represents the total value of existing contracts, less amounts previously invoiced. Contract types include but are not limited to purchase orders, long term agreements and contractual authorization to proceed. 2.
Backlog - Represents the total value or current estimated value of existing contracts, less amounts previously invoiced. Contract types include but are not limited to purchase orders, long term agreements and contractual authorization to proceed. (Backlog was previously referred to as funded backlog. No change to the historical dollar amount presented to the table above.) 2.
Changes in these budget and spending levels, policies, or priorities, which are subject to U.S. domestic and foreign geopolitical risks and threats, may impact our defense businesses, including the timing of and delays in U.S. government licenses and approvals for sales, the risk of sanctions, or other restrictions. 45 We believe that our business is well positioned in areas that the DoD and other customers indicate are priorities for future defense spending, including those based on the 2023 National Security Strategy document, the 2024 U.S.
Changes in these budget and spending levels, policies, or priorities, which are subject to U.S. domestic and 44 foreign geopolitical risks and threats, may impact our defense businesses, including the timing of and delays in U.S. government licenses and approvals for sales, the risk of sanctions, or other restrictions.
The acquired RMS intangible assets will be amortized over a weighted average period of 12.1 years. Depreciation of fixed assets used in the production of goods sold is included in cost of goods sold.
The acquired MTI, ISP and Five Axis intangible assets will be amortized over a weighted average period of 11.0, 10.7 and 13.0 years respectively. Depreciation of fixed assets used in the production of goods sold is included in cost of goods sold.
In April, 2025, the Company entered into a new Credit Agreement (the “Citi Credit Agreement”) by and among Karman, the lenders from time to time party thereto and Citibank, N.A.
We fund our investing activities primarily from cash provided by our operating and financing activities. On April 1, 2025, the Company entered into a new Credit Agreement (as amended from time to time, the “Citi Credit Agreement”) by and among Karman, the lenders from time to time party thereto and Citibank, N.A.
Cost of Goods Sold Cost of goods sold consists of direct costs and allocated indirect costs. Direct costs include labor, materials, subcontracts and other costs directly related to the execution of a specific contract. Indirect costs include overhead expenses, fringe benefits and depreciation.
We do not believe our revenues are subject to significant seasonal variations. Cost of Goods Sold Cost of goods sold consists of direct costs and allocated indirect costs. Direct costs include labor, materials, subcontracts and other costs directly related to the execution of a specific contract.
Other Obligations and Commitments See Note 7 through Note 8, of the Notes to the Consolidated Financial Statements for information regarding our other obligations and commitments. 57 Leases We lease certain facilities and equipment under financing and operating leases that expire at various dates through 2041.
Other Obligations and Commitments See Note 6 through Note 8, of the Notes to the Consolidated Financial Statements for information regarding our other obligations and commitments. Leases See Note 8, Leases, of the Notes to the Consolidated Financial Statements for information regarding our operating and finance lease obligations.
For the impairment test, we first assess qualitative factors, macroeconomic conditions, industry and market considerations, triggering events, cost factors, and overall financial performance, to determine whether it is necessary to perform a quantitative goodwill impairment test. Alternatively, we may bypass the qualitative assessment for some or all of its reporting units and apply the quantitative impairment test.
For purpose of testing goodwill for impairment, we operate as a single reporting unit, which is consistent with our single operating segment. In performing the impairment test, we first assess qualitative factors, including macroeconomic conditions, industry and market considerations, triggering events,cost factors, and overall financial performance, to determine whether it is necessary to perform a quantitative goodwill impairment test.
For purposes of testing goodwill for 54 impairment, we operate as a single reporting unit. Based upon the annual goodwill impairment testing performed in the fourth quarter of each year, we determined that there was no impairment of our goodwill during the years ended December 31, 2024, 2023, or 2022.
Based upon the annual goodwill impairment testing performed in the fourth quarter of each fiscal year, we determined that there was no impairment of our goodwill during the years ended December 31, 2025, 2024, or 2023. Acquired intangible assets include: customer relationships, customer production backlog, patents and know-how.
