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What changed in COMTECH TELECOMMUNICATIONS CORP /DE/'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of COMTECH TELECOMMUNICATIONS CORP /DE/'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.

+667 added−717 removedSource: 10-K (2025-11-10) vs 10-K (2024-10-30)

Top changes in COMTECH TELECOMMUNICATIONS CORP /DE/'s 2025 10-K

667 paragraphs added · 717 removed · 437 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

128 edited+60 added−77 removed60 unchanged
Biggest changeSatellite and Space Communications Segment Terrestrial and Wireless Networks Segment • Contributed approximately 60% of fiscal 2024 net sales • Satellite Modems and Amplifiers: One of the only U.S.-based providers of modems and high-power amplifiers, facilitating the transmission of voice, video and data over GEO, MEO and LEO satellite constellations • Troposcatter Technologies: A global leader in troposcatter technologies, capable of securely transmitting digitized voice, video, and data over distances up to 200 miles, with strong market share in existing C-band and X-band troposcatter systems worldwide • Government Services: Provides specialized onsite and remote professional engineering and training / support services for U.S. government customers • Space Components: Specializes in delivering components for antennas and high-reliability electronic components and engineering services for space programs • Customers include the world’s largest defense contractors, allied foreign governments, as well as multiple U.S. government agencies (including all branches of the U.S.
Biggest changeSatellite and Space Communications Segment Allerium Segment • Satellite Modems and Amplifiers: A leading U.S.-based provider of satellite modems and high-power amplifiers, facilitating the transmission of voice, video and data over GEO, MEO and LEO satellite constellations • Troposcatter Technologies: A global leader in troposcatter technologies, capable of securely transmitting digitized voice, video, and data over distances up to 200 miles, with strong market share in existing C-band and X-band troposcatter systems worldwide • Cybersecurity Training (Formerly known as Government Services) : Provide advanced cybersecurity training, primarily in support of U.S.
Further, if we are unable to certify that our products are conflict free, we may face challenges with our customers, which could place us at a competitive disadvantage and could harm our reputation. 19 Laws and regulations have been enacted that affect companies conducting business on the Internet, including the European General Data Protection Regulation ("GDPR").
Further, if we are unable to certify that our products are conflict free, we may face challenges with our customers, which could place us at a competitive disadvantage and could harm our reputation. Laws and regulations have been enacted that affect companies conducting business on the Internet, including the European General Data Protection Regulation ("GDPR").
We believe that we are well-positioned to capitalize on this demand through sales of our market-leading, including new next-generation satellite ground infrastructure technologies that can be used with the thousands of new LEO, MEO and large HTS satellites that are expected to be deployed over the next several years, and our advanced troposcatter systems.
We believe we are well-positioned to capitalize on this demand through sales of our market-leading next-generation satellite ground infrastructure technologies that can be used with the thousands of new LEO, MEO and large HTS satellites that are expected to be deployed over the next several years, and our advanced troposcatter systems.
Additionally, changes in regulatory requirements could further restrict our ability to deliver services to our international customers or negatively impact our business, including the addition of a country to the list of sanctioned countries under the IEEPA or similar legislation. In the past, we have self-reported violations of export control laws or regulations to the U.S.
Additionally, changes in regulatory requirements could further restrict our ability to deliver services to our international customers or negatively impact our business, including the addition of a country to the list of sanctioned countries under the IEEPA or similar legislation. 19 In the past, we have self-reported violations of export control laws or regulations to the U.S.
Today, we provide public safety and location technologies to many U.S. telecommunication carriers, the largest being Verizon (for which we provide 911 call routing via cellular service). We believe we service a significant portion of the carrier market for 911 cellular call routing applications, along with one other leading competitor.
Today, we provide public safety and location technologies to many U.S. telecommunication carriers, the largest being Verizon (for which we provide 911 call routing via cellular and wireline service). We believe we service a significant portion of the carrier market for 911 cellular call routing applications, along with one other leading competitor.
Our People Strategy is also focused on meeting and executing our strategic recruitment initiatives, developing and promoting talent; supporting competitive benefits and wellness programs; and emphasizing the importance of our employees’ health, safety and wellness.
Our People Strategy is also focused on meeting our strategic recruitment initiatives, developing and promoting talent, supporting competitive benefits and wellness programs, and emphasizing the importance of our employees’ health, safety and wellness.
Our Satellite and Space Communications segment is one of a limited number of U.S.-based providers of modems and high-power amplifiers, a market leader in troposcatter technologies, and serves some of the world’s largest defense contractors and allied foreign governments, as well as multiple U.S. government agencies, including branches of the U.S. Armed Forces, U.S. Department of Defense (“DoD”) and U.S.
Our Satellite and Space Communications segment is one of a limited number of U.S.-based providers of satellite modems and high-power amplifiers, a market leader in troposcatter technologies, and serves some of the world’s largest defense contractors and allied foreign governments, as well as multiple U.S. government agencies, including branches of the U.S. Armed Forces, U.S.
In both cases, we are at the forefront of the technologies that solve extraordinarily complex communications problems – whether it’s a 911 call captured, routed, and data-enhanced to optimize the public safety result in situations where every second matters, or providing communications infrastructure that ensures people, businesses, and governments can connect anywhere on earth, under any conditions – including on the battlefield.
In both cases, we are at the forefront of the technologies that solve extraordinarily complex communications problems – whether it is a 911 call captured, routed and data-enhanced to optimize the public safety result in situations where every second matters, or providing communications infrastructure that ensures people, businesses and governments can connect anywhere on earth, under any conditions – including on the battlefield.
Our customers are the businesses, communities and governments that need to implement and improve 911 infrastructure in the U.S., as well as MNOs in the U.S. and abroad that have a need to determine subscriber location within a network or to facilitate messaging services.
Our customers are the businesses, communities and governments that need to implement and improve 911 infrastructure in the U.S., as well as mobile network operators ("MNOs") in the U.S. and abroad that have a need to determine subscriber location within a network or to facilitate messaging services.
Except for the U.S., no individual country (including sales to U.S. domestic companies for inclusion in products that are sold to a foreign country) represented more than 10% of consolidated net sales for fiscal 2024, 2023 and 2022.
Except for the U.S., no individual country (including sales to U.S. domestic companies for inclusion in products that are sold to a foreign country) represented more than 10% of consolidated net sales for fiscal 2025, 2024 and 2023.
Our text messaging platforms are used by wireless carriers to provide short messaging services (“SMS”) to their end-customers as well as being used to communicate with 911 public safety answering points (“PSAPs”). Solacom Call Handling Solutions Solacom Guardian is our state-of-the-art call handling solution, which provides an integrated call and text-to-and-from 911 solution on a unified platform.
Our text messaging platforms are used by wireless carriers to provide short messaging services (“SMS”) to their end-customers, as well as being used to communicate with 911 public safety answering points ("PSAP"). Call Handling Solutions Guardian is our state-of-the-art call handling solution, which provides an integrated call and text-to-and-from 911 solution on a unified platform.
This new solution offers streaming live feeds from traffic cameras at and near incident location, and accesses caller information like past residences, criminal history, or next-of-kin information at the tap of a button.
This new solution offers streaming live feeds from traffic cameras at and near incident locations, and accesses caller information like past residences, criminal history or next-of-kin information at the tap of a button.
As service providers work to offer connectivity to these high-speed, high-bandwidth satellites and expand their networks to handle the demand for new LEO, MEO and HTS applications, we believe our ELEVATE TM , Heights TM and UHP networking platforms, and our solid-state amplifiers will ultimately be incorporated into many new installations and equipment upgrades.
As service providers work to offer connectivity to these high-speed, high-bandwidth satellites and expand their networks to handle the demand for new LEO, MEO and HTS applications, we believe our networking platforms, and our solid-state amplifiers will ultimately be incorporated into many new installations and equipment upgrades.
The Guardian platform includes an integrated cloud-based texting solution (“Guardian Messenger”) which provides call takers / dispatchers with the ability to collect, process and share previously unavailable live incident information such as text, photos, and video via SMS and multimedia messaging services (“MMS”), from one integrated desktop.
The Guardian platform includes an integrated cloud-based texting solution we call Guardian Messenger, which provides call takers / dispatchers with the ability to collect, process and share previously unavailable live incident information such as text, photos, and video via SMS and multimedia messaging services (“MMS”), from one integrated desktop.
Backlog in both our Satellite and Space Communications segment and Terrestrial and Wireless Networks segment has been, and could be, highly influenced by the nature and timing of orders received from federal, state and local governments and defense-related agencies, causing such orders to be subject to unpredictable funding, deployment and technology decisions by such customers.
Backlog in both our Satellite and Space Communications segment and Allerium segment has been, and could be, highly influenced by the nature and timing of orders received from federal, state and local governments and defense-related agencies, causing such orders to be subject to unpredictable funding, deployment and technology decisions by such customers.
During fiscal 2024, 2023 and 2022, we incurred $4.1 million, $3.8 million and $1.2 million, respectively, of strategic emerging technology costs for next-generation satellite technology to advance our solutions offerings to be used with new broadband satellite constellations.
During fiscal 2025, 2024 and 2023, we incurred $0.3 million, $4.1 million and $3.8 million, respectively, of strategic emerging technology costs for next-generation satellite technology to advance our solutions offerings to be used with new broadband satellite constellations.
The GDPR imposes certain privacy related requirements on companies that receive or process personal data of residents of the European Union that are currently different than those in the United States and include significant penalties for non-compliance.
The GDPR imposes certain privacy related requirements on companies that receive or process personal data of residents of the European Union that are currently different than those in the U.S. and include significant penalties for non-compliance.
Offering a bird's-eye view of integrated data, the SmartResponse ® solution empowers first responders to ensure appropriate resources are on the scene and to better serve the public in emergency situations. 8 Terrestrial and Wireless Networks: Key Markets and Growth Drivers We are a leading provider of modern public safety and location technologies.
Offering a bird's-eye view of integrated data, the SmartResponse ® solution empowers first responders to ensure appropriate resources are on the scene and to better serve the public in emergency situations. Allerium: Key Markets and Growth Drivers We are a leading provider of modern public safety and location technologies.
Similarly, there are several legislative proposals in the United States, at both the federal and state level, that could impose new obligations in areas affecting our business, such as liability for personal data protection.
Similarly, there are several legislative proposals in the U.S., at both the federal and state level, that could impose new obligations in areas affecting our business, such as liability for personal data protection.
In September 2024, we announced the launch of our new Digital Common Ground (“DCG”) portfolio of modems, designed to enable the U.S. DoD and coalition partners to move to digitized, hybrid satellite network architectures.
In fiscal 2025, we announced the launch of our new Digital Common Ground (“DCG”) portfolio of modems, designed to enable the U.S. DoD and coalition partners to move to digitized, hybrid satellite network architectures.
We encourage employee participation to identify opportunities for improvement and review and monitor our performance with safety committees at our local sites. Local safety committees identify safety programs and ensure completion of all training and target learning objectives. Employee wellness is important to Comtech.
We encourage employee participation to identify opportunities for improvement and review and monitor our performance with safety committees at our local sites. Local safety committees identify safety programs and ensure completion of all training and target learning objectives.
Next Generation 911 and Call Delivery In addition to 911 call routing, we provide systems integration, geospatial location information, satellite and location infrastructure terminals, and linkage to NG-911 Emergency Services IP Networks ("ESInet"). We also offer what we believe are best-in-class 911 call handling solutions under the Solacom brand name.
Next Generation 911 and Call Delivery In addition to 911 call routing, we provide systems integration, geospatial location information, satellite and location infrastructure terminals, and linkage to NG-911 Emergency Services IP Networks ("ESInet"). We also offer what we believe are best-in-class 911 call handling solutions.
ITEM 1. BUSINESS Founded in 1967, we have a longstanding history of providing critical communications infrastructure technology and solutions to customers around the world. We serve two core end-markets: secure satellite and wireless communications via our Satellite and Space Communications segment, and next-generation 911 and public safety via our Terrestrial and Wireless Networks segment.
ITEM 1. BUSINESS Founded in 1967, we have a longstanding history of providing critical communications technology and solutions to customers around the world. We serve two core end-markets: secure satellite and wireless communications via our Satellite and Space Communications segment and public safety via our Allerium (formerly, our Terrestrial and Wireless Networks) segment.
Terrestrial and Wireless Networks: Customer Base Our customer base for the Terrestrial and Wireless Networks segment serves numerous customers, primarily in North America and Australia, with whom we have cultivated longstanding relationships, including state and local governments, and a number of the largest telecommunication companies in the world.
Allerium: Customer Base Our Allerium segment serves numerous customers, primarily in North America and Australia, with whom we have cultivated longstanding relationships, including state and local governments, and a number of the largest telecommunication companies in the world.
Internal research and development expenses are reported as research and development expenses for financial reporting purposes and were $24.1 million, $48.6 million and $52.5 million in fiscal 2024, 2023 and 2022, respectively, representing 4.5%, 8.8% and 10.8% of total consolidated net sales, respectively, for these periods.
Internal research and development expenses are reported as research and development expenses for financial reporting purposes and were $17.4 million, $24.1 million and $48.6 million in fiscal 2025, 2024 and 2023, respectively, representing 3.5%, 4.5% and 8.8% of total consolidated net sales, respectively, for these periods.
In addition to the recent increases in customer-funded research and development activities, in fiscal 2024, we also experienced an increase in engineering efforts related to cost to fulfill contract assets and internal use software, for which we capitalized $2.9 million and $3.8 million, respectively.
In addition to the recent increases in customer-funded research and development activities, in fiscal 2025 and 2024, we also experienced an increase in engineering efforts related to cost to fulfill contract assets and internal use software. In both fiscal 2025 and 2024, we capitalized $2.9 million for cost to fulfill contract assets.
Our next generation solutions enable rich, multimedia information to be delivered alongside 911 calls. Also, our E-911 and NG-911 call routing solutions allow cellular carriers and voice over the Internet ("VoIP") carriers, as well as legacy telecommunications carriers, to deliver emergency calls to public safety emergency call centers nationwide.
Our next generation solutions enable rich, multimedia information to be delivered alongside 911 calls and situational awareness data. Also, our E-911 and NG-911 call routing solutions allow global wireless carriers and voice over the Internet ("VoIP") carriers, as well as legacy telecommunications carriers, to deliver emergency communications and rich situational awareness data to public safety emergency call centers nationwide.
The DCG product line is also one of the first to be Digital Intermediate Frequency Interoperability (“DIFI”) compliant, adhering to DoD and coalition communications standards to enable seamless information flow between services, a key tenet of Combined Joint All Domain Command and Control (“CJADC2”). The DCG product line offers industry leading performance, through multi-gigabit throughput at launch.
The DCG product line is also one of the first to be Digital Intermediate Frequency Interoperability (“DIFI”) compliant, adhering to DoD and coalition communications standards to enable seamless information flow between services, a key tenet of CJADC2. The DCG product line offers industry leading performance, through multi-gigabit throughput at launch.
Our communications solutions provide command and control and satellite networking capabilities that support U.S. and allied government initiatives for assured and resilient communications capabilities, as well as supporting interoperability objectives, including the Joint All Domain Command and Control (“JADC2”) efforts. • New LEO, MEO and HTS Satellites: Thousands of new satellites are reportedly in orbit or being launched over the next several years, according to announcements by companies including Telesat Lightspeed, Eutelsat, OneWeb, SpaceX Starlink, Amazon Kuiper and Viasat, which we believe will lead to increasingly complex satellite networks.
Our communications solutions provide command and control and satellite networking capabilities that support U.S. and allied government initiatives for assured and resilient communications capabilities, as well as supporting interoperability objectives, including CJADC2 objectives. • New LEO, MEO and HTS Satellites: Thousands of new satellites in orbit or scheduled for launch over the next several years, according to announcements by Amazon Kuiper, Eutelsat OneWeb, SpaceX Starlink, Telesat Lightspeed and Viasat, which we believe will lead to increasingly complex satellite networks.
Our solutions include feature-rich data sets (such as: precise location information, route optimization, text messaging, photos and real-time video), putting first responders in the best possible position to make decisions when every second counts.
Our solutions include feature-rich data sets (such as: precise location information, text messaging, photos, videos, real-time call transcription and translation), putting first responders in the best possible position to make decisions when every second counts.
As these industries increasingly rely on data from connected devices, using location information in real-time is expected to enhance existing business processes and outcomes as well as end user experiences. We believe end-market applications such as worker’s safety in high-risk areas, smart manufacturing and autonomous driving would benefit enormously from new precision-positioning techniques.
As these industries increasingly rely on data from connected devices, we expect our services can facilitate their use of location information in real-time to enhance existing business processes and outcomes, as well as end user experiences. We believe end-market applications such as worker’s safety in high-risk areas, smart manufacturing and autonomous driving would benefit enormously from new precision-positioning techniques.
The EHSMS has the goals of engaging employees at all levels of the organization in the prevention of work-related injuries and illnesses, reducing environmental impacts, and fostering a culture of continuous improvement. 17 U.S. Government Contracts and Security Clearances The U.S. government operates on an October-to-September fiscal year.
In fiscal 2025, we continued to support our EHS goals of engaging employees at all levels of the organization in the prevention of work-related injuries and illnesses, reducing environmental impacts and fostering a culture of continuous improvement. U.S. Government Contracts and Security Clearances The U.S. government operates on an October-to-September fiscal year.
" At July 31, 2024, 66.6% of our backlog consisted of orders for use by U.S. commercial customers, 18.8% consisted of U.S. government contracts, subcontracts and government funded programs and 14.6% consisted of orders for use by international customers (including sales to U.S. domestic companies for inclusion in products that will be sold to international customers).
At July 31, 2025, 69.6% of our backlog consisted of orders for use by U.S. commercial customers, 12.1% consisted of U.S. government contracts, subcontracts and government funded programs and 18.3% consisted of orders for use by international customers (including sales to U.S. domestic companies for inclusion in products that will be sold to international customers).
During fiscal 2024, 2023 and 2022, we were reimbursed by customers for such activities in the amounts of $18.9 million, $14.0 million and $9.8 million, respectively.
During fiscal 2025, 2024 and 2023, we were reimbursed by customers for such activities in the amounts of $22.8 million, $23.0 million and $14.0 million, respectively.
(acquired by Teledyne Technologies Inc.), Gilat Satellite Networks Ltd., Empower RF Systems, Inc., General Dynamics Corporation, Hughes Network Systems, LLC (a subsidiary of EchoStar), KVH Industries, Inc., Kratos Defense and Security Solutions (Including Kratos RT Logic and Avtec Systems, Inc.), L3Harris Technologies, Inc., Mission Microwave Technologies, LLC, ND Satcom GmbH, Novelsat LTD, Panasonic Corporation, Paradise Datacom Ltd.
(a subsidiary of HEICO Corp.), Gilat Satellite Networks Ltd., General Dynamics Corporation, Hughes Network Systems, LLC (a subsidiary of EchoStar), Kratos Defense and Security Solutions (Including Kratos RT Logic and Avtec Systems, Inc.), L3Harris Technologies, Inc., Mission Microwave Technologies, LLC, ND Satcom GmbH, Novelsat LTD, Paradise Datacom Ltd.
Domestic sales include sales to commercial customers, as well as to U.S. state and local governments. For fiscal 2024, except for the U.S. government, there were no customers that represented more than 10% of consolidated net sales. For fiscal 2023 and 2022, included in domestic sales are sales to Verizon Communications Inc.
Domestic sales include sales to commercial customers, as well as to U.S. state and local governments. For fiscal 2025 and 2024, except for the U.S. government, there were no customers that represented more than 10% of consolidated net sales.
Consistent with this effort, in our fourth quarter of fiscal 2024, we made the decision to exit our operations in Basingstoke, United Kingdom. Such operations were established in connection with the prior management team’s fiscal 2020 acquisition of CGC Technology Limited, which primarily served customers in Europe.
Consistent with this effort, in our fourth quarter of fiscal 2024, we made the decision to exit our underperforming operations in Basingstoke, United Kingdom. Such operations were established in connection with the fiscal 2020 acquisition of CGC Technology Limited.
Department of the Treasury’s Office of Foreign Assets Control ("OFAC"), the Department of Commerce ("DoC") and their foreign counterparts as well as other applicable laws relating to trade, export controls and foreign corrupt practices, the violation of which could adversely affect our operations. We must comply with all applicable export control laws and regulations of the U.S. and other countries.
Department of the Treasury’s Office of Foreign Assets Control ("OFAC"), the Department of Commerce ("DoC") , the Department of State and their foreign counterparts as well as other applicable laws relating to trade, export controls and foreign corrupt practices, the violation of which could adversely affect our operations.
Our sales strategies include a commitment to providing ongoing customer support for our systems and equipment. This support involves providing direct access to engineering staff or trained technical representatives to resolve technical or operational issues. Our products and services in many of our product lines have long sales cycles.
This support involves providing direct access to engineering staff or trained technical representatives to resolve technical or operational issues. Our products and services in many of our product lines have long sales cycles.
Material acquisitions and divestitures in the recent past include: On November 7, 2023, we completed the divestiture of our solid-state RF microwave high power amplifiers and control components product line, which was included in our Satellite and Space Communications segment, pursuant to a stock sale agreement entered into on October 11, 2023 (the "PST Divestiture").
Elements of our transformation plan related to our operations have resulted in: • On November 7, 2023, we completed the divestiture of our solid-state RF microwave high power amplifiers and control components product line, which was included in our Satellite and Space Communications segment, pursuant to a stock sale agreement entered into on October 11, 2023 (the "PST Divestiture").
Armed Forces) • Contributed approximately 40% of fiscal 2024 net sales • Next-Generation 911 Solutions: we provide emergency call routing, location validation, policy-based routing rules, logging, and security functionality • Global Carrier Location and Messaging Services: Software and equipment for location-based and text messaging services for carriers, including for public safety, commercial and government services, and wireless emergency alerts solutions for network operators • Call-Handling Solutions: we provide comprehensive call handling applications for Public Safety Answering Points • Customers include state and local governments across Canada and the U.S., and several of the largest telecommunications companies in the world (including AT&T and Verizon) 3 Financial information about our business segments, including net sales, operating results, Adjusted EBITDA (a Non-GAAP financial measure), total assets, and our operations outside the United States, is provided in " Notes to Consolidated Financial Statements - Note (12) Segment Information" included in "Part II - Item 8.
Armed Forces) • Next-Generation 911 Solutions: we provide emergency call routing, location validation, network, policy-based routing rules, logging and security functionality to states and local governments • Global Carrier Location and Messaging Services: Software and equipment for location-based and text messaging services for carriers, including for public safety, commercial and government services, and wireless emergency alerts solutions for network operators • Call-Handling Solutions: we provide comprehensive 911 call handling applications for Public Safety Answering Points ("PSAPs") • Customers include state and local governments across the U.S., Canada and Australia, and several of the largest telecommunications companies in the world (including Verizon, AT&T, Nokia and Vodafone) Financial information about our business segments is provided in Notes to Consolidated Financial Statements - Note (13) Segment Information included in Part II - Item 8.
Our Satellite and Space Communications segment is organized into four categories: satellite modem and amplifier technologies, troposcatter technologies, government services and space components. Satellite Modem and Amplifier Technologies We believe we are a leading provider of satellite earth station modems, solid-state amplifiers and traveling wave tube amplifiers.
Our Satellite and Space Communications segment is organized into four technology areas: satellite modem and amplifier technologies, troposcatter technologies, cybersecurity training (formerly, government services) and space components and antennas. Satellite Modem and Amplifier Technologies We believe we are a leading provider of satellite earth station modems, solid-state amplifiers ("SSPAs"), frequency converters and traveling wave tube amplifiers ("TWTAs").
Our location technology solutions enable the determination of a mobile device’s geospatial position in a variety of environments, leveraging a wide range of signals including Global Positioning System ("GPS"), Global Navigation Satellite Systems ("GNSS") and multiple cellular positioning technologies ranging from 2G through 5G mobile networks.
We enable the determination of a mobile device’s geospatial position in a variety of environments, leveraging a wide range of signals including GPS, GNSS and multiple cellular positioning technologies ranging from 2G through 5G mobile networks.
As a result of this U.S. government shift toward multiple award IDIQ contracts, we expect to face greater competition for future U.S. government contracts and, at the same time, greater opportunities for us to participate in program areas that we do not currently participate in.
As a result of this U.S. government shift toward multiple award IDIQ contracts, we expect to face greater competition for future U.S. government contracts and, at the same time, greater opportunities for us to participate in program areas that we do not currently participate in. 18 As a U.S. government contractor and subcontractor, we are subject to a variety of rules and regulations, such as the Federal Acquisition Regulation ("FAR").
Built on the our proven satellite communications (“SATCOM”) modem portfolio, our DCG modems are designed and built at Comtech’s headquarters in Chandler, AZ and support commercial and government satellite operations on a single common platform that can be reconfigured rapidly to address changing operational needs.
