What changed in this filing

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Item 1A. Risk Factors

2026-06-29 compared with 2025-06-25 · 220 added, 176 removed, 808 unchanged (33% of the section changed)

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In addition, if any of the following risks and uncertainties, or if any other risks and uncertainties, actually occurs, our business, financial condition or operating results could be harmed substantially, which could cause the market price of our stock to decline, perhaps significantly.

Statements in this section are based on our current beliefs and opinions regarding matters that could materially adversely affect our business, reputation, operations, financial condition and stock price in the future and are not representations as to whether such matters have or have not occurred previously.

Risk Factor Summary

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● Unauthorized access to our, our customers’ and/or our suppliers’ information and systems could negatively impact our business.

● Our employees or others acting on our behalf may engage in misconduct or other improper activities, which could cause us to lose contracts or cause us to incur costs.

● Our employees or others acting on our behalf have, and may in the future engage in misconduct or other improper activities, which could cause us to lose contracts or cause us to incur significant costs.

● Our work for the U.S.

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Government Contracts

● As of April 30, 2025, we were classified as a small business defense contractor.

The loss of our small business status may adversely affect our ability to compete for small business set aside US government contracts.

● We are subject to extensive government regulation, and our failure to comply with applicable regulations could subject us to penalties that may restrict our ability to conduct our business.

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● We could be prohibited from shipping our products to certain countries if we are unable to obtain U.S.

government authorization regarding the export of our products and services, or if current or future export laws limit or otherwise restrict our business.

government authorization regarding the export of our products and services, or if current or future export

laws limit or otherwise restrict our business.

In addition, failure to comply with export laws could result in fines, export restrictions and other sanctions and penalties.

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● We are subject to pending legal proceedings that may disrupt our business, cause us to incur substantial costs, expose us to significant legal liabilities and could have a material adverse impact on our financial performance.

perceived failure to comply with such obligations could damage our reputation, expose us to litigation risk and adversely affect our business and operating results.

● Our business is subject to federal, state and international laws regarding data protection, privacy, and information security, as well as confidentiality obligations under various agreements, and our actual or perceived failure to comply with such obligations could damage our reputation, expose us to litigation risk, subject us to civil or criminal liability and adversely affect our business and operating results.

Risks Related to Our Intellectual Property

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government, particularly to agencies of the DoD.

Historically, we have derived a significant portion of our total sales and our SUAS and LMS sales from the U.S.

Historically, we have derived a significant portion of our total sales from the U.S.

government and its agencies.

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government customer, accounted for approximately 63% of our revenue for the fiscal year ended April 30, 2026.

With the acquisition of BlueHalo, we expect the proportion of total revenue attributable to sales to the U.S.

DoD and other U.S.

government agencies to increase in fiscal year 2026.

We believe that the success and growth of our business for the foreseeable future will continue to depend to a significant degree on our ability to win government contracts, in particular from the DoD.

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In January 2025, President Trump announced an executive order establishing the Department of Government Efficiency (“DOGE”) to maximize government efficiency and productivity.

In February 2025, President Trump stated that he has directed DOGE to review Pentagon spending for potential waste and fraud.

As a result of these recent developments and other factors, the funding of U.S.

In February 2025, President Trump directed DOGE to review Pentagon spending for potential waste and fraud.

As a result of DOGE and other factors, the funding of U.S.

government programs is uncertain.

We are dependent on continued congressional appropriations and administrative allotment of funds based on an annual budgeting process.

We are dependent on continued congressional appropriations and administrative allotment of funds based

on an annual budgeting process.

We cannot assure you that current levels of congressional funding for our products and services will continue and that our business will not decline.

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government at will, and the increasing government spending reviews may result in revocation of previously awarded contracts.

A significant decline in government expenditures generally, or with respect to programs for which we provide products and/or

services, could adversely affect our business and prospects.

A significant decline in government expenditures generally, or with respect to programs for which we provide products and/or services, could adversely affect our business and prospects.

Our operating results may also be negatively impacted by other developments that affect these government programs generally, including the following:

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government shutdowns, which could adversely impact our programs and contracts with the U.S.

government, our ability to receive timely payment from U.S.

government entities and our ability to timely obtain export licenses for our products and services to fulfill contracts with our international customers.

government (the volume of which materially increased with our BlueHalo acquisition), our ability to receive timely payment from U.S.

government entities, our ability to provide services to the U.S.

government resulting in lost or delayed revenue under our services contracts, and our ability to timely obtain export licenses for our products and services to fulfill contracts with our international customers.

Additionally, there is a possibility that political decisions made by the U.S.

government, such as the establishment of DOGE and the related probes into and reductions in government spending, policy changes regarding prior military commitments by the second Trump administration, including those regarding ongoing conflicts, including between Russia and Ukraine, Israel and Hamas, Israel and Iran, or an impasse on policy issues between the executive branch and Congress, could impact future spending and program authorizations, which may not increase or may decrease or shift to programs in areas in which we do not provide products or services or are less likely to be awarded contracts.

Such changes in spending authorizations and budgetary priorities may occur as a result of shifts in spending priorities from defense-related and other programs due to, among other factors, competing demands for federal funds and the number and intensity of military conflicts.

We previously received a stop work order, which was lifted shortly after issuance, on certain existing U.S.

and Iran or an impasse on policy issues between the executive branch and Congress, could impact future spending and program authorizations, which may not increase or may decrease or shift to programs in areas in which we do not provide products or services or are less likely to be awarded contracts.

Such changes in spending authorizations and budgetary priorities may occur as a result of shifts

in spending priorities from defense-related and other programs due to, among other factors, competing demands for federal funds and the number and intensity of military conflicts.

We previously received a stop-work order on an OTA for the delivery of BADGER phased array antenna systems to support Space Force’s SCAR program, and in March 2026, the customer terminated the agreement for convenience.

We also previously received a stop-work order, which was lifted shortly after issuance, on certain existing U.S.

government contracts previously awarded to us for foreign military sales funded by the U.S.

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We may continue to receive future stop-work orders and/or contract cancellations for other existing U.S.

government contracts due to shifting foreign military aid priorities, including due to the recently announced pause on U.S.

military assistance to Ukraine, and we cannot project the aggregate negative impact on our results of operations due to any future stop work orders and/or contract cancellations.

government contracts due to shifting foreign military aid priorities.

We cannot project the aggregate negative impact on our results of operations due to any future stop-work orders and/or contract cancellations.

Military transformation and changes in overseas operational levels may affect future procurement priorities and existing programs, which could limit demand for our products and services.

We cannot predict whether and when a reduction in overseas operational levels will occur, how future procurement priorities related to defense transformation will be impacted, including by future events such as the conflicts between Russia and Ukraine or Israel and Hamas, or how changes in the threat environment will impact opportunities and competition for our products, for existing, additional or replacement programs.

and Iran or how changes in the threat environment will impact opportunities and competition for our products and services, for existing, additional or replacement programs.

While strategically, we have diversified our portfolio in an effort to mitigate the susceptibility of our business to reductions in overseas operational levels, we cannot be certain that such actions have mitigated the risk of our business to such reductions.

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The defense industry is highly competitive and generally characterized by intense competition to win contracts.

Our current principal competitors in the UAS market include Elbit Systems Ltd., Quantum-Systems, Inc., Edge Autonomy, Teledyne Technologies, Inc., Sierra Nevada Corporation, Lockheed Martin Corporation, The Boeing Company, Textron, Inc., Shield AI, Inc., Northrop Grumman Corporation, Griffon Aerospace, Inc., L3Harris Technologies, Inc.

and Israeli Aircraft Industries.

The defense and technology markets for the C-UAS and Precision Strike products and solutions are highly competitive, evolving with rapid technological advancements and shifting customer needs.

Competitors in the LMS market include Textron Inc., RTX Corporation, Lockheed Martin Corporation, Anduril Industries, Inc., Aevex Holdings, LLC and UVision Air Ltd.

Competitors in the C-UAS and Electronic Warfare markets include Anduril Industries, Inc., The Boeing Company, Lockheed Martin Corporation, RTX Corporation and other emerging technology firms and international players.

The space technology and directed energy market includes competitors such as The Boeing Company, Lockheed Martin Corporation, L3Harris Technologies, Inc., BAE Systems, Inc., and RTX Corporation.

Our current principal competitors in the UAS market include Elbit Systems Ltd., Quantum-Systems, Inc., Redwire

Corporation, Teledyne Technologies, Inc., Sierra Nevada Corporation, Lockheed Martin Corporation, The Boeing Company, Textron, Inc., Shield AI, Inc., Northrop Grumman Corporation, Griffon Aerospace, Inc., L3Harris Technologies, Inc., Anduril Industries, Inc., Airbus SE and Israeli Aircraft Industries.

The defense and technology markets for Precision Strike and Defensive products and solutions are highly competitive, evolving with rapid technological advancements and shifting customer needs.