If determined to be necessary, the quantitative impairment test shall be used to identify goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any). For the quantitative impairment test we estimate the fair value by weighting the results from the income approach and the market approach.
For the quantitative impairment test, we estimate the fair value by weighting the results of the income approach and the market approach.
Propulsion Systems : involves the integrated offering of solid rocket motor subsystems, launch systems, and ablative composites. Aerodynamic and Interstage Systems : involves supporting metallic and composite subsystems designed for aerodynamics and interstage separation. Our solutions are deployed across three growing, core end markets including: Hypersonics and Strategic Missile Defense, Missile and Tactical Integrated Defense Systems, and Space and Launch.
Our solutions are deployed across three growing, core end markets including: Hypersonics and Strategic Missile Defense, Missile and Tactical Integrated Defense Systems, and Space and Launch.
The increase in provision for income taxes was attributable to substantially larger pre-tax book income during the year ended December 31, 2024.
The increase in provision for income taxes was attributable to substantially larger pre-tax book income during the year ended December 31, 2025 and other discrete items, including the change in entity classification, non-deductible officers’ compensation, and interest and penalties related to prior year tax returns and uncertain tax positions.
Additionally, the Company incurred certain professional service fees related to its IPO that did not meet the requirements to be deferred issuance costs, these costs are considered non-recurring and outside the ordinary course of business, and therefore are not indicative of ongoing operating performance. 3. These costs include company-wide system implementation expenses and Company re-branding costs.
These costs are considered non-recurring and outside the ordinary course of business, and therefore are not indicative of ongoing operating performance. 3. Includes company-wide system implementation expenses company re-branding costs and compliance efforts. This category also includes post-acquisition integration costs, and employee expenses related to acquisitions or restructuring activities. 4.
As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Once we cease to qualify as an emerging growth company, we will be required to adopt all new or revised accounting standards as of their applicable public‑company effective dates. As a result, our financial statements may not be comparable to those of companies that have already adopted such standards in accordance with public‑company reporting requirements.
Liquidity and Capital Resources The following table summarizes our capitalization: As of December 31, 2024 2023 Cash and cash equivalents $ 11,529,770 $ 5,454,710 Debt: Finance lease liabilities (including current portion) 81,937,429 77,887,560 Revolving credit facility 25,000,000 20,000,000 Notes Payable, including current portion, net of debt issuance costs 334,060,006 304,288,123 Total debt 440,997,435 402,175,683 Member’s equity 195,996,367 182,459,333 Total capitalization (debt plus equity) $ 636,993,802 $ 584,635,016 Total debt to total capitalization 2.25 2.20 Our principal historical liquidity requirements have been for organic growth, acquisitions, capital expenditures, servicing indebtedness, including finance lease liability payments, and working capital needs.
Deferred tax liability and assets are recognized for the deferred tax consequences of differences between the tax bases and the recognized values of assets acquired and liabilities assumed in a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 740-10. 52 Liquidity and Capital Resources The following table summarizes our capitalization: As of December 31, 2025 2024 (in thousands except ratio) Cash and cash equivalents $ 33,959 $ 11,530 Debt: Finance lease liabilities (including current portion) 81,396 81,937 Revolving credit facility — 25,000 Notes Payable, including current portion, net of debt issuance costs 499,148 334,060 Total debt 580,544 440,997 Stockholders' equity and members' equity, respectively 382,691 195,996 Total capitalization (debt plus equity) $ 963,235 $ 636,993 Total debt to total capitalization 1.52 2.25 Our principal historical liquidity requirements have been for organic growth, acquisitions, capital expenditures, servicing indebtedness, including finance lease liability payments, and working capital needs.
The timing differences between provisions for income taxes recognizable under US GAAP compared to statutory taxes may create different amounts of current and deferred tax amounts. For additional information regarding provisions for taxes, see Note 14, Provision for Income Taxes, in the Notes to the Consolidated Financial Statements.
