Item 1B. Unresolved Staff Comments
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity
We face various cybersecurity threats as a prominent target, including denial-of-service attacks, ransomware, phishing, theft of intellectual property, and advanced persistent threats. As an aerospace and defense company providing advanced defense technologies and services to the U.S. and foreign governments, these threats are not just from low-level threat actors, but rise to the level of sophisticated threat actors from organized and funded adversaries, including groups affiliated with various nation states. Our customers, suppliers, subcontractors, and vendors also face similar threats. Cybersecurity incidents impacting us, or any of these third parties, could have a material adverse effect on our operations, financial condition, and results of operations. Given the cybersecurity risks we face, we believe we dedicate ample resources to addressing and mitigating our cyber risks.
Risk Management and Strategy
Our cybersecurity program is designed to identify, detect, protect against, respond to, and recover from cyber risks and incidents. Our cybersecurity program is part of our internal risk management processes, and we improve our cybersecurity practices as new threats and vulnerabilities emerge.
Our Chief Information Officer (“CIO”) and Chief Information Security Officer (“CISO”) / Vice President of Cybersecurity, both within our CIO organization, are responsible for protecting the company from cybersecurity threats. Incidents are triaged, contained and remediated pursuant to our Incident Response Plan and playbooks. This process also includes leadership and members of our IT, Legal, Security, Marketing and Communications, and other departments responsible for supporting the technologies and processes to protect against, detect, contain, mitigate, and recover from cybersecurity incidents.
Our cybersecurity team proactively hunts for cyber threats and vulnerabilities in our networks and information systems as part of our cyber risk management program. This includes monitoring our networks and systems for indicators of compromise (“IOCs”), active intrusion attempts, and other suspicious activity, including insider threat risks. The Security Operations Center team evaluates and assigns severity levels to cybersecurity incidents and, based on the severity, escalates and engages incident response teams to respond to and mitigate the risks. The cybersecurity team stays apprised of existing and emerging cybersecurity threats through commercial threat intelligence feeds and by partnering and data sharing with third parties such as the U.S. government, law enforcement agencies, customers, and other Defense Industrial Base (“DIB”) participants. We also engage third parties to conduct evaluations of our cybersecurity controls by performing penetration testing and controlled cybersecurity framework audits. We also review the cybersecurity practices of our third-party service providers and suppliers .
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We require our employees to take cybersecurity-related training regularly to promote awareness of how to detect, report, and respond to cybersecurity threats. Employees with certain roles and responsibilities are also assigned cyber training for their specific functions. We also maintain an Insider Threat program, headed by our CISO, to identify, assess, and deal with potential risks from within our company, including cybersecurity risks.
We have aligned our cybersecurity program to the Cybersecurity Maturity Model Certification (“CMMC”) program. Given the diverse nature of our U.S. business and foreign business, other frameworks and requirements may also be used and may impose compliance demands beyond those currently anticipated. We are also subject to numerous legal requirements, including those governing privacy and data protection requirements and others pursuant to the Federal Acquisition Regulation (“FAR”), agency supplements to the FAR, such as the Defense Federal Acquisition Regulation Supplement (“DFARS”), other regulatory requirements imposing controls for protecting information, including U.S. government Controlled Unclassified Information (“CUI”), International Traffic in Arms Regulations (“ITAR”), as well as requirements for reporting cybersecurity incidents to the relevant regulators.
If we fail to achieve or maintain CMMC certification ahead of contract awards from the DoD, or if we fail to achieve the level required for a particular contract, we will be unable to bid on new contracts or follow-on efforts containing CMMC clauses, which could adversely impact the success of our operations. Due to the evolving nature of CMMC and other regulatory requirements, changing customer guidance on data designations, acquisitions, unexpected environments, and the potential for new cybersecurity requirements, there is a risk that we may not meet these new requirements and be unable to bid on certain contracts or be eligible for renewals of existing contracts. Government or business decisions could change which areas of the business need to be compliant, which can incur costs or delays in eligibility for the associated contracts. Failure to adhere to cybersecurity requirements during the performance of government contracts could also subject us to liability for such non-compliance. Additionally, our subcontractors and certain vendors may need to obtain CMMC or other certifications, and we may be negatively impacted if they are not compliant with these requirements.
Governance
Our CIO and CISO / VP of Cybersecurity , each with 20+ years of related experience, are responsible for the day-to-day management of our cybersecurity program and cybersecurity risks. Our CISO and team are primarily responsible for our overall cybersecurity risk management program and supervise both internal and external resources to identify, protect against, detect, respond to, and recover from cybersecurity risks, threats, and incidents .
We have monthly meetings of our internal Configuration Control Board to help communicate and manage changes to our enterprise cybersecurity strategy and ensure it is implemented across the business, as well as to maintain awareness of events and changes occurring throughout the business.
The CISO / VP of Cybersecurity reports cybersecurity incidents to members of the company’s senior management, including the CIO, Chief Executive Officer (“CEO”), and the Board of Directors based on the severity and type of the incident to ensure proper external reporting is completed thoroughly and timely.
Pursuant to its charter, the Cybersecurity Committee of our Board of Directors is responsible for reviewing, discussing, and making recommendations to the full board regarding cybersecurity matters. Our CIO and CISO / VP of Cybersecurity provide presentations to the Cybersecurity Committee on our cybersecurity program at each of the committee’s regularly scheduled quarterly meetings. These briefings include assessments of the cyber risk and threats landscape, updates on incidents, policies and procedures, and our investments and plans in cybersecurity risk mitigation and governance. The Cybersecurity Committee also meets with the CIO and CISO to discuss various aspects of our cybersecurity program between regular meetings. All members of the Board of Directors are invited to attend all meetings of the Cybersecurity Committee, and the committee regularly briefs the entire board regarding its oversight of our cybersecurity program.