Competitors in the LMS market include Textron Inc., RTX Corporation, Lockheed Martin Corporation, Anduril Industries, Inc., Aevex Corp., SpektreWorks, Inc., Dragoon Technology LLC, Cummings Aerospace, Inc., Elbit Systems Ltd., and UVision Air Ltd.

Competitors in the C-UAS and Electronic Warfare markets include Anduril Industries, Inc., The Boeing Company, Lockheed Martin Corporation, RTX Corporation, DroneShield Limited, SRC Inc., Polaris, Inc., CACI International Inc., Northrop Grumman Corporation, L3Harris Technologies, Inc., and other emerging technology firms and international players.

The space technology and directed energy market includes competitors such as The Boeing Company, Lockheed Martin Corporation, L3Harris Technologies, Inc., BAE Systems, Inc., nLIGHT, Inc., Epirus, Inc., EO Solutions Corporation, Huntington Ingalls Industries, Inc., and RTX Corporation.

These companies have extensive experience and resources, offering satellite systems and spacecraft engineering solutions that compete with our offerings.

The cyber and mission systems areas are highly competitive, with principal competitors including L3Harris Technologies, Inc., Thales Group, Anduril Industries, Inc, and Sierra Nevada Corporation.

The cyber and mission solutions areas are highly competitive, with principal competitors including L3Harris Technologies, Inc., Thales Group, Anduril Industries, Inc., Sierra Nevada Corporation, Lockheed Martin Corporation, Booz Allen Hamilton Inc., and Leidos Holdings, Inc.

We also face competition from specialized cybersecurity firms.

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Foreign competitors may also be able to offer more cost-competitive solutions as compared to our products and services.

The markets our products and services are expanding, and competition intensifying as additional competitors enter such markets and current competitors expand their product lines.

The markets for our products and services are expanding, and competition is intensifying as additional competitors enter such markets and current competitors expand their product lines.

In order to secure contracts successfully when competing with larger, well-financed companies, we may need to agree to contractual terms that provide for lower aggregate payments to us over the life of the contract, which could adversely affect our margins.

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Demand for our products and services may not increase, or may decrease, either generally or in specific markets, for particular types of products and services or during particular time periods.

Historically, a large portion of our revenue has been with the U.S.

Despite expanding our customer base to include international clients and non-military domestic agencies and making initial export breakthroughs, sustained increases in sales to international customers are not guaranteed.

Historically, a large portion of our and BlueHalo’s revenue has been with the U.S.

An increase of international sales of our product and services may not occur as anticipated.

An increase in international sales of our product and services may not occur as anticipated.

The expansion of the markets for our products in general, and the market for our products and services in particular, depends on several factors, including the following:

● customer satisfaction with these types of systems as solutions;

● the cost, performance and reliability of our products and products offered by our competitors;

● the cost, performance and reliability of our products and services and those offered by our competitors;

● customer perceptions regarding the effectiveness and value of these types of systems;

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We derived approximately 28% of our revenue from international sales, including U.S.

government foreign military sales in which an end user is a foreign government, during the fiscal year ended April 30, 2025, compared to 62% for the fiscal year ended April 30, 2024.

government foreign military sales in which an end user is a foreign government, during the fiscal year ended April 30, 2026, down from 52% for the fiscal year ended April 30, 2025 due to BlueHalo’s lower mix of international sales.

We expect to continue to derive a significant portion of our revenue from international sales, including direct sales to allied nations, and initiated through our international operations, Telerob Gesellschaft für Fernhantierungstechnik mbH (“Telerob”).

however, we expect the proportion of our total revenue attributable to international sales will decrease in fiscal year 2026 due to BlueHalo’s lower mix of international sales.

Our international revenue and operations are subject to a number of material risks, including the following:

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● the complexities of operating a business in an international location through a subsidiary or joint venture structure that may include foreign business partners, subcontractors and suppliers;

● the complexities of managing a workforce under foreign labor and employment law and related organizational requirements;

● the complexities of managing a workforce under foreign labor and employment laws and related organizational requirements;

● the complexity of shipping our products internationally through multiple jurisdictions with varying legal requirements;

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manufacturers;

● the imposition of in-country production and manufacturing requirements by international customers;

● the imposition of in-country production and manufacturing requirements by international customers, or the inclusion of specific financial obligations, including offset obligations, in contracts with international customers;

● the imposition of tariffs, embargoes, export controls and other trade restrictions;

● different and changing legal and regulatory requirements, including those pertaining to anti-corruption, anti-boycott, data protection and privacy, employment law, intellectual property, contracts and tax in the jurisdictions in which we currently operate or may operate in the future.

Negative developments in any of these areas in one or more countries in which we operate could result in a reduction in demand for our products, the cancellation or delay of orders already placed, threats to our intellectual property, destabilization of performance, difficulty in collecting receivables and a higher cost of doing business, any of which could negatively impact our business, financial condition or results of operations.

While we have adopted policies and procedures to facilitate compliance with laws and regulations applicable to our international operations and sales,

our failure, or the failure by our employees or others working on our behalf, to comply with such laws and regulations may result in administrative, civil or criminal liabilities, including fines, suspension or debarment from government contracts or suspension of our export privileges.

Negative developments in any of these areas in one or more countries in which we operate could result in adverse effects, such as a reduction in demand for our products and services, the cancellation or delay of orders already placed, threats to our intellectual property, destabilization of performance, difficulty in collecting receivables and a higher cost of doing business, any of which could negatively impact our business, financial condition or results of operations.

While we have adopted policies and procedures to facilitate compliance with laws and regulations applicable to our international operations and sales, our failure, or the failure by our employees or others working on our behalf, to comply with such laws and regulations may result in administrative, civil or criminal liabilities, including fines, suspension or debarment from government contracts or suspension of our export privileges.

Moreover, our sales, including sales to customers outside the United States, substantially all are denominated in U.S.

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If we are unable to manage the increasing complexity of our business, or achieve or manage our expected growth, our business could be adversely affected.

The complexity of our business has increased significantly over the last several years, most recently with the closing of our acquisition of BlueHalo in May 2025.

The complexity of our business has increased significantly over the last several years, most recently with the closing of our acquisition of BlueHalo in May 2025 and Empirical Systems Aerospace, Inc.

(“ESAero”) in March 2026.

We have increased the number of product lines being pursued, expanded international product sales and added commercial services and engaged in numerous acquisitions further expanding our operations domestically and abroad.

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If we are unable to manage our growth while maintaining our quality of service, or if new systems that we implement to assist in managing our growth do not produce the expected benefits, then our business, prospects, financial condition or operating results could be adversely affected.

Our business relationships, including those of BlueHalo, may be subject to disruption due to uncertainty associated with the post-acquisition integration, which could have a material adverse effect on our results of operations, cash flows and financial position.

Parties with which we do business and with which BlueHalo did business prior to the acquisition may experience uncertainty associated with the acquisition integration, including with respect to current or future business relationships with the combined company.

Our and BlueHalo’s business relationships may be subject to disruption as customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners may attempt to delay or defer entering into new business relationships, negotiate changes in existing business relationships or consider entering into business relationships with parties other than us.

Our business relationships may be subject to disruption due to uncertainty associated with the post-acquisition integration, which could have a material adverse effect on our results of operations, cash flows and financial position.

Parties with which we do business and with which BlueHalo and ESAero did business prior to our acquisitions of such companies may experience uncertainty associated with the integration, including with respect to current or future business relationships with the combined company.

Our and our acquired business’ relationships may be subject to disruption as customers, distributors, suppliers, vendors, landlords, joint venture partners and other business partners may attempt to delay or defer entering into new business relationships, negotiate changes in existing business relationships or consider entering into business relationships with parties other than us.

These disruptions could have a material and adverse effect on our results of operations, cash flows and financial position, as well as a material and adverse effect on our ability to realize the expected cost savings and other benefits of the acquisition.

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military represents our largest source of revenue.

We have, however, expanded our product sales into new market segments, such as the AI-enabled common control system from our Tomahawk acquisition.

We have, however, expanded our product sales into new market segments, such as RF and kinetic C-UAS, electronic warfare systems, uncrewed underwater vehicles, satellite communications, laser communications, and laser weapon systems from our BlueHalo acquisition.

Our efforts to expand our product and service offerings beyond our traditional markets may divert management resources from existing operations and require us to commit significant financial resources to unproven businesses that may not generate additional sales, either of which could significantly impair our operating results.

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If we are unable to devote adequate resources to develop new products or cannot otherwise successfully develop new products or enhancements that meet customer requirements on a timely basis, our products could lose market share, our revenue and profits could decline, and we could experience operating losses.

There are difficult issues to navigate in the development and use of AI, which may result in reputational harm or liability, and failure to introduce new and innovative products that have AI capabilities could put us at a competitive disadvantage.

We currently incorporate machine learning and AI capabilities into certain of our products and solutions and may seek to expand the use of AI in our offerings in the future.

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The rapid evolution of AI will require the application of resources by us to develop, test and maintain our products, services and operations to help ensure that AI is implemented ethically in order to minimize unintended, harmful impact.