Built on our proven SATCOM modem portfolio, DCG modems are designed and built at Comtech’s headquarters in Chandler, AZ and support both commercial and government satellite operations on a common, software-defined platform that can be rapidly reconfigured to address evolving mission needs.
In addition, we incorporate modern cybersecurity design principles at every level across our DCG product line, ranging from a trusted supply chain to a thoughtful software upgrade lifecycle, including in-field updates.
In addition, we incorporate modern cybersecurity design principles at every level across our DCG product line, ranging from a trusted supply chain to a thoughtful software upgrade lifecycle, including in-field updates. We believe the technologies incorporated into our DCG product line create a meaningful competitive advantage for us.
In addition to our growth in core 911 services, the expected expansion of 988 networks in fiscal 2025 and beyond across the United States is expected to have a positive impact on our business. 988 services provide free and confidential support for people in distress, suicide prevention and crisis resources.
In addition to our growth in core 911 services, any expansion of 988 networks in the future across the U.S. could have a positive impact on our business. 988 services provide free and confidential support for people in distress, suicide prevention and crisis resources.
Space Force (“USSF”), among others. Our Terrestrial and Wireless Networks segment is a leading provider of next generation 911 (“NG-911”) infrastructure and solutions for state and local governments and carriers.
Department of Defense (“DoD”) and U.S. Space Force (“USSF”), among others. Our Allerium segment is a leading provider of next generation 911 (“NG-911”) infrastructure and solutions for state and local governments and telecommunication carriers.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Comparison of Fiscal 2024 and 2023 – Adjusted EBITDA .” More Information and Where to Find It Our Internet website is www.comtech.com , at which you can find our filings with the Securities and Exchange Commission ("SEC"), including investor letters, press releases, annual reports, quarterly reports, current reports, and any amendments to those filings.
More Information and Where to Find It Our Internet website is www.comtech.com , at which you can find our filings with the Securities and Exchange Commission ("SEC"), including investor letters, press releases, annual reports, quarterly reports, current reports, and any amendments to those filings.
We estimate that a substantial portion of the backlog as of July 31, 2024 will be recognized as sales during the next twenty-four month period, with the rest thereafter. Such estimate could be impacted by our transformation strategy discussed above, under the section " Strategic Transformation.
We estimate that a substantial portion of the backlog as of July 31, 2025 will be recognized as sales during the next twenty-four month period, with the rest thereafter. Such estimate could be impacted by our transformation plan discussed throughout this Form 10-K.
Some of our sales to international customers are paid for by letters of credit or on an open account. From time to time, some of our international customers may require us to provide performance guarantees.
When we sell internationally, we denominate most of our contracts in U.S. dollars. Some of our sales to international customers are paid for by letters of credit or on an open account. From time to time, some of our international customers may require us to provide performance guarantees.
Within the satellite communications market, we are a leading provider of components that support the mission requirements of LEO, MEO and GEO satellite communication and tracking requirements, offering a host of high-performance single-band and multi-band feed solutions.
Within the SATCOM market, we are a leading provider of components that support the mission requirements of LEO, MEO and GEO SATCOM and tracking requirements, offering a host of high-performance single-band and multi-band feed solutions. We also supply maritime antenna solutions that are fielded by foreign governments.
In some cases, these same companies may be among our competitors. 14 Listed below, in alphabetical order, are some of our competitors in each of our two business segments: Satellite and Space Communications – Advantech Co., Ltd., Aethercomm Inc.
In some cases, these same companies may be among our competitors. Listed below, in alphabetical order, are some of our competitors in each of our two business segments: Satellite and Space Communications – Advantech Co., Ltd., Aethercomm Inc. (acquired by Frontgrade Technologies, a portfolio company of Veritas Capital), Agilis Satcom, AMERGINT Technologies, Inc.
At least once per month we organize an event or engagement where employees are encouraged to participate to celebrate our workforce and our communities. Events include Asian American Pacific Islander Heritage Month, International Women’s Day, Breast Cancer Awareness Month, and Pride Month, among others.
At least once per month we organize an event or engagement where employees are encouraged to participate to celebrate our workforce and our communities. Events include National Pet Day, Men’s Health Awareness, Breast Cancer Awareness Month, and Autism Awareness Month, among others.
Representative customer categories include: • U.S. state and local governments, such as the Commonwealth of Massachusetts, the Commonwealth of Pennsylvania and the states of Arizona, Iowa, Maine, Ohio, South Carolina, Washington, St.
Representative customer categories include: • U.S. state and local governments, such as the Commonwealth of Massachusetts, the Commonwealth of Pennsylvania, the states of Arizona, Iowa, Kentucky, Maine, Ohio, South Carolina, and Washington, and North Central Texas Emergency Communications District, the Northern Illinois Next Generation Alliance and St.
Our quality engineering team assures that the product received from our suppliers and test facilities are compliant to their respective specifications prior to shipment to our end customers. Our service offerings have been expanded to include kitting to customer bill of materials with direct shipments to customer designated contract manufacturers.
Our quality engineering team assures that all products received from suppliers and test facilities are fully compliant with mission specifications prior to shipment. To further support our customers’ needs, we have expanded our service offerings to include kitting to customer bill of materials, with direct shipments to designated contract manufacturers.
This year employees had an opportunity to participate in wellness events as a company-wide challenge. We rigorously review our benefit and compensation plans to maintain competitive packages that reflect the wellness needs of our workforce and the marketplace. These programs include 401(k) plans, comprehensive health packages, and welfare benefits, among many others.
This year employees had an opportunity to participate in several wellness events as a company-wide challenge. We rigorously review our benefit and compensation plans to maintain competitive packages that reflect the wellness needs of our workforce and the marketplace as part of our financial wellness initiatives.
Our policy promotes equal employment opportunities without discrimination or harassment on the basis of race, color, national origin, religion, sex, age, disability, or any other status protected by law. Our Chief People Officer is committed to driving these policies and efforts across the enterprise to cultivate a strong culture of inclusivity. We value a workforce that is diverse by thought.
Our policy promotes equal employment opportunities without discrimination or harassment on the basis of race, color, national origin, religion, sex, age, disability, or any other status protected by law. Our senior leadership team drives these efforts across the enterprise to cultivate a strong culture of inclusivity.
At July 31, 2024, we had 1,676 employees (including temporary employees and contractors), 1,048 of whom were engaged in production and production support, 337 in research and development and other engineering support and 291 in marketing and administrative functions. None of our U.S. based employees are represented by a labor union.
At July 31, 2025, we had 1,385 employees (including temporary employees and contractors), 820 of whom were engaged in production and production support, 323 in research and development and other engineering support and 242 in marketing and administrative functions, including sales, accounting and finance, tax and information technology. None of our U.S. employees are represented by a labor union.
As a result, we believe our backlog and orders, at any point in time, are not necessarily indicative of the total sales anticipated for any future period. Research and Development We have established leading technology positions in our fields through internal and customer-funded research and development activities.
As a result, we believe our backlog and orders, at any point in time, are not necessarily indicative of the total sales anticipated for any future period.
We believe state and local governments need to upgrade existing legacy networks, location technologies, and call handling systems to modern NG-911 systems infrastructure, including 911 text messaging services, advanced data, real-time photos, and other types of information sharing over IP networks. 7 As the U.S., Canada and Australia broadly adopt upgraded NG-911 and call handling solutions, we believe that other countries will follow similar technology and telecommunications advancements.
We believe state and local governments need to upgrade existing legacy networks, location technologies, and call handling systems to modern NG-911 systems infrastructure, including 911 text messaging services, advanced data, real-time photos, and other types of information sharing over IP networks.
The products we sell require significant engineering design and manufacturing expertise. For technological capabilities that are not protected by patents or licenses, we generally rely on the expertise of our employees and our learned experiences in both the design and manufacture of our products and the delivery of our services.
For technological capabilities that are not protected by patents or licenses, we generally rely on the expertise of our employees and our learned experiences in both the design and manufacture of our products and the delivery of our services. 14 Some of our key Satellite and Space Communications segment technology is protected by patents that are significant to protecting our proprietary technology.
We are committed to providing a workplace which values the health, safety, and well-being of our employees, contractors, and visitors to our facilities, complying with Environment, Health and Safety ("EHS") legal requirements, and minimizing EHS risk.
We seek to increase efficient usage of building space and we offer our employees incentives to promote greener commuting options through rideshare programs. We are committed to providing a workplace which values the health, safety, and well-being of our employees, contractors and visitors to our facilities, complying with Environment, Health and Safety ("EHS") legal requirements, and minimizing EHS risk.
As a result of these trends and the impact of prior reductions in force announced in fiscal 2023, our research and development expenses for financial reporting purposes significantly decreased in fiscal 2024 as compared to historical periods.
In fiscal 2025 and 2024, we capitalized $3.9 million and $3.8 million, respectively, for internal use software. As a result of these trends and the impact of reductions in force actioned in fiscal 2025 and 2024, our research and development expenses for financial reporting purposes significantly decreased as compared to historical periods.
The Guardian platform also offers a cloud-based reporting and analytics solution (“Guardian Insights”), designed to assist emergency call center directors to know their operations, so they can better plan and manage resources and workloads. We are investing in product enhancements for our Guardian platform, which include additional cloud-based capabilities, analytics, and cyber security solutions.
The Guardian platform also offers a cloud-based reporting and analytics solution we call Guardian Insights, designed to assist emergency call center directors to know their operations, so they can better plan and manage resources and workloads.
In addition, we expect to leverage our relationships with larger companies (such as prime contractors to the U.S. government and large mobile wireless operators) to market our technology solutions. In fiscal 2025, we expect to continue expanding our social media and Internet presence and further developing an updated marketing and branding strategy.
In addition, we expect to leverage our relationships with larger companies (such as prime contractors to the U.S. government and large mobile wireless operators) to market our technology solutions.
Although funding for these multi-year contracts is dependent on future budgets being approved, we include the full estimated value of these large, multi-year contracts in our backlog given the critical nature of the services being provided and the positive historical experience of our state and local government customers passing their respective budgets.
Although funding for these multi-year contracts is dependent on future budgets being approved, we include the full estimated value of these large, multi-year contracts in our backlog given the legal obligations of the customer, the critical nature of the services being provided and the positive historical experience of our state and local government customers passing their respective budgets. 13 There can be no assurance that our backlog will result in actual revenue in any particular period, or at all, or that any contract included in backlog will be profitable.
We have significantly advanced the capabilities of our Troposcatter Family of Systems (“FoS”): we now deliver a next-generation, software-defined solution that represents a thousand-fold performance increase over prior generations of equipment. Over the recent past, our next-generation Troposcatter terminals have been chosen by the U.S.
We have significantly advanced the capabilities of our Troposcatter Family of Systems (“FoS”), delivering a next-generation, software-defined solution that represents a thousand-fold performance increase over prior generations of equipment. 4 Our next-generation Troposcatter terminals have been selected by the U.S. Army, the Marines and international defense organizations to support the tactical communications needs.
Fostering Proactive Belonging We believe the principle of hospitality acts as a catalyst for fostering a sense of proactive belonging, a key component for achieving a sustainable impact. At the heart of our approach is the intentional act of bringing people together across social, cultural, and experiential gaps.
Fostering Engagement We believe that a positive, welcoming environment leads to greater involvement and connection to the organization which foster a sense of proactive belonging, a key component for achieving a sustainable impact. At the heart of our approach is the intentional act of bringing people together across social, cultural and experiential gaps.
As part of this strategy, we are providing a foundation for a diverse, inclusive and equitable workplace where employees feel they belong, their views are valued, and they are empowered to pursue opportunities they are passionate about.
We are passionate about building impactful employee engagement through a variety of programs, initiatives, and other opportunities. As part of this strategy, we are providing a foundation for a workplace where employees feel they belong, their views are valued, and they are empowered to pursue opportunities that drive their professional passion.
The actual amount and timing of any revenue is subject to various contingencies, many of which are beyond our control.
There is a higher degree of risk in this regard with respect to unfunded backlog. The actual amount and timing of any revenue is subject to various contingencies, many of which are beyond our control.
Army, Air Force, Marine Corps and Navy), U.S. state and local governments and allied foreign governments. Approximately 55.4% of the segment’s sales are derived from U.S. government and related agency contracts. Representative customer categories include: • The U.S. Army, U.S. Marine Corps, U.S. Navy, prime contractors to the U.S.
For fiscal 2025, approximately 55.1% of the segment’s sales are derived from U.S. government and related agency contracts. Representative customer categories include: • The U.S. Army, U.S. Marine Corps, U.S. Navy, prime contractors to the U.S. Armed Forces, NATO and foreign governments (i.e., ministries of defense), as well as the U.S.
In addition, in recent years, we have found that overall sales cycles for each of our product lines have significantly increased, as we continue to support our customer's overall migration and upgrade to newer designs and technologies. 11 Sales by geography and customer type, as a percentage of related net sales, are as follows: Fiscal Years Ended July 31, 2024 2023 2022 2024 2023 2022 2024 2023 2022 Satellite and Space Communications Terrestrial and Wireless Networks Consolidated U.S. government 55.4 % 49.9 % 45.6 % 1.1 % 1.7 % 2.4 % 33.7 % 31.3 % 27.2 % Domestic 15.1 % 16.7 % 18.0 % 89.4 % 89.2 % 88.1 % 44.8 % 44.7 % 47.8 % Total U.S. 70.5 % 66.6 % 63.6 % 90.5 % 90.9 % 90.5 % 78.5 % 76.0 % 75.0 % International 29.5 % 33.4 % 36.4 % 9.5 % 9.1 % 9.5 % 21.5 % 24.0 % 25.0 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Sales to U.S. government customers include sales to the DoD, intelligence and civilian agencies, as well as sales directly to or through prime contractors.
Sales by geography and customer type, as a percentage of related net sales, are as follows: Fiscal Years Ended July 31, 2025 2024 2023 2025 2024 2023 2025 2024 2023 Satellite and Space Communications Allerium Consolidated U.S. government 55.1 % 55.4 % 49.9 % 1.2 % 1.1 % 1.7 % 30.3 % 33.7 % 31.3 % Domestic 13.4 % 15.1 % 16.7 % 90.0 % 89.4 % 89.2 % 48.7 % 44.8 % 44.7 % Total U.S. 68.5 % 70.5 % 66.6 % 91.2 % 90.5 % 90.9 % 79.0 % 78.5 % 76.0 % International 31.5 % 29.5 % 33.4 % 8.8 % 9.5 % 9.1 % 21.0 % 21.5 % 24.0 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 12 Sales to U.S. government customers include sales to the DoD, intelligence and civilian agencies, as well as sales directly to or through prime contractors.
By creating opportunities for provocative thinking and meaningful experiences, we are able to challenge assumptions that disrupt our innate habits of thinking and behaving. 15 We expect our employees and contractors to foster authentic connections, cultivate hospitable spaces, embrace disorienting dilemmas, and emphasize continuous learning.
By creating opportunities for provocative thinking and meaningful experiences, we are able to challenge assumptions that disrupt our innate habits of thinking and behaving. We strive for an environment where all employees feel that they belong, are accepted, included, respected and supported as individuals. We expect our employees and contractors to foster authentic connections and cultivate hospitable spaces.
These products include configurations that are formally qualified for use on aircraft and being installed as both retrofit and linefit initiatives. Troposcatter Technologies We believe we are a world leader in the design and supply of troposcatter equipment. We have designed, manufactured, and delivered troposcatter systems for well over fifty years.
Troposcatter Technologies We believe we are a world leader in the design and supply of troposcatter equipment. We have designed, manufactured, and delivered troposcatter systems for well over fifty years.
Almost all the products and services we sell to the U.S. government include technology and other technical know-how that we have internally developed. In past instances where we have provided government-purpose rights, to our knowledge, the U.S. government has not exercised any of these rights.
In past instances where we have provided government-purpose rights, to our knowledge, the U.S. government has not exercised any of these rights.
(acquired by Frontgrade Technologies, a portfolio company of Veritas Capital), Agilis Satcom, AMERGINT Technologies, Inc., Amkom Design Group Inc., AnaCom, Inc., Codan Limited, Communications and Power Industries (also referred to as "CPI"), Datum Systems, Inc., dB Control Corp. (a subsidiary of HEICO Corp.), ETM Electromatic Inc.
(acquired by ARKA), Amkom Design Group Inc., AnaCom, Inc., Codan Limited, Communications and Power Industries (also referred to as "CPI"), Datum Systems, Inc., dB Control Corp.
According to Frost & Sullivan, a leading third-party research firm, we were the second leading NG-911 primary contract holder at year-end 2023, with an estimated market share of 22.1% and a population coverage of nearly 60 million. We have primary statewide contracts in Arizona, Illinois, Iowa, Massachusetts, Ohio, Pennsylvania, South Carolina and Washington.
According to the 2024 Next Generation 911 report published by Frost & Sullivan, a leading third-party research firm, we were the second leading NG-911 primary contract holder, with an estimated market share of 22.1% and a population coverage of nearly 60 million.
We continue to provide modems and amplifiers to existing LEO and MEO communications satellite providers and expect to see growth in imaging satellites alongside commercial imaging constellations, including conventional, thermal and hyperspectral. • Satellite-Based Cellular Backhaul: Demand for satellite-based cellular backhaul services is anticipated to grow rapidly as a result of the increased penetration of smart cellular phones and network upgrades to 4G and 5G in developing regions of the world.
We continue to provide modems and amplifiers to existing LEO and MEO communications satellite providers and expect to see growth in imaging satellites alongside commercial imaging constellations, including conventional, thermal and hyperspectral. • 5G NTN and Satellite-Based Cellular Backhaul: Demand for satellite-based cellular backhaul is anticipated to continue to grow as next-generation cellular networks continue to deploy to developing regions of the world, including those that are unserved or underserved by terrestrial infrastructure due to access or challenging geography.
("Verizon"), which were 10.6% and 11.1% of consolidated net sales, respectively. International sales for fiscal 2024, 2023 and 2022 (which include sales to U.S. domestic companies for inclusion in products that are sold to international customers) were $115.9 million, $132.1 million and $121.4 million, respectively. When we sell internationally, we denominate most of our contracts in U.S. dollars.
For fiscal 2023, included in domestic sales are sales to a top tier mobile network operator ("MNO"), which were 10.6% of consolidated net sales. International sales for fiscal 2025, 2024 and 2023 (which include sales to U.S. domestic companies for inclusion in products that are sold to international customers) were $105.1 million, $115.9 million and $132.1 million, respectively.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeCompetitive Risks • All of our business activities are subject to rapid technological change, new entrants, the introduction of other distribution models and long development and testing periods each of which may harm our competitive position. • Our business is highly competitive, we are reliant upon the success of our partners, and some of our competitors have significantly greater resources than we do, which could result in a loss of customers, market share and/or market acceptance. • We rely upon various third-party companies and their technology to provide services to our customers. • Because our software may contain defects or errors, and our hardware products may incorporate defective components, our sales could decrease if these defects or errors adversely affect our reputation or delay shipments of our products.
Biggest changeCompetitive Risks • All of our business activities are subject to rapid technological change, new entrants, the introduction of other distribution models and long development and testing periods, each of which may harm our competitive position. • Our business is highly competitive, we are reliant upon the success of our partners, and some of our competitors have significantly greater resources than we do, which could result in a loss of customers, market share and/or market acceptance. • We rely upon various third-party companies and their technology to provide services to our customers. • Because our software may contain defects or errors, and our hardware products may incorporate defective components, our sales could decrease if these defects or errors adversely affect our reputation or delay shipments of our products. 22 Risks Related to our Common Stock • Our stock price is volatile. • Future issuances of our shares of common stock could dilute a stockholder's ownership interest in Comtech and reduce the market price of our shares of common stock. • Actions of activist stockholders could impact the pursuit of our business strategies and adversely affect our results of operations, financial condition and/or share price. • Provisions in our corporate documents and Delaware law could delay or prevent a change in control of Comtech.
Failure to comply with covenants could result in an event of default, which, if not cured or waived, could accelerate our repayment obligations and permit the agents under the Credit Facility to enforce on the collateral pledged to the secured parties thereunder.
Failure to comply with covenants could result in an event of default, which, if not cured or waived, could accelerate our repayment obligations and permit the agents under our Credit Facility to enforce on the collateral pledged to the secured parties thereunder.
Accordingly, we may not be able to prevent the misappropriation of our technology or prevent others from developing similar technology. Furthermore, policing the unauthorized use of our products is difficult and expensive. Litigation may be necessary in the future to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others.
Accordingly, we may not be able to prevent the misappropriation of our technology or prevent others from developing similar technology. Furthermore, policing unauthorized use of our products is difficult and expensive. Litigation may be necessary in the future to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others.
Legal, Regulatory and Litigation Risks • Changes in U.S. federal, state and local and foreign tax law could adversely affect our business and financial condition. • Our U.S. federal, state and local and foreign tax returns are subject to audit and a resulting tax assessment or settlement could have a material adverse effect on our business, results of operations and financial condition. • We may be subject to environmental liabilities. • The success of our business is dependent on compliance with FCC rules and regulations and similar foreign, state and local laws and regulations. • Regulation of the mobile communications industry and VoIP is evolving, and unfavorable changes or our failure to comply with existing and potential new legislation or regulations could harm our business and operating results. 21 • Ongoing compliance with the provisions of securities laws, related regulations and financial reporting standards could unexpectedly materially increase our costs and compliance related expenses. • Indemnification provisions in our contracts could have a material adverse effect on our consolidated results of operations, financial position, or cash flows. • We are, from time to time, and could become a party to additional litigation or subject to claims.
Legal, Regulatory and Litigation Risks • Changes in U.S. federal, state and local and foreign tax law could adversely affect our business and financial condition. • Our U.S. federal, state and local and foreign tax returns are subject to audit and a resulting tax assessment or settlement could have a material adverse effect on our business, results of operations and financial condition. • We may be subject to environmental liabilities. • The success of our business is dependent on compliance with FCC rules and regulations and similar foreign, state and local laws and regulations. • Regulation of the mobile communications industry and VoIP is evolving, and unfavorable changes or our failure to comply with existing and potential new legislation or regulations could harm our business and operating results. • Ongoing compliance with the provisions of securities laws, related regulations and financial reporting standards could unexpectedly materially increase our costs and compliance related expenses. • Indemnification provisions in our contracts could have a material adverse effect on our consolidated results of operations, financial position, or cash flows. • We are, from time to time, and could become a party to additional litigation or subject to claims.
Violations of any of these laws, rules or regulations, and other business practices that are regarded as unethical, could interrupt the sales of our products and services, result in the cancellation of orders or the termination of customer relationships, and could damage our reputation, any of which developments could have a material adverse effect on our business, results of operations and financial condition. • We must comply with all applicable export control laws and regulations of the U.S., the U.K. and other countries - Certain of our products and systems may require licenses from U.S. government agencies for export from the U.S., and some of our products are not permitted to be exported.
Violations of any of these laws, rules or regulations, and other business practices that are regarded as unethical, could interrupt the sales of our products and services, result in the cancellation of orders or the termination of customer relationships, and could damage our reputation, any of which developments could have a material adverse effect on our business, results of operations and financial condition. • We must comply with all applicable export control laws and regulations of the U.S. and other countries - Certain of our products and systems may require licenses from U.S. government agencies for export from the U.S., and some of our products are not permitted to be exported.
A security breach or other significant disruption (including as a result of a lack of redundancy and/or failure of such redundancy) involving these types of information, IT networks and related systems could: • Disrupt the proper functionality of these networks, data center facilities and systems and therefore our operations and/or those of certain of our customers; • Result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or our customers, including employee information, trade secrets, which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; • Compromise national security and other sensitive government functions; • Require significant management attention and resources to remedy the damage that results and delay progress on other business objectives; 40 • Require us to make payments to our customers to reimburse them for damages, pay them penalties or provide refunds; and • Damage our reputation with our customers (particularly agencies of the U.S. government) and the public generally.
A security breach or other significant disruption (including as a result of a lack of redundancy and/or failure of such redundancy) involving these types of information, IT networks and related systems could, among other things: • Disrupt the proper functionality of these networks, data center facilities and systems and therefore our operations and/or those of certain of our customers; • Result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or our customers, including employee information and trade secrets, which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; • Compromise national security and other sensitive government functions; • Require significant management attention and resources to remedy the damage that results and delay progress on other business objectives; • Require us to make payments to our customers to reimburse them for damages, pay them penalties or provide refunds; and 40 • Damage our reputation with our customers (particularly agencies of the U.S. government) and the public generally.
There likewise can be no assurance that we will be able to retain sufficient skilled finance and accounting personnel, especially in light of the increased demand for such personnel among publicly traded companies. • Stock-based compensation accounting standards could negatively impact our stock - Since our inception, we have used stock-based awards as a fundamental component of our employee compensation packages.
There likewise can be no assurance that we will be able to retain sufficient skilled finance and accounting personnel, especially in light of the increased demand for such personnel among publicly traded companies. 44 • Stock-based compensation accounting standards could negatively impact our stock - Since our inception, we have used stock-based awards as a fundamental component of our employee compensation packages.