For additional information regarding provisions for taxes, see Note 13, Provision for Income Taxes , in the Notes to the Consolidated Financial Statements.
Financing Activities Net cash provided by financing activities in the year ended December 31, 2024, totaled $25,665,687. For the year ended December 31, 2024, we increased our TCW Term Note agreement by $35,000,000 which was partially offset by principal repayments of $9,125,000 made during the period.
Net cash provided by financing activities for the year ended December 31, 2024 was $25.7 million, which was primarily driven by net proceeds from increasing our TCW Term Note by $34.0 million (net of payment of debt issuance costs), partially offset by repayment of TCW Term Note of $9.5 million.
Both the Revolving Credit Facility and TCW Term Note payable are variable interest rate loans with an applicable spread. For additional information related to debt, see Note 7, Debt, in the Notes to the Consolidated Financial Statements. Other Income (expense) Other income (expense) for the year ended December 31, 2024 and 2023 was $1,502,156 and $563,772, respectively.
Interest Expense, net Interest expense, net for the year ended December 31, 2025 decreased by $6.2 million, or 12.2%, to $44.6 million compared to $50.7 million during the year ended December 31, 2024. Both the Revolving Credit Facility and Term Note payable are variable interest rate loans with an applicable spread.
Financial and Operating Data Years ended December 31, (unaudited) 2024 2023 2022 Revenues $ 345,251,064 $ 280,705,570 $ 226,310,299 Funded Backlog 1 579,787,162 428,719,337 265,321,134 Net income (loss) 12,701,039 4,359,405 (14,098,619 ) EBITDA 2 98,021,020 76,236,803 55,211,060 Adjusted EBITDA 2 $ 106,144,583 $ 81,863,342 $ 60,290,868 Net income (loss) margin 3.7 % 1.6 % (6.2 )% Adjusted EBITDA Margin 2 30.7 % 29.2 % 26.6 % 1.
Financial and Operating Data Year Ended December 31, (in thousands, except percent) 2025 2024 2023 Revenue $ 471,500 $ 345,251 $ 280,705 Backlog 1 801,056 579,787 428,719 Net income 17,366 12,701 4,359 EBITDA 2 119,826 98,020 76,236 Adjusted EBITDA 2 $ 145,302 $ 106,144 $ 81,862 Net income margin 3.7 % 3.7 % 1.6 % Adjusted EBITDA Margin 2 30.8 % 30.7 % 29.2 % 1.
We define these non-GAAP financial measures as: EBITDA/Adjusted EBITDA - We define EBITDA as our net income before income taxes, depreciation and amortization and interest expense.
We define these non-GAAP financial measures as: EBITDA refers to net income before income taxes, depreciation and amortization and interest expense. Adjusted EBITDA refers to EBITDA plus, as applicable for each period, adjustments for certain items management believes are not indicative of ongoing operations. Adjusted EBITDA excludes non-cash share-based compensation expenses.
The changes in accounts receivable, contract assets, and contract liabilities during the year ended December 31, 2024 were due to initial and subsequent measurement of contracts with customers, changes in business volume, and progress of existing contracts.
Changes in our operating assets and liabilities was primarily driven by an increase in contract assets of $49.1 million, a decrease in contract liabilities of $7.1 million, which was mainly due to initial and subsequent measurement of contracts with customers, changes in business volume, and progress of existing contracts.
Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table sets forth, for the years ended December 31, 2024 and 2023, certain operating data of the Company, including presentation of the changes in amounts between reporting periods: Years Ended December 31, 2024 2023 Dollar Change Percent Change Revenues $ 345,251,064 $ 280,705,570 $ 64,545,494 23.0 % Cost of goods sold 213,139,980 175,156,456 37,983,524 21.7 % Gross profit 132,111,084 105,549,114 26,561,970 25.2 % General and administrative expenses 44,420,816 36,623,263 7,797,553 21.3 % Depreciation and amortization expense 24,130,519 20,432,034 3,698,485 18.1 % Total operating expenses 68,551,335 57,055,297 11,496,038 20.1 % Net operating income 63,559,749 48,493,817 15,065,932 31.1 % Interest expense, net (50,732,903 ) (47,867,005 ) (2,865,898 ) 6.0 % Other income (expense) 1,502,156 563,772 938,384 166.4 % (Provision for) Benefit from income taxes (1,627,963 ) 3,168,821 (4,796,784 ) (151.4 %) Net income 12,701,039 4,359,405 8,341,634 191.3 % Other comprehensive income (loss) (1,237 ) 423 (1,660 ) (392.4 %) Comprehensive income $ 12,699,802 $ 4,359,828 $ 8,339,974 191.3 % Net Income Margin 3.7 % 1.6 % Operating Margin 18.4 % 17.3 % Gross Profit Margin 38.3 % 37.6 % 0.7 % 46 Revenue Revenue for the year ended December 31, 2024 increased $64,545,494, or 23.0%, to $345,251,064 as compared to $280,705,570 for the year ended December 31, 2023.
Results of Operations Comparison of the Years Ended December 31, 2025 and 2024 The following table sets forth, for the years ended December 31, 2025 and 2024, certain operating data of the Company, including presentation of the changes in amounts between reporting periods: Years Ended December, 31 Change 2025 2024 Dollar Percent (in thousands, except percent) Revenue $ 471,500 $ 345,251 $ 126,249 36.6 % Cost of goods sold 281,474 213,140 68,334 32.1 % Gross profit 190,026 132,111 57,915 43.8 % General and administrative expenses 85,656 44,421 41,235 92.8 % Depreciation and amortization expense 31,428 24,130 7,298 30.2 % Total operating expenses 117,084 68,551 48,533 70.8 % Net operating income 72,942 63,560 9,382 14.8 % Interest expense, net (44,567 ) (50,733 ) 6,166 (12.2 %) Other income 4,147 1,502 2,645 176.1 % Provision for income taxes (15,156 ) (1,628 ) (13,528 ) 831.0 % Net income 17,366 12,701 4,665 36.7 % Other comprehensive income (loss) - (1 ) 1 (100.0 %) Comprehensive income (loss) $ 17,366 $ 12,700 $ 4,666 36.7 % Net Income Margin 3.7 % 3.7 % 0.0 % Operating Margin 15.5 % 18.4 % (2.9 %) Gross Profit Margin 40.3 % 38.3 % 2.0 % Revenue Revenue for the year ended December 31, 2025 increased $126.2 million, or 36.6%, to $471.5 million as compared to $345.3 million for the year ended December 31, 2024.
Lastly, Management excludes other non-recurring costs including net gains from disposition of assets, non-cash gains and losses from any hedging arrangements, non-cash impairment losses, business interruption insurance proceeds, and any non-recurring transaction expenses. Adjusted EBITDA Margin - Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenue.
Lastly, Adjusted EBITDA excludes other non-recurring costs including gains or losses from disposition of assets, non-cash impairment losses, non-recurring transaction expenses and other charges or gains that the Company believes are not part of the ongoing operations of its business. The resulting expense or benefit from these other non-recurring costs is inconsistent in amount and frequency.
The new term loan will mature on April 1, 2032 and the new revolving line of credit will mature on April 30, 2030.
The new term loan will mature on April 1, 2032 and the new revolving line of credit will mature on April 30, 2030. The Citi Credit Agreement contains a springing financial covenant that is tested on the last day of any testing fiscal quarter if and when the outstanding principal amount of revolving credit loans exceeds an applicable threshold.
The difference between periods was attributable to a settlement of a shareholder note in the year ended December 31, 2024. (Provision for) and Benefit From Income Taxes The provision for income taxes was ($1,627,963) for the year ended December 31, 2024 compared to a tax benefit of $3,168,821 for the year ended December 31, 2023.
Other Income Other income for the year ended December 31, 2025 and 2024 was $4.1 million and $1.5 million, respectively. The difference between periods was attributable to the write-off of a contingent consideration liability during the year ended December 31, 2025.