Our competitors may be faster or more successful than we are in incorporating AI and other disruptive technology into their offerings, which would impair our ability to compete successfully.

The pace of AI proliferation within the defense industry and in the broader economy has led to a regulatory landscape characterized by uncertainty and rapid change.

In particular, new and evolving laws and regulations outside the United States governing AI systems, most notably the EU Artificial Intelligence Act (the “EU AI Act”), which began

phasing in during 2025, may impose significant design, documentation, testing, transparency, human-oversight, and cybersecurity requirements on certain AI-enabled products and applications.

The EU AI Act establishes a risk-based regulatory framework that classifies certain AI systems as “high-risk,” including those used in the management and operation of critical infrastructure, biometric identification, and law enforcement applications.

AI systems incorporated in defense platforms may be subject to heightened regulatory scrutiny to the extent they are deemed to fall within a “high-risk” category or may fall within the scope of national security exemptions whose boundaries remain uncertain and subject to ongoing interpretation.

Our Telerob subsidiary is organized and operates in Germany and some of our products and solutions are sold to customers in EU member states and other jurisdictions considering similar AI regulatory frameworks.

Compliance with the EU AI Act and analogous international AI regulatory regimes could require us to modify product designs, implement additional testing and technical documentation processes, increase compliance expenditures, restrict certain AI-enabled capabilities, or limit or prohibit the commercialization of particular AI-enabled features in European or other international markets.

We may not be able to anticipate or respond effectively to rapidly evolving and jurisdictionally inconsistent AI regulatory requirements, and any actual or perceived failure to comply could expose us to regulatory penalties, contract disqualification, and reputational harm.

We expect to incur substantial R&D costs and devote significant resources to identifying and commercializing new products and services, which could significantly reduce our profitability and may never result in revenue to us.

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Because we account for internal R&D as an operating expense, these expenditures will adversely affect our earnings in the future.

Further, our R&D programs may not produce successful results, and our new products and services may not achieve market acceptance, create

additional revenue or become profitable, which could materially harm our business, prospects, financial results and liquidity.

Further, our R&D programs may not produce successful results, and our new products and services may not achieve market acceptance, create additional revenue or become profitable, which could materially harm our business, prospects, financial results and liquidity.

Our products and services are complex and could have unknown defects or errors, which may give rise to claims against us, diminish our brand or divert our resources from other purposes.

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Our reliance on suppliers without long-term binding contracts involves significant risks and uncertainties, including whether our suppliers will provide an adequate supply of required components or products of sufficient quality, will increase prices for the components or products, and will perform their obligations on a timely basis.

If any of our supplier’s face capacity constraints, financial instability, or an unwillingness to provide raw materials or components to us, we may need to seek alternative suppliers or revise our designs, particularly because some of our components are sourced from foreign countries.

If any of our suppliers face capacity constraints, financial instability, or an unwillingness to provide raw materials or components to us, we may need to seek alternative suppliers or revise our designs, particularly because some of our components are sourced from foreign countries.

Locating alternative sources may take significant time, and even then, we may encounter significant delays in manufacturing and shipping.

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We have also experienced rising costs for components, shipping, tariffs, warehousing, and inventory.

Our domestic suppliers have experienced increased demand for their products due to tariffs, which could impact the availability or price of our components.

Our domestic suppliers have experienced increased demand for their products, which could impact the availability or price of our components.

The permanence of these cost increases remains uncertain, and obtaining replacement components within our required time frames may prove challenging.

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While we believe our estimates of our tax obligations are reasonable, the final outcome after the conclusion of any tax examinations and any litigation could be materially different from what has been reflected in our historical financial statements.

Also due to the U.S.

Internal Revenue Service tax capitalization rules, Section 174, which requires R&D expenditures to be capitalized and amortized over a 5-year period for tax purposes, we expect an increase in cash paid for U.S.

Due to the July 2025 reconciliation bill, commonly known as the One Big Beautiful Bill Act, and U.S.

Internal Revenue Service tax capitalization rules, domestic Section 174A, which allows R&D expenditures to be deducted, we expect a decrease in cash paid for U.S.

federal income taxes in future fiscal years relative to prior periods.

The One Big Beautiful Bill Act features several tax reforms including suspending the capitalization and amortization of domestic R&D expenditures for amounts paid or incurred in tax years beginning after December 31, 2024, and before January 1, 2030.

Changes in trade policies, including the recently-announced tariff regime, could cause adverse impacts to our business.

Changes in trade policies, including the imposition of tariffs, could cause adverse impacts to our business.

In the first half of 2025, we observed a significant shift in U.S.

trade policy, with increased tariffs and the imposition of significant new tariffs that could have an adverse impact our supply chain and business operation.

While certain of the recently announced tariffs have been paused, whether and to what degree they may be reinstated is uncertain at this time and may have implications for our supplier and our business.

trade policy, with increased tariffs and the imposition of significant new tariffs that could have had an adverse impact our supply chain and business operation.

While certain of the recently announced tariffs have been paused or invalidated by the U.S.

Supreme Court, whether and to what degree they may be reinstated is uncertain at this time and may have implications for our supplier and our business.

Changes in trade policies, such as new tariffs or increases in tariffs, or reactionary measures including retaliatory tariffs, legal challenges, or currency manipulation, could adversely impact us.

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Our earnings and profit margins may decrease based on the mix of our contracts and programs and other factors related to our contracts.

In general, we perform our work under fixed-price contracts and cost-plus-fee contracts.

In general, we perform our work under FFP contracts and Cost Plus contracts.

Under fixed-price contracts, we deliver products or perform services under a contract at a stipulated price.

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Due to the size and nature of many of our contracts, the estimation of total costs at completion is complicated and subject to many variables.

For example, we must make assumptions regarding the length of time to complete the contract because costs also include expected increases in wages and prices for materials;

For example, we must make assumptions regarding the length of time to

complete the contract because costs also include expected increases in wages and prices for materials;

and consider incentives or penalties related to performance on contracts and include them in the variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the related uncertainty is resolved.

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Fixed-price contracts (including both government and commercial contracts) represented approximately 70% of our revenue for the fiscal year ended April 30, 2026.

With the acquisition of BlueHalo, we expect the proportion of fixed-price contracts to decrease in fiscal year 2026.

If we fail to anticipate technical problems, estimate costs accurately or control costs during our performance of fixed-price contracts, then we may incur losses on these contracts because we absorb any costs in excess of the fixed price.

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From time to time, these activities may result in incidents that could cause us to temporarily shut down or otherwise disrupt some manufacturing processes, which could cause production delays, and could result in liability for workplace injuries and/or fatalities.

For example, in the past couple of years we have experienced fires in some of our leased facilities that were started by lithium-ion batteries, although none resulted in material damages or disruptions to our operations in such locations.

While we have procedures in place regarding the proper storage of batteries and other explosive and flammable materials, we cannot predict whether future

fires or other incidents involving such items will occur in the future or the impact on our facilities, operations or production.

We have safety and loss prevention programs that require detailed reviews of process changes and new operations, along with routine safety audits of operations involving explosive materials, to mitigate such incidents, as well as a variety of insurance policies, though our insurance coverage may be inadequate to cover all claims and losses related to such incidents.

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Urban environments may present certain challenges to the operators of UAS and C-UAS.

C-UAS may cause and UAS may accidentally collide with other aircraft, persons or property, which could result in injury, death or property damage and significantly damage the reputation of and support for UAS and C-UAS in general.

C-UAS may cause a collision with, and UAS may accidentally collide with other aircraft, persons or property, which could result in injury, death or property damage and significantly damage the reputation of and support for UAS and C-UAS in general.

As the usage of UAS and C-UAS has increased, particularly by military customers, the danger of such collisions has increased.

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Additionally, expenses resulting from cyber security attacks and other security risks may not be fully insured or otherwise mitigated, which could harm our financial results.

Our employees or others acting on our behalf may engage in misconduct or other improper activities, which could cause us to lose contracts or cause us to incur costs.

We are exposed to the risk that employee fraud or other misconduct from our employees or others acting on our behalf could occur.

Misconduct by employees or others could include intentional failures to comply with U.S.

government procurement regulations, engaging in unauthorized activities, insider threats to our cybersecurity, or falsifying time records.

Misconduct by our employees or others acting on our behalf could also involve the improper use of our customers’ sensitive or classified information, which could result in regulatory sanctions against us, serious harm to our reputation, a loss of contracts and a reduction in revenues, or cause us to incur costs to respond to any related governmental inquiries.

Our employees or others acting on our behalf have, and may in the future, engage in misconduct or other improper activities, which could cause us to lose contracts or cause us to incur significant costs.

We are exposed to the risk that negligence, fraud or other misconduct from our employees or others acting on our behalf could occur.

Misconduct by employees or others could include, for example, intentional failures to comply with U.S.

government or other regulations and requirements, engaging in unauthorized activities, insider threats to our cybersecurity, falsifying time records, or the improper use of our customers’ sensitive or classified information.