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Cybersecurity Threats
We have experienced cybersecurity incidents in the past and will experience cybersecurity incidents in the future. Prior cybersecurity incidents have not materially affected , or are reasonably likely to affect, our business strategy, results of operations or financial condition; however, there is no guarantee that a future cybersecurity incident would not have a material adverse effect on such items. While our cybersecurity program is designed to mitigate cybersecurity risks, we cannot eliminate all risks from cybersecurity threats. See Item 1A. Risk Factors for more information on our cybersecurity risks.
Item 2. Propertie s.
As of April 30, 2026, our facilities are primarily leased. Our corporate headquarters are located in Arlington, Virginia where we currently occupy approximately 7,400 square feet under an amended lease agreement expiring in August 2030. We also lease (i) a total of approximately 280,000 square feet of space in Simi Valley, California, which leases expire between 2027 and 2030, (ii) a total of approximately 200,000 square feet of space in Albuquerque, New Mexico, which leases expire between 2028 and 2034, (iii) a total of approximately 150,000 square feet of space in Huntsville, Alabama, which leases expire between 2026 and 2029, and (iv) approximately 150,000 square feet of space in Moorpark, California, for which the lease expires in 2030. These locations are used for administration and to design, engineer, test and manufacture, and (v) other facilities in California, Maryland, Florida, Virginia, Pennsylvania, Kansas, Colorado, Minnesota, Oklahoma, Texas and Ohio. We have international locations in Hampton Bishop, United Kingdom, used for business development and program management support, and Stuttgart, Germany, which facilities are used for administration, research and development, logistics, testing and manufacturing of UGV products.
As of April 30, 2026, our business segments of AxS and SCDE had significant operations at the following locations listed alphabetically:
● AxS: Centreville, VA; Huntsville, AL; Lawrence, KS; Leesburg, VA; Moorpark, CA; Petaluma, CA; ; Pottstown, PA; San Luis Obispo, CA; Simi Valley, CA; Sunrise, FL; Stuttgart, Germany.
● SCDE: Albuquerque, NM; Annapolis Junction, MD; Dayton, OH; Herndon, VA; Huntsville, AL; Germantown, MD.
● Corporate: Arlington, VA; Herndon, VA and Simi Valley, CA.
Item 3. Legal Proceeding s.
On May 26, 2026, a securities class action complaint was filed in the U.S. District Court for the Eastern District of Virginia by Eric Norrell naming AeroVironment; Wahid Nawabi, our President and CEO; Kevin McDonnell, our former Executive Vice President and Chief Financial Officer; and Mary Clum, President of our Space, Cyber & Directed Energy segment, as defendants. See Norell v. AeroVironment, Inc., No. 1:26-cv-01429 (E.D. Va.). The complaint asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, claiming that the defendants made false and materially misleading statements regarding our work for the U.S. Space Force’s Satellite Communication Augmentation Resource (“SCAR”) program. The plaintiff seeks to represent a proposed class of all persons who purchased or otherwise acquired our common stock during the period June 25, 2025 through March 10, 2026. The complaint seeks a jury trial and unspecified compensatory damages, interest, and attorneys’ fees and other costs.
On August 9, 2021, a former employee filed a class action complaint against AeroVironment in California Superior Court in Los Angeles, California alleging various claims pursuant to the California Labor Code related to wages, meal breaks, overtime, unreimbursed business expenses and other recordkeeping matters. The complaint seeks a jury trial and payment of various alleged unpaid wages, penalties, interest and attorneys’ fees in unspecified amounts. We filed our answer on December 16, 2021. The parties participated in a mediation session on May 8, 2025, but did not reach a resolution during the session.
On March 29, 2024, a former employee filed a complaint against AeroVironment in the Ventura County Superior Court in California, alleging violations of the California Labor Code related to wages, meal breaks, overtime,
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unreimbursed business expenses and other recordkeeping matters and seeking penalties recoverable under California Labor Code section 2698, et. seq., Private Attorney General Act of 2004 (“PAGA”) and all other remedies available under PAGA. The complaint seeks civil penalties on behalf of the plaintiff and similarly situations persons pursuant to PAGA. We filed our answer on June 20, 2024. The parties stipulated to stay this PAGA case ahead of the mediation in the class action matter listed in the immediately preceding paragraph above.
On June 11, 2025, the parties reached an agreement in principle to settle all claims in the class action complaint and PAGA complaint pursuant to a mediator’s proposal made on such a date by the mediator from the May 8, 2025 class action mediation session. A court must approve the terms of the settlement before we will pay any amounts pursuant to the settlement. The estimated settlement was accrued in our consolidated statements of income(loss) for the year ended April 30, 2025. We are currently working with the plaintiff to seek preliminary approval of the settlement.
We are subject to lawsuits, government investigations, audits and other legal proceedings from time to time in the ordinary course of our business. It is not possible to predict the outcome of any legal proceeding with any certainty. The outcome or costs we incur in connection with a legal proceeding could adversely impact our operating results and financial position.
Item 4. Mine Safety Disclosur e.
Not applicable.
PART II