Operating Expenses: General and Administrative Expenses General and administrative expenses increased to $36,623,263 for the year ended December 31, 2023 from $30,036,084 for the year ended December 31, 2022.
The increase was primarily driven by operating leverage and improved operating efficiency. Operating Expenses: General and Administrative Expenses General and administrative expenses increased to $85.7 million for the year ended December 31, 2025 from $44.4 million for the year ended December 31, 2024.
The $29,792,441, or 20.5%, increase in cost of goods sold was primarily a result of increased materials and labor costs.
Cost of Goods Sold and Gross Profit Cost of goods sold increased to $281.5 million for the year ended December 31, 2025, from $213.1 million for the year ended December 31, 2024. The $68.3 million, or 32.1%, increase in cost of goods sold was primarily a result of increased spending on materials and labor to support production growth.
Net cash provided by operating activities was $20,326,561 in the year ended December 31, 2023 compared to ($5,892,750) in the year ended December 31, 2022. The changes in accounts receivable, contract assets, contract liabilities during 2023 were due to initial and subsequent measurement of contracts with customers, changes in business volume, and progress of existing contracts.
Change in our operating assets and liabilities was primarily driven by an increase in contract assets of $18.0 million, a decrease in contract liabilities of $6.2 million, which was mainly due to initial and subsequent measurement of contracts with customers, changes in business volume, and progress of existing contracts.
We have elected to use this extended transition period for complying with new or revised accounting standards that have different 58 effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.
Until that time, we have elected to use the extended transition period for adopting new or revised accounting standards, which permits us to delay adoption until the dates applicable to private companies.
Removed
As described in additional detail below, the results of operations include the following disaggregation of end market revenues: Years Ended December 31, 2024 2023 Dollar Change Percent Change Hypersonics and Strategic Missile Defense $ 114,593,971 $ 100,093,421 $ 14,500,550 14.5 % Space and Launch 115,036,292 94,642,721 20,393,571 21.5 % Tactical Missile and Integrated Defense Systems 115,620,801 85,969,428 29,651,373 34.5 % Total Revenue $ 345,251,064 $ 280,705,570 $ 64,545,494 23.0 % Our revenues for the year ended December 31, 2024 continued to benefit from increased U.S.
Added
Aerodynamic and Interstage Systems : involves supporting metallic and composite subsystems designed to enhance aerodynamics and enable different modes of interstage separation. Propulsion Systems : involves the integrated offering of solid rocket motors and supporting subsystems, critical subsystems for liquid fueled rocket motors, launch systems, and ablative composites.
Removed
Government spending in response to evolving global threats, including conflicts in the Middle East, such as the Hamas-Israel conflict and actions by Iran’s proxies against the United States and its allies, alongside ongoing challenges from the Russia-Ukraine war, North Korean provocations, and rising tensions with China.
Added
We believe that our business is well positioned in areas that the DoW and other customers indicate are priorities for future defense spending, including those based on the 2023 National Security Strategy document, the 2024 U.S.
Removed
The Company believes it is positioned to address the growing spending needs of the United States and its allies. The increase in Hypersonics and Strategic Missile Defense revenue was driven by well-funded development and production programs, alongside increased government spending.
Added
In addition, the One Big Beautiful Bill Act (“OBBBA”) enacted in July, 2025 provides approximately $150 billion in incremental defense funding through fiscal year 2029, supporting multiple defense programs such as Hypersonics, Missiles and Munitions. We expect these tailwinds to reinforce demand for capabilities aligned with our core offerings.
Removed
Revenue growth for the year ended December 31, 2024 was more moderate compared to the year ended December 31, 2023 due to the number of programs within the Hypersonics and Strategic Missile Defense revenue end market being within qualification and testing, compared to other end markets where more programs are in full or initial production phases of the program life cycle.
Added
Recent Developments On April 2, 2025 ,we completed the acquisition of Metal Technology Inc. (“MTI”), pursuant to the terms of a Securities Purchase Agreement (the “MTI Agreement”) under which a whole owned subsidiary of ours agreed to purchase MTI for $82.3 million in cash.