Any such negligence, fraud or other misconduct by our employees or others acting on our behalf could result in regulatory sanctions against us, serious harm to our reputation, a loss of contracts and a reduction in revenues, or cause us to incur significant costs to respond to any related governmental inquiries.

It is not always possible to deter misconduct, and the precautions we take to prevent and detect this activity may not be effective in controlling unknown or unmanaged risks or losses, which could cause us to lose contracts or cause a reduction in revenues.

In addition, alleged or actual misconduct by employees or others acting on our behalf could result in investigations or prosecutions of persons engaged in the subject activities, which could result in unanticipated consequences or expenses and management distraction for us regardless of whether we are alleged to have any responsibility.

We may in the future experience such misconduct, despite our various compliance programs.

Despite our compliance and training programs, we have in the past and may in the future experience negative consequences from misconduct.

Misconduct or improper actions by our employees, agents, subcontractors, suppliers, business partners and/or joint ventures could subject us to administrative, civil or criminal investigations and enforcement actions;

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Global credit and financial markets have experienced extreme disruptions in recent years, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability.

There can be no assurance that renewed deterioration in credit and financial markets and confidence in economic conditions will not occur.

There can be no assurance that renewed deterioration in

credit and financial markets and confidence in economic conditions will not occur.

Our general business strategy may be adversely affected by any economic downturn, volatile business environment or continued unpredictable and unstable market conditions.

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If certain key suppliers were to become capacity constrained or insolvent as a result of a market downturn or disruption, then we may have to find new suppliers, which can result in significant delays in manufacturing and shipping our products to customers and additional costs.

See above risk factor “If critical components or raw materials used to manufacture our products or used in our development programs become scarce or unavailable,

then we may incur delays in manufacturing and delivery of our products and in completing our development programs, which could damage our business,” for more detail on risks related to our supply chain.

See above risk factor “If critical components or raw materials used to manufacture our products or used in our development programs become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products and in completing our development programs, which could damage our business,” for more detail on risks related to our supply chain.

Customers’ Inability to Obtain Financing to Make Purchases from Us and/or Maintain Their Business:

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Acquisitions could be difficult to integrate, divert the attention of key personnel, disrupt our business, dilute stockholder value and impair our financial results.

In May 2025, we closed our acquisition of BlueHalo, the most recent in a series of acquisitions beginning in February 2021, with the acquisition of Arcturus and the Intelligent Systems Group business segment (“ISG”).

In March 2026, we closed our acquisition of ESAero, the most recent in a series of acquisitions beginning in February 2021, with the acquisition of Arcturus and the Intelligent Systems Group business segment (“ISG”).

We then acquired Telerob in May 2021, Planck Aerosystems, Inc.

(“Planck”) in August 2022, Tomahawk Robotics, Inc.

(“Tomahawk”) in September 2023.

(“Tomahawk”) in September 2023 and BlueHalo in May 2025.

We intend to consider additional acquisitions that could add to our customer base, technological capabilities or system offerings.

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Acquisitions also frequently result in the recording of goodwill and other intangible assets that are subject to potential impairments in the future that could harm our financial results.

For example, as part of our annual goodwill impairment test during the fiscal quarter ended April 30, 2025, we determined the carrying value of the UGV reporting unit exceeded its fair value due to a decrease in forecasted results of the UGV reporting unit resulting from reduced probability and delays of obtaining certain opportunities as well as an increase in forecast expenditures to support operational decisions identified during the fiscal quarter ended April 30, 2025.

For example, in January 2026 a stop-work order was received on an OTA for the delivery of BADGER phased array antenna systems to support Space Force’s SCAR program, and in March 2026, the customer terminated the agreement for convenience.

We concluded that the stop-work order represented a trigger event that indicated the carrying value of the Space reporting unit exceeded its fair value.

As a result, we updated the estimates of the long-term cash flows of the Space reporting unit to reflect the reduced revenue associated with the stop-work order and termination for convenience as well as an increase in expected research and development, and capital investments to achieve product commercialization, which is expected to result in expanded opportunities and improve long term product margins.

The changes in estimates resulted in the recognition of a goodwill impairment charge of approximately $241 million in the Space reporting unit.

Also, as part of our annual goodwill impairment test during the fiscal quarter ended April 30, 2025, we determined the carrying value of the UGV reporting unit exceeded its fair value due to a decrease in forecasted results of the UGV reporting unit resulting from reduced probability and delays of obtaining certain opportunities as well as an increase in forecast expenditures to support operational decisions identified during the fiscal quarter ended April 30, 2025.

Due to the changes in estimates, we recorded a goodwill impairment charge of $18.4 million and accelerated amortization of certain UGV intangibles of $4.3 million for our fiscal year ended April 30, 2025.

During the fiscal year ended April 30, 2023, we recorded a MUAS

goodwill impairment charge of $156.0 million and accelerated amortization of certain MUAS intangibles of $34.1 million for the MUAS reporting unit.

The MUAS related charges resulted from decreases in expected cash flows associated with us not being down selected for a U.S.

DoD program of record and the closure of all of our MEUAS COCO sites in the fiscal year ended April 30, 2023.

In addition, if we finance acquisitions by issuing equity, or securities convertible into equity, such as the stock issued as consideration for the purchases of BlueHalo, Arcturus and Tomahawk, then our existing stockholders may be diluted, which could lower the market price of our common stock.

Further, as lock-up and other restrictions on such consideration shares lapse, we could experience heightened trading activity that could disrupt the market price for our common stock.

If we finance acquisitions through debt, such as the credit facilities we entered into in connection with the consummation of our acquisition of Arcturus and subsequently amended with our acquisition of BlueHalo, then such future debt financing may contain covenants or other provisions that limit our operational or financial flexibility and represent default risk if we are unable to maintain certain financial performance metrics while the debt remains outstanding.

If we finance acquisitions through debt, such as the convertible notes issued after the BlueHalo acquisition and the credit facilities we entered into in connection with the consummation of our acquisition of Arcturus and subsequently amended in connection with our acquisition of BlueHalo, then such future debt financing may contain covenants or other provisions that limit our operational or financial flexibility and represent default risk if we are unable to maintain certain financial performance metrics while the debt remains outstanding.

It is possible that following an acquisition, the integration process could result in the loss of key employees, the loss of customers, the disruption of either or both of our and the acquired company’s ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, including the integration of IT systems, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated.

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In addition, we must achieve the anticipated growth and cost savings without adversely affecting current revenues and investments in future growth.

If we are not able to successfully achieve these objectives, the anticipated synergies and other benefits of the acquisition may not be realized fully, or at all, or may take longer to realize than expected.

If we are not able to successfully achieve these objectives, the anticipated synergies and other benefits of the acquisition may not be realized fully, or at all, or may take longer to realize than

Additionally, we may inherit from acquired companies legal, regulatory, and other risks that occurred prior to the acquisition, whether known or unknown to us, which may be material.

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The failure to successfully evaluate and execute acquisitions or investments or otherwise adequately address these risks could materially harm our business and financial results.

We have a significant amount of goodwill and intangible assets on our consolidated financial statements that are subject to impairment based upon future adverse changes in our business or prospects, such as the impairment recorded for the MUAS and UGV reporting units.

As of April 30, 2026, the carrying values of goodwill and identifiable intangible assets on our balance sheet were $2,583.1 million and $929.8 million, respectively.

With the acquisition of BlueHalo, the carrying values of goodwill and identifiable intangible assets will increase significantly in fiscal year 2026.

We perform our annual impairment tests during the fourth quarter of each fiscal year or when events or circumstances change in a manner that indicates an asset might be impaired.

Events or circumstances that could trigger an impairment review include, but are not limited to, a significant adverse change in legal factors or in the business or political climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the manner of our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends or significant underperformance relative to projected future results of operations.

During our annual impairment test during the fiscal quarter ended April 30, 2025, we determined the carrying value of the UGV reporting unit exceeded its fair value due to a decrease in forecasted results of the UGV reporting unit resulting from reduced probability and delays of obtaining certain opportunities as well as an increase in forecast

expenditures to support operational decisions identified during the fiscal quarter ended April 30, 2025.

The changes in estimates resulted in the recognition of a goodwill impairment charge of $18.4 million in the UGV reporting unit and accelerated intangible amortization expenses of $4.3 million during the fiscal year ended April 30, 2025.

In May 2023, a trigger event was identified that indicated that the carrying value of the MUAS reporting unit exceeded its fair value.

Specifically, we received notification that we were not down selected for a U.S.

DoD program of record which resulted in a significant decrease in the projected future cash flows of the MUAS reporting unit.

As a result, we updated our estimates of long-term future cash flows used in the valuation of the MUAS reporting unit.

These changes in estimates, resulted in the recognition of a goodwill impairment charge of $156.0 million in the MUAS reporting unit.

Additionally, the closure of all of our MEUAS COCO sites resulted in accelerated intangible amortization expenses of $34.1 million during the fiscal year ended April 30, 2023.