To the extent that this accounting standard makes it less attractive to grant stock-based awards to employees, we may incur increased compensation costs, change our equity compensation strategy or find it difficult to attract, retain and motivate employees, each of which could have a material adverse effect on our business, results of operations and financial condition.
To the extent that this accounting standard makes it less attractive to grant stock-based awards to employees, we may incur increased cash compensation costs, change our equity compensation strategy or find it difficult to attract, retain and motivate employees, each of which could have a material adverse effect on our business, results of operations and financial condition.
The failure to retain or attract members of our management team and other key personnel could impair our ability to execute our strategy and implement operational initiatives, thereby having a material adverse effect on our financial condition and results of operations. Likewise, we could experience losses of customers who may be concerned about our ongoing long-term viability.
The failure to retain or attract members of our management team and other key personnel could impair our ability to execute our strategy and implement operational initiatives, thereby having a material adverse effect on our financial condition and results of operations. Likewise, we could experience losses of customers who may be concerned about our long-term viability.
Some local initiatives, like those in Michigan, are already seeing increased call volumes and struggling to keep pace with the demand, particularly for youth mental health services. Overall, the lifeline is seen as a critical step in improving mental health responses, but it faces significant hurdles in achieving full efficacy in the coming years.
Some local initiatives, like those in Michigan, are already seeing increased call volumes and struggling to keep pace with the demand, particularly for youth mental health services. Overall, the 988 lifeline is seen as a critical step in improving mental health responses, but it faces significant hurdles in achieving full efficacy in the coming years.
Although adjustments relating to past audits of our federal and state income tax returns were immaterial, a tax assessment or settlement for other periods or other jurisdictions that may be selected for future audit could have a material adverse effect on our business, consolidated results of operations and financial condition. We may be subject to environmental liabilities.
Although adjustments relating to past audits of our federal and state income tax returns were immaterial, a tax assessment or settlement for other periods or other jurisdictions that may be selected for future audit could have a material adverse effect on our business, consolidated results of operations and financial condition. 41 We may be subject to environmental liabilities.
There can be no assurance that the impacts of all the aforementioned conditions will not continue, or worsen, in the future. If global economic business and political conditions deteriorate as compared to the current environment it could have a material adverse impact on our business outlook and our business, operating results and financial condition.
There can be no assurance that the impacts of any or all the aforementioned conditions will not continue, or worsen, in the future. If global economic business and political conditions deteriorate as compared to the current environment, it could have a material adverse impact on our business outlook and our business, operating results and financial condition.
All of the aforementioned conditions and factors could have a material adverse effect on our business, results of operations and financial condition. Additionally, cost cutting, efficiency initiatives, reprioritization, other affordability analyses, and changes in budgetary priorities by our governmental customers, including the U.S. government, could adversely impact both of our operating segments.
All of the aforementioned conditions and factors could have a material adverse effect on our business, results of operations and financial condition. Additionally, cost cutting, efficiency initiatives, reprioritization, other affordability analyses, and changes in budgetary priorities by our governmental customers, including the U.S. government, could adversely impact our operating segments.
Negative audit findings could also result in termination of a contract, forfeiture of profits, suspension of payments, fines and suspension or debarment from U.S. government contracting or subcontracting for a period of time. 31 Our dependence on sales to international customers exposes us to unique business, commercial and export compliance risks.
Negative audit findings could also result in termination of a contract, forfeiture of profits, suspension of or refund of payments, fines and suspension or debarment from U.S. government contracting or subcontracting for a period of time. 31 Our dependence on sales to international customers exposes us to unique business, commercial and export compliance risks.
Many of the end-markets for our products and services may be significantly impacted for other issues that result in adverse global economic conditions. For example, many of our international end-customers are in emerging and developing countries that are subject to sweeping economic and political changes. Many governments around the world are under pressure to reduce their spending.
Many of the end-markets for our products and services may be significantly impacted by other issues that result in adverse global economic conditions. For example, many of our international end-customers are in emerging and developing countries that are subject to sweeping economic and political changes. Many governments around the world are under pressure to reduce their spending.
No such requirements exist for VoIP service providers, so carriers could prevent us from continuing to provide VoIP 911 service by denying us access to the required databases. 44 Ongoing compliance with the provisions of securities laws, related regulations and financial reporting standards could unexpectedly materially increase our costs and compliance related expenses.
No such requirements exist for VoIP service providers, so carriers could prevent us from continuing to provide VoIP 911 service by denying us access to the required databases. Ongoing compliance with the provisions of securities laws, related regulations and financial reporting standards could unexpectedly materially increase our costs and compliance related expenses.
Termination for convenience provisions provide us with little to no recourse related to: our potential recovery of costs incurred or costs committed, potential settlement expenses and hypothetical profit on work completed prior to termination. • Our U.S. government contracts are subject to funding by the U.S.
Termination for convenience provisions could provide us with little to no recourse related to: our potential recovery of costs incurred or costs committed, potential settlement expenses and hypothetical profit on work completed prior to termination. • Our U.S. government contracts are subject to funding by the U.S.
Under U.S. generally accepted accounted principles, such contract assets generally result from timing differences between (a) when we must recognize revenue on contracts based on our activities to satisfy performance obligations related to products that have no alternative use and for which we have the right to payment in the event of a contract termination, and (b) when we can invoice our customers under the terms of those associated contracts (i.e., which is often based on our successful achievement of a milestone, such as an acceptance test or physical delivery of a product).
Under U.S. generally accepted accounting principles, such contract assets generally result from timing differences between (a) when we must recognize revenue on contracts based on our activities to satisfy performance obligations related to products that have no alternative use and for which we have the right to payment in the event of a contract termination, and (b) when we can invoice our customers under the terms of those associated contracts (i.e., which is often based on our successful achievement of a milestone, such as an acceptance test or physical delivery of a product).
If our sole-source proposals are rejected in favor of a competitor’s proposal, it could result in the termination of existing contracts, which could have a material adverse effect on our business, results of operations and financial condition. 35 • We may not be able to obtain sufficient components to meet expected demand - Our dependence on component availability, government furnished equipment, subcontractors and key suppliers, including the core manufacturing expertise of our high-volume technology manufacturing center located in Arizona exposes us to risk.
If our sole-source proposals are rejected in favor of a competitor’s proposal, it could result in the termination of existing contracts, which could have a material adverse effect on our business, results of operations and financial condition. 35 • We may not be able to obtain sufficient components to meet expected demand - Our dependence on component availability, government furnished equipment, subcontractors as key suppliers and the core manufacturing expertise of our high-volume technology manufacturing center located in Arizona exposes us to risk.
This funding is aimed at distributing emergency-type communications more efficiently, by providing a direct response for mental health crises. Some states, like Michigan, have launched their own versions of 988 services with additional state and federal support. However, despite these efforts, the system is still far from fully optimized.
This funding is aimed at distributing emergency-type communications more efficiently, by providing a direct response for mental health crises. Some states, like Michigan, California and Washington, have launched their own versions of 988 services with additional state and federal support. However, despite these efforts, the system is still far from fully optimized.
There can be no assurance that we will win additional contracts or that actual contracts that are awarded will ultimately be profitable. • Failure to comply with government contractor obligations can result in adverse consequences for the company - As a supplier to the U.S. government, we must comply with numerous regulations, including those governing security, contracting practices and classified information.
There can be no assurance that we will win additional contracts or that actual contracts that are awarded will ultimately be profitable. • Failure to comply with government contractor obligations can result in adverse consequences for us - As a supplier to the U.S. government, we must comply with numerous regulations, including those governing security, contracting practices and classified information.
During the pendency of the transformation strategy, our employees may face considerable distraction and uncertainty and we may experience increased levels of employee attrition. A loss of key personnel or material erosion of employee morale could have a materially adverse effect on our ability to meet customer expectations, thereby adversely affecting our business and results of operations.
During the pendency of the transformation plan, our employees may face considerable distraction and uncertainty, and we may experience increased levels of employee attrition. A loss of key personnel or material erosion of employee morale could have a materially adverse effect on our ability to meet customer expectations, thereby adversely affecting our business and results of operations.
We anticipate maintaining compliance with the terms and financial covenants in our Credit Facility for the foreseeable future, however, there can be no assurance that we will be able to meet these covenants. Further, our ability to comply with covenants, terms of and conditions on our Credit Facility may be affected by events beyond our control.
We anticipate maintaining compliance with the terms and financial covenants in our credit facilities for the foreseeable future; however, there can be no assurance that we will be able to meet these covenants. Further, our ability to comply with covenants, terms of and conditions on our credit facilities may be affected by events beyond our control.
A significant decline in our customers' spending that is greater than we anticipate or a shift in funding priorities may also have a negative effect on future orders, sales, income and cash flows and we might be required to perform a quantitative assessment during fiscal 2025 or beyond.
A significant decline in our customers' spending that is greater than we anticipate or a shift in funding priorities may also have a negative effect on future orders, sales, income and cash flows and we might be required to perform a quantitative assessment during fiscal 2026 or beyond.
If we are unable to develop unique and proprietary solutions that are superior to and/or more cost effective than other market offers, our 911 business could get replaced by new market entrants, resulting in a material adverse effect on our business, results of operations and financial condition. • Under the FCC’s mandate, our 911 and emerging 988 businesses are dependent on state and local governments - Under the FCC’s mandate, wireless carriers are required to provide 911 services only if state and local governments request the service.
If we are unable to develop unique and proprietary solutions that are superior to and/or more cost effective than other market offers, our 911 business could get replaced by new market entrants, resulting in a material adverse effect on our business, results of operations and financial condition. 42 • Under the FCC’s mandate, our 911 business and emerging 988 opportunities are dependent on state and local governments - Under the FCC’s mandate, wireless carriers are required to provide 911 services only if state and local governments request the service.
See "Part II - Item 9A Controls and Procedures" for information related to the material weaknesses that we identified as of July 31, 2024. There can be no assurance that we will be able to remediate the material weaknesses that we have identified, or maintain all of the controls necessary for continued compliance.
See Part II - Item 9A Controls and Procedures for information related to the material weaknesses that we identified as of July 31, 2025. There can be no assurance that we will be able to remediate the material weaknesses that we have identified, or maintain all of the controls necessary for continued compliance.
At the federal level, the 988 Implementation Act introduced in 2023 seeks to expand access further by requiring health insurance plans to cover crisis services and addressing gaps in care for populations like those on Medicare.
At the U.S. federal level, the 988 Implementation Act introduced in 2023 seeks to expand access further by requiring health insurance plans to cover crisis services and addressing gaps in care for populations like those on Medicare.
For additional information related to these lawsuits, see "Notes to Consolidated Financial Statements - Note (13)(a) - Commitments and Contingencies - Legal Proceedings and Other Matters" included in "Part II - Item 8. Financial Statements and Supplementary Data," included in this Form 10-K.
For additional information related to these lawsuits, see Notes to Consolidated Financial Statements - Note (14)(a) - Commitments and Contingencies - Legal Proceedings and Other Matters included in Part II - Item 8. Financial Statements and Supplementary Data, included in this Form 10-K.
This diversion of attention may have an adverse effect on the conduct of our business, and, as a result, on our financial condition and results of operations, particularly if the time it takes to complete our transformation strategy is protracted.
This diversion of attention may have an adverse effect on the conduct of our business, and, as a result, on our financial condition and results of operations, particularly if the time it takes to complete our transformation plan is protracted.
Factors that could have a significant impact on the market price of our stock include, among others: • strategic transactions, such as acquisitions and divestitures by us and our competitors; • our ability to successfully integrate and manage acquisitions or unwind and manage divestitures; • our issuance of potentially dilutive equity or equity-type securities; • our issuance of debt or refinancing our debt; • our ability to successfully access equity and debt capital markets; • future announcements concerning us or our competitors; • shareholder activism involving our common stock, board of directors or corporate governance; • receipt or non-receipt of substantial orders for products and services; • quality deficiencies in services or products; • results of technological innovations and new commercial products; • changes in our own outlook or recommendations of securities analysts; • government regulations; • changes in the status or outcome of government audits; • proprietary rights or product or patent litigation; • changes in U.S. government policies; • changes in economic conditions generally, particularly in the terrestrial and wireless networks and satellite and space communications markets; • changes in securities market conditions, generally; • changes in prevailing interest rates; • changes in the status of litigation and legal matters (including changes in the status of export matters); • cyber attacks; • energy blackouts; • acts of terrorism or war; • inflation or deflation; • rumors or allegations regarding our financial disclosures or practices; • our ability to timely file documents required by the SEC within prescribed time periods; and • global pandemics.
Factors that could have a significant impact on the market price of our stock include, among others: • strategic transactions, such as acquisitions and divestitures by us and our competitors; • our ability to successfully integrate and manage acquisitions or unwind and manage divestitures; • our issuance of potentially dilutive equity or equity-type securities; • our issuance of debt or refinancing our debt; • our ability to successfully access equity and debt capital markets; • future announcements concerning us or our competitors; • shareholder activism involving our common stock, board of directors or corporate governance; • receipt or non-receipt of substantial orders for products and services; • quality deficiencies in services or products; • results of technological innovations and new commercial products; • changes in our own outlook or recommendations of securities analysts; • government regulations; • changes in the status or outcome of government audits; • proprietary rights or product or patent litigation; • changes in U.S. government policies; • changes in economic conditions generally, particularly in the markets we serve; • changes in securities market conditions, generally; • changes in prevailing interest rates; • changes in the status of litigation and legal matters (including changes in the status of export matters); • cyber attacks; • energy blackouts; • acts of terrorism or war; • inflation or deflation; • rumors or allegations regarding our financial disclosures or practices; • our ability to timely file documents required by the SEC within prescribed time periods; and • global pandemics.
Our inability to effectively manage the negative impacts of U.S. and foreign trade policies, including, in connection with our business with customers outside of the United States or with newly sanctioned entities could adversely affect our business and financial results.
Our inability to effectively manage the negative impacts of U.S. and foreign trade policies, including, in connection with our business with customers outside of the U.S. or with newly sanctioned entities could adversely affect our business and financial results.
Sales for use by international customers (including sales to U.S. companies for inclusion in products that will be sold to international customers) represented approximately 21.5%, 24.0% and 25.0% of our consolidated net sales for the fiscal years ended July 31, 2024, 2023 and 2022, respectively, and we expect that international sales will continue to be a significant portion of our consolidated net sales for the foreseeable future.
Sales for use by international customers (including sales to U.S. companies for inclusion in products that will be sold to international customers) represented approximately 21.0%, 21.5% and 24.0% of our consolidated net sales for the fiscal years ended July 31, 2025, 2024 and 2023, respectively, and we expect that international sales will continue to be a significant portion of our consolidated net sales for the foreseeable future.
Challenges include staffing shortages, particularly for behavioral health professionals, and the need for technological improvements like georouting to better connect callers with the appropriate local services. Some states are also exploring sustainable funding models, such as implementing 988 surcharges similar to those used for 911 services, to ensure long-term viability.
Challenges include staffing shortages, particularly for behavioral health professionals, and the need for technological improvements, like geo-routing to better connect callers with the appropriate local services. Some states are also exploring sustainable funding models, such as implementing 988 surcharges similar to those used for 911 services, to ensure long-term viability.
Our expected growth and our financial position depends on, among other things, our ability to keep pace with such changes and developments and to respond to the increasing variety of electronic equipment users and transmission technologies.
Our expected growth and our financial position depend on, among other things, our ability to keep pace with such changes and developments and to respond to the increasing variety of electronic equipment users and transmission technologies.
Changes in, or our failure to comply with, applicable laws and regulations could materially adversely harm our business, results of operations, and financial condition. 42 • Our future growth is dependent, in part, on developing NG-911 compliant products - The FCC requires that certain location information be provided to network operators for public safety answering points when a subscriber makes a 911 call.
Changes in, or our failure to comply with, applicable laws and regulations could materially adversely harm our business, results of operations, and financial condition. • Our future growth is dependent, in part, on developing NG-911 compliant products - The FCC requires, among other things, that certain location information be provided to network operators for public safety answering points when a subscriber makes a 911 call.
We cannot be sure that our systems will operate appropriately if we experience hardware or software failure, intentional disruptions of service by third parties, an act of God or an act of war.
We cannot be sure that our systems will operate appropriately if we experience hardware or software failures, intentional disruptions of service by third parties, an act of God or an act of war.
In the future, if we determine that our inventory is overvalued, we will be required to recognize such costs in our financial statements at the time of such determination. Any such charges could be materially adverse to our results of operations and financial condition. Our efforts to invoice and collect unbilled receivables may be unsuccessful.
In the future, if we determine that our inventory is overvalued, we will be required to recognize such costs in our financial statements at the time of such determination. Any such charges could be materially adverse to our results of operations and financial condition. Our efforts to invoice and collect unbilled accounts receivable may be unsuccessful.
Our Terrestrial and Wireless Networks segment provides public safety and location technologies to various state and local municipalities and to a large extent, we are reliant on the success of our wireless partners and distributors to meet our growth objectives. In some cases, our wireless partners may have different objectives, or our distributors may not be successful.
Our Allerium segment provides public safety and location technologies to various state and local municipalities and to a large extent, we are reliant on the success of our wireless partners and distributors to meet our growth objectives. In some cases, our wireless partners may have different objectives, or our distributors may not be successful.
Our Board of Directors and management team value constructive input from investors, regularly engage in dialogue with our stockholders, and are committed to acting in the best interests of all of our stockholders.
Our Board of Directors and executive management value constructive input from investors, regularly engage in dialogue with our stockholders, and are committed to acting in the best interests of all of our stockholders.
Many of these factors will be outside of our control and any one of them could result in increased costs, including restructuring charges, decreases in the amount of expected revenues and diversion of management’s time and energy, which could adversely affect our business, financial condition and results of operations.
Many of these factors will be outside of our control and any one of them could result in increased costs, including restructuring charges, decreases in the amount of expected revenues and diversion of management’s attention, which could adversely affect our business, financial condition and results of operations.
Managing the disposition of multiple production facilities and their attending employee populations is difficult and may negatively impact business prospects in the short and long term.
Managing the restructuring of multiple production facilities and their attending employee populations is difficult and may negatively impact business prospects in the short and long term.
There can be no assurance that our pursuit of strategic alternatives will be successful within the anticipated time frame, or at all. There can also be no assurance that such activity will not adversely affect our business, results of operations or financial condition.
There can be no assurance that our transformation plan, including our pursuit of strategic alternatives, will be successful within the anticipated time frame, or at all. There can also be no assurance that such activity will not adversely affect our business, results of operations or financial condition.
Ongoing instability and conflicts in global markets, including in the Ukraine and Eastern Europe, Israel, Lebanon, the Gaza Strip and the Middle East and Asia, and the attending possibility of economic sanctions, have created and may continue to create economic and political disruption that could adversely impact our revenue, gross margins and financial results.
Ongoing instability and conflicts in global markets, including in Ukraine, the Gaza Strip, Israel, Lebanon, and other countries in the Middle East and Asia, and the attending possibility of economic sanctions, have created and may continue to create economic and political disruption that could adversely impact our revenue, gross margins and financial results.
For a more complete discussion of the material risks facing our business, please see below: Global Risks • New and ongoing challenges relating to current supply chain constraints and impacts from inflation, including for satellite ground station and troposcatter components, could adversely impact our revenue, gross margins and financial results. • If global economic business and political conditions deteriorate as compared to the current environment it could have a material adverse impact on our business outlook and our business, operating results and financial condition. • We have significant operations in locations which could be materially and adversely impacted in the event of a terrorist attack and government responses thereto or significant disruptions (including natural disasters) to our business. • Ongoing instability and conflicts in global markets, including in the Ukraine and Eastern Europe, Israel, Lebanon, the Gaza Strip and the Middle East and Asia, and the attending possibility of economic sanctions, have created and may continue to create economic and political disruption that could adversely impact our revenue, gross margins and financial results.
For a more complete discussion of the material risks facing our business, please see below: Global Risks • New and ongoing challenges relating to current supply chain constraints, including for satellite ground station and troposcatter components, and impacts from inflation and any new or increased tariffs on imports and other trade restrictions, could adversely impact our revenue, gross margins and financial results. • If global economic business and political conditions deteriorate as compared to the current environment, it could have a material adverse impact on our business outlook and our business, operating results and financial condition. • We have significant operations in locations which could be materially and adversely impacted in the event of a terrorist attack and government responses thereto or significant disruptions (including natural disasters) to our business. 20 • Ongoing instability and conflicts in global markets, including in Ukraine, the Gaza Strip, Israel, Lebanon and other countries in the Middle East and Asia, and the attending possibility of economic sanctions, have created and may continue to create economic and political disruption that could adversely impact our revenue, gross margins and financial results.
Similarly, there are a number of state privacy laws, as well as legislative proposals in the United States, at both the federal and state level, that could impose new obligations in areas affecting our business, such as liability for personal data protection.
Similarly, there are a number of state privacy laws, as well as legislative proposals in the U.S., at both the federal and state level, that could impose new obligations in areas affecting our business, such as liability for personal data protection.
The final determination of tax examinations and any related litigation could be materially different than what is reflected in historical income tax provisions and accruals. 41 Our U.S. federal income tax returns for fiscal 2021 through 2023 are subject to potential future Internal Revenue Service ("IRS") audit.
The final determination of tax examinations and any related litigation could be materially different than what is reflected in historical income tax provisions and accruals. Our U.S. federal income tax returns for fiscal 2022 through 2025 are subject to potential future Internal Revenue Service ("IRS") audit.
The GDPR imposes certain privacy related requirements on companies that receive or process personal data of residents of the European Union that are currently different than those in the United States and include significant penalties for non-compliance.
The GDPR imposes certain privacy related requirements on companies that receive or process personal data of residents of the European Union that are currently different than those in the U.S. and include significant penalties for non-compliance.
Business Risks • Our current cash and liquidity projections raise substantial doubt about our ability to continue as a going concern. • Our business outlook is difficult to forecast and operating results are subject to significant fluctuations and are likely to be volatile. • Our backlog is subject to customer cancellation or modification and such cancellations or modifications could result in a decline in sales and increased provisions for excess and obsolete inventory. • Our efforts to invoice and collect unbilled receivables may be unsuccessful. 20 • Contract cost growth on our firm fixed-price contracts exposes us to reduced profitability and the potential loss of future business and other risks. • Our business is highly dependent on the budgetary decisions of our government customers. • Our contracts with the U.S. government are subject to unique business, commercial and government audit risks. • Our dependence on sales to international customers exposes us to unique business, commercial and export compliance audit risks. • A change in our relationship with our large wireless carrier customers could have a material adverse effect. • A change by wireless carrier partners in the pricing and other terms by which they offer our products to their end-customers could have a material adverse affect. • Disputes with our subcontractors or key suppliers or their inability to deliver on a timely basis, could cause delays in our shipments. • Our estimates regarding future warranty obligations may change based on a variety of factors, impacting future cost of revenue.
Business Risks • Our cash and liquidity projections may not materialize as anticipated. • Our business outlook is difficult to forecast and operating results are subject to significant fluctuations and are likely to be volatile. • Our backlog is subject to customer cancellation or modification and such cancellations or modifications could result in a decline in sales and increased provisions for excess and obsolete inventory. • Our efforts to invoice and collect unbilled accounts receivable may be unsuccessful. • Contract cost growth on our firm fixed-price contracts exposes us to reduced profitability and the potential loss of future business and other risks. • Our business is highly dependent on the budgetary decisions of our government customers. • Our contracts with the U.S. government are subject to unique business, commercial and government audit risks. • Our dependence on sales to international customers exposes us to unique business, commercial and export compliance audit risks. • A change in our relationship with our large wireless carrier customers could have a material adverse effect. • A change by wireless carrier partners in the pricing and other terms by which they offer our products to their end-customers could have a material adverse affect. • Disputes with our subcontractors or key suppliers or their inability to deliver on a timely basis, could cause delays in our shipments. • Our estimates regarding future warranty obligations may change based on a variety of factors, impacting future cost of revenue.
For example, many companies are developing new technologies and the shift towards open standards will likely result in increased competition and some of our products may become commoditized as a result. 48 Our Terrestrial and Wireless Networks segment provides various technologies that are utilized on mobile devices.
For example, many companies are developing new technologies and the shift towards open standards will likely result in increased competition and some of our products may become commoditized as a result. Our Allerium segment provides various technologies that are utilized on mobile devices.
We expect the DoD’s increased use of commercial off-the-shelf products and components in military equipment will encourage new competitors to enter the market. Also, although the implementation of advanced telecommunications services is in its early stages in many developing countries, we believe competition will continue to intensify as businesses and foreign governments realize the market potential of telecommunications services.
We expect the DoD’s increased use of commercial off-the-shelf products and components in military equipment will encourage new competitors to enter the market. Also, although the implementation of next-generation communications services is in its early stages in many developing countries, we believe competition will continue to intensify as businesses and foreign governments realize the market potential of such services.