Removed
Space and Launch revenues were supported by new launch vehicle programs, including Blue Origin’s New Glenn and ULA’s Vulcan and the acquisition of Rapid Machine Solutions – Wolcott Design Services, LLC (RMS). From the acquisition date of February 16, 2024, to December 31, 2024, RMS generated revenue of $11,692,260.
Added
The acquisition of MTI expands the Company’s capabilities in advanced materials and is expected to strengthen its position in the strategic missile defense market through enhanced product offerings and customer relationships.
Removed
These programs are expected to continue expanding as the commercial space launch market exceeds Federal Aviation Administration (FAA) projections. Tactical Missile and Integrated Defense Systems revenues increased, primarily due to key programs entering or continuing production phases of our program lifecycles.
Added
On May 28, 2025, we completed the acquisition of Industrial Solid Propulsion (“ISP”) pursuant to a Securities Purchase Agreement (the “ISP Agreement”), under which we purchased all issued and outstanding equity interests in ISP and related real estate of ISP, for approximately $52.9 million in cash and 147,842 shares of our common stock, subject to satisfaction or waiver of certain customary closing adjustments.
Removed
This market’s growth continues to be supported by successful system deployments in the Ukraine and Middle East conflicts, which continue generating significant global demand. Cost of Goods Sold and Gross Profit Cost of goods sold increased to $213,139,980 for the year ended December 31, 2024, from $175,156,456 for the year ended December 31, 2023.
Added
The ISP Agreement contains customary representations, warranties and covenants of the parties. The acquisition of ISP expands the Company’s capabilities in small-diameter solid propellant and energetic propulsion systems, strengthening its position in the UAS and missile defense markets through proprietary technologies and integrated manufacturing expertise. On October 28, 2025, we completed the acquisition of Five Axis Industries Inc.
Removed
The $37,983,524, or 21.7%, increase in cost of goods sold was primarily a result of increased materials and labor costs. Since the acquisition of RMS on February 16, 2024, RMS has incurred $4,967,447 of cost of sales, which was not reflected in our prior period results.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed3 unchanged
Biggest changeItem 7A. Q uantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk Our primary exposure to interest rate risk results from outstanding borrowings under the Revolving Credit Facility and Term Note under the TCW Credit Agreement, both of which have a floating interest rate component.
Biggest changeItem 7A. Q uantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk Our primary exposure to interest rate risk resulted from outstanding borrowings under the term note and revolving line of credit, both of which have a floating interest rate component.
However, continued cost inflation and supply chain disruptions during 2024 may continue to require similar efforts to mitigate the impact of continued cost inflation and supply chain disruptions on our results of operations. Our inability or failure to offset cost increases could adversely affect our business, results of operations, or financial condition.
However, continued cost inflation and supply chain disruptions experienced during 2025 may continue to require similar efforts to mitigate the impact of continued cost inflation and supply chain disruptions on our results of operations. Our inability or failure to offset cost increases could adversely affect our business, results of operations, or financial condition.
We estimate that a 1% increase in interest rates for the year ended December 31, 2024, December 31, 2023 and 2022 would have resulted in approximately a $3.1 million, $3.0 million and $3.2 million increase in interest expense, respectively.
We estimate that a 1% increase in interest rates for the year ended December 31, 2025, December 31, 2024 and 2023 would have resulted in approximately a $3.8 million, $3.1 million and $3.0 million increase in interest expense, respectively.
We had cash of $11,529,770 and $5,454,710 as of December 31, 2024 and 2023, respectively, which is held for working capital and general corporate purposes. We do not have significant amount of cash equivalents or restricted cash and we do not enter into investments for trading or speculative purposes.
We had cash of $34.0 million and $11.5 million as of December 31, 2025 and 2024, respectively, which is held for working capital and general corporate purposes. We do not have significant amount of cash equivalents or restricted cash and we do not enter into investments for trading or speculative purposes.