Accordingly, the MUAS reporting unit was considered at an increased risk of failing future quantitative goodwill impairment tests as the estimated fair value of the MUAS reporting unit did not substantially exceed its carrying value.

During the annual impairment test during the fiscal quarter ended April 30, 2025, the MUAS reporting unit was no longer considered at an increased risk of failing future quantitative goodwill impairment tests due to an increase in the estimated fair value of the reporting unit from significant increases in forecasted results.

In January 2026, a stop-work order was received on an OTA for the delivery of BADGER phased array antenna systems to support Space Force’s SCAR program.

Additionally, in March 2026, the customer terminated the agreement for convenience.

We concluded that the stop-work order represented a trigger event that indicated the carrying value of the Space reporting unit exceeded its fair value.

As a result, we updated the estimates of the long-term cash flows of the Space reporting unit to reflect the reduced revenue associated with the stop-work order and termination for convenience as well as an increase in expected research and development and capital investments to achieve product commercialization, which is expected to result in expanded opportunities and improve long term product margins.

The changes in estimates resulted in the recognition of a goodwill impairment charge of approximately $241 million in the Space reporting unit.

Fair value determinations utilized in the quantitative goodwill impairment test require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors.

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Our substantial borrowings under our credit facilities could adversely affect our financial condition and restrict our operating flexibility.

On February 19, 2021, in connection with the consummation of the Arcturus acquisition, we entered into a credit agreement with certain lenders, letter of credit issuers, and others (as amended February 4, 2022, June 6, 2023, October 4, 2024 and May 1, 2025 the “Credit Agreement”), which, together with its associated Security and Pledge Agreement, provides for a $700.0 million term A loan (the “Term A Loan”) and provides for a revolving commitment in an aggregate principal amount of $350.0 million (the “Revolving Facility” and together with the Term A Loan, the “Credit Facilities”).

The Term A Loan matures on May 1, 2027, the two year anniversary of the closing of the BlueHalo acquisition, and amortizes at a rate of 5.00% per annum, with the remaining outstanding principal amount due and payable on the maturity date.

The applicable margin on the Term A Loan is based upon our Consolidated Leverage Ratio (as defined in the Credit Agreement) and whether we elect as its benchmark rate (i) SOFR (in which case, the applicable margin ranges from 1.50 - 2.50% per annum depending on our Consolidated Leverage Ratio) plus a credit spread adjustment of 0.10% or (ii) Base Rate (in which case, the applicable margin ranges from 0.50 - 1.50% per annum depending on our Consolidated Leverage Ratio).

Upon the occurrence of an event of default, an additional 2.00% per annum default interest rate may apply.

Mandatory prepayments of the Term A Loan are required in connection with (i) the disposition of certain assets to the extent not reinvested and (ii) the incurrence of non-permitted debt.

With the fourth amendment on May 1, 2025, the Credit

Agreement, with its associated Security and Pledge Agreement, provided for a $700.0 million term A loan (the “Term A Loan”) and provides for a revolving commitment in an aggregate principal amount of $350.0 million (the “Revolving Facility” and together with the Term A Loan, the “Credit Facilities”).

On the closing date of the BlueHalo acquisition, the Term A Loan was drawn in full for $700.0 million, and we borrowed approximately $225.0 million from our available Revolving Facility, the combined proceeds of which were used to repay certain outstanding indebtedness of BlueHalo upon the closing of the acquisition of BlueHalo and to pay for certain related transaction costs.

Following the BlueHalo acquisition, as of May 1, 2025, the total amount of borrowings outstanding under the Credit Facilities was $955.0 million.

In June 2025, we drew an additional $10.0 million under the Revolving Facility.

In July 2025, we issued 4,057,460 shares of common stock at a public offering price of $248.00 per share (the “Common Stock Offering”) and issued $747.5 million aggregate principal amount of 0% convertible senior notes due 2030 (the “Notes” and “Notes Offering”).

The aggregate net proceeds from the Common Stock Offering and the Notes Offering, after deducting underwriting discounts and debt and equity issuance costs, was approximately $1.70 billion.

The Company used approximately $965.3 million of the net proceeds from the Common Stock Offering and the Notes Offering to repay indebtedness under the Term Loan Facility and outstanding borrowings under the Revolving Credit Facility.

The $700.0 million term loan was repaid in full and closed;

although new term loans can be renegotiated and issued under the Credit Facility.

The Revolving Facility is available to be drawn upon.

As of April 30, 2026, $747.5 million of Notes was outstanding.

The Notes are senior unsecured obligations of the company.

The Notes do not bear regular interest, and the principal amount of the Notes will not accrete.

The notes mature on July 15, 2030, and are convertible prior to April 15, 2030 only upon specified events, and thereafter at the holder’s option until two trading days before maturity.

The initial conversion rate is 3.1017 shares of the Company's common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $322.40 per share of the Company's common stock.

The Company may settle conversions entirely in cash or in a combination of cash and shares, but all conversions must be settled in cash up to at least the principal amount of the Notes being converted.

On or after July 21, 2028 and up to 61 scheduled trading days before maturity, the Notes are redeemable at the Company’s option at par plus accrued special interest if the stock price exceeds 130% of the conversion price for specified trading day thresholds;

partial redemptions require at least $100 million principal remaining outstanding, and any call is treated as a Make Whole Fundamental Change increasing the conversion rate in certain cases.

Upon a Fundamental Change (certain business combinations or delisting events), holders may require repurchase at par plus accrued special interest (with a limited exception for certain cash mergers).

The notes include customary events of default with automatic acceleration upon certain company level bankruptcy events and acceleration at the trustee’s or 25% holders’ direction for other continuing defaults;

however, for certain reporting covenant breaches, the company may elect a “sole remedy” consisting solely of the payment of additional special interest at 0.25% per annum for the first 180 days and 0.50% thereafter, for up to 365 days.

In support of our obligations under the Credit Facilities, we have granted security interests in substantially all of our personal property and that of our domestic subsidiaries, including a pledge of the equity interests in our subsidiaries (limited to 65% of outstanding equity interests in the case of our foreign subsidiaries), subject to customary exclusions and exceptions.

In addition, our domestic subsidiaries, including BlueHalo and Arcturus, are required to be guarantors of the Credit Facilities.

In addition, our domestic subsidiaries are required to be guarantors of the Credit Facilities.

In addition, our increased level of indebtedness may have important consequences to us, including:

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● limiting our flexibility in planning for, or reacting to, changes in the economy, the defense industry, and the markets in which we operate;

● subjecting us to maintenance of various financial covenants and adherence to certain other affirmative and negative covenants, requiring us to seek lender consent or waiver in relation to our financial performance or other potential strategic actions in the future;

or other potential strategic actions in the future;

● placing us at a competitive disadvantage compared to our competitors with less indebtedness;

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To the extent we incur additional indebtedness, the risks described above could increase.

If we do not have sufficient funds to repay the Term A Loan when it becomes due in 2027, it may be necessary to refinance our debt through additional debt or equity financings.

If we do not have sufficient funds to repay outstanding loans, it may be necessary to refinance our debt through additional debt or equity financings.

Any refinancing with new debt could be at higher interest rates and may require us to comply with more onerous covenants than the Credit Agreement, which could further restrict our business operations.

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Any of the foregoing limitations or events could materially and adversely affect our financial condition and results of operations.

The indebtedness represented by our Notes could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations under the Notes.

As of April 30, 2026, we had total indebtedness of approximately $747.5 million consisting of aggregate principal of our Notes.

We may incur additional indebtedness to meet future financing needs.

The indebtedness represented by our Notes and obligations under the Indenture pursuant to which the Notes were issued could have significant negative consequences for our security holders and our business, results of operations and financial condition

by, among other things:

● increasing our vulnerability to adverse economic and industry conditions;

● limiting our ability to obtain additional financing;

● requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes;

● limiting our flexibility to plan for, or react to, changes in our business;

● diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the Notes;

● placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.

Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our indebtedness, including the Notes, and our cash needs may increase in the future.

In addition, the Indenture contains, and any future indebtedness that we may incur may contain, financial and other restrictive covenants that limit our ability to operate our business, raise capital or make payments under our other indebtedness.

If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.

The conversion of Notes could impair our financial position and liquidity.

Because we must settle at least a portion of our conversion obligation in cash, the conversion of Notes could materially and adversely affect our financial position and liquidity.

Before April 15, 2030, Noteholders will have the right to convert their Notes only upon the occurrence of certain events.

From and after April 15, 2030, Noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

However, many of the conditions that permit the conversion of Notes before April 15, 2030 are beyond our control.

We could be required to expend a significant amount of cash to settle conversions, which could significantly harm our financial position and liquidity.

We face various risks related to pandemics and similar public health crises, which may adversely impact our business.

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We have research and development and manufacturing operations located in California in regions known for seismic activity and wildfires, and in other areas prone to natural disasters.

While we maintain insurance coverage to cover certain of risks of losses for damage or destruction to facilities and property and for interruption of our business, such insurance may not cover specific losses and the amount of our insurance coverage may not be adequate to cover all of our losses.