Strategic Growth Risks • We face a number of risks relating to the expected long-term growth of our business. • Loss of our executive officers or other key personnel or other changes to our management team could disrupt our operations and growth plans or harm our business. • We must service the debt and maintain compliance with various covenants under a credit facility that imposes restrictions on our business. • Divestitures of portions of our business in the course of pursuing strategic alternatives and revisiting our portfolio could prove difficult to carve out, disrupt our business, dilute stockholder value or adversely affect operating results or the market price of our common stock. • Our investments in recorded goodwill and other intangible assets have been impaired and may be further impaired as a result of future business conditions, a deterioration of the global economy or if we change our reporting unit structure as we pursue strategic alternatives.
Strategic Growth Risks • We face a number of risks relating to the expected long-term growth of our business. • Loss of our executive officers or other key personnel or other changes to our management team could disrupt our operations and growth plans or harm our business. • We must service the debt and maintain compliance with various covenants under a credit facility that imposes restrictions on our business. • Divestitures of portions of our business in the course of carrying out our transformation plan and reshaping our product portfolio could prove difficult to carve out, disrupt our business, dilute stockholder value or adversely affect operating results or the market price of our common stock. 21 • Our investments in recorded goodwill and other intangible assets have been impaired and may be further impaired as a result of future business conditions, a deterioration of the global economy or if we change our reporting unit structure for any reason.
In the first quarter of fiscal 2018, we adopted FASB ASU No. 2016-09 which modified certain aspects of ASC 718, including the requirement to recognize excess tax benefits and shortfalls in the income statement.
We adopted FASB ASU No. 2016-09 which modified certain aspects of ASC 718, including the requirement to recognize excess tax benefits and shortfalls in the income statement.
None of our state income tax returns prior to fiscal 2020 are subject to audit.
None of our state income tax returns prior to fiscal 2021 are subject to audit.
Additionally, in light of various factors including but not limited to our announcement to pursue strategic alternatives, we have postponed and or re-prioritized certain initiatives (e.g., our drive toward an common company-wide ERP tool), which may result in certain inefficiencies and or increased costs in the future. • Our markets are highly competitive and there can be no assurance that we can continue to compete effectively - The markets for our products are highly competitive.
Additionally, in light of various factors including but not limited to our announced transformation plan, we have postponed or re-prioritized certain initiatives (e.g., our drive toward a common company-wide ERP tool), which may result in certain inefficiencies or increased costs in the future. • Our markets are highly competitive and there can be no assurance that we can continue to compete effectively - The markets for our products are highly competitive.
Department of State, Directorate of Defense Trade Controls ("DDTC"), DoC, OFAC and similar regulatory authorities in the jurisdictions where we have operations, including His Majesty's Revenue & Customs ("HMRC") in the United Kingdom.
Department of State, Directorate of Defense Trade Controls ("DDTC"), Department of Commerce ("DoC"), OFAC and similar regulatory authorities in the jurisdictions where we have operations, including His Majesty's Revenue & Customs ("HMRC") in the U.K.
The failure of Congress to approve future budgets and/or increase the debt ceiling of the U.S. on a timely basis could delay or result in the loss of contracts for the procurement of our products and services and we may be asked or required to continue to perform for some period of time on certain of our U.S. government contracts, even if the U.S. government is unable to make timely payments.
Continued uncertainty around the approval by Congress of future budgets and/or increases in the debt ceiling of the U.S. on a timely basis could delay or result in the loss of contracts for the procurement of our products and services and we may be asked or required to continue to perform for some period of time on certain of our U.S. government contracts, even if the U.S. government is unable to make timely payments.
We design and manufacture our over-the-horizon microwave equipment and systems in Florida, where major hurricanes have occurred in the past, and amplifiers in Santa Clara, California, an area close to major earthquake fault lines. Additionally, certain of our Terrestrial and Wireless Networks segment activities are conducted in Washington State near a fault line.
We design and manufacture our over-the-horizon microwave equipment and systems in Florida, where major hurricanes have occurred in the past, and amplifiers in Santa Clara, California, an area close to major earthquake fault lines. Additionally, certain of our Allerium segment activities are conducted in Washington State near a fault line. We maintain operations in Maryland near a U.S.
These aforementioned supply chain constraints, and their related challenges could result in future shortages, increased material costs or use of cash, engineering design changes, and delays in new product introductions, each of which could adversely impact our revenue, gross margins and financial results.
The aforementioned supply chain constraints, and their related challenges could result in, among other things, future shortages, increased material costs or use of cash, engineering design changes, late delivery penalties and delays in new product introductions, each of which could adversely impact our revenue, gross margins and financial results.
A decrease in DoD or Department of Homeland Security expenditures, the elimination or curtailment of a material program in which we are involved, or changes in payment patterns of our customers as a result of changes in U.S. government spending could have an adverse effect on our business, results of operations and financial condition. On September 25, 2024, the U.S.
A decrease in U.S. government spending, the elimination or curtailment of a material program in which we are involved, or changes in payment patterns of our customers as a result of changes in U.S. government spending could have an adverse effect on our business, results of operations and financial condition.
Over the past two years, the 988 Suicide & Crisis Lifeline has seen both growth and challenges as it continues to be rolled out across the U.S. The U.S. federal government has allocated significant funding to this initiative, with over $432.0 million earmarked for expanding services, including regional call centers and crisis intervention teams.
The 988 Suicide & Crisis Lifeline has seen both growth and challenges as it continues to be rolled out across the U.S. The U.S. federal government has allocated funding to this initiative, earmarked for expanding services, including regional call centers and crisis intervention teams.
During our fiscal years ended July 31, 2024, 2023 and 2022, sales to the U.S. government (including sales to prime contractors to the U.S. government) were $182.3 million, $172.0 million and $132.6 million, or 33.7%, 31.3% and 27.2% of our consolidated net sales, respectively.
During our fiscal years ended July 31, 2025, 2024 and 2023, sales to the U.S. government (including sales to prime contractors to the U.S. government) were $151.3 million, $182.3 million and $172.0 million, or 30.3%, 33.7% and 31.3% of our consolidated net sales, respectively.
If assumed net sales and cash flow projections are not achieved in future periods or our common stock price significantly declines from current levels, our Satellite and Space Communications and Terrestrial and Wireless Networks reporting units could be at risk of failing the quantitative assessment and goodwill and intangibles assigned to the respective reporting units could be impaired.
If assumed net sales and cash flow projections are not achieved in future periods, our common stock price significantly declines from current levels, and /or we complete certain actions related to our transformation plan, our Satellite and Space Communications and Allerium reporting units could be at risk of failing the quantitative assessment and goodwill and intangibles assigned to the respective reporting units could be impaired.
As suppliers evaluate our financial condition on an ongoing basis, they may also take steps to revise payment terms (e.g., by requiring payment in advance of delivery or payment milestones) that may negatively impact the anticipated timing of components required for the assembly of our products or services rendered in support of our programs.
Suppliers may also take steps to revise payment terms (e.g., by requiring payment in advance of delivery or payment milestones) that may negatively impact the anticipated timing of components required for the assembly of our products or services rendered in support of our programs.
Our ability to meet future anticipated liquidity needs over the next year beyond the issuance date will largely depend on our ability to generate positive cash inflows from operations, maximize our borrowing capacity under our Credit Facility, as discussed further below, and or secure other sources of outside capital.
Our ability to meet future anticipated liquidity needs over the next year beyond the issuance date will largely depend on our ability to execute on our operational strategy, generate positive cash inflows from operations, maximize our borrowing capacity under our Credit Facility and or secure outside capital.
A significant change in an estimate on one or more programs could have a material adverse effect on our business, results of operations and financial condition. 29 Our business is highly dependent on the budgetary decisions of our government customers, including the U.S. government (including prime contractors to the U.S. government), and changes in the U.S. government’s fiscal policies or budgetary priorities may have a material adverse effect on our business, operating results and financial condition.
Our business is highly dependent on the budgetary decisions of our government customers, including the U.S. government (including prime contractors to the U.S. government), and changes in the U.S. government’s fiscal policies or budgetary priorities may have a material adverse effect on our business, operating results and financial condition.
Strategic Transformation Risks • We may fail to realize all of the anticipated benefits of our operational initiatives, including the strategic alternatives for our Terrestrial and Wireless Networks segment and further portfolio-shaping opportunities, or those benefits may take longer to realize than expected. • Our transformation strategy may require a substantial portion of the time and attention of our management team, which may have an adverse effect on our business and results of operations, and we may face increased levels of employee attrition.
Transformation Plan Risks • We may fail to realize all of the anticipated benefits of our strategic and operational initiatives, or those benefits may take longer to realize than expected. • Our transformation plan may require a substantial portion of the time and attention of our management team, which may have an adverse effect on our business and results of operations, and we may face increased levels of employee attrition.
Global Risks New and ongoing challenges relating to current supply chain constraints and impacts from inflation, including for satellite ground station and troposcatter components, could adversely impact our revenue, gross margins and financial results.
Global Risks New and ongoing challenges relating to current supply chain constraints, including for satellite ground station and troposcatter components, and impacts from inflation and any new or increased tariffs on imports and other trade restrictions, could adversely impact our revenue, gross margins and financial results.
The actual recognition of revenue on contracts included in backlog may never occur or may change because a program schedule could change; a customer may not follow up with order details (e.g., delivery instructions), fluctuations in currency exchange rates after an order is placed could cause our products to become too expensive for a foreign customer; a customer’s program could be canceled, a contract could be reduced, modified or terminated early due to changes in a customer’s priorities; funding may not be included in future budgets; actual indirect rates being reimbursed on U.S. government contracts may ultimately be less than those indirect rates included in our initial proposals; or an option that we had assumed would be exercised is not exercised.
The actual recognition of revenue on contracts included in backlog may never occur or may change because a program schedule could change; a customer may not follow up with order details (e.g., delivery instructions), fluctuations in currency exchange rates after an order is placed could cause our products to become too expensive for a foreign customer; a customer’s program could be canceled, a contract could be reduced, modified or terminated early due to changes in a customer’s priorities; funding may not be included in future budgets; actual indirect rates being reimbursed on U.S. government contracts may ultimately be less than those indirect rates included in our initial proposals; or an option that we had assumed would be exercised is not exercised. 28 We record a provision for excess and obsolete inventory based on historical and projected usage trends and other factors, including the consideration of the amount of backlog we have on hand at any particular point in time.
Our contracts with the U.S. government are subject to unique business and commercial risks, including: • protest following an award by an unsuccessful bidder, resulting in a stop-work order; • unexpected contract or project terminations or suspensions; • unpredictable order placements, reductions, accelerations, delays or cancellations; • higher than expected final costs, particularly relating to software and hardware development, for work performed under contracts where we commit to specified deliveries for a fixed-price; and • unpredictable cash collections of unbilled receivables that may be subject to acceptance of contract deliverables by the customer and contract close out procedures, including government audit and approval of final indirect rates. 30 Although we take steps to mitigate our risk with respect to contracts with the U.S. government, we may not be able to do so in every instance for any of the following reasons, among others: • Our U.S. government contracts can easily be terminated by the U.S. government - Our U.S. government contracts and subcontracts can be terminated by the U.S. government for its convenience or upon an event of default by us.
Our contracts with the U.S. government are subject to unique business and commercial risks, including: • protest following an award by an unsuccessful bidder, resulting in a stop-work order; • unexpected contract or project terminations or suspensions; • unpredictable order placements, reductions, accelerations, delays or cancellations; • higher than expected final costs, particularly relating to software and hardware development, for work performed under contracts where we commit to specified deliveries for a fixed-price; and 30 • unpredictable cash collections of unbilled receivables that may be subject to acceptance of contract deliverables by the customer and contract close out procedures, including government audit and approval of final indirect rates.
Our investments in recorded goodwill and other intangible assets could be further impaired as a result of future business conditions, a deterioration of the global economy or if we change our reporting unit structure as we pursue strategic alternatives. As of July 31, 2024, goodwill recorded on our Consolidated Balance Sheet aggregated $284.2 million.
Our investments in recorded goodwill and other intangible assets could be impaired as a result of future business conditions, a deterioration of the global economy or if we change our reporting unit structure for any reason. As of July 31, 2025, goodwill recorded on our Consolidated Balance Sheet aggregated $204.6 million.
If deployment of those funds is delayed, stopped or never occurs, our results of operations or financial condition in future periods could be materially and adversely affected. 43 Regulation of the mobile communications industry and VoIP is evolving, and unfavorable changes or our failure to comply with existing and potential new legislation or regulations could harm our business and operating results.
If deployment of those funds is delayed, stopped or never occurs, our future prospects may be negatively impacted. Regulation of the mobile communications industry and VoIP is evolving, and unfavorable changes or our failure to comply with existing and potential new legislation or regulations could harm our business and operating results.
We are unable to predict the impact these or similar events could have on our business, financial position, results of operations or cash flows. Our contracts with the U.S. government are subject to unique business, commercial and government audit risks. We depend on the U.S. government for a significant portion of our revenues.
We are unable to predict the impact these or similar events could have on our business, financial position, results of operations or cash flows, which could disrupt program execution and impact the timing of payments for government customers. Our contracts with the U.S. government are subject to unique business, commercial and government audit risks.
In light of current challenges in the supply chain, we may not be able to qualify alternate suppliers for our components. Heading into our fiscal 2025, we have a significant portion of our targeted revenues in our backlog.
In light of current challenges in the supply chain, we may not be able to qualify alternate suppliers for our components timely, or at all. 23 Heading into fiscal 2026, we have a significant portion of our anticipated revenues in funded backlog.
Our business is uniquely subject to certain risks related to its long term growth. These risks include: • We may not be ultimately successful in transformation activities - The pursuit of strategic alternatives and portfolio reshaping is a complex undertaking.
Our business is uniquely subject to certain risks related to its long term growth. These risks include: • We may not be ultimately successful in transformation activities - Carrying out our transformation plan, including portfolio reshaping, is a complex undertaking.
Net Intangibles with Finite Lives Similar to goodwill, we also review the recoverability of our net intangibles with finite lives whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.
Net Intangibles with Finite Lives Similar to goodwill, we also assess the recoverability of the carrying value of our long-lived assets, including identifiable intangible assets with finite useful lives, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
The current CISO has extensive information technology experience and partners closely with our Technology, Innovation & Cyber Committee of the Board of Directors. More broadly, we routinely audit our systems and practices against the DFARS and proposed Cybersecurity Maturity Model Certification ("CMMC") program, DoD’s cybersecurity requirements for handling government contracts and Controlled Unclassified Information ("CUI"), respectively.
InfoSec partners closely with our Technology, Innovation & Cyber Committee of the Board of Directors to oversee and manage cybersecurity-related risks. More tactically, we routinely audit our systems and practices against the DFARS and Cybersecurity Maturity Model Certification ("CMMC") program, DoD’s cybersecurity requirements for handling government contracts and Controlled Unclassified Information ("CUI"), respectively.
The control environment material weakness contributed to other material weaknesses within our system of internal control over financial reporting at the control activity level, where we did not design and implement effective control activities, including controls related to revenue, inventory and other assets.
This control environment material weakness contributed to other material weaknesses within our system of internal control over financial reporting at the control activity level, where we did not design and implement effective control activities, including controls related to: revenue, inventory, other assets, contract liabilities, and complex accounting matters and transactions (including debt, convertible preferred stock and related embedded derivatives).
U.S. laws and regulations applicable to us include the Arms Export Control Act, the IEEPA, the ITAR, the EAR and the trade sanctions laws and regulations administered by the U.S. Treasury Department's OFAC.
U.S. laws and regulations applicable to us include the Arms Export Control Act, the IEEPA, the ITAR, the EAR and the trade sanctions laws and regulations administered by the U.S. Treasury Department's OFAC. We are also subject to similar restrictions in other countries.
As of July 31, 2024, we had $123.7 million of contract assets recorded on our Consolidated Balance Sheet, commonly referred to as unbilled receivables.
As of July 31, 2025, we had $90.7 million of contract assets recorded in Accounts Receivable, Net on our Consolidated Balance Sheet , commonly referred to as unbilled receivables.
For example, our 911 hosted location-based services and satellite teleport services operations depend on our ability to maintain our computer equipment and systems in effective working order, and to protect our systems against damage from fire, natural disaster, terrorist attack, power loss, telecommunications failure, sabotage, unauthorized access to our system or similar events. 23 Any unanticipated interruption or delay in our operations or breach of security could have an adverse effect on our business, results of operations and financial condition.
For example, our 911 hosted location-based services and satellite teleport services operations depend on our ability to maintain our computer equipment and systems in effective working order, and to protect our systems against damage from fire, natural disaster, terrorist attack, power loss, telecommunications failure, sabotage, unauthorized access to our system or similar events.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTo manage and remediate cybersecurity risks identified as part of our ERM process and to manage emerging cybersecurity threats in real time; we have implemented a Managed Detection and Response system that supports the Security Operations Center. We are a member of the DoD Defense Industrial Base Collaborative Information Sharing Environment and the National Defense Information Sharing and Analysis Center.
Biggest changeWe are a member of the DoD Defense Industrial Base Collaborative Information Sharing Environment and the National Defense Information Sharing and Analysis Center. These organizations share real-time cybersecurity threat information and best practices in protecting, detecting and recovering from cybersecurity threats.
Our cybersecurity program is regularly assessed through management self-evaluations and ongoing monitoring procedures to evaluate our program effectiveness, including vulnerability management through active discovery, and testing to validate patching and configuration. Additionally, our InfoSec function regularly assesses our program effectiveness through audits of our entities, systems, and processes to help maintain compliance with policies.
Our cybersecurity program is regularly assessed through management self-evaluations and ongoing monitoring procedures to evaluate our program effectiveness, including vulnerability management through active discovery and testing to validate patching and configuration. Additionally, InfoSec regularly assesses our program effectiveness through audits of our entities, systems, and processes to help maintain compliance with policies.
Government Authorized Systems Our information technology systems used in connection with programs for the U.S. government align with the NIST standard and meet the requirements of 32 CFR Part 117 (National Industrial Security Program Operating Manual) and other applicable U.S. government guidance. The program includes authorizations and assessments of new and existing IT systems by our customers.
Government Authorized Systems Our information technology systems used in connection with programs for the U.S. government align with the NIST standard and meet the requirements of 32 CFR Part 117 (National Industrial Security Program Operating Manual or "NISPOM") and other applicable U.S. government guidance. The program includes authorizations and assessments of new and existing IT systems by our customers.
We use these assessments to supplement our own evaluation of the overall effectiveness of our program and target improvement areas. Several external organizations also evaluate our enterprise cybersecurity program, including the U.S. Defense Contract Management Agency ("DCMA") and Cybersecurity Maturity Model Certificate Third Party Assessment Organization.
We use these assessments to supplement our own evaluation of the overall effectiveness of our program and target improvement areas. Several external organizations also evaluate our enterprise cybersecurity program, including the U.S. Defense Contract Management Agency ("DCMA") and Cybersecurity Maturity Model Certificate or "CMMC" Third Party Assessment Organization.
Enterprise Cybersecurity Our enterprise cybersecurity program aligns with the National Institute of Standards and Technology (“NIST”) standards, among others, and includes processes and controls for the deployment of new IT systems by the Company and controls over new and existing systems operation.
Enterprise Cybersecurity Our enterprise cybersecurity program aligns with the National Institute of Standards and Technology (“NIST”) standards, among others, and includes processes and controls for the deployment of new IT systems by us and controls over new and existing systems operation.
Our CISO regularly updates the Technology, Innovation and Cyber Committee and Board of Directors on cybersecurity risks as they relate to our information and operational technology systems and our suppliers and partners, as well as provides regular updates on enterprise cybersecurity incidents and key defenses and mitigation strategies.
Our cybersecurity risk management team regularly updates the Technology, Innovation and Cyber Committee and Board of Directors on cybersecurity risks as they relate to our information and operational technology systems and our suppliers and partners, as well as provides regular updates on enterprise cybersecurity incidents and key defenses and mitigation strategies.
The Technology, Innovation, and Cyber Committee of the Board of Directors also reviews enterprise cybersecurity risks in connection with its oversight of cybersecurity and compliance risks. Our CISO leads our enterprise cybersecurity program and is responsible for assessing and managing enterprise cybersecurity risks in coordination with the EVP of Systems and IT Controls.
The Technology, Innovation, and Cyber Committee of the Board of Directors also reviews enterprise cybersecurity risks in connection with its oversight of cybersecurity and compliance risks. Our cybersecurity risk management team leads our enterprise cybersecurity program and is responsible for assessing and managing enterprise cybersecurity risks.
As part of our ERM program, our functional and operations departments identify and manage enterprise risks on an annual cycle. The process consists of structured reviews, discussions, and mitigation planning, and includes risks identified by our cybersecurity functions.
As part of our ERM program, our functional and operations departments identify and manage enterprise risks on an annual cycle. The process consists of structured reviews, discussions, and mitigation planning, and includes risks identified by our cybersecurity functions. The cybersecurity ERM process is administered by InfoSec with input from each business segment and function.
In addition, we restrict user access and require authorized users to complete additional user and cybersecurity training. 53 Third Party Service Providers We engage third party service providers to expand the capabilities and capacity of our cybersecurity program, including for design, monitoring and testing of the program’s risk prevention and protection measures and process execution, including incident detection, investigation, analysis and response, eradication and recovery.
Third Party Service Providers We engage third party service providers to expand the capabilities and capacity of our cybersecurity program, including for design, monitoring and testing of the program’s risk prevention and protection measures and process execution, including incident detection, investigation, analysis and response, eradication and recovery.
The cybersecurity ERM process is administered by InfoSec with input from each business segment and function, continually monitors material cybersecurity risks facing Comtech, including cybersecurity threats and threats to our internal systems, our products, services and programs for customers, and our supply chain.
InfoSec continually monitors material cybersecurity risks facing Comtech, including cybersecurity threats and threats to our internal systems, our products, services and programs for customers, and our supply chain.
Our CISO has extensive experience leading information technology for global organizations across communications, aerospace and defense, and works directly with our CEO, Chief Financial Officer, Executive Vice President ("EVP") of Systems and IT Controls, and other members of senior management to assess cybersecurity threats as part of our ERM process.
Our cybersecurity risk management team has extensive experience leading information technology for global organizations across communications, aerospace and defense, and works directly with our CEO, Chief Financial Officer, Executive Vice President ("EVP") of Systems and IT Controls, and other members of senior management team to assess cybersecurity threats as part of our ERM process. 52 To manage and remediate cybersecurity risks identified as part of our ERM process and to manage emerging cybersecurity threats in real time; we have implemented a Managed Detection and Response system that supports the Security Operations Center.
Our CISO regularly reviews enterprise cybersecurity risks, controls, program policy and processes, including training, oversees policy and program development, implementation, and updates, and informs senior leadership on cybersecurity-related issues and activities affecting the organization. Additionally, our CISO is regularly apprised of enterprise cybersecurity events, threats, and activities, including with respect to incidents, protection vulnerabilities, software update needs and lifecycle status.
Our cybersecurity risk management team regularly reviews and manages enterprise cybersecurity risks, controls, program policy and processes, including training, oversees policy and program development, implementation, and updates, and informs senior leadership on cybersecurity-related issues and activities affecting the organization.
The policies and controls we have implemented to date reflect our adherence to these requirements and have been assessed by external organizations, including industry partners.
As a government contractor, we must comply with extensive cybersecurity regulations, including the DFARS related to adequately safeguarding controlled unclassified information and reporting cybersecurity incidents to the DoD. The policies and controls we have implemented to date reflect our adherence to these requirements and have been assessed by external organizations, including industry partners.
We monitor use on these systems, including vulnerability management through patching and configuration.
We monitor use on these systems, including vulnerability management through patching and configuration. In addition, we restrict user access and require authorized users to complete additional user and cybersecurity training.
Removed
These organizations share real-time cybersecurity threat information and best practices in protecting, detecting, and recovering from cybersecurity threats. As a government contractor, we must comply with extensive cybersecurity regulations, including the DFARS related to adequately safeguarding controlled unclassified information and reporting cybersecurity incidents to the DoD.
Added
During fiscal year 2025 and through the date of this filing, based on the information available, we did not identify any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents (as such terms are defined in Item 106(a) of Regulation S-K), that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Added
Please see Cybersecurity Risks under Item 1A - Risk Factors under Part I of this Form 10-K for more information about risks to us from cybersecurity threats.
Added
Additionally, our cybersecurity risk management team regularly monitors and leads efforts to address and remediate, as appropriate, enterprise cybersecurity events, threats, and activities, including with respect to incidents, protection vulnerabilities, software update needs and lifecycle status.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur Satellite and Space Communications segment maintains office space in Cypress, California and Plano, Texas used primarily for R&D, engineering, sales and customer support. F. Our Satellite and Space Communications segment leases an additional five facilities, four of which aggregate 16,000 square feet and are located in the U.S. with the remaining facility aggregating 3,000 square feet located in India.