While we maintain insurance coverage to cover certain risks of losses for damage or destruction to facilities and property and for interruption of our business, such insurance may not cover specific losses and the amount of our insurance coverage may not be adequate to cover all of our losses.

A significant natural disaster, such as an earthquake, fire or other catastrophic event, could severely affect our ability to conduct normal business operations, and as a result, our future operating results could be materially and adversely affected, including if our losses are not adequately or timely covered by our insurance.

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However, unanticipated changes in assumptions and management estimates underlying our recorded liabilities for medical claims could result in materially different amounts of expense than expected under our health insurance program, which could have an adverse material impact on our financial condition and results of operations.

Recession, financial and credit market disruptions may adversely affect us.

If another global recession emerges, we may experience declines in revenues, profitability and cash flows from reduced orders, payment delays, collection difficulties, increased price pressures for our products, increased risk of excess and obsolete inventories or other factors caused by the economic problems of our customers.

If negative conditions in the global credit markets prevent our customers from having access to credit or render them insolvent, orders for our products may decrease, which would result in lower revenue.

Likewise, if our suppliers face challenges in obtaining credit, selling their products, or otherwise in operating their businesses or remaining solvent, they may become

unable to offer the materials we use to manufacture our products.

An economic or credit crisis could also have an impact on our ability to raise capital when needed.

These events could adversely impact our ability to manufacture affected products and could also result in reductions in our revenue, increased price competition, and increased operating costs, which could adversely affect our business, financial condition, operational results, and cash flows.

Risks Related to Our U.S.

Government Contracts

As of April 30, 2025, we were classified as a small business defense contractor.

The loss of our small business status may adversely affect our ability to compete for small business set aside US government contracts.

As of April 30, 2025 we had fewer than 1,500 employees, and we are presently classified as a small business defense contractor under our primary North American Industry Classification Systems (“NAICS”) industry and product specific codes (336411 - Aircraft Manufacturing) which are regulated in the United States by the Small Business Administration (“SBA”).

Businesses that meet the small business size standard for the relevant NAICS code are able to bid on small business set aside contracts.

While we do not presently derive a substantial portion of our business from contracts which are set aside for small businesses, we have been able to bid on small business set aside contracts as well as contracts which are open to non-small business entities.

With the acquisition of BlueHalo, we exceed 1,500 employees and no longer qualify as a small business, which could limit our ability to partner with other business entities that seek to team with small business entities as may be required under a specific contract.

We will not be eligible to serve as the prime contractor on small business set aside programs and may need to implement a small business subcontracting plan with other companies that qualify as a small business, for SBA approval.

The loss of our small business classification could have a material adverse effect on our financial position and/or results of operations.

Additionally, in accordance with 48 CFR § 9903.201-1(b), Cost Accounting Standards (“CAS”) Applicability, if we are no longer eligible for the small business exemption and we receive a CAS triggering contract of more than $7.5 million, we will be subject to the requirements of modified CAS.

If net CAS-covered awards received in the prior year exceed $50 million or we receive a single CAS-covered contract of $50 million or more in the current year, we will be subject to full CAS requirements.

We would be required to demonstrate compliance with such standards upon the award of a contract subject to the full range of CAS, which will impose additional administrative costs on our business, and may significantly affect the manner in which we conduct our business with our customers and adversely affect our results of operations.

We are subject to extensive government regulation, and our failure to comply with applicable regulations could subject us to penalties that may restrict our ability to conduct our business.

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companies from providing anything of value to a foreign official to help obtain, retain or direct business, or obtain any unfair advantage;

DoD Cybersecurity Maturity Model Certification (“CMMC”) program, which mandates third-party assessments for companies working with the U.S.

DoD, verifying such companies’ adherence to specific cybersecurity standards;

● the National Telecommunications and Information Administration and the Federal Communications Commission, which regulate the wireless spectrum allocations upon which UAS depend for operation and data transmission in the United States;

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The indirect costs we incur in performing government contracts have been audited or have been subject to audit on an annual basis.

The audits of our incurred cost claims through fiscal year 2022 have been settled and the audits of BlueHalo’s incurred cost claims through fiscal 2021 have been settled.

The audits of legacy AV’s incurred cost claims through fiscal year 2024 have been settled, and the audits of BlueHalo’s incurred cost claims through fiscal 2021 have been settled.

As of April 30, 2026, we had no reserve for open incurred cost claim audits.

In addition, non-audit reviews or investigations by the government may still be conducted on all our government contracts.

Any costs found to be improperly allocated to a specific cost reimbursement contract will not be reimbursed, while such costs already reimbursed must be refunded.

If an audit or investigation of our business were to uncover improper or illegal activities, we could be subject to civil and criminal penalties and administrative sanctions, including

termination of contracts, suspension of payments, fines and suspension or debarment from doing business with the U.S.

Any costs found to be improperly allocated to a specific Cost Plus contract will not be reimbursed, while such costs already reimbursed must be refunded.

If an audit or investigation of our business were to uncover improper or illegal activities, we could be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, suspension of payments, fines and suspension or debarment from doing business with the U.S.

We could experience serious harm to our reputation if allegations of impropriety or illegal acts were made against us, even if the allegations were inaccurate.

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Moreover, if any of our administrative processes and business systems are found not to comply with the applicable requirements, we may be subjected to increased government scrutiny or required to obtain additional governmental approvals that could delay or otherwise adversely affect our ability to compete for or perform contracts.

Our purchasing system was most recently reviewed and approved again in February 2025 and BlueHalo’s purchasing system was recently reviewed and approved again in April 2025.

Legacy AV’s purchasing system was most recently reviewed and approved again in February 2025, and BlueHalo’s purchasing system was recently reviewed and approved again in April 2025.

An unfavorable outcome to such an audit or investigation by the DCAA, U.S.

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Congress generally appropriates funds on a fiscal year basis, even though a program may continue for several years.

Consequently, programs are often only partially funded initially, and additional

funds are committed only as Congress makes further appropriations.

Consequently, programs are often only partially funded initially, and additional funds are committed only as Congress makes further appropriations.

The termination or reduction of funding for a government program would result in a loss of anticipated future revenue attributable to that program.

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government contracts.

These laws and regulations, among other things, require certification and disclosure of all cost and pricing data in connection with contract negotiation, define allowable and unallowable costs and otherwise govern our right to reimbursement under certain cost-based U.S.

These laws and regulations, among other things, require certification and disclosure of all cost and pricing data in connection with contract negotiation, define allowable and unallowable costs

and otherwise govern our right to reimbursement under certain cost-based U.S.

government contracts, and restrict the use and dissemination of classified information and the exportation of certain products and technical data.

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National Airspace System, a public operator must obtain a COA from the FAA or fly in restricted airspace.

The FAA’s COA approval process requires that the public operator certify the airworthiness of the aircraft for its intended purpose, that a collision with another aircraft or other airspace user is extremely improbable, that the small uncrewed aircraft system complies with appropriate cloud and terrain clearances and that the operator or spotter of the small uncrewed aircraft system is generally within one half-mile laterally and 400 feet vertically of the small uncrewed aircraft system while in operation.

The FAA’s COA approval process requires that the public operator certify the airworthiness of the aircraft for its intended purpose, that a collision with another aircraft or other

airspace user is extremely improbable, that the small uncrewed aircraft system complies with appropriate cloud and terrain clearances and that the operator or spotter of the small uncrewed aircraft system is generally within one half-mile laterally and 400 feet vertically of the small uncrewed aircraft system while in operation.

Furthermore, the FAA’s clarification of existing policy stated that the rules for radio-controlled hobby aircraft do not apply to public or commercial use of SUAS and MUAS.

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Obtaining and maintaining security clearances for employees involves a lengthy process, and it is difficult to identify, recruit and retain employees who already hold security clearances.

If our employees are unable to obtain security clearances in a timely manner, or at all, or if our employees who hold security clearances are unable to maintain the clearances or terminate employment with us, then a customer requiring classified work could terminate the contract or decide not to renew it

upon its expiration.

In addition, we expect that many of the contracts on which we will bid will require us to demonstrate our ability to obtain facility security clearances and employ personnel with specified types of security clearances.

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The results of any such proceedings are unpredictable.

We record accruals for liabilities where we believe a loss is probable and reasonably estimable, including when negotiating settlement where appropriate in response to such claims, however, our actual losses may differ significantly from our interim estimates.

We record accruals for liabilities where we believe a loss is probable and reasonably estimable, including when negotiating settlements where appropriate in response to such claims, however, our actual losses may differ significantly from our interim estimates.

An adverse or unfavorable resolution of any proceedings against us could have a material impact on our financial position, cash flows and results of operations.

Our business is subject to federal, state and international laws regarding data protection, privacy, and information security, as well as confidentiality obligations under various agreements, and our actual or perceived failure to comply with such obligations could damage our reputation, expose us to litigation risk and adversely affect our business and operating results.