Biggest changeOur Satellite and Space Communications segment leases an additional four facilities, three of which aggregate 13,000 square feet and are located in the U.S. with the remaining facility aggregating 3,000 square feet located in India. All are primarily utilized for engineering, sales, software development, customer support and general office use. G.
To support our long-term business goals, we entered a 15-year lease for a new 146,000 square foot high-volume technology manufacturing facility in Chandler, Arizona. In fiscal 2023, we completed the relocation of certain of our satellite ground infrastructure production facility operations to this new facility, which reduced our Tempe, Arizona footprint to 20,000 square feet through January 2027.
To support our long-term business goals, we entered a 15-year lease for a 146,000 square foot high-volume technology manufacturing facility in Chandler, Arizona. In fiscal 2023, we completed the relocation of certain of our satellite ground infrastructure production facility operations to this new facility, which reduced our Tempe, Arizona footprint to 20,000 square feet through January 2027.
The Chandler, Arizona facility utilizes state-of-the-art design and production techniques, including analog, digital and RF microwave production, hardware assembly and full-service engineering. In fiscal 2024, this location became our new corporate headquarters. B. Our Satellite and Space Communications segment engineers and manufactures our over-the-horizon microwave troposcatter systems and mission-critical satellite equipment in a leased facility in Orlando, Florida. C.
The Chandler, Arizona facility utilizes state-of-the-art design and production techniques, including analog, digital and RF microwave production, hardware assembly and full-service engineering. In fiscal 2024, this location became our new corporate headquarters. B. Our Satellite and Space Communications segment engineers and manufactures our over-the-horizon microwave troposcatter systems and mission-critical satellite equipment in a leased facility in Orlando, Florida. 55 C.
The following table lists our primary leased facilities at July 31, 2024: Location Property Type Square Footage Lease Expiration Satellite and Space Communications Chandler, Arizona A Manufacturing and Engineering and Corporate Headquarters 146,000 July 2036 Orlando, Florida B Manufacturing and Engineering 99,000 April 2026 Hampshire, UK C Manufacturing and Engineering 77,000 November 2030 Santa Clara, California D Manufacturing and Engineering 47,000 April 2026 Cypress, California E Support, Engineering and Sales 28,000 July 2025 Tempe, Arizona A Manufacturing and Engineering 20,000 January 2027 Various facilities F Support, Engineering and Sales 19,000 Various Plano, Texas E R&D and Engineering 12,000 August 2025 Saint-Laurent, Canada G Manufacturing, Engineering, Sales and General Office 12,000 June 2029 460,000 Terrestrial and Wireless Networks Seattle, Washington H Network Operations, R&D, Engineering and Sales 30,000 October 2033 Stoughton, Massachusetts I Network Operations 26,000 March 2025 Annapolis, Maryland J Support, Engineering and Sales 17,000 July 2026 Gatineau, Canada K Network Operations, R&D, Engineering, Sales and General Office 16,000 April 2028 Chicago, Illinois K General Office 4,000 September 2024 93,000 Corporate Melville, New York L General Office 9,600 August 2027 Annapolis, Maryland J General Office and Common Areas 2,000 July 2026 11,600 Total Square Footage 564,600 A.
The following table lists our primary leased facilities at July 31, 2025: Location Property Type Square Footage Lease Expiration Satellite and Space Communications Chandler, Arizona A Manufacturing and Engineering and Corporate Headquarters 146,000 July 2036 Orlando, Florida B Manufacturing and Engineering 99,000 April 2026 Hampshire, UK C Manufacturing and Engineering 56,000 November 2030 Santa Clara, California D Manufacturing and Engineering 47,000 April 2026 Cypress, California E Support, Engineering and Sales 28,000 July 2030 Tempe, Arizona A Manufacturing and Engineering 20,000 January 2027 Various facilities F Support, Engineering and Sales 16,000 Various Plano, Texas E R&D and Engineering 12,000 September 2030 Saint-Laurent, Canada G Manufacturing, Engineering, Sales and General Office 12,000 June 2029 436,000 Allerium (formerly, Terrestrial and Wireless Networks) Seattle, Washington H Network Operations, R&D, Engineering and Sales 30,000 October 2033 Stoughton, Massachusetts I Network Operations 19,000 March 2030 Annapolis, Maryland J Support, Engineering and Sales 17,000 July 2026 Gatineau, Canada K Network Operations, R&D, Engineering, Sales and General Office 17,000 November 2035 Gatineau, Canada K Network Operations, R&D, Engineering, Sales and General Office 15,000 April 2028 98,000 Corporate Melville, New York L General Office 9,600 August 2027 Annapolis, Maryland J General Office and Common Areas 2,000 July 2026 11,600 Total Square Footage 545,600 A.
Our Terrestrial and Wireless Networks segment maintains office space in Annapolis, Maryland used primarily for the design and development of our software-based systems and applications and network operations for our Terrestrial and Wireless Networks segment. K.
Our Allerium segment maintains office space in Stoughton, Massachusetts used primarily for servicing certain of our state and local municipality NG-911 customers. J. Our Allerium segment maintains office space in Annapolis, Maryland used primarily for the design and development of our software-based systems and applications and network operations for our Allerium segment. K.
Our facility in Gatineau, Canada is subject to expropriation by the City of Gatineau and we expect to exit this facility and enter into a new lease agreement for an alternate facility in calendar 2025. L. Our Unallocated segment maintains general office space in a building complex located in Melville, New York for certain company-wide functions.
As a result, we entered into a new lease agreement for an alternate facility in July 2025. L. Our Unallocated segment maintains general office space in a building complex located in Melville, New York for certain company-wide functions.
Our Terrestrial and Wireless Networks segment maintains office space in Gatineau, Canada and Chicago, Illinois that are utilized for network operations, R&D, engineering, sales of our public safety and location technology solutions and general office use. We exited our Chicago, Illinois office in September 2024.
Our Allerium segment maintains office space in Gatineau, Canada that is utilized for network operations, R&D, engineering, sales of our public safety and location technology solutions and general office use. Our facility in Gatineau, Canada was subject to expropriation by the City of Gatineau and we expect to exit this facility in January 2026.
Our Terrestrial and Wireless Networks segment maintains office space in Seattle, Washington used primarily for servicing and hosting our VoIP and VoWiFi E911 and NG-911 services, and related emerging technologies. I. Our Terrestrial and Wireless Networks segment maintains office space in Stoughton, Massachusetts used primarily for servicing certain of our state and local municipality NG-911 customers. J.
Our Satellite and Space Communications segment maintains office space in Saint-Laurent, Canada, used primarily for sales, engineering, manufacturing and general office use. H. Our Allerium segment maintains office space in Seattle, Washington, used primarily for servicing and hosting our VoIP and VoWiFi E911 and NG-911 services, and related emerging technologies. I.
As part of our environmental related initiatives, we were able to reduce our total company-wide square footage of our various facilities for a total three-year reduction of 288,000 sq. ft. or 33.8%. 56
As part of our environmental related initiatives, we were able to reduce our total company-wide square footage of our various facilities for a total four-year reduction of 307,000 sq. ft. or 36.0%. Subsequent Event In the first quarter of fiscal 2026, our Allerium segment entered an 11,000 square foot, 6-year lease in Broomfield, Colorado.
Our Satellite and Space Communications segment currently leases two manufacturing facilities in Hampshire (Basingstoke), United Kingdom, where we previously manufactured high precision full motion fixed and mobile X/Y satellite tracking antennas.
Our Satellite and Space Communications segment leases a manufacturing facility in Hampshire, Basingstoke, U.K., where we previously manufactured high precision full motion fixed and mobile X/Y satellite tracking antennas. In fiscal 2025, we wound down such operations and are exploring options for an early termination of this one remaining facility lease. D.
All are primarily utilized for engineering, sales, software development, customer support, and general office use. G. Our Satellite and Space Communications segment maintains office space in Saint-Laurent, Canada, used primarily for sales, engineering, manufacturing and general office use. H.
Our Satellite and Space Communications segment manufactures certain amplifiers in a leased manufacturing facility located in Santa Clara, California. E. Our Satellite and Space Communications segment maintains office space in Cypress, California and Plano, Texas, respectively, used primarily for R&D, engineering, sales and customer support. F.
Removed
As a result of our fourth quarter fiscal 2024 decision to exit this product line, we are currently in discussions with each landlord regarding our exit and termination of such facility leases. 55 D. Our Satellite and Space Communications segment manufactures certain amplifiers in a leased manufacturing facility located in Santa Clara, California. E.
Added
This facility is used primarily for network operations, R&D, engineering, sales and general office space. 56
Removed
In fiscal 2024, as part of the divestiture of our solid-state RF microwave high power amplifiers and control components product line, we no longer lease the 45,000 square foot engineering and manufacturing facility in Melville, New York or the 8,000 square foot facility in Topsfield, Massachusetts.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 3. LEGAL PROCEEDINGS Information regarding legal proceedings is incorporated herein by reference to the " Notes to Consolidated Financial Statements – Note (13)(a) - Commitments and Contingencies – Legal Proceedings and Other Matters " included in " Part II - Item 8. Financial Statements and Supplementary Data, " of this Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable.
Biggest changeITEM 3. LEGAL PROCEEDINGS Information regarding legal proceedings is incorporated herein by reference to the Notes to Consolidated Financial Statements - Note (14)(a) - Commitments and Contingencies - Legal Proceedings and Other Matters included in Part II - Item 8. Financial Statements and Supplementary Data of this Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

37 edited+80 added−11 removed17 unchanged
Biggest changeResults of Operations The following table sets forth, for the periods indicated, certain income and expense items expressed as a percentage of our consolidated net sales: Fiscal Years Ended July 31, 2024 2023 2022 Gross margin 29.1 % 33.5 % 37.0 % Selling, general and administrative expenses 22.8 % 21.8 % 23.6 % Research and development expenses 4.5 % 8.8 % 10.8 % Amortization of intangibles 3.9 % 3.9 % 4.4 % Impairment of long-lived assets, including goodwill 11.9 % — % — % CEO transition costs 0.5 % 1.7 % 2.8 % Loss on business divestiture 0.2 % — % — % Proxy solicitation costs — % — % 2.3 % Operating loss (14.8) % (2.7) % (6.9) % Interest expense and other items 3.8 % 2.9 % 0.7 % Loss before benefit from income taxes (18.6) % (5.6) % (7.6) % Net loss (18.5) % (4.9) % (6.8) % Net loss attributable to common stockholders (25.1) % (6.2) % (8.9) % Adjusted EBITDA (a Non-GAAP measure) 8.5 % 9.7 % 8.1 % For a definition and explanation of Adjusted EBITDA, see " Item 7.
Biggest changeFinancial Statements and Supplementary Data (which discussion is incorporated herein by reference), for further information. 62 Results of Operations The following table sets forth, for the periods indicated, certain income and expense items expressed as a percentage of our consolidated net sales: Fiscal Years Ended July 31, 2025 2024 2023 Gross margin 25.6 % 29.1 % 33.5 % Selling, general and administrative expenses 28.7 % 22.8 % 21.8 % Research and development expenses 3.5 % 4.5 % 8.8 % Amortization of intangibles 4.3 % 3.9 % 3.9 % Impairment of long-lived assets, including goodwill 15.9 % 11.9 % — % CEO transition costs 0.4 % 0.5 % 1.7 % Loss on business divestiture — % 0.2 % — % Proxy solicitation costs 0.5 % — % — % Operating loss (27.8) % (14.8) % (2.7) % Interest expense and other items 3.3 % 3.8 % 2.9 % Loss before benefit from income taxes (31.1) % (18.6) % (5.6) % Net loss (31.1) % (18.5) % (4.9) % Net loss attributable to common stockholders (40.9) % (25.1) % (6.2) % Adjusted EBITDA (a Non-GAAP measure) (0.4) % 8.5 % 9.7 % For a definition and explanation of Adjusted EBITDA, see Item 7.
Capitalized internal use software costs are amortized once the software is placed in service on the straight-line method over the estimated useful life of the software, which is generally three years. Provisions for Excess and Obsolete Inventory. We record a provision for excess and obsolete inventory based on historical and projected usage trends.
Capitalized internal use software costs are amortized once the software is placed in service on the straight-line method over the estimated useful life of the software, which is generally three years. 61 Provisions for Excess and Obsolete Inventory. We record a provision for excess and obsolete inventory based on historical and projected usage trends.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our equity securities during the fiscal year ended July 31, 2024. On September 29, 2020, our Board of Directors authorized a $100.0 million stock repurchase program, which replaced our prior program.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our equity securities during the fiscal year ended July 31, 2025. On September 29, 2020, our Board of Directors authorized a $100.0 million stock repurchase program, which replaced our prior program.
Please see " Strategic Transformation " section discussed above, as well as Item 1A – “ Risk Factors ” under Part I of this Form 10-K for more information about risks pertaining to business and factors that can influence our future results. 59 Critical Accounting Policies We consider certain accounting policies to be critical due to the estimation process involved in each.
Please see the " Transformation Plan " section discussed above, as well as disclosures in Item 1A – Risk Factors under Part I of this Form 10-K for more information about risks pertaining to our business and those factors that can influence our future results. 59 Critical Accounting Policies We consider certain accounting policies to be critical due to the estimation process involved in each.
We recognize all or a portion of the benefit of income tax positions only when we have made a determination that it is "more-likely-than-not" that the tax position will be sustained upon examination, based upon the technical merits of the position and other factors.
We recognize all or a portion of the benefit of income tax positions in our GAAP results only when we have made a determination that it is "more-likely-than-not" that the tax position will be sustained upon examination, based upon the technical merits of the position and other factors.
This segment offers customers: satellite ground infrastructure technologies, services and system integration that facilitate the transmission of voice, video and data over GEO, MEO and LEO satellite constellations, including traveling wave tube power amplifiers, modems, VSAT platforms and frequency converters; over-the-horizon microwave solutions that can transmit digitized voice, video, and data over distances up to 200 miles using the troposphere and diffraction; professional engineering, training and field support services, including cybersecurity, for multiple U.S. government agencies; and procurement and supply chain management of high reliability Electrical, Electronic and Electromechanical ("EEE") parts for satellite, launch vehicle and manned space applications. • Terrestrial and Wireless Networks - is organized into three service areas: next generation 911 and call delivery, Solacom call handling solutions, and trusted location and messaging solutions.
This segment offers customers: satellite ground infrastructure technologies, services and system integration that facilitate the transmission of voice, video and data over GEO, MEO and LEO satellite constellations, including traveling wave tube power amplifiers, satellite modems, VSAT platforms and frequency converters; over-the-horizon microwave solutions that can transmit digitized voice, video, and data over distances up to 200 miles using the troposphere and diffraction; advanced cybersecurity training in support of U.S. government and certain commercial and university customers; and procurement and supply chain management of high reliability Electrical, Electronic and Electromechanical ("EEE") parts for satellite, launch vehicle and manned space applications. • Allerium (formerly, Terrestrial and Wireless Networks) - is organized into three service areas: next generation 911 and call delivery, call handling solutions, and trusted location and messaging solutions.
Judgment is required in determining when technological feasibility of a product is established. Technological feasibility for our advanced communication software solutions is generally reached after all high-risk development issues have been resolved through coding and testing. Generally, this occurs shortly before the products are released to customers and when we are able to validate the marketability of such product.
Technological feasibility for our advanced communication software solutions is generally reached after all high-risk development issues have been resolved through coding and testing. Generally, this occurs shortly before the products are released to customers and when we are able to validate the marketability of such product.
We anticipate future growth in our business due to a trend of increasing demand for global voice, video and data usage in recent years, in addition to the growth of emergency communication networks and related applications. We provide our solutions to both commercial and governmental customers.
Over the long-term, we anticipate future growth in our end markets due to a trend of increasing demand for global voice, video and data usage in recent years, in addition to the growth of emergency communication networks and related applications. We provide our solutions to both commercial and governmental customers.
Our gross profit may also be affected by the impact of any cumulative adjustments to contracts that are accounted for over time. In particular our contracts with the U.S. government can be terminated for convenience by it at any time and orders are subject to unpredictable funding, deployment and technology decisions by the U.S. government.
Our gross profit may also be affected by the impact of any cumulative adjustments to contracts that are accounted for over time. Our contracts with the U.S. government (or prime contractors to the U.S. government) can be terminated for convenience at any time and orders are subject to unpredictable funding, deployment and technology decisions by our customers.
We manage our business through two reportable operating segments: • Satellite and Space Communications - is organized into four technology areas: satellite modem and amplifier technologies, troposcatter technologies, government services and space components.
We manage our business through two reportable operating segments: • Satellite and Space Communications - is organized into four technology areas: satellite modem and amplifier technologies, troposcatter technologies, cybersecurity training (formerly, known as government services) and space components.
The $100.0 million stock repurchase program has no time restrictions and repurchases may be made from time to time in open-market or privately negotiated transactions, or by other means in accordance with federal securities laws. We had approximately 28.7 million shares of Common Stock outstanding as of July 31, 2024.
The stock repurchase program has no time restrictions and repurchases may be made from time to time in open-market or privately negotiated transactions, or by other means in accordance with federal securities laws. We had approximately 29.4 million shares of Common Stock outstanding as of July 31, 2025.
Future changes to the estimated allowance for doubtful accounts could be material to our results of operations and financial condition.
Future changes to the estimated allowance for doubtful accounts could be material to our results of operations and financial condition. Derivative Instruments and Warrant Liabilities.
Approximate Number of Equity Security Holders As of October 23, 2024, there were approximately 764 holders of our common stock. Such number of record owners was determined from our stockholder records and does not include beneficial owners whose shares of our common stock are held in the name of various security holders, dealers and clearing agencies.
Approximate Number of Equity Security Holders As of November 4, 2025, there were approximately 760 holders of our common stock. Such number of record owners was determined from our stockholder records and does not include beneficial owners whose shares of our common stock are held in the name of various security holders, dealers and clearing agencies.
This segment offers customers: SMS text to 911 services, providing alternate paths for individuals who need to request assistance (via text messaging) a method to reach Public Safety Answering Points ("PSAPs"); next generation 911 solutions, providing emergency call routing, location validation, policy-based routing rules, logging and security functionality; Emergency Services IP Network transport infrastructure for emergency services communications and support of next generation 911 services; call handling applications for PSAPs; wireless emergency alerts solutions for network operators; and software and equipment for location-based and text messaging services for various applications, including for public safety, commercial and government services.
This segment offers customers: SMS text to 911 services; next generation 911 solutions, providing emergency call routing, location validation, policy-based routing rules, logging and security functionality; Emergency Services IP Network transport infrastructure for emergency services communications and support of next generation 911 services; call handling applications for PSAPs; wireless emergency alerts solutions for network operators; and software and equipment for location-based and text messaging services for various applications, including for public safety, commercial and government services.
Measurement of credit losses requires consideration of historical loss experience, including the need to adjust for changing business conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates and the financial health of specific customers.
However, we may not be able to accurately predict our future credit loss experience. Measurement of credit losses requires consideration of historical loss experience, including the need to adjust for changing business conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates and the financial health of specific customers.
Once technological feasibility is established, all software costs are capitalized until the product is available for general release to customers. To date, costs capitalized related to internally developed software to be sold were not material, but could increase in the future.
Once technological feasibility is established, all software costs are capitalized until the product is available for general release to customers. To date, costs capitalized related to software developed for the purpose of selling to third parties was not material, but could increase in the future.
Generally, we will require cash in advance or payment secured by irrevocable letters of credit before an order is accepted from an international customer that we do not do business with regularly.
Generally, we will require cash in advance or payment secured by irrevocable letters of credit before an order is accepted from an international customer that we do not do business with regularly. In addition, we seek to obtain insurance for certain domestic and international customers.
The ultimate outcome of tax exposures and risks involves significant uncertainties. If actual outcomes differ materially from these estimates, they could have a material impact on our results of operations and financial condition. Our U.S. federal income tax returns for fiscal 2021 through 2023 are subject to potential future Internal Revenue Service ("IRS") audit.
If actual outcomes differ materially from these estimates, they could have a material impact on our results of operations and financial condition. Our U.S. federal income tax returns for fiscal 2022 through 2025 are subject to potential future Internal Revenue Service ("IRS") audit. None of our state and foreign income tax returns prior to fiscal 2021 are subject to audit.
ITEM 6. [RESERVED] 58 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview of Business We are a leading global provider of next-generation 911 emergency systems ("NG-911") and secure wireless and satellite communications technologies.
ITEM 6. [RESERVED] 58 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview of Business We are a leading provider of satellite and space communications technologies, terrestrial and wireless network solutions, Next Generation 911 ("NG-911") and emergency services and cloud native capabilities.
For tax positions that are determined as "more-likely-than-not" to be sustained upon examination, the tax benefit recognized is the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.
For tax positions that are determined as "more-likely-than-not" to be sustained upon examination, the tax benefit recognized is the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. We recognize potential interest and penalties related to uncertain tax positions in income tax expense.
Capitalization of costs requires judgment in determining when a project has reached the application development stage, the proportion of time spent in the application development stage, and the period over which we expect to benefit from the use of that software.
Capitalization of costs requires judgment in determining when a project has reached the application development stage, the proportion of time spent in the application development stage, and the period over which we expect to benefit from the use of that software. During fiscal 2025 and 2024, internal-use software costs capitalized were $3.9 million and $3.8 million, respectively.
We record a liability for estimated warranty expense based on historical claims, product failure rates and other factors. Costs associated with some of our warranties that are provided under long-term contracts are incorporated into our estimates of total contract costs. There exist inherent risks and uncertainties in estimating warranty expenses, particularly on larger or longer-term contracts.
Costs associated with some of our warranties that are provided under long-term contracts are incorporated into our estimates of total contract costs. There exist inherent risks and uncertainties in estimating warranty expenses, particularly on larger or longer-term contracts.
Controls and Procedures, " included in this Form 10-K, for further information. Allowance for Doubtful Accounts. We perform credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness, as determined by our review of our customers’ current credit information.
We perform credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness, as determined by our review of our customers’ current credit information.
Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other personnel-related expenses associated with product development. Research and development expenses also include third-party development and programming costs. Costs incurred internally in researching and developing software to be sold are charged to expense until technological feasibility has been established for the software.
Research and development expenses also include third-party development and programming costs. Costs incurred internally in researching and developing software to be sold are charged to expense until technological feasibility has been established for the software. Judgment is required in determining when technological feasibility of a product is established.
Also, more recently, in fiscal 2024, we experienced a significant increase in the overall level of contract assets (i.e., unbilled receivables) related to large, long-term contracts with certain U.S. government and international customers. We continue to monitor our accounts receivable credit portfolio.
We have, on a limited basis, approved certain customer requests. Also, we can from time to time experience significant increases in the overall level of contract assets (i.e., unbilled receivables) related to large, long-term contracts with certain U.S. government, domestic and international customers. We continuously monitor our accounts receivable credit portfolio.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Comparison of Fiscal 2024 and 2023 - Adjusted EBITDA." 62 Fiscal 2024 Highlights and Business Outlook for Fiscal 2025 Our financial performance for the fiscal year ended July 31, 2024 includes: • Consolidated net sales of $540.4 million, compared to $550.0 million in fiscal 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Comparison of Fiscal 2025 and 2024 - Adjusted EBITDA. 63 Fiscal 2025 Results and Business Outlook Our financial performance for the fiscal year ended July 31, 2025 includes: • Consolidated net sales of $499.5 million, compared to $540.4 million in fiscal 2024, reflecting: (a) the completion of certain legacy contracts to deliver next-generation troposcatter terminals to the U.S.
We capitalize certain costs related to internal-use software (e.g., hosted "SaaS" applications within our Terrestrial and Wireless Networks segment), primarily consisting of direct labor and third-party vendor costs associated with creating the software.
As it relates to software developed for the purpose of internal-use (e.g., hosted "SaaS" applications within our Allerium segment), costs capitalized primarily consist of direct labor and third-party vendor costs associated with creating the software.
Impairment of Goodwill and Other Intangible Assets . As of July 31, 2024, total goodwill recorded on our Consolidated Balance Sheet aggregated $284.2 million (of which $110.1 million relates to our Satellite and Space Communications segment and $174.1 million relates to our Terrestrial and Wireless Networks segment).
As of July 31, 2025, total goodwill recorded on our Consolidated Balance Sheet aggregated $204.6 million (of which $30.5 million relates to our Satellite and Space Communications segment and $174.1 million relates to our Allerium segment).
Additionally, as of July 31, 2024, net intangibles recorded on our Consolidated Balance Sheet aggregated $194.8 million (of which $48.4 million relates to our Satellite and Space Communications segment and $146.4 million relates to our Terrestrial and Wireless Networks segment).
Additionally, as of July 31, 2025, net intangibles recorded on our Consolidated Balance Sheet aggregated $173.1 million (of which $41.2 million relates to our Satellite and Space Communications segment and $131.9 million relates to our Allerium segment).
For purposes of reviewing impairment and the recoverability of goodwill and other intangible assets, our Satellite and Space Communications and Terrestrial and Wireless Networks segments each constitute a reporting unit and we must make various assumptions in determining their estimated fair values.