Our business is subject to federal, state and international laws and regulations regarding data protection, privacy, and information security, as well as confidentiality obligations under various agreements, and our actual or perceived failure to comply with such obligations could damage our reputation, expose us to litigation risk, subject us to civil or criminal liability and adversely affect our business and operating results.

In connection with our business, we receive, collect, process and retain certain sensitive and confidential customer information.

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Additionally, we expect that existing laws, regulations and standards may be interpreted differently in the future.

There remains significant uncertainty surrounding the regulatory framework for the future of personal data transfers from the European Union to the United States with

regulations such as the General Data Protection Regulation (“GDPR”), which imposes stringent E.U.

There remains significant uncertainty surrounding the regulatory framework for the future of personal data transfers from the European Union to the United States with regulations such as the General Data Protection Regulation (“GDPR”), which imposes stringent E.U.

data protection requirements, provides an enforcement authority, and imposes large penalties for noncompliance, including for the transfer of personal data between the company and our German subsidiary, Telerob.

Future laws, regulations, standards and other obligations, including the adoption of the GDPR, as well as changes in the interpretation of existing laws, regulations, standards and other obligations could impair our ability to collect, use or disclose information relating to individuals, which could decrease demand for our products, require us to restrict our business operations, increase our costs and impair our ability to maintain and grow our customer base and increase our revenue.

Our business operations are subject to the evolving requirements of the U.S.

DoD Cybersecurity Maturity Model Certification (“CMMC”) program.

CMMC mandates third-party assessments for companies working with the U.S.

DoD, verifying such companies’ adherence to specific cybersecurity standards.

These certifications are essential for eligibility in new contract awards.

We have completed/passed a DoD Defense Industrial Base Cybersecurity Assessment Center (DIBCAC) audit, high confident assessment, in 2022, which met the Level 3 requirements under the CMMC 1.0 framework.

The recently acquired BlueHalo passed a Level 2 audit using a Third-Party Cybersecurity Assessor Organization (3CPAO), demonstrating adherence to updated security practices outlined in CMMC 2.0, which went into effect December 16, 2024.

Our ongoing compliance with the CMMC framework is critical, particularly as the National Institute of Standards and Technology (“NIST”) Special Publication 800-172 requirements, designed to enhance protection for controlled unclassified information, have not yet appeared in any government Requests for Proposals we have bid but are expected.

We are actively preparing to meet the more stringent requirements of CMMC Level 3.

There's a potential risk of not achieving Level 3 certification before upcoming contract awards or failing to attain the level required for a specific contract.

Such a scenario could restrict us from bidding on those contracts, including follow-on awards for existing U.S.

Such limitations could negatively impact our revenue, profitability, and cash flow.

Furthermore, compliance with CMMC may extend to our subcontractors and certain vendors, potentially requiring their certification as well.

Their non-compliance could also pose challenges for our business.

The associated costs of CMMC compliance are significant and may increase in the future, potentially affecting our operating results.

individuals, which could decrease demand for our products, require us to restrict our business operations, increase our costs and impair our ability to maintain and grow our customer base and increase our revenue.

Our business operations are subject to the evolving cybersecurity requirements of U.S.

government agencies, including the DoD CMMC program.

Our ongoing compliance with the CMMC framework is critical, and the associated costs of CMMC compliance are significant and may increase in the future, potentially affecting our operating results.

Since the acquisition of BlueHalo, we have undertaken an effort to integrate the computer systems of legacy BlueHalo and our legacy computer systems (“Legacy AV”).

In early 2026 we became aware of potential issues concerning Legacy AV’s compliance with certain cybersecurity requirements.

Accordingly, in February 2026, we initiated an internal investigation, led by external counsel, regarding Legacy AV’s compliance with cybersecurity requirements in certain DoD contracts and subcontracts, to include an evaluation of the accuracy of Legacy AV’s cybersecurity information in the Supplier Performance Risk System (“SPRS”).

Our investigation is ongoing, and we cannot predict whether it will lead to any adverse impact, nor can we predict the timing, outcome, or nature of any possible impact.

If we have not complied or are unable to comply with the CMMC requirements, our ability to receive certain new DoD contracts, subcontracts, or follow-on work could be negatively affected.

Additionally, non-compliance with requirements imposed on government contractors may result in the U.S.

Government or other customers terminating our existing contracts, ceasing to do business with us, or imposing additional requirements.

We also could be subject to significant penalties, damages, criminal fines, and suspension or debarment from U.S.

Government contracting.

Any of these potential consequences could materially and adversely affect our business, prospects, financial condition, and results of operations.

Although we endeavor to comply with those federal, state and foreign laws and regulations, industry standards, contractual obligations and other legal obligations that apply to us, such laws, regulations, standards and obligations are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another, other requirements or legal obligations, our practices or the features of our products.

As such, we cannot assure ongoing compliance with all such laws or regulations, industry standards, contractual obligations and other legal obligations, and our efforts to do so may cause us to incur significant costs or require changes to our business practices, which could adversely affect our business and operating results.

As such, we cannot ensure ongoing compliance with all such laws or regulations, industry standards, contractual obligations and other legal obligations, and our efforts to do so may cause us to incur significant costs or require changes to our business practices, which could adversely affect our business and operating results.

Any failure or perceived failure by us to comply with federal, state or foreign laws or regulations, industry standards, contractual obligations or other legal obligations, or any actual or suspected security incident, whether or not resulting in unauthorized access to, or acquisition, release or transfer of personal information or other data, may result in governmental enforcement actions and prosecutions, private litigation, fines and penalties or adverse publicity and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.

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Furthermore, certain environmental laws, including the U.S.

Comprehensive, Environmental Response,

Compensation and Liability Act of 1980, impose strict, joint and several liability on current and previous owners or operators of real property for the cost of removal or remediation of hazardous substances and impose liability for damages to natural resources.

Comprehensive, Environmental Response, Compensation and Liability Act of 1980, impose strict, joint and several liability on current and previous owners or operators of real property for the cost of removal or remediation of hazardous substances and impose liability for damages to natural resources.

These laws often impose liability even if the owner or operator did not know of, or was not responsible for, the release of such hazardous substances.

These environmental laws also assess liability on persons who arrange for hazardous substances to be sent to disposal or treatment facilities when such facilities are later found to be contaminated.

Such persons can be held responsible for cleanup costs even if they never owned or operated the contaminated facility.

Such persons can be held responsible for cleanup costs even if they never owned or operated the

contaminated facility.

Although we have never been named a responsible party at a contaminated site, we could potentially be named a responsible party in the future.

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In addition, the U.S.

government has licenses under certain of our patents and certain other intellectual property that are developed or used in performance of government contracts, and it may use or authorize

others to use such patents and intellectual property for government and other purposes.

government has licenses under certain of our patents and certain other intellectual property that are developed or used in performance of government contracts, and it may use or authorize others to use such patents and intellectual property for government and other purposes.

Moreover, existing U.S.

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Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property or otherwise gaining access to our technology.

Unauthorized third parties may try to copy or reverse engineer our products or portions of our products or otherwise obtain and use our intellectual property.

Unauthorized third parties may try to copy or reverse

engineer our products or portions of our products or otherwise obtain and use our intellectual property.

Moreover, many of our employees have access to our trade secrets and other intellectual property.

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In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may believe are in your best interest as one of our stockholders.

Concurrently with the execution and delivery of the Merger Agreement, the Arlington Entities entered into a shareholder’s agreement with us pursuant to which the Arlington Entities have, among other things, agreed to abide by

customary standstill covenants, obligations to vote consistent with the recommendation of our Board of Directors, and customary employee non-solicit restrictions with respect to our and our subsidiaries’ employees (including BlueHalo and its subsidiaries).

In connection with the BlueHalo acquisition, the Arlington Entities entered into a shareholder’s agreement with us pursuant to which the Arlington Entities have, among other things, agreed to abide by customary standstill covenants, obligations to vote consistent with the recommendation of our Board of Directors, and customary employee non-solicit restrictions with respect to our subsidiaries’ employees (including BlueHalo and its subsidiaries).

Under the shareholder’s agreement, we have, among other things, agreed to provide the Arlington Entities with certain board designation rights and, following a lock-up period as set forth in the shareholder’s agreement, customary registration rights, including customary demand and piggyback rights.

The Arlington Entities will have such designation rights to designate two directors until they and their affiliates cease to collectively hold and own, directly or indirectly, at least 20% of our Adjusted Outstanding Shares and the Arlington Entities will have such designation rights to designate one director until they and their affiliates cease to collectively hold and own, directly or indirectly, at least 15% but less than 20% of our Adjusted Outstanding Shares.

to designate one director until they and their affiliates cease to collectively hold and own, directly or indirectly, at least 15% but less than 20% of our Adjusted Outstanding Shares.

“Adjusted Outstanding Shares” is defined in the shareholder’s agreement to refer to the total number of our issued and outstanding shares of common stock, less then number of shares issued by us within six months of May 1, 2025.

Our Board of Directors consists of ten members, two of whom have been designated by the Arlington Entities.