For purposes of reviewing impairment and the recoverability of goodwill and other intangible assets, our segments each constitute a reporting unit and we must make various assumptions in determining their estimated fair values. See Notes to Consolidated Financial Statements - Note (15) - Long-lived Assets, including Goodwill and Note (16) - Intangible Assets included in Part II - Item 8.
We recognize potential interest and penalties related to uncertain tax positions in income tax expense. 60 In assessing the need for a valuation allowance for deferred tax assets, we consider all positive and negative evidence, including past financial performance, timing and judgments about future taxable income and tax planning strategies.
In assessing the need for a valuation allowance for deferred tax assets, we consider all positive and negative evidence, including past financial performance, timing and judgments about future taxable income and tax planning strategies. Valuation allowances are established, when necessary, to reduce net deferred tax assets to the amount "more-likely-than-not" expected to be realized.
Valuation allowances are established, when necessary, to reduce net deferred tax assets to the amount "more-likely-than-not" expected to be realized. We continuously evaluate additional facts representing positive and negative evidence in determining our ability to realize these deferred tax assets. Significant judgment is required in determining income tax provisions and tax positions.
We continuously evaluate additional facts representing positive and negative evidence in determining our ability to realize these deferred tax assets. Significant judgment is required in determining income tax provisions and tax positions. The ultimate outcome of tax exposures and risks involves significant uncertainties.
None of our state income tax returns prior to fiscal 2020 are subject to audit. Future tax assessments or settlements could have a material adverse effect on our consolidated results of operations and financial condition. Capitalized Engineering Costs. We generally expense all research and development costs.
Future tax assessments or settlements could have a material adverse effect on our consolidated results of operations and financial condition. Capitalized Engineering Costs. We generally expense all research and development costs. Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other personnel-related expenses associated with product development.
In addition, we seek to obtain insurance for certain domestic and international customers. 61 We monitor billing events, collections and payments from our customers and maintain an allowance for doubtful accounts based upon our historical experience and any specific customer collection issues that we have identified.
We monitor billing events, collections and payments from our customers and maintain an allowance for doubtful accounts based upon our historical experience and any specific customer collection issues that we have identified. In light of ongoing tight credit market conditions and high interest rates, we continue to see requests from our customers for higher credit limits and longer payment terms.
Our Quarterly Financial Information Quarterly and period-to-period sales and operating results may be significantly affected by either short-term or long-term contracts with our customers. In addition, our gross profit is affected by a variety of factors, including the mix of products, systems and services sold, production efficiencies, estimates of warranty expense, price competition and general economic conditions.
In addition, our gross profit is affected by a variety of factors, including, among other things, the mix of products, systems and services sold, production efficiencies, provisions for excess and obsolete inventories, estimates of warranty expense, price competition and general economic conditions.
Such activities could result in a material impairment of our goodwill and/or intangible assets. See " Part I - Item 1. Business - Strategic Transformation " for more information. Provision for Warranty Obligations. We provide warranty coverage for most of our products, including products under long-term contracts, for a period of at least one year from the date of shipment.
We provide warranty coverage for most of our products, including products under long-term contracts, for a period of at least one year from the date of shipment. We record a liability for estimated warranty expense based on historical claims, product failure rates and other factors.
Financial Statements and Supplementary Data " (which discussion is incorporated herein by reference), included in this Form 10-K, for further information. Also, as announced on October 17, 2024, we are executing a strategy to transform Comtech into a pure-play satellite and space communications company.
Financial Statements and Supplementary Data (which discussion is incorporated herein by reference), included in this Form 10-K, for further information. Ongoing and future actions supporting our transformation strategy could result in a material impairment of our goodwill and/or intangible assets. 60 Provision for Warranty Obligations.
Removed
During our fourth quarter of fiscal 2024, we recorded a $64.5 million non-cash impairment charge in our Satellite and Space Communications segment related to long-lived assets, including goodwill. See " Notes to Consolidated Financial Statements - Note (14) - Goodwill" and "Note (15) - Intangible Assets " included in " Part II - Item 8.
Added
Our Quarterly Financial Information Quarterly and period-to-period sales and operating results may be significantly affected by, among other things, short-term or long-term contracts with our customers, allowances for bad debt, impairments of long-lived assets (including goodwill) and changes in the estimated fair value of derivative instruments and warrants.
Removed
Ongoing and future actions supporting our transformation strategy include: an exploration of strategic alternatives for our Terrestrial and Wireless Networks segment, which is well underway; the pursuit of further portfolio-shaping opportunities to enhance profitability, efficiency and focus; and the implementation of additional operational initiatives to both achieve profitable results from operations as well as to align our go-forward cost structure with a pure-play focus on satellite and space communications.
Added
A cost-to-cost measure of progress is principally used to account for contracts in our Satellite and Space Communications segment and, to a lesser extent, certain location-based and messaging infrastructure contracts in our public safety and location technologies product line within our Allerium segment.
Removed
Once the software is placed in service, these costs are amortized on the straight-line method over the estimated useful life of the software. During fiscal 2024, internal-use software costs capitalized were $3.8 million.
Added
For over time contracts using a cost-to-cost measure of progress, we have an estimate at completion ("EAC") process in which management reviews the progress and execution of our performance obligations and calculates an estimated contract profit based on total estimated contract revenue and cost.
Removed
In light of ongoing tight credit market conditions and high interest rates, we continue to see requests from our customers for higher credit limits and longer payment terms. We have, on a limited basis, approved certain customer requests.
Added
Since certain contracts extend over a long period of time, the impact of revisions in revenue and/or cost estimates during the progress of work may impact current period earnings through a cumulative adjustment. Additionally, if the EAC process indicates a loss, a provision is made for the total anticipated loss in the period that it becomes evident.
Removed
To-date, there has been no material changes in our credit portfolio as a result of the challenging business conditions. Although our overall credit losses have historically been within the allowances we established, we may not be able to accurately predict our future credit loss experience, given the current poor business environment.
Added
Contract revenue and cost estimates for significant contracts are generally reviewed and reassessed at least quarterly. We perform on a broad range of contracts whose revenue is recognized over time, including the development of complex and advanced customized solutions which often require the application of new technologies.
Removed
The prior year included a full year of operations related to our solid state, high power amplifier product line divested in November 2023 (the "PST Divestiture").
Added
Cost estimates on fixed-price development contracts and early stage/low-rate production contracts are inherently more uncertain as to future events than on mature, full-rate production contracts. As a result, for fixed-price development contracts and early stage/low-rate production contracts, there is typically more variability in those estimates and greater financial risk associated with unanticipated cost growth.
Removed
Adjusted for the PST Divestiture and despite very challenging business conditions in fiscal 2024, our consolidated net sales grew slightly from fiscal 2023; • Gross margin was 29.1%, compared to 33.5% in fiscal 2023; • GAAP net loss attributable to common stockholders was $135.4 million and included: a $64.5 million impairment charge in our Satellite and Space Communications segment related to long-lived assets, including goodwill; $12.5 million of restructuring costs; $4.1 million of strategic emerging technology costs for next-generation satellite technology; $2.9 million of CEO transition costs; and a $1.2 million loss associated with the PST Divestiture due to the acquirer not achieving certain post-divestiture earn-out criteria; • GAAP EPS loss of $4.70 and Non-GAAP EPS of $0.10; • Adjusted EBITDA (a Non-GAAP financial measure discussed below) of $45.7 million, a decrease of 14.6% from fiscal 2023, due in part to the PST Divestiture; • New bookings (also referred to as orders) of $700.6 million, resulting in an annual book-to-bill ratio of 1.30x (a measure defined as bookings divided by net sales); • Backlog of $798.9 million as of July 31, 2024, compared to $662.2 million as of July 31, 2023 and $653.4 million as of April 30, 2024.
Added
Risks include, but are not limited to: technical engineering risks related to the underlying technologies being developed; schedule risks related to completing performance obligations timely; and customer risks related to changing specifications.
Removed
Backlog as of July 31, 2024 represents a new record for Comtech; • Revenue visibility of approximately $1.8 billion as of July 31, 2024, an increase from the $1.1 billion as of July 31, 2023.
Added
The estimation of contract revenue, cost and progress toward completion requires the use of judgment, which can be affected by any number of factors over time and which may cause our actual results to differ materially from those estimates, as facts and circumstances change or become known to us.
Removed
We measure this revenue visibility as the sum of our $798.9 million of funded backlog, plus the total unfunded value of certain multi-year contracts that we have received and from which we expect future orders; and • Cash flows used in operating activities of $54.5 million, due primarily to a significant increase in the overall level of contract assets (i.e., unbilled receivables) in fiscal 2024 related to our progress on large, long-term "over-time" contracts awarded to us by certain U.S. government and international end customers, as well as the timing of payments to our suppliers as we execute on our backlog.
Added
Changes in estimates can occur for a variety of reasons including, but not limited to: changes in the availability, productivity and cost of labor; the effect of change orders on contract scope; the resolution of engineering risks at lower or higher costs than anticipated; the availability and cost of material components and subcontracts, as well as the performance of our subcontractors or suppliers; the impact of unanticipated changes in our customers' schedules; and changes in indirect cost allocations, such as overhead.
Removed
As experienced in the latter part of fiscal 2024, we expect the level of our unbilled receivables to continue to decline throughout fiscal 2025, as we invoice our customers upon physical delivery of products or the achievement of specified contractual milestones.
Added
The impact of gross favorable and unfavorable changes in contract estimates on reported gross margin is presented in the table below: Fiscal Years Ended July 31, 2025 2024 2023 Gross favorable changes $ 11,439,000 11,802,000 7,421,000 Gross unfavorable changes (19,671,000) (20,744,000) (11,451,000) Net changes $ (8,232,000) (8,942,000) (4,030,000) Impairment of Long-Lived Assets, Including Goodwill .
Removed
Additionally, cash flows used in operating activities includes $16.0 million in aggregate payments for restructuring costs, including severance, CEO transition costs and strategic emerging technology costs for next-generation satellite technology. Non-GAAP financial measures discussed above are reconciled to the most directly comparable GAAP financial measures in the table included in the below section "
Added
Controls and Procedures, included in this Form 10-K, for further information (including a discussion of provisions recorded in our first quarter of fiscal 2025 associated with certain discontinued products and operations within our Satellite and Space Communications segment). Allowance for Doubtful Accounts.
Added
Except as discussed in Notes to Consolidated Financial Statements - Note (4) - Accounts Receivable included in Part II - Item 8. Financial Statements and Supplementary Data (which discussion is incorporated herein by reference), included in this Form 10-K, our overall credit losses have historically been within the allowances we established.
Added
We evaluate our financial instruments, including our Credit Facility, Subordinated Credit Facility, Convertible Preferred Stock and warrants to issue our common stock pursuant to the terms of such instruments, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.
Added
Such evaluation considers a qualitative and quantitative assessment of whether the host instrument is more debt or equity-like, and if embedded derivatives should be bifurcated from the host instrument and/or combined for accounting purposes.
Added
For derivatives that are accounted for as liabilities, the derivative is initially recorded at its estimated fair value and is then re-valued at each reporting date, with changes in its estimated fair value reported in our Consolidated Financial Statements .
Added
To estimate such fair values, with the assistance of a third party valuation expert, we primarily use Monte Carlo simulation models, on a with and without basis, or Black-Scholes option pricing models, each adjusted for instrument-specific terms.
Added
Due to the nature of our derivative instruments and warrant liabilities, we must use Level 3 inputs for estimating fair value, which are unobservable inputs developed using the best available information under the circumstances.
Added
Level 3 inputs are supported by little or no market activity, are significant to the fair value of the assets or liabilities and reflect our assumptions related to how market participants would use similar inputs to price the asset or liability. Accordingly, our estimates and assumptions could prove to be inaccurate.
Added
Also, changes in such estimates and assumptions from period to period could be material to our results of operations and financial condition. See Notes to Consolidated Financial Statements - Note (1)(j) - Fair Value Measurements and Financial Instruments included in Part II - Item 8.
Added
Marine Corps and Army; (b) the divestiture of our high power solid state amplifiers product line in November 2023; (c) the wind down of our steerable antennas product line in the U.K.; and (d) the discontinuation of certain low-margin orders in our Satellite and Space Communications segment in order to focus on opportunities through which we can provide a more differentiated solution at higher margins; offset, in part, by growth in our: (x) Allerium segment, driven by our next-generation 911 emergency communications solutions; and (y) Satellite and Space Communications satellite ground infrastructure solutions, reflecting the ongoing shift back to higher volume production contracts as certain legacy non-recurring engineering contracts draw nearer to completion; • Gross margin was 25.6%, compared to 29.1% in fiscal 2024, reflecting, in addition to product mix changes, an $11.4 million non-cash charge in our first quarter of fiscal 2025 related to the write down of certain inventories as a result of restructuring activities within our Satellite and Space Communications segment; our quarterly gross profit, both in dollars and as a percentage of consolidated net sales, improved sequentially throughout fiscal 2025, ultimately achieving a 31.2% gross profit percentage in our fourth quarter; • GAAP net loss attributable to common stockholders was $204.3 million and included, among other things: a $79.6 million non-cash impairment charge related to long-lived assets, including goodwill; $48.9 million of net non-cash adjustments and paid-in-kind dividends related to our Convertible Preferred Stock; $27.9 million in amortization and write-offs of deferred financing costs, debt discount, accreted interest and interest paid-in-kind related to our senior and subordinated credit facilities; $21.7 million of intangible asset amortization; a $16.1 million non-cash charge to fully reserve for an unbilled receivable contract asset; $15.6 million of restructuring costs; the $11.4 million non-cash inventory charge discussed above; $2.7 million of proxy solicitation costs; and $2.1 million of CEO transition costs; offset, in part, by a $38.5 million non-cash benefit resulting from the remeasurement of warrants and derivatives; our quarterly GAAP net loss attributable to common stockholders improved sequentially throughout fiscal 2025, due primarily to improved operational and financial performance, which ultimately positioned us to achieve positive GAAP operating income in our fourth quarter; • GAAP EPS loss of $6.95 and Non-GAAP EPS of $2.41; • Adjusted EBITDA (a Non-GAAP financial measure discussed below) was negative $2.0 million, compared to Adjusted EBITDA of positive $45.7 million in fiscal 2024; we experienced sequential quarterly improvements in Adjusted EBITDA throughout fiscal 2025, with improvements from negative $30.8 million in our first quarter to positive $13.3 million in our fourth quarter; • New bookings (also referred to as orders) of $372.7 million, resulting in an annual book-to-bill ratio of 0.75x (a measure defined as bookings divided by net sales); bookings in the third quarter included a $36.4 million debooking related to the low margin U.S.
Added
Army GFSR contract that was protested by and ultimately awarded to the incumbent in May 2025; as part of our transformation plan, we have refocused and prioritized our sales efforts to target higher margin opportunities in which we have greater differentiation; • Backlog of $672.1 million as of July 31, 2025, compared to $798.9 million as of July 31, 2024 and $708.1 million as of April 30, 2025; new bookings and backlog do not yet include the $130.0 million plus, multi-year contract extension awarded to us by a U.S. domestic top tier mobile network operator in November 2025; • Revenue visibility of approximately $1.1 billion as of July 31, 2025.
Added
We measure this revenue visibility as the sum of our $672.1 million of funded backlog, plus the total unfunded value of certain multi-year contracts that we have received and from which we expect future orders; and • Cash flows used in operating activities of $8.3 million, reflecting sequential quarterly improvements throughout fiscal 2025 from negative $21.8 million in our first quarter to positive $11.4 million in our fourth quarter; excluding $23.0 million in aggregate payments for restructuring costs, including severance, proxy solicitation costs and CEO transition costs, fiscal 2025 cash flows provided by operating activities would have been $14.7 million; also, fiscal 2025 operating cash flows include $29.6 million of total cash paid for interest related to debt obligations and income taxes. 64 As of the issuance date, we determined that we have alleviated the substantial doubt regarding our ability to continue as a going concern, which was first disclosed in December 2023.
Added
As discussed throughout this Form 10-K for the fiscal year ended July 31, 2025, such determination considered: our significantly improved operational and financial performance over recent fiscal quarters; the cumulative amendments to our senior and subordinated credit facilities (which among other things, provide for a long-term financial covenant holiday through January 31, 2027); our enhanced liquidity position; and considering our projections of future operating cash flows.
Added
Non-GAAP financial measures discussed above are reconciled to the most directly comparable GAAP financial measures in the table included in the below section Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Comparison of Fiscal 2025 and 2024.
Added
Other Key Business Developments and Updates Satellite and Space Communications Our Satellite and Space Communications segment continues to focus on addressing performance, thoughtfully evaluating the product portfolio and implementing initiatives to improve margins and cash flow generation.
Added
During fiscal 2025, we have revamped this segment with new leadership and streamlining; refocused our product portfolio around differentiated technology and solutions; improved accountability and process disciplines, including implementation of robust approval processes; renegotiated customer contract terms and pricing; aligned product management and program management; eliminated legacy products and services that were not contributing meaningfully to related segment net sales and or gross profits and launched new products as this segment transitions from low or no margin non-recurring engineering contracts to higher volume manufacturing orders.
Added
As an update to our recent performance, during the fourth quarter of fiscal 2025, we were awarded a mix of orders which span across multiple product lines and included, among others: • additional funding of approximately $10.3 million from a major U.S. prime contractor in support of NASA's Orion Production and Operations Contract ("OPOC"), commonly known as the Artemis project; • incremental funding of approximately $7.4 million for continued, ongoing training and support of complex cybersecurity operations for U.S. government customers; • $2.8 million in funded orders calling for the supply of Very Small Aperture Terminal (“VSAT”) equipment and related services for the U.S.
Added
Army (given the award of the follow on "VSAT IV" contract to a competitor, we do not expect material contributions from our legacy contract going forward); • over $2.0 million in funded orders for high power Ka band traveling wave tube amplifiers for use in a satellite constellation designed to provide high speed internet access to rural areas of the U.S.; • approximately $2.0 million in funded orders from a long-term, existing international customer for the procurement of EEE space parts and services; • approximately $2.0 million in funded orders from the U.S.
Added
Navy for satellite ground infrastructure solutions; • over $1.0 million in funded orders related to an international customer's replacement of an existing air traffic control network; and • over $1.0 million in funded orders for satellite ground infrastructure solutions intended for use in the SES mPower satellite constellation. 65 In fiscal 2024, we won a highly competitive $48.6 million contract to deliver next-generation Enterprise Digital Intermediate Frequency Multi-Carrier (“EDIM”) modems for the U.S.
Added
Army's satellite communications ("SATCOM") digitization and modernization programs. The advanced, software defined EDIM modem is intended to: support multiple satellite providers; become one of the primary modems used for U.S. military SATCOM, eventually replacing the Enhanced Bandwidth Efficient Modem ("EBEM"); and provide the U.S. Army, Navy and Air Force with a digitized, hybrid satellite network architecture.
Added
We are progressing with our efforts on this contract and pleased to have recently secured incremental funding from the customer for additional work, as well as funding for initial production quantities to be delivered following the completion of final acceptance testing, currently anticipated in fiscal 2026.
Added
During fiscal 2025, we began deliveries of initial production units to our prime contractor in support of a next-generation satellite modem contract and will be moving into full production during fiscal 2026, as the program transitions from a multi-year development period into a production-oriented stage.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

2 edited+0 added−0 removed0 unchanged
Biggest changeMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 59 Overview 59 Critical Accounting Policies 60 Results of Operations 62 Fiscal 2024 Highlights and Business Outlook for Fiscal 2025 63 Comparison of Fiscal 2024 and 2023 66 Comparison of Fiscal 2023 and 2022 73 Liquidity and Capital Resources 74 Recent Accounting Pronouncements 79 ITEM 7A.
Biggest changeMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 59 Overview 59 Critical Accounting Policies 60 Results of Operations 63 Fiscal 2025 Result s and Business Outlook 64 Comparison of Fiscal 2025 and 2024 68 Comparison of Fiscal 2024 and 2023 76 Liquidity and Capital Resources 77 Recent Accounting Pronouncements 81 ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 79 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 79
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 82 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 82

Item 7. Management's Discussion & Analysis

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

86 edited+42 added−122 removed13 unchanged
Biggest changeAdjusted EBITDA (both in dollars and as a percentage of related net sales) for both fiscal 2024 and 2023 are shown in the table below (numbers in the table may not foot due to rounding): Fiscal Years Ended July 31, 2024 2023 2024 2023 2024 2023 2024 2023 ($ in millions) Satellite and Space Communications Terrestrial and Wireless Networks Unallocated Consolidated Net (loss) income $ (55.5) 15.5 21.0 12.3 (65.4) (54.7) $ (100.0) (26.9) Provision for (benefit from) income taxes 0.7 (1.7) 0.7 (0.2) (1.6) (2.0) (0.3) (3.9) Interest expense — — — — 22.1 15.0 22.2 15.0 Interest (income) and other 0.6 1.2 — 0.2 — (0.2) 0.7 1.2 Write-off of deferred financing costs — — — — 1.8 — 1.8 — Change in fair value of warrants and derivatives — — — — (4.3) — (4.3) — Amortization of stock-based compensation — — — — 6.1 10.1 6.1 10.1 Amortization of intangibles 6.7 7.3 14.5 14.1 — — 21.2 21.4 Depreciation 3.9 4.1 7.9 7.6 0.4 0.2 12.2 11.9 Impairment of long-lived assets, including goodwill 64.5 — — — — — 64.5 — Amortization of cost to fulfill assets 1.0 1.0 — — — — 1.0 1.0 CEO transition costs — — — — 2.9 9.1 2.9 9.1 Restructuring costs 3.8 5.7 0.6 1.3 8.1 3.9 12.5 10.9 Strategic emerging technology costs 4.1 3.8 — — — — 4.1 3.8 Loss on business divestiture — — — — 1.2 — 1.2 — Adjusted EBITDA $ 29.8 37.0 44.7 35.3 (28.7) (18.8) $ 45.7 53.5 Percentage of related net sales 9.2 % 11.0 % 20.6 % 16.6 % NA NA 8.5 % 9.7 % 71 The decrease in consolidated Adjusted EBITDA, both in dollars and as a percentage of consolidated net sales, for fiscal 2024 as compared to fiscal 2023 primarily reflects lower consolidated net sales and gross profit (both in dollars and as a percentage of consolidated net sales) and higher selling, general and administrative expenses, offset in part by lower research and development expenses in both of our reportable operating segments, as discussed above.
Biggest changeAdjusted EBITDA (both in dollars and as a percentage of related net sales) for both fiscal 2025 and 2024 are shown in the table below (numbers in the table may not foot due to rounding): Fiscal Years Ended July 31, 2025 2024 2025 2024 2025 2024 2025 2024 ($ in millions) Satellite and Space Communications Allerium Unallocated Consolidated Operating (loss) income $ (111.6) (54.2) 24.1 21.7 (51.6) (47.4) $ (139.1) (79.9) Amortization of stock-based compensation — — — — 3.1 6.1 3.1 6.1 Amortization of intangibles 7.3 6.7 14.5 14.5 — — 21.7 21.2 Impairment of long-lived assets, including goodwill 79.6 64.5 — — — — 79.6 64.5 Depreciation 3.0 3.9 8.3 7.9 0.5 0.4 11.8 12.2 Amortization of cost to fulfill assets 0.3 1.0 — — — — 0.3 1.0 Restructuring costs 5.5 3.8 0.6 0.6 9.5 8.1 15.6 12.5 Strategic emerging technology costs 0.3 4.1 — — — — 0.3 4.1 Proxy solicitation costs — — — — 2.7 — 2.7 — CEO transition costs — — — — 2.1 2.9 2.1 2.9 Loss on business divestiture — — — — — 1.2 — 1.2 Adjusted EBITDA $ (15.8) 29.8 47.6 44.7 (33.7) (28.7) $ (2.0) 45.7 Percentage of related net sales: Operating income NA NA 10.5 % 10.0 % NA NA NA NA Adjusted EBITDA NA 9.2 % 20.7 % 20.6 % NA NA NA 8.5 % The decrease in consolidated Adjusted EBITDA, both in dollars and as a percentage of consolidated net sales, for fiscal 2025 as compared to fiscal 2024 primarily reflects lower consolidated net sales and gross profit (both in dollars and as a percentage of consolidated net sales, and including an $11.4 million non-cash charge related to a write down of inventory) and higher selling, general and administrative expenses (driven by a $16.1 million non-cash charge related to an allowance for doubtful accounts), offset in part by lower research and development expenses, as discussed above.
Although closely aligned, our definition of Adjusted EBITDA is different than EBITDA (as such term is defined in our Credit Facility) utilized for financial covenant calculations and also may differ from the definition of EBITDA or Adjusted EBITDA used by other companies and therefore may not be comparable to similarly titled measures used by other companies.
Although closely aligned, our definition of Adjusted EBITDA is different than EBITDA (as such term is defined in our Credit Facility and Subordinated Credit Facility) utilized for financial covenant calculations and also may differ from the definition of EBITDA or Adjusted EBITDA used by other companies and therefore may not be comparable to similarly titled measures used by other companies.
The future payments related to uncertain tax positions have not been presented in the table above due to the uncertainty of the amounts and timing of any potential cash settlement with the taxing authorities. 78 Recent Accounting Pronouncements We are required to prepare our consolidated financial statements in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") which is the source for all authoritative U.S. generally accepted accounting principles, which is commonly referred to as "GAAP." The FASB ASC is subject to updates by the FASB, which are known as Accounting Standards Updates ("ASUs").
The future payments related to uncertain tax positions have not been presented in the table above due to the uncertainty of the amounts and timing of any potential cash settlement with the taxing authorities. 80 Recent Accounting Pronouncements We are required to prepare our consolidated financial statements in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") which is the source for all authoritative U.S. generally accepted accounting principles, which is commonly referred to as "GAAP." The FASB ASC is subject to updates by the FASB, which are known as Accounting Standards Updates ("ASUs").
As discussed further in " Notes to Consolidated Financial Statements - Note (13) - Commitments and Contingencies, " included in " Part II - Item 8.- Financial Statements and Supplementary Data ," included in this Form 10-K (which discussion is incorporated herein by reference), we are subject to a number of indemnification demands and we are incurring ongoing legal expenses in connection with these matters.
As discussed further in Notes to Consolidated Financial Statements - Note (14) - Commitments and Contingencies, included in Part II - Item 8.- Financial Statements and Supplementary Data , included in this Form 10-K (which discussion is incorporated herein by reference), we are subject to a number of indemnification demands and we are incurring ongoing legal expenses in connection with these matters.
For example, quantification of stock-based compensation expense requires inputs such as the number of shares granted and market price that are not currently ascertainable. Accordingly, reconciliations to the Non-GAAP forward looking metrics are not available without unreasonable effort and such unavailable reconciling items could significantly impact our financial results.
For example, quantification of stock-based compensation expense requires inputs such as the number of shares granted and market price that are not currently ascertainable. Accordingly, reconciliations to the Non-GAAP forward looking metrics would not be available without unreasonable effort and such unavailable reconciling items could significantly impact our financial results.
Commitments In the normal course of business, other than as discussed below, we routinely enter into binding and non-binding purchase obligations primarily covering anticipated purchases of inventory and equipment. We do not expect that these commitments, as of July 31, 2024, will materially adversely affect our liquidity.
Commitments In the normal course of business, other than as discussed below, we routinely enter into binding and non-binding purchase obligations primarily covering anticipated purchases of inventory and equipment. We do not expect that these commitments, as of July 31, 2025, will materially adversely affect our liquidity.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies - Provisions for Excess and Obsolete Inventory," we regularly review our inventory and record a provision for excess and obsolete inventory based on historical and projected usage trends.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies - Provisions for Excess and Obsolete Inventory, we regularly review our inventory and record a provision for excess and obsolete inventory based on historical and projected usage trends.
Comparison of Fiscal 2023 and 2022 A detailed discussion of fiscal 2023 items and year-over-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in "Part II - Item 7.
Comparison of Fiscal 2024 and 2023 A detailed discussion of fiscal 2024 items and year-over-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in Part II - Item 7.
In fiscal 2023, we adjusted the Company’s capital allocation plans and determined to forgo a common stock dividend. Future common stock dividends, if any, remain subject to compliance with financial covenants under our Credit Facility, as well as Board approval and certain voting rights of holders of our Convertible Preferred Stock.
In fiscal 2023, we adjusted our capital allocation plans and determined to forgo a common stock dividend. Future common stock dividends, if any, remain subject to compliance with financial covenants under our Credit Facility and Subordinated Credit Facility, as well as Board approval and certain voting rights of holders of our Convertible Preferred Stock.
Financial Statements and Supplementary Data, " included in this Form 10-K (which discussion is incorporated herein by reference), our Consolidated Balance Sheet at July 31, 2024 includes total liabilities of $8.6 million for uncertain tax positions, including interest, any or all of which may result in a cash payment.
Financial Statements and Supplementary Data, included in this Form 10-K (which discussion is incorporated herein by reference), our Consolidated Balance Sheet at July 31, 2025 includes total liabilities of $8.1 million for uncertain tax positions, including interest, any or all of which may result in a cash payment.
Furthermore, even if targets had been provided, items such as stock-based compensation, adjustments to the provision for income taxes, amortization of intangibles and interest expense, which are specific items that impact these measures, have not yet occurred, are out of our control, or cannot be predicted.
Furthermore, even if guidance or targets had been provided, items such as stock-based compensation, adjustments to the provision for income taxes, amortization of intangibles and interest expense, which are specific items that impact these measures, have not yet occurred, are out of our control, or cannot be predicted at this time.
As further discussed in " Notes to Consolidated Financial Statements – Note (10) - "Income Taxes " included in " Part II - Item 8.
As further discussed in Notes to Consolidated Financial Statements - Note (11) - Income Taxes included in Part II - Item 8.
The $100.0 million stock repurchase program has no time restrictions and repurchases may be made from time to time in open-market or privately negotiated transactions, or by other means in accordance with federal securities laws. There were no repurchases of our common stock during fiscal 2024 and 2023.
The $100.0 million stock repurchase program has no time restrictions and repurchases may be made from time to time in open-market or privately negotiated transactions, or by other means in accordance with federal securities laws and the terms of our Credit Facility. There were no repurchases of our common stock during fiscal 2025 and 2024.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Comparison of Fiscal 2023 and 2022" in our Annual Report on Form 10-K for the year ended July 31, 2023. 73 Liquidity and Capital Resources Our cash and cash equivalents were $32.4 million and $19.0 million at July 31, 2024 and 2023, respectively.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Comparison of Fiscal 2024 and 2023 in our Annual Report on Form 10-K for the year ended July 31, 2024. 76 Liquidity and Capital Resources Our cash and cash equivalents were $40.0 million and $32.4 million at July 31, 2025 and 2024, respectively.
As a result of these trends, a more focused prioritization of resources across various programs and the impact of prior reductions in force announced in fiscal 2023, our research and development expenses for financial reporting purposes significantly decreased in fiscal 2024 as compared to historical periods. Amortization of Intangibles.
As a result of these trends, a more focused prioritization of resources across various programs and the impact of prior reductions in force announced in fiscal 2023, our internal research and development expenses for financial reporting purposes has significantly decreased more recently as compared to historical periods.
During fiscal 2024 and 2023, we incurred $4.1 million and $3.8 million, respectively, of strategic emerging technology costs in our Satellite and Space Communications segment for next-generation satellite technology to advance our solutions offerings to be used with new broadband satellite constellations.
During fiscal 2025 and 2024, we incurred $0.3 million and $4.1 million, respectively, of strategic emerging technology costs in our Satellite and Space Communications segment for next-generation satellite technology to advance our solutions offerings to be used with newer broadband satellite constellations.
Our consolidated gross profit, as a percentage of consolidated net sales may also be impacted by the timing and outcome of actions we may take related to our transformation strategy initiatives. Selling, General and Administrative Expenses . Selling, general and administrative expenses were $123.2 million and $120.0 million for fiscal 2024 and 2023, respectively.
Our consolidated gross profit, as a percentage of consolidated net sales, may also be impacted by the timing and outcome of actions we may take related to our transformation strategy. Selling, General and Administrative Expenses . Selling, general and administrative expenses were $143.5 million and $123.2 million for fiscal 2025 and 2024, respectively.
Financial Statements and Supplementary Data, " (which discussion is incorporated herein by reference), included in this Form 10-K, the holders of the Convertible Preferred Stock have the option to redeem such shares for cash: (i) in the event of the occurrence of an asset sale trigger; (ii) in the event of a satisfaction of the existing Credit Facility; and (iii) in all other cases, October 31, 2028.
Financial Statements and Supplementary Data (which discussion is incorporated herein by reference), included in this Form 10-K, the holders of the Convertible Preferred Stock have the option to redeem such shares for cash: (i) in the event of the occurrence of an asset sale meeting certain criteria; (ii) on or after April 30, 2027 in the event of a satisfaction of the existing Credit Facility; and (iii) in all other cases, October 31, 2028.
Fiscal 2024 ($ in millions, except for per share amounts) Operating (Loss) Income Net (Loss) Income Attributable to Common Stockholders Net (Loss) Income per Diluted Common Share Reconciliation of GAAP to Non-GAAP Earnings: GAAP measures, as reported $ (79.9) $ (135.4) $ (4.70) Loss on extinguishment of convertible preferred stock — 19.6 0.68 Adjustments to reflect redemption value of convertible preferred stock — 15.9 0.55 Change in fair value of warrants and derivatives — (4.3) (0.15) Impairment of long-lived assets, including goodwill 64.5 63.8 2.21 Amortization of intangibles 21.2 16.4 0.57 Restructuring costs 12.5 9.7 0.34 Amortization of stock-based compensation 6.1 4.8 0.17 Strategic emerging technology costs 4.1 3.8 0.13 CEO transition costs 2.9 2.2 0.08 Loss on business divestiture 1.2 1.2 0.04 Amortization of cost to fulfill assets 1.0 1.0 0.03 Net discrete tax expense — 4.1 0.14 Non-GAAP measures $ 33.5 $ 2.8 $ 0.10 72 Fiscal 2023 ($ in millions, except for per share amounts) Operating (Loss) Income Net (Loss) Income Attributable to Common Stockholders Net (Loss) Income per Diluted Common Share Reconciliation of GAAP to Non-GAAP Earnings: GAAP measures, as reported $ (14.7) $ (33.9) $ (1.21) Adjustments to reflect redemption value of convertible preferred stock — 7.0 0.25 Amortization of intangibles 21.4 16.6 0.59 Restructuring costs 10.9 8.3 0.30 Amortization of stock-based compensation 10.1 7.9 0.28 CEO transition costs 9.1 8.6 0.31 Strategic emerging technology costs 3.8 3.4 0.12 Amortization of cost to fulfill assets 1.0 1.0 0.03 Net discrete tax benefit — (0.3) (0.01) Non-GAAP measures $ 41.6 $ 18.5 $ 0.65 Our Adjusted EBITDA is a Non-GAAP measure that represents earnings (loss) before interest, income taxes, depreciation expense, amortization of intangibles, amortization of stock-based compensation, amortization of cost to fulfill assets, restructuring costs, strategic emerging technology costs (for next-generation satellite technology), change in fair value of warrants and derivatives, write-off of deferred financing costs, CEO transition costs, impairment of long-lived assets, including goodwill, loss on business divestiture and, in the past, acquisition plan expenses, change in fair value of convertible preferred stock purchase option liability, COVID-19 related costs, facility exit costs, proxy solicitation costs and strategic alternatives analysis expenses and other.
Fiscal 2025 ($ in millions, except for per share amounts) Operating Loss Net Loss Attributable to Common Stockholders Net Loss Income per Diluted Common Share Reconciliation of GAAP to Non-GAAP Earnings: GAAP measures, as reported $ (139.1) $ (204.3) $ (6.95) Adjustments to reflect redemption value of convertible preferred stock — 100.1 3.40 Change in fair value of warrants and derivatives — (38.5) (1.32) Gain on extinguishment of convertible preferred stock — (51.2) (1.74) Impairment of long-lived assets, including goodwill 79.6 79.6 2.71 Amortization of intangibles 21.7 20.8 0.71 Restructuring costs 15.6 14.9 0.51 Amortization of stock-based compensation 3.1 3.1 0.11 Proxy solicitation costs 2.7 2.5 0.09 CEO transition costs 2.1 2.0 0.07 Strategic emerging technology costs 0.3 0.3 0.01 Amortization of cost to fulfill assets 0.3 0.3 0.01 Net discrete tax benefit — (0.3) (0.01) Non-GAAP measures $ (13.8) $ (70.8) $ (2.41) Fiscal 2024 ($ in millions, except for per share amounts) Operating (Loss) Income Net (Loss) Income Attributable to Common Stockholders Net (Loss) Income per Diluted Common Share Reconciliation of GAAP to Non-GAAP Earnings: GAAP measures, as reported $ (79.9) $ (135.4) $ (4.70) Loss on extinguishment of convertible preferred stock — 19.6 0.68 Adjustments to reflect redemption value of convertible preferred stock — 15.9 0.55 Change in fair value of warrants and derivatives — (4.3) (0.15) Impairment of long-lived assets, including goodwill 64.5 63.8 2.21 Amortization of intangibles 21.2 16.4 0.57 Restructuring costs 12.5 9.7 0.34 Amortization of stock-based compensation 6.1 4.8 0.17 Strategic emerging technology costs 4.1 3.8 0.13 CEO transition costs 2.9 2.2 0.08 Loss on business divestiture 1.2 1.2 0.04 Amortization of cost to fulfill assets 1.0 1.0 0.03 Net discrete tax expense — 4.1 0.14 Non-GAAP measures $ 33.5 $ 2.8 $ 0.10 75 Our Adjusted EBITDA is a Non-GAAP measure that represents earnings (loss) before interest, income taxes, depreciation, amortization of intangibles, impairment of long-lived assets, including goodwill, amortization of cost to fulfill assets, amortization of stock-based compensation, CEO transition costs, change in fair value of warrants and derivatives, proxy solicitation costs, restructuring costs, strategic emerging technology costs (for next-generation satellite technology) and write-off of deferred financing costs and debt discounts, and in the recent past, acquisition plan expenses, change in fair value of the convertible preferred stock purchase option liability, COVID-19 related costs, facility exit costs, strategic alternatives expenses and other and loss on business divestiture.
Our material cash requirements could increase beyond our current expectations due to factors such as: (i) an inability to meet our current obligations under our Credit Facility as they become, or to obtain future waivers or amendments from the lenders in the event compliance is not maintained; (ii) general economic conditions; (iii) a change in government spending priorities and or contracting decisions; (iv) larger than usual customer orders; (v) a future redemption by the holders of our Convertible Preferred Stock; or (vi) actions we may take related to our strategic transformation.
Our material cash requirements could increase beyond our current expectations due to factors such as: (i) an inability to meet our current obligations under our credit facilities as they become due, or to obtain future waivers or amendments from the lenders in the event compliance is not maintained; (ii) general economic conditions; (iii) a change in the timing or amounts of government spending priorities and or contracting decisions; (iv) larger than usual customer orders; (v) a future redemption by the holders of our Convertible Preferred Stock; or (vi) actions we may take related to our transformation plan. 78 Also, in light of our transformation plan initiatives, we continue to review and evaluate our capital allocation plans.
Most notably under the new requirements is greater disaggregation of information in the effective tax rate reconciliation, including the inclusion of both percentages and amounts, specific categories, and additional information for reconciling items meeting a quantitative threshold defined by the guidance.
Most notably, this ASU requires greater disaggregation of information in the effective tax rate reconciliation, including the inclusion of both percentages and amounts, specific categories and additional information for reconciling items meeting a quantitative threshold defined by the guidance.
Our Non-GAAP effective income tax rate can differ materially from our GAAP effective income tax rate. In addition, due to the GAAP net loss for the period, Non-GAAP EPS for fiscal 2024 and 2023 was computed using weighted average diluted shares outstanding of 29,132,000 and 28,376,000, respectively.
Our Non-GAAP effective income tax rate can differ materially from our GAAP effective income tax rate. In addition, due to the GAAP net loss for the period, Non-GAAP net income per diluted common share for fiscal 2024 was computed using weighted average diluted shares outstanding of 29,132,000, respectively.
Excluding the loss on the PST Divestiture, the impact of CEO transition costs and its respective portion of restructuring charges in each period, Unallocated expenses for fiscal 2024 would have been $35.3 million, as compared to $29.0 million for fiscal 2023.
Excluding the loss on the PST Divestiture, proxy solicitation costs, CEO transition costs and its respective portion of restructuring charges in each period, Unallocated expenses for fiscal 2025 would have been $37.3 million, as compared to $35.3 million for fiscal 2024.
For fiscal 2024, our cash flows reflect the following: • Net cash used in operating activities was $54.5 million and $4.4 million for fiscal 2024 and 2023, respectively.
For fiscal 2025, our cash flows reflect the following: • Net cash used in operating activities was $8.3 million and $54.5 million for fiscal 2025 and 2024, respectively.
At July 31, 2024, we had $247,000 of cash deposited as collateral in connection with outstanding standby letters of credit to guarantee future performance on certain customer contracts and no commercial letters of credit outstanding.
At July 31, 2025, we had $0.1 million of cash deposited as collateral in connection with outstanding standby letters of credit to guarantee future performance on certain customer contracts and no commercial letters of credit outstanding.
Our U.S federal income tax returns for fiscal 2021 through 2023 are subject to potential future IRS audit. None of our state income tax returns prior to fiscal 2020 are subject to audit. Future tax assessments or settlements could have a material adverse effect on our consolidated results of operations and financial condition. Net Loss Attributable to Common Stockholders.
Our U.S. federal income tax returns for fiscal 2022 through 2025 are subject to potential future IRS audit. None of our state and foreign income tax returns prior to fiscal 2021 are subject to audit. Future tax assessments or settlements could have a material adverse effect on our consolidated results of operations and financial condition.
This ASU is effective for fiscal years beginning after December 15, 2023 (our fiscal year beginning on August 1, 2024) and for interim periods within fiscal years beginning after December 15, 2024 (our interim period beginning on August 1, 2025), with early adoption permitted.
This ASU is effective for fiscal years beginning after December 15, 2024 (our fiscal year beginning on August 1, 2025), with early adoption permitted.
Non-GAAP net income attributable to common stockholders and net income per diluted common share reflect Non-GAAP provisions for income taxes based on full year results, as adjusted for the Non-GAAP reconciling items included in the tables below. We evaluate our Non-GAAP effective income tax rate on an ongoing basis, and it can change from time to time.
Non-GAAP results reflect Non-GAAP provisions for (benefits from) income taxes based on year-to-date results, as adjusted for the Non-GAAP reconciling items included in the tables below. We evaluate our Non-GAAP effective income tax rate on an ongoing basis, and it can change from time to time.
Our ability to meet future anticipated liquidity needs over the next year beyond the issuance date will largely depend on our ability to generate positive cash inflows from operations, maximize our borrowing capacity under our Credit Facility, as discussed further below, and or secure other sources of outside capital.
Our ability to meet future anticipated liquidity needs over the next year beyond the issuance date will largely depend on our ability to execute on our operational strategy, generate positive cash inflows from operations, maximize our borrowing capacity under our Credit Facility and or secure outside capital.
Operating (loss) income by reportable segment is shown in the table below: Fiscal Years Ended July 31, 2024 2023 2024 2023 2024 2023 2024 2023 ($ in millions) Satellite and Space Communications Terrestrial and Wireless Networks Unallocated Consolidated Operating (loss) income $ (54.2) $ 15.0 $ 21.7 $ 12.3 $ (47.4) $ (42.0) $ (79.9) $ (14.7) Percentage of related net sales NA 4.5 % 10.0 % 5.8 % NA NA NA NA Our GAAP operating loss of $79.9 million for fiscal 2024 reflects: (i) a $64.5 million non-cash charge related to the impairment of certain long-lived assets, including goodwill, in our Satellite and Space Communications segment; (ii) $21.2 million of amortization of intangibles; (iii) $12.5 million of restructuring costs (of which $3.8 million, $0.6 million and $8.1 million related to our Satellite and Space Communications, Terrestrial and Wireless Networks and Unallocated segments, respectively); (iv) $6.1 million of amortization of stock-based compensation; (v) $4.1 million of strategic emerging technology costs; (vi) $2.9 million of CEO transition costs; (vii) a $1.2 million loss on the PST Divestiture reported in our Unallocated segment; and (viii) $1.0 million of amortization of cost to fulfill assets, as discussed above.
Operating (loss) income by reportable segment is shown in the table below: Fiscal Years Ended July 31, 2025 2024 2025 2024 2025 2024 2025 2024 ($ in millions) Satellite and Space Communications Allerium Unallocated Consolidated Operating (loss) income $ (111.6) $ (54.2) $ 24.1 $ 21.7 $ (51.6) $ (47.4) $ (139.1) $ (79.9) Percentage of related net sales NA NA 10.5 % 10.0 % NA NA NA NA Our GAAP operating loss of $139.1 million for fiscal 2025 reflects: (i) a non-cash goodwill impairment charge of $79.6 million; (ii) $21.7 million of amortization of intangibles; (iii) $15.6 million of restructuring costs (of which $5.5 million, $0.6 million and $9.5 million related to our Satellite and Space Communications, Allerium and Unallocated segments, respectively); (iv) $3.1 million of amortization of stock-based compensation; (v) $2.7 million of proxy solicitation costs; (vi) $2.1 million of CEO transition costs; (vii) $0.3 million of strategic emerging technology costs; and (viii) $0.3 million of amortization of cost to fulfill assets, as discussed above.
Financial Statements and Supplementary Data, " included in this Form 10-K, (which discussion is incorporated herein by reference), during fiscal 2024 the following FASB ASUs have been issued and incorporated into the FASB ASC and have not yet been adopted by us as of July 31, 2024: • FASB ASU No. 2023-07, which requires the disclosure of significant segment expenses, by reportable segment, regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss.
Financial Statements and Supplementary Data, included in this Form 10-K, (which discussion is incorporated herein by reference), during fiscal 2025 we adopted: • FASB ASU No. 2023-07, which requires the disclosure of significant segment expenses, by reportable segment, regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss.
Amortization relating to intangible assets with finite lives was $21.2 million for fiscal 2024 (of which $6.7 million was for the Satellite and Space Communications segment and $14.5 million was for the Terrestrial and Wireless Networks segment) and $21.4 million for fiscal 2023 (of which $7.3 million was for the Satellite and Space Communications segment and $14.1 million was for the Terrestrial and Wireless Networks segment).
Amortization relating to intangible assets with finite lives was $21.7 million for fiscal 2025 (of which $7.2 million was for the Satellite and Space Communications segment and $14.5 million was for the Allerium segment) and $21.2 million for fiscal 2024 (of which $6.7 million was for the Satellite and Space Communications segment and $14.5 million was for the Allerium segment).
The net benefit was driven by the impact of a lower market price of our common stock after the issuance of the warrants to the holders of our Series B-1 Convertible Preferred Stock in January 2024, offset in part by a higher market price of our common stock after the issuance of warrants to certain lenders under our Credit Facility in June 2024.
The remeasurement and resulting non-cash benefit for fiscal 2024 was driven by the impact of a lower market price of our common stock after the issuance of the warrants to the holders of our Convertible Preferred Stock in January 2024, offset in part by a higher market price of our common stock after the issuance of warrants to certain lenders under our Credit Facility in June 2024.
See "Notes to Consolidated Financial Statements - Note (16) - Convertible Preferred Stock" and " Note (8) - Credit Facility" included in " Part II - Item 8. Financial Statements and Supplementary Data " for more information. 70 Benefit from Income Taxes. For fiscal 2024 and 2023, we recorded tax benefits of $0.3 million and $3.9 million, respectively.
See Notes to Consolidated Financial Statements - Note (8) - Credit Facility, Note (9) - Subordinated Credit Facility and Note (17) - Convertible Preferred Stock included in Part II - Item 8. Financial Statements and Supplementary Data for more information. Benefit from Income Taxes. For fiscal 2025 and 2024, we recorded nominal tax benefits.
Interest (income) and other for both fiscal 2024 and 2023 was nominal. All of our available cash and cash equivalents are currently invested in bank deposits and money market deposit accounts which, at this time, are currently yielding an immaterial interest rate. Write-off of Deferred Financing Costs.
All of our available cash and cash equivalents are currently invested in bank deposits and money market deposit accounts which, at this time, are currently yielding an immaterial interest rate. Write-off of Deferred Financing Costs and Debt Discounts.
In addition to those items discussed above, the more recent period also includes: (i) $19.6 million of expenses related to the exchange of our Series A-1 Convertible Preferred Stock for Series B Convertible Preferred Stock on January 22, 2024 (inclusive of the initial fair value of warrants issued to such holders) and the exchange of our Series B Convertible Preferred Stock for Series B-1 Convertible Preferred Stock on June 17, 2024; (ii) $11.6 million of dividends related to our Convertible Preferred Stock outstanding during fiscal 2024; and (iii) $4.3 million of Series B Convertible Preferred Stock issuance costs (consisting of third party financial advisor, legal and professional fees).
In addition to those items discussed above: (i) fiscal 2025 includes $100.1 million of net dividends related to our Convertible Preferred Stock, offset, in part, by a $51.2 million gain related to the exchange of our Series B-1 Convertible Preferred Stock for Series B-2 Convertible Preferred Stock on October 17, 2024; and (ii) fiscal 2024 includes: (a) $19.6 million of losses related to the exchange of our Series A-1 Convertible Preferred Stock for Series B Convertible Preferred Stock on January 22, 2024 (inclusive of the initial fair value of warrants issued to such holders) and the exchange of our Series B Convertible Preferred Stock for Series B-1 Convertible Preferred Stock on June 17, 2024; (b) $11.6 million of dividends related to our Convertible Preferred Stock; and (c) $4.3 million of Series B Convertible Preferred Stock issuance costs (consisting of third party financial advisor, legal and professional fees).
During fiscal 2024 and 2023, consolidated net loss attributable to common stockholders was $135.4 million and $33.9 million, respectively.
Net Loss Attributable to Common Stockholders. During fiscal 2025 and 2024, consolidated net loss attributable to common stockholders was $204.3 million and $135.4 million, respectively.
During the fourth quarter of fiscal 2024, in connection with the extinguishment and refinancing of our Prior Credit Facility through a new syndicate of lenders, we fully expensed all $1.8 million of the remaining deferred financing costs related to the Prior Credit Facility. Change in Fair Value of Warrants.
During fiscal 2024, in connection with the June 17, 2024 refinancing and extinguishment of the prior credit facility, we fully expensed all $1.8 million of the remaining deferred financing costs related to such credit facility. Change in Fair Value of Warrants and Derivatives.
As discussed further in " Notes to Consolidated Financial Statements - Note (8) - Credit Facility " included in " Part II - Item 8.
As discussed further in Notes to Consolidated Financial Statements - Note (17) - Convertible Preferred Stock, included in Part II - Item 8.
Adjusted EBITDA is also a measure frequently requested by our investors and analysts. We believe that investors and analysts may use Adjusted EBITDA, along with other information contained in our SEC filings, including GAAP measures, in assessing our performance and comparability of our results with other companies.
We believe that investors and analysts may use these Non-GAAP measures along with other information contained in our SEC filings, including GAAP measures, in assessing our performance and comparability of our results with other companies.
As a percentage of consolidated net sales, research and development expenses were 4.5% and 8.8% for fiscal 2024 and 2023, respectively. For fiscal 2024 and 2023, research and development expenses of $12.9 million and $22.4 million, respectively, related to our Satellite and Space Communications segment, and $10.6 million and $25.2 million, respectively, related to our Terrestrial and Wireless Networks segment.
As a percentage of consolidated net sales, research and development expenses were 3.5% and 4.5% for fiscal 2025 and 2024, respectively. 70 For fiscal 2025 and 2024, research and development expenses of $5.6 million and $12.9 million, respectively, related to our Satellite and Space Communications segment, and $11.6 million and $10.6 million, respectively, related to our Allerium segment.
Excluding such items, our consolidated operating income for fiscal 2023 would have been $41.6 million.
Excluding such items, our consolidated operating income for fiscal 2024 would have been $33.5 million.
In addition to testing goodwill associated with our Satellite and Space Communications reporting unit for impairment, we also assessed the recoverability of the carrying values of our other long-lived assets, including identifiable intangible assets with finite useful lives.
As a result, in the first quarter of fiscal 2025, we recognized a $79.6 million non-cash goodwill impairment charge in our Satellite and Space Communications reporting unit. In addition to testing goodwill for impairment, we also assessed the recoverability of the carrying values of our other long-lived assets in this segment, including identifiable intangible assets with finite useful lives.
For purposes of determining our 8.1% effective tax rate for fiscal 2024, the impairment of long-lived assets, including goodwill, the change in fair value of warrants, CEO transition costs and the impact of the PST Divestiture are each considered significant, unusual or infrequently occurring discrete tax items and excluded from the computation of our effective tax rate.
For purposes of determining our (0.47)% effective tax rate for fiscal 2025, the impairment of goodwill, the change in fair value of warrants and derivatives, proxy solicitation costs and CEO transition costs are considered significant, unusual or infrequently occurring discrete tax items and excluded from the computation of our effective tax rate.
The decrease in operating income, excluding the above items, from $41.6 million for fiscal 2023 to $33.5 million for fiscal 2024 primarily reflects lower consolidated net sales and gross profit (both in dollars and as a percentage of consolidated net sales) and higher selling, general and administrative expenses (due to increased headcount, legal and professional fees and cash incentive compensation), offset in part by lower research and development expenses in both of our reportable operating segments, as discussed above.
The decrease, excluding the above items, from $33.5 million of operating income to $13.8 million of operating loss for the more recent period primarily reflects lower consolidated net sales and gross profit (both in dollars and as a percentage of consolidated net sales) and higher selling, general and administrative expenses, offset in part by lower research and development expenses, as discussed above.
Accordingly, the accompanying consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties. Our material cash requirements are for working capital, debt service (including interest), capital expenditures, income tax payments, facilities lease payments and dividends related to our Convertible Preferred Stock, which are payable in kind or in cash under certain circumstances.
Our material cash requirements are for working capital, debt service (including interest), capital expenditures, tax payments, facilities lease payments and dividends related to our Convertible Preferred Stock, which are payable in kind or in cash under certain circumstances.
Our effective tax rate (excluding discrete tax items) for fiscal 2024 was 8.1%, as compared to 14.5% for fiscal 2023. The decrease in the rate is primarily due to changes in expected product and geographical mix.
Our effective tax rate (excluding discrete tax items) for fiscal 2025 was (0.47)%, as compared to 8.1% for fiscal 2024. The decrease in the rate is primarily due to changes in expected product and geographical mix and not providing for tax benefits on U.S. and U.K. related deferred tax assets in the more recent period.
The significant increase in our Terrestrial and Wireless Networks segment operating income, both in dollars and as a percentage of the related segment net sales, for fiscal 2024 reflects lower research and development expenses, as discussed above.
The increase in our Allerium segment operating income, both in dollars and as a percentage of the related segment net sales, for fiscal 2025 reflects higher net sales and gross profit, offset in part by higher selling, general and administrative expenses and research and development expenses, as discussed above.
The increase in Unallocated expenses, excluding such items, was primarily due to higher selling, general and administrative expenses, as discussed above. Amortization of stock-based compensation was $6.1 million and $10.1 million, respectively, for fiscal 2024 and 2023.
The increase in Unallocated expenses, excluding such items, was primarily due to higher selling, general and administrative expenses, as discussed above. Interest Expense and Other. Interest expense was $45.7 million and $22.2 million for fiscal 2025 and 2024, respectively.
To minimize risk, we generally invest excess cash and cash equivalents in money market mutual funds (both government and commercial), certificates of deposit, bank deposits, and U.S. Treasury securities.
Our investment policy relating to our cash and cash equivalents is intended to minimize principal loss while at the same time maximize the income we receive without significantly increasing risk. To minimize risk, we generally invest excess cash and cash equivalents in money market mutual funds (both government and commercial), certificates of deposit, bank deposits, and U.S. Treasury securities.
Although it is difficult in the current economic and credit environment to predict the terms and conditions of financing that may be available in the future, we believe that we would have sufficient access to credit from financial institutions and/or financing from public and private debt and equity markets. 76 In addition to making capital investments for our high-volume manufacturing centers, we have been making significant capital expenditures and building out cloud-based computer networks to support our previously announced NG-911 contract wins.
Although it is difficult in the current economic and credit environment to predict the terms and conditions of financing that may be available in the future, we believe that we would have sufficient access to credit from financial institutions and/or financing from public and private debt and equity markets.
Excluding such items, our consolidated operating income for fiscal 2024 would have been $33.5 million. 69 Our GAAP operating loss of $14.7 million for fiscal 2023 reflects: (i) $21.4 million of amortization of intangibles; (ii) $10.9 million of restructuring costs (of which $5.7 million, $1.3 million and $3.9 million related to our Satellite and Space Communications, Terrestrial and Wireless Networks and Unallocated segments, respectively); (iii) $10.1 million of amortization of stock-based compensation; (iv) $9.1 million of CEO transition costs; (v) $3.8 million of strategic emerging technology costs; and (vi) $1.0 million of amortization of cost to fulfill assets, as discussed above.
Our GAAP operating loss of $79.9 million for fiscal 2024 reflects: (i) a non-cash goodwill impairment charge of $64.5 million; (ii) $21.2 million of amortization of intangibles; (iii) $12.5 million of restructuring costs (of which $3.8 million, $0.6 million and $8.1 million related to our Satellite and Space Communications, Allerium and Unallocated segments, respectively); (iv) $6.1 million of amortization of stock-based compensation; (v) $4.1 million of strategic emerging technology costs; (vi) $2.9 million of CEO transition costs; (vii) a $1.2 million loss on the PST Divestiture reported in our Unallocated segment; and (viii) $1.0 million of amortization of cost to fulfill assets, as discussed above.
Credit Facility See " Notes to Consolidated Financial Statements - Note (8) - Credit Facility " included in " Part II - Item 8.
As discussed above and in Notes to Consolidated Financial Statements - Note (5) - Inventories included in Part II - Item 8.
CEO transition costs were $13.6 million for fiscal 2022 and entirely related to our former CEO, Mr. Kornberg. CEO transition costs are expensed in our Unallocated segment. Loss on Business Divestiture. In connection with the PST Divestiture, during fiscal 2024, we recorded a $1.2 million loss in our Unallocated segment due to the acquirer not achieving certain post-divestiture earn-out criteria.
In connection with the PST Divestiture, during fiscal 2024, we recorded a $1.2 million loss in our Unallocated segment due to the acquirer not achieving certain post-divestiture earn-out criteria. Although a loss for GAAP purposes, the PST Divestiture resulted in a gain for tax purposes.
Our consolidated gross profit, as a percentage of consolidated net sales, depends on the volume of sales, sales mix and related gross profit for each segment, and therefore is inherently difficult to forecast.
Such non-cash charge also included the write down of inventory associated with the CGC Divestiture that was no longer considered salable during the period. Our consolidated gross profit, as a percentage of consolidated net sales, depends on the volume of sales, sales mix and related gross profit for each segment, and therefore is inherently difficult to forecast.
Also, in light of our recently announced strategic transformation initiatives, we continue to review and evaluate our capital allocation plans. Furthermore, we may choose to raise additional funds through equity and debt financing transactions to provide additional flexibility or to pursue acquisitions.
Furthermore, we may choose to raise additional funds through equity and debt financing transactions to provide additional flexibility or to pursue acquisitions.
The decrease in our Satellite and Space Communications segment's Adjusted EBITDA, both in dollars and as a percentage of related segment net sales, primarily reflects lower net sales and gross profit (both in dollars and as a percentage of related segment net sales), offset in part by lower research and development expenses, as discussed above The increase in our Terrestrial and Wireless Networks segment's Adjusted EBITDA, both in dollars and as a percentage of related segment net sales, reflects lower research and development expenses, offset in part by a lower gross profit percentage on related segment net sales, as discussed above.
The decrease in our Satellite and Space Communications segment's Adjusted EBITDA reflects significantly lower net sales and gross profit (both in dollars and as a percentage of related segment net sales, and including an $11.4 million non-cash charge related to inventory) and higher selling, general and administrative expenses (driven by a $16.1 million non-cash charge related to an allowance for doubtful accounts), offset in part by lower research and development expenses, as discussed above.
Although a loss for GAAP purposes, the PST Divestiture resulted in a gain for tax purposes. However, we completed the PST Divestiture in a tax efficient manner as we utilized a portion of the capital loss carryforward (related to the failed 2020 Gilat acquisition) which was set to expire in 2026. Operating (Loss) Income.
However, we completed the PST Divestiture in a tax efficient manner as we utilized a portion of our capital loss carryforward which is set to expire in 2026. 71 Operating (Loss) Income. Operating loss for fiscal 2025 and 2024 was $139.1 million and $79.9 million, respectively.
The period-over-period decrease in cash flows from operating activities reflects overall changes in net working capital requirements, principally the timing of: (i) payments to vendors; and (ii) progress toward completion on contracts accounted for over time, including related shipments, billings and collections.
The significant period-over-period improvement reflects favorable changes in net working capital requirements, due primarily to improved accountability and process disciplines, as well as the timing of and progress toward completion on contracts accounted for over time, including related shipments, billings and collections.
During fiscal 2024 and 2023, customers reimbursed us $18.9 million and $14.0 million, respectively, which is not reflected in the reported research and development expenses but is included in net sales with the related costs included in cost of sales. 68 In addition to the recent increases in customer-funded research and development activities, in fiscal 2024, we also experienced an increase in engineering efforts related to cost to fulfill contract assets and internal use software, for which we capitalized $2.9 million and $3.8 million, respectively.
In addition to increases in customer-funded research and development activities in recent years, in fiscal 2025 and 2024, we also experienced an increase in engineering efforts related to cost to fulfill contract assets and internal use software, for which we capitalized $6.8 million and $6.7 million, respectively.
The remaining research and development expenses of $0.5 million and $1.0 million in fiscal 2024 and 2023, respectively, related to the amortization of stock-based compensation expense.
The remaining research and development expenses of $0.2 million and $0.6 million in fiscal 2025 and 2024, respectively, related to the amortization of stock-based compensation expense. Whenever possible, we seek customer funding for research and development to adapt our products to specialized customer requirements.
The significant decrease in our Satellite and Space Communications segment operating income for fiscal 2024 primarily reflects the non-cash impairment charge related to certain long-lived assets, including goodwill, and lower net sales and gross profit (both in dollars and as a percentage of related segment net sales), offset in part by lower research and development expenses, as discussed above.
The decrease in our Satellite and Space Communications segment operating income for fiscal 2025 also reflects significantly lower net sales and gross profit, both in dollars and as a percentage of related segment net sales (including an $11.4 million non-cash charge related to the write down of certain inventory and impact of the PST and CGC divestitures), an incremental year-over-year non-cash goodwill impairment charge, higher selling, general and administrative expenses (driven by a $16.1 million non-cash charge related to an allowance for doubtful accounts, offset in part by cost savings initiatives) and higher amortization of intangibles, offset in part by lower research and development expenses, as discussed above.
This ASU is effective for fiscal years beginning after December 15, 2024 (our fiscal year beginning on August 1, 2025), with early adoption permitted. We are evaluating the impact of this ASU on our consolidated financial statements and disclosures.
This ASU is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual periods (our fiscal year beginning on August 1, 2026), with early adoption permitted.
Financial Statements and Supplementary Data, " (which discussion is incorporated herein by reference), included in this Form 10-K, for additional information on our lease commitments. 77 As discussed further in " Notes to Consolidated Financial Statements - Note (16) - Convertible Preferred Stock " included in " Part II - Item 8.
Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note (8) - Credit Facility and Note (9) - Subordinated Credit Facility for additional discussion related to the commitments under our Credit Facility and Subordinated Credit Facility, respectively (which discussion is incorporated herein by reference), and Note (10) - Leases for additional information on our lease commitments.
During fiscal 2023, we recorded a net discrete tax benefit of $0.8 million, primarily related to the reversal of tax contingencies no longer required due to the expiration of applicable statute of limitations and the deductible portion of CEO transition costs, offset in part by the settlement of stock-based awards and the finalization of certain tax accounts in connection with our fiscal 2022 federal and state income tax returns.
During fiscal 2025, we recorded a net discrete tax benefit of $0.6 million primarily related to the reversal of tax contingencies no longer required due to the expiration of applicable statute of limitations and proxy solicitation costs.
While we believe we will be able to generate sufficient positive cash inflows, maximize our borrowing capacity and secure outside capital, there can be no assurance our plans will be successfully implemented and, as such, we may be unable to continue as a going concern over the next year beyond the issuance date.
Based on the foregoing, over the next year beyond the issuance date, we believe that we will: (i) be able to generate sufficient positive cash inflows and maximize our borrowing capacity under our Credit Facility to continue as a going concern, and (ii) comply with the covenants contained in our credit facilities.
At July 31, 2024, cash payments due under contractual obligations (including estimated interest expense on our Credit Facility), excluding purchase orders that we entered into in our normal course of business, are as follows: ($ in thousands) Total Due Within 1 Year Credit Facility - principal payments $ 194,163 4,050 Credit Facility - interest payments 92,800 28,985 Operating lease obligations 43,690 8,263 Contractual cash obligations $ 330,653 41,298 The commitments under our Credit Facility are described in detail above.
At July 31, 2025, cash payments due under contractual obligations (including estimated interest expense on our Credit Facility), excluding purchase orders that we entered into in our normal course of business, are as follows: ($ in thousands) Total Due Within 1 Year Credit Facility - principal payments $ 133,901 4,050 Credit Facility - estimated interest payments 46,627 18,316 Operating lease obligations 42,940 7,637 Subordinated Credit Facility 100,144 — Subordinated Credit Facility Make-Whole Amount 25,700 — Contractual cash obligations $ 349,312 30,003 79 As stated above, the amounts in the above table represent cash payments due under contractual obligations.
See " Notes to Consolidated Financial Statements - Note (9) -"Leases " included in " Part II - Item 8.
The Credit Facility, Subordinated Credit Facility and Convertible Preferred Stock are discussed below and in Notes to Consolidated Financial Statements - Note (8) – Credit Facility, Note (9) - Subordinated Credit Facility and Note (17) – Convertible Preferred Stock included in Part II - Item 8.
Excluding restructuring costs, selling, general and administrative expenses for fiscal 2024 and 2023 would have been $110.9 million or 20.5% and $109.2 million or 19.9%, respectively, of consolidated net sales. Amortization of stock-based compensation expense recorded as selling, general and administrative expenses was $4.8 million in fiscal 2024 as compared to $8.0 million in fiscal 2023.
Excluding such provision for doubtful accounts and restructuring costs, selling, general and administrative expenses for fiscal 2025 and 2024 would have been $111.8 million or 22.3% and $110.7 million or 20.5%, respectively, of consolidated net sales.
Financial Statements and Supplementary Data " for further discussion of the Credit Facility). Our effective interest rate (including amortization of deferred financing costs) in fiscal 2024 was approximately 12.3% as compared to 8.9% in fiscal 2023. Our current cash borrowing rate (which excludes the amortization of deferred financing costs) under our Credit Facility is approximately 14.8%. Interest (Income) and Other.
Our current cash borrowing rate under our Credit Facility is approximately 13.9%, which reflects the benefit of recent amendments to the Credit Facility and lower interest rates, as compared to 14.8% in the corresponding prior year period. 72 Interest (Income) and Other. Interest (income) and other for both fiscal 2025 and 2024 was nominal.
Amortization of stock-based compensation is not allocated to our two reportable operating segments. Research and Development Expenses. Research and development expenses were $24.1 million and $48.6 million for fiscal 2024 and 2023, respectively, representing a decrease of $24.5 million, or 50.4%.
Research and development expenses were $17.4 million and $24.1 million for fiscal 2025 and 2024, respectively, representing a decrease of $6.7 million, or 27.8%.
This new shelf registration statement was declared effective by the SEC as of July 25, 2022 and expires on July 25, 2025. On September 29, 2020, our Board of Directors authorized a $100.0 million stock repurchase program, which replaced our prior program.
Ultimately, the availability of our cash and cash equivalents is dependent on a well-functioning liquid market. On September 29, 2020, our Board of Directors authorized a $100.0 million stock repurchase program, which replaced our prior program.
The increase is due to a higher average debt balance outstanding during fiscal 2024, a general rise in interest rates compared to the prior year and higher interest rates under our Credit Facility entered into in June 2024 (see "Notes to Consolidated Financial Statements - Note (8) - Credit Facility" included in " Part II - Item 8.
The increase during fiscal 2025 is primarily due to: higher interest rates and fees and average debt balance outstanding during the more recent period related to our Credit Facility; accreted interest related to our Subordinated Credit Facility; the amortization of deferred financing costs and debt discounts related to both credit facilities; and the immediate expensing of certain financing fees related to refinancing and or amending our credit facilities, as discussed further in Notes to Consolidated Financial Statements - Note (8) - Credit Facility and Note (9) - Subordinated Credit Facility included in Part II - Item 8.
We expect strategic emerging technology costs to decrease in fiscal 2025 as a result of our fourth quarter fiscal 2024 decision to cease operations related to our steerable antenna product line in the United Kingdom. Whenever possible, we seek customer funding for research and development to adapt our products to specialized customer requirements.
As a result of our decision to cease operations related to our steerable antenna product line in the U.K., we do not expect to incur similar strategic emerging technology costs in the future. Amortization of Intangibles.
At both July 31, 2024 and October 25, 2024, $32.5 million was drawn on the Revolver Loan. As of the issuance date, our available sources of liquidity approximate $28.7 million, consisting solely of qualified cash and cash equivalents.
Of such amounts, $17.6 million was drawn on the Revolver Loan at both dates. 77 At July 31, 2025, October 31, 2025 and November 7, 2025, our available sources of liquidity totaled $47.0 million, $51.0 million and $50.3 million, respectively, which includes qualified cash and cash equivalents of $37.4 million, $41.4 million and $40.7 million, respectively, and the remaining available portion of the Revolver Loan of $9.6 million as of each such date.
As a percentage of consolidated net sales, selling, general and administrative expenses were 22.8% and 21.8% for fiscal 2024 and 2023, respectively.
As a percentage of consolidated net sales, selling, general and administrative expenses were 28.7% and 22.8% for fiscal 2025 and 2024, respectively. Although higher on a year-over-year basis, in fiscal 2025, we implemented actions to reduce overall spending on general and administrative activities, primarily in our Satellite and Space Communications and Unallocated segments.
During fiscal 2024, we recorded a $4.3 million net benefit from the remeasurement of warrants.
During fiscal 2025 and 2024, we recorded a $38.5 million and $4.3 million non-cash benefit, respectively, due to the remeasurement of warrants and derivatives related to our Credit Facility, Subordinated Credit Facility and Convertible Preferred Stock.
As the Convertible Preferred Stock are not mandatorily redeemable for cash, the redemption value of such shares are not presented in the table above. As discussed further in " Notes to Consolidated Financial Statements - Note (19) - Subsequent Events - Subordinated Credit Agreement " included in " Part II - Item 8.
As the Convertible Preferred Stock are not mandatorily redeemable for cash, the redemption value of such shares are not presented in the table above. In the ordinary course of business, we include indemnification provisions in certain of our customer contracts.
Reconciliations of our GAAP consolidated operating loss, net loss attributable to common stockholders and net loss per diluted common share for fiscal 2024 and 2023 to the corresponding Non-GAAP measures are shown in the tables below (numbers and per share amounts in the table may not foot due to rounding).
The increase in our Allerium segment's Adjusted EBITDA, both in dollars and as a percentage of related segment net sales, reflects higher gross profit (both in dollars and as a percentage of related segment net sales), offset by higher selling, general and administrative expenses and higher research and development expenses, as discussed above. 74 Reconciliations of our GAAP consolidated results to the corresponding Non-GAAP measures are shown in the tables below (numbers and per share amounts in the tables may not foot due to rounding).
The adoption of this guidance will impact our disclosures only and we do not expect it to have a material impact on our consolidated financial statements. • FASB ASU No. 2023-09 enhances and establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements.
In addition, the following FASB ASUs have been issued and incorporated into the FASB ASC and have not yet been adopted by us as of July 31, 2025: • FASB ASU No. 2023-09, which among other things, enhances and establishes new income tax disclosure requirements, in addition to modifying and eliminating certain existing requirements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of July 31, 2024, we had cash and cash equivalents of $32.4 million, which consisted of cash and highly-liquid money market deposit accounts. Many of these investments are subject to fluctuations in interest rates, which could impact our results.
Biggest changeAs of July 31, 2025, we had total cash and cash equivalents of $40.0 million, which consisted of cash and highly-liquid money market deposit accounts. Many of these investments are subject to fluctuations in interest rates, which could impact our results.
Although we do not currently use interest rate derivative instruments to manage exposure to interest rate changes, we may choose to do so in the future in connection with our Credit Facility. Our earnings and cash flows are also subject to fluctuations due to changes in interest rates on our investment of available cash balances.
Although we do not currently use interest rate derivative instruments to manage exposure to interest rate changes, we may choose to do so in the future in connection with our credit facilities. Our earnings and cash flows are also subject to fluctuations due to changes in interest rates on our investment of available cash balances.
Based on our investment portfolio balance as of July 31, 2024, a hypothetical change in interest rates of 10% would have a nominal impact on interest income over a one-year period. Ultimately, the availability of our cash and cash equivalents is dependent on a well-functioning liquid market.
Based on our investment portfolio balance as of July 31, 2025, a hypothetical change in interest rates of 10% would have a nominal impact on interest income over a one-year period. Ultimately, the availability of our cash and cash equivalents is dependent on a well-functioning liquid market.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our earnings and cash flows are subject to fluctuations due to changes in interest rates primarily from borrowings under our Credit Facility.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our earnings and cash flows are subject to fluctuations due to changes in interest rates primarily from borrowings under our credit facilities.
Based on the amount of outstanding debt under our Credit Facility, a hypothetical change in interest rates by 10% would change interest expense by approximately $2.7 million over a one-year period.
Based on the amount of outstanding debt under our credit facilities, a hypothetical change in interest rates by 10% would change interest expense by approximately $2.4 million over a one-year period.

Other CMTL 10-K year-over-year comparisons