The two directors nominated by the Arlington Entities upon the closing of the BlueHalo acquisition resigned from our Board of Directors effective June 17, 2026 and the Arlington Entities have not designated any replacement directors in their place.

Moreover, the shareholder’s agreement provides that we renounce any interests or expectancy in being offered any business opportunities which the shareholder nominees, the Arlington Entities, or their affiliates conduct whether directly or indirectly, whether or not such business is competitive with or in the same or similar lines of business as us.

This renunciation does not extend to business opportunities invested in on the basis of confidential information received from us or our representatives.

The issuance or sale of shares of our common stock, or rights to acquire shares of our common stock, could depress the trading price of our common stock and the Notes.

We may conduct future offerings of common stock, preferred stock or other securities that are convertible into, or exercisable or exchangeable for, our common stock to finance our operations or fund acquisitions, or for other purposes.

In addition, we have shares reserved and available for issuance pursuant to our 2023 Employee Stock Purchase Plan and our Amended and Restated 2021 Equity Incentive Plan and issued 17,425,849 shares of common stock as consideration for the BlueHalo acquisition, substantially all of which are subject to a lock-up, or earlier if approved by us, but will be eligible for resale upon expiration of the applicable lock-up period.

Also, we issued 671,078 shares for the ESAero acquisition.

The Indenture for the Notes does not restrict our ability to issue additional equity securities in the future.

If we issue additional shares of our common stock or rights to acquire shares of our common stock, if any of our existing stockholders sell a substantial amount of our common stock, or if the market perceives that such issuances or sales may occur, then the trading price of our common stock and, accordingly, the Notes may significantly decline.

In addition, any issuance of additional shares of common stock will dilute the ownership interests of our existing common stockholders, including Noteholders who have received shares of our common stock upon conversion of their Notes.

The market price of our common stock may decline because of our acquisition activity .

The market price of our common stock may decline as a result of our acquisition activity if, among other things, we are unable to achieve the expected growth in revenue and earnings, or if the operational cost savings estimates in connection with the integration of acquired businesses are not realized.

The market price of our common stock may decline as a result of our acquisition activity if, among other things, we are unable to achieve the expected growth in revenue and earnings, potential impairment of goodwill and intangible assets from acquisitions, or if the operational cost savings estimates in connection with the integration of acquired businesses are not realized.

The market price of our common stock also may decline if we do not achieve the perceived benefits of the acquisitions as rapidly or to the extent anticipated by financial or industry analysts or if the effect of the acquisitions on our financial results is not consistent with the expectations of financial or industry analysts.

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● acquire complementary businesses or technologies;

● facility purchases and production capacity enhancement;

● otherwise respond to competitive pressures.

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We have obtained capital from the Credit Facilities noted above including the Term Loan Facility and Revolving Facility.

We cannot assure you that additional financing

will be available on terms favorable to us, or at all.

We cannot assure you that additional financing will be available on terms favorable to us, or at all.

Our current Credit Facilities contain, and future debt financing may contain, covenants or other provisions that limit our operational or financial flexibility.

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(i) program change management controls to ensure that program and data changes are identified, tested, authorized, and implemented appropriately;

(ii) user access controls to ensure appropriate segregation of duties and to adequately restrict user and privileged access to appropriate personnel.

Second, BlueHalo did not design and maintain an effective control environment commensurate with our financial reporting requirements.

Specifically, it did not maintain a sufficient complement of personnel with an appropriate degree of internal controls and accounting knowledge, experience, and training commensurate with its accounting and financial reporting requirements.

and (ii) user access controls to ensure appropriate segregation of duties and to adequately restrict user and privileged access to appropriate personnel.

Second, BlueHalo did not design and maintain an effective control environment commensurate with our financial reporting requirements as a public company.

Specifically, it did not maintain a sufficient complement of personnel with an appropriate degree of internal controls and accounting knowledge, experience, and training commensurate with its

accounting and financial reporting requirements.

The limited personnel resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in the finance and accounting functions.

Third, BlueHalo did not design and maintain effective monitoring activities of the design and operation of controls on a timely basis, taking necessary corrective action to ensure that controls continue to operate effectively and are modified for changes in conditions as appropriate.

Bringing BlueHalo into compliance with rules and regulations applicable to us as a public company and integrating BlueHalo into our current compliance and accounting system and disclosure controls and procedures is expected to increase our legal and financial compliance costs, make some activities more difficult, time consuming or costly and increase demand on our systems and resources.

Third, BlueHalo did not design and maintain effective monitoring activities of the design and operation of controls on a timely basis, or take necessary corrective action to ensure that controls continue to operate effectively and are modified for changes in conditions as appropriate.

Bringing BlueHalo into compliance with rules and regulations applicable to us as a public company and integrating BlueHalo into our current compliance and accounting system and disclosure controls and procedures has increased our legal and financial compliance costs and is expected to continue to do so, make some activities more difficult, time consuming or costly and increase demand on our systems and resources.

We cannot predict or estimate the amount of additional costs we may incur to bring BlueHalo into compliance with these requirements (including by remediating its outstanding material weaknesses) and we cannot guarantee the measures we take will be sufficient to satisfy our obligations as a public company.

Ineffective internal control over financial reporting could also cause investors to lose confidence in our

reported financial information, which would harm our business and likely have a negative effect on the trading price of shares of our common stock.

Ineffective internal control over financial reporting could also cause investors to lose confidence in our reported financial information, which would harm our business and likely have a negative effect on the trading price of shares of our common stock.

Furthermore, the need to establish the necessary corporate infrastructure to integrate BlueHalo may divert management’s attention from implementing our growth strategy, which could prevent us from improving our business, financial condition and results of operations.

Based on our assessment of our internal control over financial reporting as of April 30, 2026, we identified one material weakness remaining.

BlueHalo did not design and maintain effective IT general controls for certain information systems that are relevant to the preparation of BlueHalo’s financial reporting information that is included in our consolidated financial statements.

Specifically, BlueHalo did not design and maintain user access controls to ensure appropriate segregation of duties and to adequately restrict user and privileged access to appropriate personnel.

We have committed to a remediation plan to address the deficiencies and enhance the internal control environment and remediation efforts are ongoing.

We identified a material weakness in our internal control over financial reporting, and if we are unable to remediate this material weakness, or if we experience additional material weaknesses or other deficiencies in the future or otherwise fail to maintain an effective system of internal control, we may not be able to accurately and timely report our financial results.

In connection with the preparation of the Company’s consolidated financial statements as of and for the year ended April 30, 2026, the Company identified an error in the calculation of the carrying value used in the goodwill impairment analysis for the Space reporting unit.

The Company determined that this error originated from a newly identified material weakness related to the preparation and review of the goodwill impairment analysis.

Remediation efforts place a significant burden on management and add increased pressure to our financial resources and processes.

As a result, we may not be successful in making the improvements necessary to remediate the material weakness identified by management, be able to do so in a timely manner, or be able to identify and remediate additional control deficiencies, including material weaknesses, in the future.

Additionally, completion of remediation does not provide assurance that our remediation or other controls will continue to operate properly or remain adequate and we cannot assure you that we will not identify additional material weaknesses in our internal control over financial reporting in the future.

If we are unable to successfully remediate our existing material weakness or any future material weaknesses or other deficiencies in our internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within the time periods specified by the rules and forms of the SEC, could be adversely affected.

This failure could negatively affect the market price and trading liquidity of our common stock, cause investors to lose confidence in our reported financial information, subject us to civil and criminal investigations and penalties and generally materially and adversely impact our business and financial condition.

We have not paid any cash dividends on our common stock and do not anticipate paying any cash dividends in the foreseeable future.

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Although historically our operations have not been materially affected by inflation and we have been successful in adjusting prices to our customers to reflect changes in our material and labor costs, the rate of current inflation and resulting pressures on our costs and pricing could adversely impact our business and financial results.

Inflation can

adversely affect us by increasing our operating costs, including our materials, freight and labor costs, which are already under pressure due to supply chain constraints.

Inflation can adversely affect us by increasing our operating costs, including our materials, freight and labor costs, which are already under pressure due to supply chain constraints.

As interest rates rise to address inflation, such increases will also impact the base rates applicable in our credit arrangements and will result in borrowed funds becoming more expensive to us over time;

similar financing pressures from inflation also can have a negative impact on customers’ willingness to purchase our products in the same volumes and at the same rates as previously anticipated.

In a highly inflationary environment, we may be unable to raise the sales prices of our products at or above the rate of inflation, which could reduce our profit margins having a material adverse effect on our financial performance.

In a highly inflationary

environment, we may be unable to raise the sales prices of our products at or above the rate of inflation, which could reduce our profit margins having a material adverse effect on our financial performance.

Recession, financial and credit market disruptions may adversely affect us.

Likewise, if our suppliers face challenges in obtaining credit, selling their products, or otherwise in operating their businesses or remaining solvent, they may become unable to offer the materials we use to manufacture our products.

An economic or credit crisis could also have an impact on our ability to raise capital when needed.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors