What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-06-25 compared with 2024-06-27 · 312 added, 471 removed, 1216 unchanged (39% of the section changed)

32 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill — Refer to Note 1 and Note 6 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value.

The Company estimates the fair value by weighting the results from the income approach and the market approach.

The income approach incorporates the use of projected financial information and a discount rate that are developed using market participant-based assumptions.

The cash-flow projections are based on seven-year financial forecasts developed by management that include revenue projections, capital spending trends, and investment in working

capital to support anticipated revenue growth.

The selected discount rate considers the risk and nature of the respective reporting unit’s cash flows, and the rates of return market participants would require to invest their capital in its reporting units.

The market approach utilizes the guideline public company and guideline transaction methods.

As of April 30, 2024, the Medium Uncrewed Aircraft Systems (MUAS) reporting unit has a goodwill balance of $135,800,000.

The fair value of the MUAS reporting unit exceeded the carrying value by 10% as of January 28, 2024, the date of the most recent annual goodwill impairment test.

The MUAS reporting unit is considered at an increased risk of failing future quantitative goodwill impairment tests.

We identified goodwill for MUAS as a critical audit matter because of the significant judgments made by management to estimate the fair value of the MUAS reporting unit and the difference between its fair value and carrying value.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to future revenue projections.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the expected amount and timing of future revenue projections used to estimate the fair value of the MUAS reporting unit included the following, among others:

● We tested the effectiveness of management’s controls over their goodwill impairment evaluation, including those over the determination of the fair value of the MUAS reporting unit, such as controls related to management’s review of forecasts of future revenues.

● We inquired of appropriate individuals, both within and outside of finance, regarding the revenue projections.

● We assessed the reasonableness of management’s forecasts of future revenues by comparing the projections to historical results, certain peer companies, third-party industry forecasts, contractual agreements and internal communications to management and the Company’s Board of Directors.

● With the assistance of our fair value specialists, we compared applicable industry forecasted long-term revenue growth rates to management’s projected revenues used within the valuation model.

● We evaluated management’s ability to estimate future revenues by comparing actual revenues to management’s historical forecasts.

Business Acquisitions — Refer to Note 1 and Note 21 to the financial statements

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition — Contract Estimates on Select Contracts - Refer to Note 1 to the financial statements

Critical Audit Matter Description

On September 15, 2023, the Company closed its acquisition of Tomahawk Robotics, Inc.

Pursuant to the merger agreement, the Company acquired 100% of Tomahawk equity for total consideration of $134,367,000, net of cash acquired.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

Accordingly, the purchase price was allocated to the fair value of the assets acquired and liabilities assumed, resulting in technology of $39,000,000, customer relationship of $4,800,000, trademarks of $1,600,000 and goodwill of $95,414,000.

Management estimated the fair value of the intangible assets using discounted cash flow analyses, which were based on the Company’s preliminary estimates of future sales, earnings and cash flows after considering such factors as general market conditions, anticipated customer demand, changes in working capital, long term business plans and recent operating performance.

Determining the fair value of the intangible assets acquired required management to make significant judgments including the amount and timing of expected future cash flows, long term growth rates and discount rates.

We identified the assumptions related to estimating the amount and timing of expected future revenues to be a critical audit matter given the inherent judgment involved in estimating these amounts.

Performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

As further described in Note 1 to the financial statements, for performance obligations satisfied over time, revenue is generally recognized using costs incurred to date relative to total estimated costs at completion to measure progress.

Contract estimates are based on various assumptions to project the outcome of future events that may span several years.

Contract costs include labor, materials, subcontractors’ costs, other direct costs, and indirect costs applicable on government and commercial contracts.

Additionally, the nature of the Company’s contracts gives rise to several types of

variable consideration, including undefinitized contract actions and unpriced change orders, which are within the scope of ASC 606 with final contract values to be negotiated, penalty fees and incentive awards generally for late delivery and early delivery, respectively.

The Company regularly reviews and updates its contract-related estimates.

Changes in cumulative revenue estimates, due to changes in the estimated transaction price or cost estimates including definitization of contracts, are recorded using a cumulative catch-up adjustment in the period identified.

We analyzed the Company’s contract portfolio to identify contracts that we believe had elevated financial or performance risk.

For those contracts identified, the evaluation of one or more contract estimate assumptions used to recognize revenue required extensive audit effort due to the complexity of the contracts and a high degree of auditor judgments.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the expected amount and timing of future revenue used to estimate the fair value of the intangible assets acquired included the following, among others:

● We tested the effectiveness of management’s controls over the valuation of intangibles, including management’s controls over the estimates of the amount and timing of expected future revenues.

● We assessed the reasonableness of management’s forecasts of future revenues by performing inquiries of appropriate individuals outside of the accounting organization, comparing the projections to historical results, contractual agreements, third-party industry forecasts, and internal communications to management and the Company’s Board of Directors.

● With the assistance of our fair value specialists, we compared applicable industry forecasted long-term revenue growth rates to management’s projected revenues used within the valuation model.

● We evaluated management’s ability to estimate future revenues by comparing actual revenues to estimates assumed in the valuation model.

Our audit procedures related to the contract estimates for these contracts identified included the following, among others:

● We tested the design and operating effectiveness of management’s controls over the significant assumptions and judgments underlying the contract estimates associated with these contracts.

● Based on the risk characteristic identified on an individual contract, we evaluated certain contract estimates by:

o Reading the underlying contract and any amendments or modifications to understand the contractual requirements and performance obligations.

o Assessing the reasonableness of the assumed variable consideration based on contract terms, relevant historical trends, and performing inquiries with the Company’s program and business management regarding their basis of estimates including work plans, engineering specifications, program labor and suppliers, actual performance to date, and any recent correspondence between the company and the customer.

o Evaluating the appropriateness of the timing and amounts of changes in select contract estimates by obtaining supporting documentation.

o Assessing the completeness and accuracy of information utilized to develop contract estimates.

o Testing the mathematical accuracy of management’s calculation of revenue recognized during the period for the selected contracts, and the cumulative catch-up adjustment, if applicable.

/s/ Deloitte & Touche LLP

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Inventories, net

Income taxes receivable

Prepaid expenses and other current assets

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Interest expense, net

Other expense, net

Sale of ownership in HAPSMobile Inc.

joint venture

Other income (expense), net

Income (loss) before income taxes

Provision for (benefit from) income taxes

Equity method investment (loss) income, net of tax

Equity method investment income (loss), net of tax

Net income (loss)

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Net income (loss) attributable to AeroVironment, Inc.

Net income (loss) per share attributable to AeroVironment, Inc.

Net income (loss) per share

Weighted-average shares outstanding:

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Other comprehensive income (loss):

Unrealized gain (loss) on available-for-sale investments, net of deferred tax expense of $ 0 , $ 0 and $ 8 for the fiscal years ended April 30, 2024, 2023 and 2022, respectively

Unrealized gain on available-for-sale investments, net of deferred tax expense of $ 0 for the fiscal years ended April 30, 2023

Change in foreign currency translation adjustments

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Net (loss) income

Unrealized loss on investments

Unrealized gain on investments

Foreign currency translation

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Restricted stock awards forfeited

Business acquisition

Tax withholding payment related to net share settlement of equity awards

Shares issued, net of issuance costs

Deconsolidation of previously controlled subsidiary

Stock-based compensation

Balance at April 30, 2023

Net (loss) income

Unrealized gain on investments

Foreign currency translation

Stock options exercised

Restricted stock awards

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Shares issued, net of issuance costs

Deconsolidation of previously controlled subsidiary

Issuance of common stock for business acquisition

Stock based compensation

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Foreign currency translation

Employee stock purchase plan contributions

Stock options exercised

Restricted stock awards

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Tax withholding payment related to net share settlement of equity awards

Shares issued, net of issuance costs

Issuance of common stock for business acquisition

Stock based compensation

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Net income (loss)

Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Depreciation and amortization

Impairment of goodwill

Loss (gain) from equity method investments

(Gain) loss from equity method investments

Loss on deconsolidation of previously controlled subsidiary

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Loss on foreign currency transactions

Unrealized loss on available-for-sale equity securities, net

Unrealized (gain) loss on available-for-sale equity securities, net

Deferred income taxes

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Other liabilities

Net cash provided by (used in) operating activities

Net cash (used in) provided by operating activities

Investing activities

Acquisition of property and equipment

Equity method investments

Acquisition of property and equipment and capitalized software to be sold

Contributions in equity method investments

Equity security investments

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Acquisition of intangibles

Proceeds from sale of ownership in equity method investment

Proceeds from loan repayment

Proceeds from deconsolidation of previously controlled subsidiary, net of cash deconsolidated

Redemptions of available-for-sale investments

Purchases of available-for-sale investments

Purchase of available-for-sale investments

Net cash used in investing activities

Financing activities

Proceeds from revolving credit facility

Principal payments of term loan

Principal payments of revolver

Holdback and retention payments for business acquisition

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Payment of debt issuance costs

Payment of equity issuance costs

Tax withholding payment related to net settlement of equity awards

Employee stock purchase plan contributions

Exercise of stock options

1 unchanged sentence

Effects of currency translation on cash and cash equivalents

Net (decrease) increase in cash, cash equivalents, and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental disclosures of cash flow information

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Issuance of common stock for business acquisition

Unrealized gain (loss) on available-for-sale investments, net of deferred tax expense of $ 0 , $ 0 and $ 8 for the fiscal years ended April 30, 2024, 2023 and 2022, respectively

Unrealized gain on available-for-sale investments, net of deferred tax expense of $ 0 for the fiscal years ended April 30, 2023

Change in foreign currency translation adjustments

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and its wholly-owned subsidiaries Arcturus UAV, Inc.

(“Arcturus”), Telerob Gesellschaft für Fernhantierungstechnik mbH (“Telerob”) and Tomahawk Robotics, Inc.

(“Tomahawk”) (collectively referred to herein as the “Company”).

On May 3, 2021, the Company closed its acquisition of Telerob pursuant to the Share Purchase Agreement (the “Telerob Purchase Agreement”) with Unmanned Systems Investments GmbH, a German limited liability company incorporated under the laws of Germany (the “Telerob Seller”), and each of the unit holders of the Seller (collectively, the “Telerob Shareholders”), to purchase 100 % of the issued and outstanding shares of Telerob Seller’s wholly-owned subsidiary Telerob GmbH (the “Telerob Acquisition”).

Telerob has been incorporated into the Uncrewed Systems (“UxS”) segment.

The assets, liabilities and operating results of Telerob GmbH have been included in the Company’s consolidated financial statements.

Refer to Note 21—Business Acquisitions for further details.

(“Arcturus”), Telerob Gesellschaft für Fernhantierungstechnik mbH (“Telerob”), Tomahawk Robotics, Inc.

(“Tomahawk”) and Archangel Merger Sub LLC (collectively referred to herein as the “Company”).

On August 17, 2022, the Company purchased certain assets of, and assumed certain liabilities of Planck Aerosystems, Inc.

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Refer to Note 21—Business Acquisitions for further details.

On November 13, 2024, the Company formed Archangel Merger Sub LLC, a Delaware limited liability company and a direct wholly owned subsidiary of the Company (“Merger Sub”), for the purpose of the announced acquisition of BlueHalo Financing Topco, LLC (“BlueHalo”).

On May 1, 2025, the Company completed the acquisition of BlueHalo.

Refer to Note 25—Subsequent Events for further details.

Investments in Companies Accounted for Using the Equity or Cost Method

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When an investment accounted for using the equity method issues its own shares, the subsequent reduction in the Company’s proportionate interest in the investee is reflected in equity as an adjustment to paid-in-capital.

Company evaluates its investments in companies accounted for by the equity or cost method for impairment when there is evidence or indicators that a decrease in value may be other than temporary.

In December 2017, the Company and SoftBank Corp.

(“SoftBank”) formed a joint venture, HAPSMobile Inc.

(“HAPSMobile”).

In March 2022, the Company sold its 7 % share of HAPSMobile to SoftBank.

Following the sale, SoftBank owns 100 % of HAPSMobile.

Prior to the sale, as the Company had the ability to exercise significant influence over the operating and financial policies of HAPSMobile, the Company’s investment was accounted as an equity method investment.

The Company had presented its proportion of HAPSMobile’s net loss in equity method investment (loss) income, net of tax in the consolidated statements of income (loss).

The carrying value of the investment in HAPSMobile was recorded in other assets.

Refer to Note 8—Investments in Companies Accounted for Using the Equity Method for further details.

The Company evaluates its investments in companies accounted for by the equity or cost method for impairment when there is evidence or indicators that a decrease in value may be other than temporary.

In July 2019, the Company made its initial capital contribution to a limited partnership fund focusing on highly relevant technologies and start-up companies serving defense and industrial markets.

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Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance.

The Company’s CODM, who is the Chief Executive Officer, makes operating decisions, assesses performance and makes resource allocation decisions, including the focus of research and development (“R&D”) and other significant expenses, leading to decisions related to resource allocations in relation to profit and loss.

Accordingly, the Company identifies three reportable segments.

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Certain prior year amounts have been reclassified to conform to the current year presentation.

Specifically, the Company’s limit on executive compensation has been reclassified out of changes permanent items in the reconciliation of income tax expense (benefit) for all periods presented.

Also, the Company’s inventory reserve has been reclassified out of allowances, reserves and other in the significant components of the Company’s deferred income tax assets and liabilities for all periods presented.

Specifically, the Company’s segment disclosures for prior periods have been recast to conform to the adoption of Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

Cash Equivalents

2 unchanged sentences

Treasury bills.

Restricted Cash

The Company classifies cash accounts which are not available for general use as restricted cash.

The Company had no restricted cash as of April 30, 2024 or 2023, respectively.

The Company’s investments are accounted for as available-for-sale and are reported at fair value.

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Long-Lived Assets

Property and equipment are carried at cost.

Property, plant and equipment are carried at cost.

Depreciation of property and equipment, including amortization of leasehold improvements, are provided using the straight-line method over the following estimated useful lives:

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Amortization expense related to cloud computing arrangements for the fiscal years ended April 30, 2025, 2024 and 2023 was $ 2,541,000 , $ 1,444,000 and $ 560,000 .

Costs of Software to Be Sold

Costs incurred for internally developed and produced or purchased software to be sold, leased or marketed once the software has established technological feasibility are capitalized and recorded on the consolidated balance sheets in other assets.

The amounts capitalized are amortized according to the greater of a straight-line basis over the estimated useful life of the service arrangement, which generally range from two to five years , or the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product.

As of April 30, 2025 and 2024, capitalized costs of software to be sold, leased or marketed was $ 3,269,000 and $ 0 , respectively, net of accumulated amortization of $ 460,000 and $ 0 , respectively.

Intangibles Assets — Acquired in Business Combinations

The Company performs valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and allocates the purchase price of the acquired business to the respective net tangible and intangible assets.

Acquired intangible assets include technology, backlog, in-process research and development, customer relationships, trademarks and tradenames, and non-compete agreements.

Acquired intangible assets include technology, backlog, licenses, in-process research and development,

customer relationships, trademarks and tradenames, and non-compete agreements.

The Company determines the appropriate useful life by performing an analysis of expected cash flows based on historical experience of the acquired businesses.

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The original estimate of an asset’s useful life and the impact of an event or circumstance on either an asset’s useful life or carrying value involve significant judgment.

As part of the Company’s annual goodwill impairment and identifiable asset test during the fiscal quarter ended April 30, 2025, a decrease in forecasted results of the Uncrewed Ground vehicles (“UGV”) reporting unit resulted in accelerated intangible amortization expenses of $ 4,258,000 , which was recorded during the three months ended April 30, 2025.

Due to the closure of all the Company’s MUAS COCO sites, the Company revised the estimated useful life for the MUAS customer relationships which resulted in accelerated intangible amortization expenses of $ 34,149,000 during the fiscal year ended April 30, 2023.

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Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets.

Goodwill is tested at the reporting unit level for impairment annually during the fourth quarter of the Company’s fiscal year or when events or circumstances change in a manner that indicates goodwill might be impaired.

Goodwill is assigned to the reporting units based on specific identification.

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 the Company’s use of the acquired assets or the strategy for the Company’s overall business, significant negative industry or economic trends or significant underperformance relative to projected future results of operations.

The Company tests goodwill for impairment annually during the fourth quarter of the fiscal year or when events or circumstances change in a manner that indicates goodwill 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 the Company’s overall business, significant negative industry or economic trends or significant underperformance relative to projected future results of operations.

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value.

For the impairment test, the Company first assesses qualitative factors,

macroeconomic conditions, industry and market considerations, triggering events, cost factors, and overall financial performance, to determine whether it is necessary to perform a quantitative goodwill impairment test.

Alternatively, the Company may bypass the qualitative assessment for some or all of its reporting units and apply the quantitative impairment test.

For the impairment test, we first assess qualitative factors, macroeconomic conditions, industry and market considerations, triggering events, cost factors, and overall financial performance, to determine whether it is necessary to perform a quantitative goodwill impairment test.

Alternatively, we may bypass the qualitative assessment for some or all of its reporting units and apply the quantitative impairment test.

If determined to be necessary, the quantitative impairment test shall be used to identify goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any).

For the quantitative impairment test, the Company estimates the fair value by weighting the results from the income approach and the market approach.

These valuation approaches consider a number of factors that include, but are not limited to, prospective financial information, growth rates, terminal value, discount rates, and comparable multiples from publicly traded companies in the Company’s industry and require the Company to make certain assumptions and estimates regarding industry economic factors and the future profitability of its business.

When performing the income approach for each reporting unit, the Company incorporates the use of projected financial information and a discount rate that are developed using market participant based assumptions.

The cash flow projections are based on seven-year financial forecasts developed by management that include revenue projections, capital spending trends, and investment in working capital to support anticipated revenue growth, which are updated at least annually and reviewed by management.

The selected discount rate considers the risk and nature of the respective reporting unit’s cash flows and the rates of return market participants would require to invest their capital in its reporting units.

When performing the market approach for each reporting unit, the Company utilizes the guideline public company method and the guideline transaction method.

The guideline public company method incorporates revenue and earnings multiples from publicly traded companies with operations and other characteristics similar to each reporting unit.

The selected multiples consider each reporting unit’s relative growth, profitability, size, and risk relative to the selected publicly traded companies.

The guideline transaction method incorporates implied multiples based on transactions from publicly traded companies with similar characteristics to each reporting unit.

Subsequent to the performance of the Company’s annual goodwill impairment test, in May 2023, a trigger event was identified that indicated that the carrying value of the MUAS reporting unit exceeded its fair value.

Specifically, the Company received notification that it was not down selected for a U.S.

For the quantitative impairment test we estimate the fair value by weighting the results from the income approach and the market approach.

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.

These changes in estimates resulted in the recognition of a goodwill impairment charge of $ 18,359,000 in the UGV reporting unit.

Subsequent to the performance of our annual goodwill impairment test for the fiscal year ended April 30, 2023, 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, the Company updated its estimates of long-term future cash flows to reflect lower revenue and EBITDA growth rate expectations used in the valuation of the MUAS reporting unit.

These changes in estimates resulted in the recognition of a goodwill impairment charge of $ 156,017,000 in the MUAS reporting unit.

The Company determined that it was more likely than not that the fair value of the Company’s other reporting units were more than their carrying values as of the annual goodwill impairment test date.

The estimated fair value of the MUAS reporting unit does not substantially exceed its carrying value due to the impairment recorded during the fourth quarter ended April 30, 2023, resulting in carrying value being equal to estimated fair value.

The fair value of the MUAS reporting unit exceeded the carrying value by 10 % as of January 28, 2024, the date of the most recent annual goodwill impairment test.

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.

Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding future plans, as well as industry, economic, and regulatory conditions.

These assumptions and estimates include estimated future annual net cash flows, income tax rates, discount rates, growth rates, and other market factors.

Estimated future annual net cash flows based in part upon the Company’s ability to obtain contracts from the U.S.

DoD and foreign allied nations and negotiate the estimated pricing are considered the most significant, sensitive assumptions.

If current expectations of future growth rates and margins are not met, if market factors outside of the Company’s control, such as discount rates, income tax rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to long-term operating plans, then MUAS may become impaired in the future.

Accordingly, the MUAS reporting unit is considered at an increased risk of failing future quantitative goodwill impairment tests.

During the most recent annual impairment test during the fourth quarter of fiscal year 2024, the estimated fair value of all reporting units, other than MUAS, substantially exceeded their carrying value.

The estimates and assumptions used to determine the fair value of the Company’s reporting units are highly subjective in nature.

As a result, we updated our estimates of long-term future cash flows to reflect lower revenue and EBITDA growth rate expectations used in the valuation of the MUAS reporting unit.

These changes in estimates, resulted in the recognition of a goodwill impairment charge of $ 156,017,000 in the MUAS reporting unit recorded during the fiscal year ended April 30, 2023.

As of April 30, 2025, our MUAS reporting unit has a goodwill balance of $ 135,773,000 .

During the most recent annual impairment test during the fourth quarter of fiscal year 2025, the estimated fair value of all reporting units, other than UGV, substantially exceeded their carrying value.

The estimates and assumptions used to determine the fair value of our reporting units are highly subjective in nature.

Actual results can be materially different from the estimates and assumptions.

If actual market conditions are less favorable than those projected by the industry or by us, or if events occur or circumstances change that would reduce the estimated fair value of the Company’s indefinite-lived intangible assets below the carrying amounts, the Company could recognize future impairment charges, the amount of which could be material.

If actual market conditions are less favorable than those projected by the industry or by us, or if events occur or circumstances change that would reduce the estimated fair value of our indefinite-lived intangible assets below the carrying amounts, we could recognize future impairment charges, the amount of which could be material.

Product Warranty

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Product warranty reserves are recorded in other current liabilities.

Warranties are provided on certain contracts but do not typically provide for services beyond standard assurances.

As such, warranties are in general not considered to be separate performance obligations.

Accrued Sales Commissions

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Where applicable, associated interest and penalties are also recorded.

The Company records a deferred tax asset for acquisition-related costs incurred

for an acquisition that closes in a subsequent reporting period.

The Company reevaluates the deferred tax asset in the period the acquisition closes and reverses the deferred tax asset to tax expense for deductible expenses.

Customer Advances

8 unchanged sentences

A performance obligation is a promise in a contract to transfer distinct goods or services to a customer, and it is the unit of account in ASC 606.

A contract’s transaction price is allocated to each distinct performance obligation and

revenue is recognized when each performance obligation under the terms of a contract is satisfied.

A contract’s transaction price is allocated to each distinct performance obligation and revenue is recognized when each performance obligation under the terms of a contract is satisfied.

Revenue is measured at the amount of consideration the Company expects to receive in exchange for transferring goods or providing services.

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The contractual right to payment is generally supported by termination for convenience clauses that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit, and take control of any work in process.

Revenue for Loitering Munitions Systems (“LMS”) product deliveries, customization of uncrewed ground vehicles (“UGV”) transport vehicles and customer-funded R&D contracts is recognized over time as costs are incurred.

Revenue for Loitering Munitions Systems (“LMS”) product deliveries, customization of UGV transport vehicles and customer-funded R&D contracts is recognized over time as costs are incurred.

Contract services revenue is composed of revenue recognized on contracts for the provision of services, including repairs and maintenance, training, engineering design, development and prototyping activities and technical support services.

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On April 30, 2025, the Company had approximately $ 726,627,000 of remaining performance obligations under contracts with its customers, which the Company also refers to as backlog.

The Company currently expects to recognize approximately 90 % of the remaining performance obligations as revenue in fiscal 2025 and an additional 10 % in fiscal 2026 .

The Company currently expects to recognize approximately 90 % of the remaining performance obligations as revenue in fiscal 2026 , an additional 9 % in fiscal 2027 and the remaining thereafter .

The Company collects sales, value add, and other taxes concurrent with revenue producing activities, which are excluded from revenue when they are both imposed on a specific transaction and collected from a customer.

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For long-term contracts, the Company estimates the total expected costs to complete the contract and recognizes revenue based on the percentage of costs incurred at period end.

Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying the Company’s performance obligations.

Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.

Contract costs include labor, materials, subcontractors’ costs, other direct costs, and indirect costs applicable on government and commercial contracts.

Contract estimates are based on various assumptions to project the outcome of future events that may span several years.

These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, the performance of subcontractors, and the availability and timing of funding from the customer.

The nature of the Company’s contracts gives rise to several types of variable consideration, including undefinitized contract actions which are within the scope of ASC 606 with final contract values to be negotiated, penalty fees and incentive awards generally for late delivery and early delivery, respectively.

The nature of the Company’s contracts gives rise to several types of variable consideration, including undefinitized contract actions and unpriced change orders, which are within the scope of ASC 606 with final contract values to be negotiated, penalty fees and incentive awards generally for late delivery and early delivery, respectively.

The Company generally estimates such variable consideration as the most likely amount.

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In the period undefinitized contract actions become definitized, a cumulative catch-up adjustment is recorded to reflect the final consideration, which could have a material positive or negative impact.

If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the total loss in the quarter it is identified, and it is recorded in other current liabilities.

In the period undefinitized contract actions or unpriced change orders become definitized, a cumulative catch-up adjustment is recorded to reflect the final consideration, which could have a material positive or negative impact.

If at any time the estimate of contract profitability indicates an anticipated loss on the contract and the contract falls under the scope of onerous contract guidance, contracts for which specifications are provided by the customer for the construction of facilities or the production of goods or the provision of related services, the Company recognizes the total loss in the quarter it is identified, and it is recorded in other current liabilities.

The balance of forward loss reserves as of April 30, 2025 and April 30, 2024 was $ 104,000 and $ 374,000 , respectively.

The Company recorded the forward loss reserves as the total estimated costs to complete the contracts are in excess of the total remaining consideration of the contracts.

The Company records forward loss reserves when the total estimated costs to complete the contracts are in excess of the total remaining consideration of the contracts.

No adjustment on the forward loss reserve for any one contract was material to the Company’s consolidated financial statements for the fiscal years ended April 30, 2025, 2024 or 2023.

The impact of adjustments in contract estimates on the Company’s operating earnings can be reflected in either operating costs and expenses or revenue.

The aggregate impact of adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was an increase to revenue of $ 5,408,000 for the year ended April 30, 2024 and not significant for the years ended April 30, 2023 or 2022.

During the year ended April 30, 2024, the Company revised estimates to complete two LMS contracts.

The aggregate impact of these adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was an increase to revenue of approximately $ 2,672,000 .

During the years ended April 30, 2023 and 2022, the Company revised its estimates of the total expected costs to complete a LMS contract.

The aggregate impact of these adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was a decrease to revenue of approximately $ 1,898,000 and $ 1,124,000 , respectively.

The aggregate impact of adjustments in contract estimates on revenue related to

performance obligations satisfied or partially satisfied in previous periods was an increase to revenue of $ 6,002,000 and $ 5,408,000 for the years ended April 30, 2025 and 2024, respectively, and not significant for the year ended April 30, 2023.

During the year ended April 30, 2025, the Company definitized four LMS undefinitized contract actions, which resulted in a cumulative catch-up revenue adjustment of $ 9,870,000 increase to revenue, and eight LMS unpriced change orders, which resulted in a cumulative catch-up revenue adjustment of $ 2,177,000 increase to revenue.

The Company also revised estimates of the total expected costs to complete contracts, including one LMS contract which decreased revenue by approximately $ 2,874,000 .

During the year ended April 30, 2024, the Company revised estimates of the total expected costs to complete contracts, including two LMS contracts which increased revenue by approximately $ 2,672,000 .

During the year ended April 30, 2023, the Company revised its estimates of the total expected costs to complete contracts, including one LMS contract which decreased revenue by approximately $ 1,898,000 .

Revenue by Category

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However, the Company sometimes receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities recorded in customer advances on the consolidated balance sheets.

Contract liabilities are not a significant financing component as they are generally utilized to pay for contract costs

within a one-year period or are used to ensure the customer meets contractual requirements.

Contract liabilities are not a significant financing component as they are generally utilized to pay for contract costs within a one-year period or are used to ensure the customer meets contractual requirements.

These assets and liabilities are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period.

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The assets related to costs to fulfill contracts with customers are capitalized and amortized over the period the related performance obligations are satisfied.

As of April 30, 2024, the Company’s costs to fulfill were not material.

As of April 30, 2025, the Company’s costs to fulfill were 1,948,000 .

As of April 30, 2024, the Company had no costs to fulfill future performance obligations on contracts considered to be probable of occurrence.

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These costs are direct contract costs and are expensed to cost of sales when the corresponding revenue is recognized, which is generally as the research and development services are performed.

Revenue from customer-funded R&D was approximately $ 82,104,000 , $ 97,880,000 and $ 84,247,000 for the years ended April 30, 2024, 2023 and 2022, respectively.

The related cost of sales for customer-funded R&D totaled approximately $ 62,181,000 , $ 70,711,000 and $ 59,054,000 for the years ended April 30, 2024, 2023 and 2022, respectively.

Revenue from customer-funded R&D was $ 78,491,000 , $ 82,104,000 and $ 97,880,000 for the years ended April 30, 2025, 2024 and 2023, respectively.

The related cost of sales for customer-funded R&D totaled $ 58,028,000 , $ 62,181,000 and $ 70,711,000 for the years ended April 30, 2025, 2024 and 2023, respectively.

Lease Accounting

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The Company defines the initial lease term to include renewal options determined to be reasonably certain.

The Company’s leases have remaining lease terms of less than one year to seven years , some of which may include options to extend the lease for up to nine years , and some of which may include options to terminate the lease after three years .

The Company’s leases have remaining lease terms of less than one year to six years , some of which may include options to extend the lease for up to ten years , and some of which may include options to terminate the lease after one to twelve months .

If the Company determines the option to extend or terminate is reasonably certain, it is included in the determination of lease assets and liabilities.

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Advertising costs are expensed as incurred.

Advertising expenses included in SG&A expenses were approximately $ 457,000 , $ 494,000 and $ 451,000 for the years ended April 30, 2024, 2023 and 2022, respectively.

Advertising expenses included in SG&A expenses were $ 416,000 , $ 457,000 and $ 494,000 for the years ended April 30, 2025, 2024 and 2023, respectively.

Foreign Currency Transactions

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( 176,212,000 )

( 4,188,000 )

Denominator for basic earnings per share:

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During the years ended April 30, 2025, 2024 and 2023, certain options, shares of restricted stock and restricted stock units were not included in the computation of diluted earnings per share because their inclusion would have been anti-dilutive.

Due to the net loss for the fiscal years ended April 30, 2023 and 2022, no shares reserved for issuance upon exercise of stock options or shares of unvested restricted stock were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive.

Due to the net loss for the fiscal year ended April 30, 2023, no shares reserved for issuance upon exercise of stock options or shares of unvested restricted stock were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive.

The number of options, restricted stock and restricted stock units which met this anti-dilutive criterion was approximately 393 , 1,000 and 146,000 for the years ended April 30, 2025, 2024 and 2023, respectively.

Recently Issued Accounting Standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

Recently Adopted Accounting Standards

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07.

ASU 2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses reported to the CODM.

ASU 2023-07 also requires all segment profit or loss and assets disclosures to be provided on an annual and interim basis.

The new standard is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

ASU 2023-07 is adopted retrospectively.

The Company is evaluating the potential impact of this adoption on its disclosures.

Effective April 30, 2025, the Company adopted the ASU 2023-07.

ASU 2023-07 was adopted retrospectively and the required disclosures are made for all periods presented.

The Company adoption of ASU 2023-07 did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Standards

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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The Company is evaluating the potential impact of this adoption on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income— Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”).

ASU 2024-03 requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses included in each expense caption on the face of the income statement at interim and annual reporting periods.

The new standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, and should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements.

The Company is evaluating the potential impact of this adoption on our consolidated financial statements.

Investments consist of the following:

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April 30, 2024

Net losses recognized during the period on equity securities

Net gain (loss) recognized during the period on equity securities

Net loss recognized during the period on equity securities sold during the period

Unrealized loss recognized during the period on equity securities still held at the reporting date

Unrealized gain (loss) recognized during the period on equity securities still held at the reporting date

Fair Value Measurements

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Equity securities

The Company’s financial liabilities measured at fair value on a recurring basis at April 30, 2023, were as follows (in thousands):

Fair Value Measurement Using

Quoted prices in

active markets for

identical assets

Contingent consideration

The following table provides a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):

Measurements Using

Unobservable Inputs

Balance at May 1, 2023

Business acquisition

Transfers to Level 3

Total fair value measurement adjustments (realized or unrealized)

Included in selling, general and administrative

Balance at April 30, 2024

The amount of total (gains) or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets or liabilities still held at April 30, 2024

Pursuant to the Telerob Purchase Agreement, the Telerob Sellers were eligible to receive up to a maximum of € 6,000,000 (approximately $ 6,418,000 ) in additional cash consideration if specific revenue and contract award targets for Telerob were achieved during the 36 month period after closing.

The contingent consideration was valued using a Black-Scholes option-pricing model.

The analysis considered, among other items, contractual terms of the Telerob Purchase Agreement, the Company’s discount rate, the timing of expected future cash flows and the probability that the revenue and contract award targets required for payment of the contingent consideration will be achieved.

The first year earnout of € 2,000,000 (approximately $ 2,139,000 ) was not achieved.

During the fiscal year ended April 30, 2023, the second year earnout of € 2,000,000 (approximately $ 2,132,000 ) was achieved and was paid in November 2023.

The third earnout of € 2,000,000 (approximately $ 2,139,000 ) was not achieved.

Refer to Note 21—Business Acquisitions.

Pursuant to the ISG Purchase Agreement, the sellers could receive up to a maximum of $ 6,000,000 in additional cash consideration (“contingent consideration”), if certain revenue targets were achieved during the three years following closing.

The contingent consideration was valued using a Black-Scholes option-pricing model.

The analysis considered, among other items, contractual terms of the ISG Purchase Agreement, the Company’s discount rate, the timing of expected future cash flows and the probability that the revenue targets required for payment of the contingent consideration will be achieved.

During the fiscal year ended April 30, 2022, the targets for the first and second year were achieved, and during the fiscal year ended April 30, 2023, the target for the third year was achieved.

The consideration was held and released from an escrow account not controlled by the Company and, therefore, not recorded on the consolidated balance sheets.

The related consideration of $ 2,000,000 for the first year target was released from the escrow account during the fiscal year ended April 30, 2022.

The related consideration of $ 2,000,000 for both the second and third year targets were released from the escrow account during the fiscal year ended April 30, 2023.

The Company had no financial liabilities measured at fair value on a recurring basis at April 30, 2024.

On September 12, 2022, the Company invested $ 5,000,000 and acquired 500,000 shares and 500,000 privately placed, redeemable warrants of Amprius Technologies, Inc.

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The Company tests identifiable intangible assets and goodwill for impairment in the fourth quarter of each fiscal year unless there are interim indicators that suggest that it is more likely than not that either the identifiable intangible assets or goodwill may be impaired.

The weighted average amortization period at April 30, 2024 and 2023 was three years and four years , respectively.

The weighted average amortization period at April 30, 2025 and 2024 was three years .

Amortization expense for the years ended April 30, 2025, 2024 and 2023 was $ 23,391,000 , $ 17,954,000 and $ 58,121,000 , respectively.

As part of the Company’s annual goodwill impairment and identifiable assets test during the fiscal quarter ended April 30, 2025, a decrease in forecasted results of the UGV reporting unit resulted in accelerated intangible amortization expenses of $ 4,258,000 , which was during the three months ended April 30, 2025.

Due to the closure of all of the Company’s MUAS COCO sites during the three months ended April 30, 2023, we revised the estimated useful life for MUAS customer relationships which resulted in accelerated intangible amortization expenses of $ 34,149,000 during the fiscal year ended April 30, 2023.

Additionally, in conjunction with the goodwill impairment test performed during the year ended April 30, 2023,

the remaining intangibles in the MUAS reporting unit were tested for recoverability.

The asset recoverability test did not result in an impairment for the remaining intangibles in the MUAS reporting unit.

Additionally, in conjunction with the goodwill impairment test performed during the year ended April 30, 2023, the remaining intangibles in the MUAS reporting unit were tested for recoverability.

The asset recoverability test did not result in an impairment recorded for the remaining intangibles in the MUAS reporting unit.

Refer to Note 6—Goodwill for further details.

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Technology and backlog intangible assets were recognized in conjunction with the Company’s acquisition of Planck on August 17, 2022.

Technology, backlog and customer relationship intangible assets were recognized in conjunction with the Company’s acquisition of Telerob on May 3, 2021.

Refer to Note 21—Business Acquisitions for further details.

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Balance at April 30, 2024

Additions to goodwill

Accumulated impairment losses

Change to goodwill

Impairment of goodwill

Balance at April 30, 2025

Accumulated impairment losses

Balance at April 30, 2023

Accumulated impairment losses

Additions to goodwill

Change to goodwill

Impairment of goodwill

Balance at April 30, 2024

Accumulated impairment losses

During the Company’s annual impairment test during the fiscal quarter ended April 30, 2025, the Company 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 $ 18,359,000 in the UGV reporting unit.

The addition during the fiscal year ended April 30, 2024 to the UxS segment relates to the Tomahawk Acquisition.

The addition during the fiscal year ended April 30, 2023 to the UxS segment relates to the Planck Acquisition.

The change to goodwill during the fiscal years ended April 30, 2025 and 2024 in UxS is attributable to the translation of the goodwill related to the Telerob Acquisition, which was recorded in Euros and translated to dollars at each reporting date.

Refer to Note 21—Business Acquisitions for further details.

Subsequent to the performance of the Company’s annual goodwill impairment and identifiable asset test for the fiscal year ended April 30, 2023, in May 2023, a trigger event was identified that indicated that the carrying value of the MUAS reporting unit exceeded its fair value.

Specifically, the Company received notification that it was not down selected for a U.S.

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These changes in estimates resulted in the recognition of a goodwill impairment charge of $ 156,017,000 in the MUAS reporting unit.

The fair value of the MUAS reporting unit exceeded the carrying value by 10 % as of January 28, 2024, the

date of the most recent annual goodwill impairment test.

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.

Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding future plans, as well as industry, economic, and regulatory conditions.

These assumptions and estimates include estimated future annual net cash flows, income tax rates, discount rates, growth rates, and other market factors.

Estimated future annual net cash flows based in part upon the Company’s ability to obtain contracts from the U.S.

DoD and foreign allied nations and negotiate the estimated pricing are considered the most significant, sensitive assumptions.

Accordingly, the MUAS reporting unit is considered at an increased risk of failing future quantitative goodwill impairment tests.

Property and Equipment, net

1 unchanged sentence

(In thousands)

Leasehold improvements

In-service ISR assets

Land, building, and leasehold improvements

Machinery and equipment

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At April 30, 2025 and 2024, the reclassified assets had a carrying value of $ 1,486,000 and $ 1,979,000 , respectively.

During the fiscal years ended April 30, 2024, 2023 and 2022, the Company recorded losses on the disposal of in-service ISR assets which included the write-off of $ 0 , $ 192,000 and $ 1,378,000 of non-cash purchase accounting fair value adjustments, respectively.

Investments in Companies Accounted for Using the Equity Method

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Under the terms of the limited partnership agreement, the Company is committed to contributions totaling $ 20,000,000 over an expected five year period.

During the fiscal year ended April 30, 2024 and 2023, the Company made total contributions of $ 3,074,000 and $ 5,778,000 , respectively.

Under the terms of the limited partnership agreement, the Company has committed to make additional capital contributions of $ 11,126,000 to the fund expected to be paid over the next three fiscal years.

During the fiscal years ended April 30, 2025, 2024 and 2023, the Company made total contributions of $ 5,674,000 , $ 3,074,000 and $ 5,778,000 , respectively.

Under the terms of the limited partnership agreement, the Company has committed to make additional capital contributions of $ 5,474,000 to the fund expected to be paid over the next two fiscal years.

The Company accounts for investments in limited partnerships as equity method investments as the Company is deemed to have influence when it holds more than a minor interest.

For the fiscal years ended April 30, 2024, 2023 and 2022, the

Company recorded its ownership percentage of the net (loss) gain of the limited partnership, or $( 1,782,000 ), $( 2,453,000 ), and $ 5,889,000 , respectively, in equity method investment (loss) income, net of deferred taxes $ 0 , $ 0 , and $ 1,300,000 , respectively, in the consolidated statements of income (loss).

For the fiscal years ended April 30, 2025, 2024 and 2023, the Company recorded its ownership percentage of the net gain (loss) of the limited partnership, or $ 4,816,000 , $( 1,782,000 ), and $( 2,453,000 ) respectively, in equity method investment income (loss), net of deferred taxes $ 0 , respectively, in the consolidated statements of income (loss).

At April 30, 2025 and 2024, the carrying value of the investment in the limited partnership of $ 30,423,000 and $ 19,933,000 , respectively, was recorded in available-for-sale long-term investments.

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As a result of the sales, the Company decreased its interest in Altoy from 85 % to 15 %.

The Company no longer controls Altoy, and therefore, has deconsolidated Altoy in the Company’s consolidated financial statements, which resulted in losses of $ 0 and $ 189,000 during the fiscal years ended April 30, 2024 and 2023, respectively.

The Company no longer controls Altoy, and therefore, has deconsolidated Altoy in the Company’s consolidated financial statements, which resulted in a loss of $ 189,000 during the fiscal year ended April 30, 2023.

The Company maintains significant influence, accounts for its investment in Altoy as an equity method investment and records its proportion of any gains or losses of Altoy in equity method investment (loss) income, net of tax.

For the fiscal year ended April 30, 2024, the Company’s proportion of the net income of Altoy for the Company’s ownership was $ 108,000 .

For the fiscal

year ended April 30, 2025 and 2024, the Company’s proportion of the net income of Altoy for the Company’s ownership was $ 21,000 and $ 108,000 , respectively.

For the fiscal year ended April 30, 2023, the Company’s proportion of the net income of Altoy for the Company’s ownership was not significant.

At April 30, 2025 and 2024, the carrying values of the investment in Altoy of $ 173,000 and $ 152,000 , respectively, was recorded in other assets on the consolidated balance sheets.

Investment in HAPSMobile Inc.

In December 2017, the Company and SoftBank formed a joint venture, HAPSMobile, which is a Japanese corporation.

Concurrent with the formation of HAPSMobile, the Company executed a Design and Development Agreement (the “DDA”) with HAPSMobile.

In connection with the formation of the joint venture on December 27, 2017, the Company initially purchased shares of HAPSMobile representing a 5 % ownership.

On December 4, 2019, the Company purchased additional shares of HAPSMobile to increase its ownership stake to approximately 7 %.

In March 2022, the Company sold its 7 % equity interest in HAPSMobile to SoftBank, for 808,008,000 yen ($ 6,497,000 ) and a gain was recorded in sale of ownership in HAPSMobile Inc.

joint venture.

Following the sale, SoftBank owns 100 % of HAPSMobile, and, therefore, the Company no longer applies the equity method of accounting.

On May 29, 2021, the Company entered into an amendment to the DDA with HAPSMobile.

The parties agreed to the amendment in anticipation of the Company and SoftBank entering into a Master Design and Development Agreement (“MDDA”) with each other to continue the design and development of the Solar High Altitude Pseudo-Satellite (“Solar HAPS”) aircraft developed under the DDA.

Pursuant to the MDDA, which has a five-year term, SoftBank will issue orders to the Company for the Company to perform design and development services and produce deliverables as specified in the applicable order(s).

Upon the execution of the MDDA, SoftBank issued to the Company, and the Company accepted, the first order under the MDDA which has a maximum value of approximately $ 51,200,000 .

Concurrent with the execution of the MDDA, each of SoftBank and the Company agreed to lend HAPSMobile loans which are convertible into shares of HAPSMobile under certain conditions, and to cooperate with each other to explore restructuring and financing options for HAPSMobile to continue the development of Solar HAPS.

The Company committed to lend 500,000,000 yen.

On June 7, 2021 the Company funded 130,000,000 yen ($ 1,195,000 ) of the loan agreement.

On August 13, 2021, the Company made the second payment of the loan agreement in the amount of 180,000,000 yen ($ 1,638,000 ).

On October 29, 2021, the Company made the final payment under the loan agreement in the amount of 190,000,000 yen ($ 1,674,000 ).

On March 1, 2022, HAPSMobile repaid the Company the loan in full plus accrued interest in the amount of 503,832,000 yen ($ 4,345,000 ).

The repayment resulted in equity method income during the fiscal year ended April 30, 2022 up to the extent of the previously recognized equity method losses associate with the loan.

Summarized financial information of the equity method investments, including HAPSMobile for the period of fiscal year 2022 prior to the sale of equity interest, are as follows:

(In thousands)

Current assets

Noncurrent assets

Current liabilities

Year Ended April 30,

(In thousands)

Realized and unrealized (losses) gains on investments

Net (loss) income

Warranty Reserves

11 unchanged sentences

Bank National Association, as joint lead arrangers and joint bookrunners (the “Credit Agreement”).

The Credit Agreement and its associated Security and Pledge Agreement set forth the terms and conditions for (i) a five-year $ 100,000,000 revolving credit facility, which includes a $ 25,000,000 sublimit for the issuance of standby and commercial letters of credit (the “Revolving Facility”), and (ii) a five-year amortized $ 200,000,000 term A loan (the “Term Loan Facility”, and together with the Revolving Facility, the “Credit Facilities”).

Certain existing letters of credit issued by JPMorgan Chase Bank were reserved for under the Revolving Facility at closing and remain outstanding under the terms thereof.

Upon execution of the Credit Agreement, the Company drew the full principal of the Term Loan Facility for use in the acquisition of Arcturus.

The Term Loan Facility requires payment of 5 % of the outstanding obligations in each of the first four loan years, with the remaining 80 % payable in loan year five, consisting of three quarterly payments of 1.25 % each, with the remaining outstanding principal amount of the Term Loan Facility due and

payable on the final maturity date.

The Credit Agreement and its associated Security and Pledge Agreement set forth the terms and conditions for (i) a five-year $ 100,000,000 revolving credit facility, which included a $ 25,000,000 sublimit for the issuance of standby and commercial letters of credit (the “Revolving Facility”), and (ii) a five-year amortized $ 200,000,000 term A loan drawn in full upon execution (the “Term Loan Facility”, and together with the Revolving Facility, the “Credit Facilities”).

The Term Loan Facility required payment of 5 % of the outstanding obligations in each of the first four loan years, consisting of three quarterly payments of 1.25 % each, with the remaining 80 % outstanding principal amount of the Term Loan Facility due and payable on the final maturity date.

Proceeds from the Term Loan Facility were used in part to finance a portion of the cash consideration for the Arcturus Acquisition.

Borrowings under the Revolving Facility may be used for working capital and other general corporate purposes.

Any borrowing under the Credit Agreement may be repaid, in whole or in part, at any time and from time to time without premium or penalty other than customary breakage costs, and any amounts repaid under the Revolving Facility may be reborrowed.

Mandatory prepayments are required under the revolving loans when borrowings and letter of credit usage exceed the aggregate revolving commitments of all lenders.

Mandatory prepayments are also required in connection with the disposition of assets to the extent not reinvested and unpermitted debt transactions.

In support of its obligations pursuant to the Credit Facilities, the Company has granted security interests in substantially all of the personal property of the Company and its domestic subsidiaries, including a pledge of the equity interests in its subsidiaries (limited to 65 % of outstanding equity interests in the case of foreign subsidiaries), and the proceeds thereof, with customary exclusions and exceptions.

The Company’s existing and future domestic subsidiaries, including Arcturus, are guarantors for the Credit Facilities.

The Credit Agreement contains certain customary representations and warranties and affirmative and negative covenants, including certain restrictions on the ability of the Company and its subsidiaries (as defined in the Credit Agreement) to incur any additional indebtedness or guarantee indebtedness of others, to create liens on properties or assets, or to enter into certain asset and stock-based transactions.

In addition, the Credit Agreement includes certain financial maintenance covenants, requiring that (x) the Consolidated Leverage Ratio (as defined in the Credit Agreement) shall not be more than 3.00 to 1.00 as of the end of any fiscal quarter and (y) the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) shall not be less than 1.25 to 1.00 as of the end of any fiscal quarter.

The Credit Agreement includes certain financial maintenance covenants, requiring that (x) the Consolidated Leverage Ratio (as defined in the Credit Agreement) shall not be more than 3.00 to 1.00 as of the end of any fiscal quarter and (y) the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) shall not be less than 1.25 to 1.00 as of the end of any fiscal quarter.

On February 4, 2022, the Company entered into a First Amendment to Credit Agreement and Waiver relating to its existing Credit Agreement (the “First Amendment to Credit Agreement”).

3 unchanged sentences

and 3.00 to 1.00 for any fiscal quarter ending thereafter.

On June 6, 2023, the Company entered into a Second Amendment to Credit Agreement relating to its existing credit Agreement which increased the sublimit from $ 10,000,000 to $ 25,000,000 .

The Credit Agreement, as amended by the First Amendment and Second Amendment to the Credit Agreement, contains certain customary events of default, which include failure to make payments when due thereunder, the material inaccuracy of representations or warranties, failure to observe or perform certain covenants, cross-defaults, bankruptcy and insolvency-related events, certain judgments, certain ERISA-related events, invalidity of loan documents, or a Change of Control (as defined in the Credit Agreement).

Upon the occurrence and continuation of an event of default, the Lenders may cease making future loans under the Credit Agreement and may declare all amounts owing under the Credit Agreement to be immediately due and payable.

The First Amendment to Credit Agreement also implemented certain secured overnight financing rate (“SOFR”) interest rate mechanics and interest rate reference benchmark replacement provisions in order to effectuate the transition from LIBOR as a reference interest rate.

4 unchanged sentences

The Company also remains responsible for certain commitment fees from 0.20 – 0.35 % depending on the Consolidated Leverage Ratio, and administrative agent expenses incurred in relation to the Credit Facilities.

In the event of a default, an additional 2 %

default interest rate in addition to the applicable rate if specified or the Base Rate plus Applicable Margin if an applicable rate is not specified.

As of April 30, 2024, the Company is in compliance with all amended covenants.

In the event of a default, an additional 2 % default interest rate in addition to the applicable rate if specified or the Base Rate plus Applicable Margin if an applicable rate is not specified.

On June 6, 2023, the Company entered into a Second Amendment to Credit Agreement relating to its existing credit Agreement which increased the sublimit from $ 10,000,000 to $ 25,000,000 .

On October 4, 2024, the Company entered into a Third Amendment to Credit Agreement with the existing lenders, BofA NA, the administrative agent and the swingline lender, JPM, and U.S.

Bank, and Citibank (the “New Lender”) (the “Third Amendment to Credit Agreement”).

The Third Amendment to Credit Agreement provided for an aggregate $ 200,000,000 revolving credit facility, including a $ 25,000,000 sublimit for the issuance of standby and commercial letters of credit, and a $ 10,000,000 sublimit for swingline loans, secured by all assets of the Company and the Guarantors, and extends the maturity date for obligations pursuant to the Credit Agreement to October 4, 2029.

Upon effectiveness of the Third Amendment to Credit Agreement, the Company drew $ 15,000,000 from the amended Revolving Facility and repaid in full all outstanding amounts owed pursuant to the prior Term Loan Facility.

The Third Amendment to Credit Agreement reflects the removal of the Term Loan Facility.

The unamortized debt issuance costs allocated to the Term Loan Facility of $ 590,000 were expensed upon repayment of the Term Loan Facility and recorded in interest expense.

In addition to adding the New Lender and adjusting certain fee schedules, the Third Amendment to Credit Agreement also allowed the Company to incur additional forms of secured and unsecured permitted indebtedness without separate consent of the Administrative Agent and make certain payments related thereto, including certain bilateral letters of credit, supply chain financing transactions, securitization transactions pertaining to its accounts receivable, and issuance of unsecured convertible debt pertaining to its Common Stock (and certain call spread transactions related thereto), subject in each instance to further specified parameters, including aggregate dollar limits on certain activities and satisfaction of ongoing and pro forma financial covenants.

The Third Amendment to Credit Agreement substituted a Consolidated Senior Secured Leverage Ratio for the Consolidated Leverage Ratio required to be maintained under the existing Credit Agreement.

The Consolidated Leverage Ratio became an incurrence test, used to determine whether or not the Company may take certain actions, such as borrowing under the Credit Agreement, making acquisitions, incurring certain unsecured debt, or making payments on junior debt.

In order to take such actions, the Consolidated Leverage Ratio may not exceed 4.00 to 1.0 .

However, the ratio increases to 4.50 to 1.0 during a Leverage Increase Period, covering each of the four fiscal quarters of the Company immediately following the consummation of any qualified acquisition.

The newly added Consolidated Senior Secured Leverage Ratio, measuring the Consolidated Senior Secured Funded Indebtedness, as of a date of determination, to Consolidated EBITDA for the applicable measurement period, shall not exceed 3.00 to 1.0 at the end of any fiscal quarter of the Company, increasing to 3.50 to 1.0 in a Leverage Increase Period.

In each case, no more than one Leverage Increase Period shall be in effect at any time, and the basic ratio levels must be achieved and maintained for at least two fiscal quarters immediately following each Leverage Increase Period prior to giving effect to another Leverage Increase Period.

The requirement for the Consolidated Fixed Charge Coverage Ratio to be no less than 1.25 to 1.0 at the end of any fiscal quarter of the Company remained unchanged in the Third Amendment to Credit Agreement.

The Third Amendment to Credit Agreement removed the requirement that the Company prepay the loans with the proceeds of dispositions of assets or newly incurred debt.

The Company’s ability to borrow under the Revolving Facility is reduced by outstanding letters of credit, which as of April 30, 2025 and 2024 was $ 9,376,000 and $ 15,668,000 , respectively.

of April 30, 2025, approximately $ 160,624,000 was available under the Revolving Facility.

Borrowings under the Revolving Facility may be used for working capital and other general corporate purposes, including acquisitions that meet certain parameters.

As of April 30, 2025, the Company was in compliance with all amended covenants.

On May 1, 2025 in connection with the consummation of the BlueHalo Acquisition, the Company entered into a Fourth Amendment to Credit Agreement with the existing lenders, BofA NA, the administrative agent and the swingline lender, JPM, and U.S.

Bank, and Citibank (the “Fourth Amendment to Credit Agreement” and the existing Credit Agreement as amended thereby, the “Amended Credit Agreement”).

The Amended Credit Agreement now provides for an aggregate $ 700,000,000 term loan and an aggregate $ 350,000,000 revolving credit facility, including a $ 25,000,000 sublimit for the issuance of standby and commercial letters of credit, and a $ 10,000,000 sublimit for swingline loans, secured by all assets of the Company and the Guarantors, and extends the maturity date for obligations pursuant to the Amended Credit Agreement to October 4, 2029.

Upon effectiveness of the Amended Credit Agreement, the Company drew $ 225,000,000 from the amended Revolving Facility and the full $ 700,000,000 of the Term Loan Facility.

The Term A Loan matures two years after the Closing Date 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 the Company’s Consolidated Leverage Ratio (as defined in the Credit Agreement) and whether the Company elects as its benchmark rate (i) SOFR (in which case, the applicable margin ranges from 1.50 - 2.50 % per annum depending on the Company’s 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 the Company’s Consolidated Leverage Ratio).

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

Pursuant to the Fourth Amendment to Credit Agreement, the Company is subject to two financial maintenance covenants which require that (i) the Consolidated Senior Secured Leverage Ratio (as defined in the Credit Agreement) not exceed 3.50 to 1.00 as of the end of any fiscal quarter, for the four fiscal quarter following consummation of the BlueHalo Acquisition, and thereafter 3.00 to 1.00 as of the end of any fiscal quarter, and (ii) the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) not be less than 1.25 to 1.00 as of the end of any fiscal quarter.

Notwithstanding the foregoing, for the first two fiscal quarters of fiscal year 2026, the Company shall not be required to comply with the Consolidated Senior Secured Leverage Ratio (as defined in the Credit Agreement) covenant, so long as at the end of each such fiscal quarter, the Company’s Consolidated Senior Secured Leverage Ratio does not exceed (i) 3.50 to 1.00 (calculated including certain projected synergies that would not otherwise be included in the definition of “Consolidated EBITDA” (as defined in the Credit Agreement)) and (ii) 3.75 to 1.00.

Long-term debt and the current period interest rates were as follows:

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On September 24, 2021, the stockholders of the Company approved the 2021 Equity Incentive Plan (“2021 Plan”) effective September 24, 2021, for officers, directors, key employees and consultants.

Under the 2021 Plan, incentive stock options, nonqualified stock options, restricted stock awards, stock appreciation right awards, performance share awards, performance stock unit awards, dividend equivalents awards, stock payment awards, deferred stock awards, restricted stock unit awards, other stock-based awards, performance bonus awards or performance-based awards may be granted at the discretion of the compensation committee, which consists of outside directors.

Under the 2021 Plan, incentive stock options, nonqualified stock options, restricted stock awards, stock appreciation right awards, performance

share awards, performance stock unit awards, dividend equivalents awards, stock payment awards, deferred stock awards, restricted stock unit awards, other stock-based awards, performance bonus awards or performance-based awards may be granted at the discretion of the compensation committee, which consists of outside directors.

The sum of any cash compensation, or other compensation, and the value of awards granted to a non-employee director as compensation for services as a non-employee director during any fiscal year may not exceed $ 500,000 , which amount is increased to $ 700,000 in the fiscal year of a non-employee director’s initial year of service as a non-employee director.

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The Restated 2006 Plan expired in July 2021.

On September 19, 2023, the stockholders of the Company approved the Company’s 2023 Employee Stock Purchase Plan (the “2023 ESPP”).

The 2023 ESPP allows for eligible employees to purchase common stock through payroll deductions of up to $ 25,000 worth of common stock (determined at the fair market value of the shares at the time such rights are granted) for each calendar year in which the purchase rights are outstanding at any time.

Shares of common stock are purchased under the 2023 ESPP at a discount to the market price of the shares of no less than 85 % of the fair market value of the Company’s common stock on each purchase date.

Subject to adjustments for changes in the Company’s capitalization and certain corporate transactions, the total number of shares available for issuance under the 2023 ESPP is 1,000,000 shares of common stock.

As of April 30, 2025, 14,598 shares have been issued under the 2023 ESPP.

The fair value of the grants under the 2023 ESPP was estimated at the grant date using an option pricing model.

Assumptions included in the option pricing model included the expected term of grants, the expected volatility, the risk-free interest rate, and the expected dividend yield.

The expected term of stock options represents the weighted average period the Company expects the grants to remain outstanding, based on the offering period of the grant.

The expected volatility is based on historical volatility for the Company’s stock.

The risk-free interest rate is based on the implied yield on a U.S.

Treasury zero coupon bond with a remaining term that approximates the expected term of the option.

The expected dividend yield of zero reflects that the Company has not paid any cash dividends since inception and does not anticipate paying cash dividends in the foreseeable future.

The fair value of stock options granted previously was estimated at the grant date using the Black-Scholes option pricing model.

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The tax benefit realized from stock-based compensation was $ 6,984,000 , $ 0 and $ 3,387,000 for the fiscal years ended April 30, 2025, 2024, and 2023, respectively.

The following tabulation summarizes certain information concerning outstanding and exercisable options at April 30, 2024:

Options Outstanding

Options Exercisable

Range of Exercise Prices

The remaining weighted average contractual life of exercisable options at April 30, 2024 was 0.9 years.

Information related to the Company’s restricted stock awards at April 30, 2025 and for the year then ended is as follows:

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Long-Term Incentive Awards

During the three months ended July 29, 2023, the Company granted awards under its 2021 Equity Incentive Plan (the “2021 Plan”) to key employees (“Fiscal 2024 LTIP”).

During the three months ended July 27, 2024, the Company granted awards under the 2021 Plan to key employees (“Fiscal 2025 LTIP”).

Awards under the Fiscal 2025 LTIP consist of:

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Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

During the fiscal year ended April 30, 2024 the Company recorded $ 3,916,000 of compensation expense related to the Fiscal 2024 LTIP PRSUs.

At April 30, 2024, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2024 LTIP PRSUs is $ 15,836,000 .

During the three months ended July 30, 2022, the Company granted awards under the 2021 Plan to key employees (“Fiscal 2023 LTIP”).

During the fiscal year ended April 30, 2025, the Company recorded $ 3,134,000 of compensation expense related to the Fiscal 2025 LTIP.

At April 30, 2025, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2025 LTIP is $ 18,735,000 .

During the three months ended July 29, 2023, the Company granted awards under its 2021 Plan to key employees (“Fiscal 2024 LTIP”).

Awards under the Fiscal 2024 LTIP consist of:

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The actual payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and non-GAAP adjusted EBITDA targets for the performance period.

Settlement of the PRSUs

will be made in fully-vested shares of the Company’s common stock.

During the fiscal year ended April 30, 2024 and 2023, the Company recorded $ 3,349,000 and $ 2,690,000 of compensation expense related to the Fiscal 2023 LTIP PRSUs, respectively.

Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

During the fiscal years ended April 30, 2025 and 2024 the Company recorded $ 4,177,000 and $ 3,916,000 of compensation expense related to the Fiscal 2024 LTIP PRSUs, respectively.

At April 30, 2025, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2024 LTIP PRSUs is $ 15,511,000 .

During the three months ended July 31, 2021, the Company granted awards under its amended and restated 2006 Equity Incentive Plan (the “Restated 2006 Plan”) to key employees (“Fiscal 2022 LTIP”).

During the three months ended July 30, 2022, the Company granted awards under the 2021 Plan to key employees (“Fiscal 2023 LTIP”).

Awards under the Fiscal 2023 LTIP consist of:

(i) time-based restricted stock awards and time-based restricted stock units, which vest in equal tranches in July 2022, July 2023 and July 2024, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and non-GAAP operating income targets for the three-year period ending April 30, 2024.

(i) time-based restricted stock awards and time-based restricted stock units, which vest in equal tranches in July 2023, July 2024 and July 2025, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and non-GAAP adjusted EBITDA targets for the three-year period ending April 30, 2025.

At the award date, target achievement levels for each of the financial performance metrics were established for the PRSUs, at which levels the PRSUs would vest at 100 % for each such metric.

Threshold achievement levels for which the PRSUs would vest at 50 % for each such metric and maximum achievement levels for which such awards would vest at 250 % for each such metric were also established.

The actual payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and non-GAAP operating income targets for the performance period.

payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and non-GAAP adjusted EBITDA targets for the performance period.

Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

During the fiscal years ended April 30, 2024, 2023 and 2022, the Company recorded $ 902,000 , $ 846,000 and $ 752,000 of compensation expense related to the Fiscal 2022 LTIP PRSUs, respectively.

During the fiscal year ended April 30, 2025, 2024, and 2023, the Company recorded $ 3,139,000 , $ 3,349,000 and $ 2,690,000 of compensation expense related to the Fiscal 2023 LTIP PRSUs, respectively.

At April 30, 2025, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2023 LTIP PRSUs is $ 11,448,000 .

During the three months ended August 1, 2020, the Company granted awards under the Restated 2006 Plan to key employees (“Fiscal 2021 LTIP”).

Awards under the Fiscal 2022 LTIP consist of:

(i) time-based restricted stock awards, which vest in equal tranches in July 2021, July 2022 and July 2023, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and operating income targets for the three-year period ending April 30, 2023.

During the three months ended July 27, 2024, the company issued a total of 15,427 fully-vested shares of the Company’s common stock to settle the PRSUs in the Fiscal 2022 LTIP.

No compensation expense was recorded during fiscal year ended April 30, 2024 for the Fiscal 2021 LTIP PRSUs.

During the fiscal year ended April 30, 2023, the Company recorded $ 354,000 of compensation expense related to the Fiscal 2021 LTIP PRSUs.

During the fiscal year ended April 30, 2022, the Company recorded a reversal of $( 634,000 ) compensation expense related to the Fiscal 2021 LTIP PRSUs.

During the fiscal years ended April 30, 2024 and 2023, the company recorded $ 902,000 and $ 846,000 related to the fiscal year 2022 LTIP PRSUs.

At April 30, 2025 and 2024, the Company recorded cumulative stock-based compensation expense from these long-term incentive award PRSUs of $ 27,141,000 and $ 16,662,000 , respectively.

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The estimation of whether the performance targets will be achieved requires judgment, and, to the extent actual results or updated estimates differ from the Company’s current estimates, the cumulative effect on current and prior periods of those changes will be recorded in the period estimates are revised.

The components of (loss) income before income taxes are as follows (in thousands):

The components of income (loss) before income taxes are as follows (in thousands):

Year Ended April 30,

(Loss) income before income taxes

Equity method investment (loss) income

Total (loss) income before income taxes

Income (loss) before income taxes

Equity method investment income (loss)

Total income (loss) before income taxes

The Company expects any foreign earnings to be reinvested in such foreign jurisdictions and, therefore, no deferred tax liabilities for U.S.

income taxes on undistributed earnings are recorded.

The foreign subsidiaries do not have

any undistributed earnings.

The foreign subsidiaries do not have any undistributed earnings.

A reconciliation of income tax expense (benefit) computed using the U.S.

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Foreign rate differential

State and local income taxes, net of federal benefit

R&D and other tax credits

State income taxes, net of federal benefit

Research and development credits

Valuation allowance

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Foreign derived intangible income

Excess benefit of equity awards

Excess benefit relating to stock-based compensation

Goodwill impairment

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Year Ended April 30,

Total income tax (benefit) expense

Total income tax expense (benefit)

Significant components of the Company’s deferred income tax assets and liabilities are as follows (in thousands):

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Net operating loss and credit carry-forwards

Acquisition related costs

Capitalized research and development costs

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Fixed asset basis

Allowances, reserves, and other

Outside basis difference

Right-of-use asset

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based research), as applicable, pursuant to Section 174 of the Internal Revenue Code.

As of April 30, 2024 and 2023, the Company recorded a tax adjustment to capitalize and amortize its R&E costs, which resulted in an increase to income taxes payable of approximately $ 42,788,000 and $ 24,962,000 , respectively, and a decrease to net deferred tax liabilities of a similar amount.

At April 30, 2024 and 2023 the Company recorded a valuation allowance of $ 23,835,000 and $ 22,503,000 , respectively, primarily against state R&D credits as the Company is currently generating more tax credits than it will utilize in future years and against capital loss carryforward.

The valuation allowance increased by $ 1,332,000 and decreased by $ 2,337,000 for April 30, 2024 and April 30, 2023, respectively.

At April 30, 2024 the Company had state credit carryforwards of $ 24,054,000 that do not expire.

As of April 30, 2025 and 2024, the Company recorded a tax adjustment to capitalize and amortize its R&D costs, which resulted in an increase to income taxes payable of approximately $ 57,266,000 and $ 42,788,000 , respectively.

At April 30, 2025 and 2024 the Company recorded a valuation allowance of $ 26,770,000 and $ 23,835,000 , respectively, primarily against state R&D credits as the Company is currently generating more tax credits than it will utilize in future years and against its capital loss carryforward.

The valuation allowance increased by $ 2,935,000 and $ 1,332,000 for April 30, 2025 and April 30, 2024, respectively primarily due to a full valuation allowance against foreign deferred tax assets.

At April 30, 2025 the Company had California R&D credit carryforwards of $ 24,728,000 .

These credits carryforward indefinitely.

At April 30, 2025, the Company had federal, state and foreign net operating loss carryforwards of approximately $ 1,757,000 , $ 97,314,000 and $ 5,012,000 , respectively.

The federal net operating losses carry forward indefinitely.

The state net operating losses will begin expiring in fiscal year 2035, and the foreign loss carry forward indefinitely.

The state net operating losses will begin expiring in fiscal year 2035, and foreign net operating losses carry forward indefinitely.

Utilization of federal and state net operating loss carryforwards may be subject to substantial annual limitation due to the ownership changes as provided by Section 382 of the Internal Revenue Code and similar state provisions.

At April 30, 2024 and 2023, the Company had approximately $ 13,601,000 and $ 12,841,000 , respectively, of unrecognized tax benefits of which $ 5,139,000 would impact the Company’s rate and $ 6,517,000 would result in an increase in valuation allowance.

The Company estimates that $ 1,616,000 of its unrecognized tax benefits will decrease in the next twelve months due to statute of limitation expiration.

At April 30, 2025 and 2024, the Company had approximately $ 13,429,000 and $ 13,601,000 , respectively, of unrecognized tax benefits, respective to the 2025 balance, $ 5,004,000 would impact the Company’s tax expense and $ 6,377,000 would result in an increase in California R&D credit valuation allowance.

The Company estimates that

$ 1,478,000 of its unrecognized tax benefits will decrease in the next twelve months due to statute of limitation expiration.

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits for the years ended April 30, 2025 and 2024 (in thousands):

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The 2021 to 2024 tax years remain open to examination by the IRS for federal income taxes.

The tax years 2013 and 2019 to 2023 remain open for major state taxing jurisdictions.

The tax years 2019 to 2024 remain open for major state taxing jurisdictions.

Share Repurchase Plan and Issuances

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Changes in Accounting Estimates

During the years ended April 30, 2024, 2023 and 2022, the Company revised its estimates at completion of various contracts recognized using the over time method, which resulted in cumulative catch up adjustments during the year in which the change in estimate occurred.

The change in estimate was a result of the Company changing the total costs required to complete the contracts due to having more accurate cost information as work progressed in subsequent periods on the various contracts.

During the year ended April 30, 2024, the Company revised estimates to complete two LMS contracts.

During the years ended April 30, 2023 and 2022, the Company revised its estimates of the total expected costs to complete a LMS contract.

$ 1,898,000 and $ 1,124,000 , respectively.

As part of the Company’s annual goodwill impairment and identifiable asset test during the fiscal quarter ended April 30, 2025, a decrease in forecasted results of the UGV reporting unit resulted in accelerated intangible amortization expenses of $ 4,258,000 , or loss per diluted share of $ 0.12 , which was recorded during the three months ended April 30, 2025.

During the fiscal year ended April 30, 2023, due to the closure of all of the Company’s MUAS COCO sites, the Company revised the estimated useful life of the MUAS customer relationship intangible asset which resulted in accelerated intangible amortization expenses of $ 34,149,000 , increasing net loss by $ 26,158,000 , or loss per diluted share of $ 1.04 .

During the year ended April 30, 2022, the Company revised its estimates of the achievement of the performance metrics of the Company’s long term incentive plans, which resulted in a cumulative adjustment to reduce previously recognized compensation expense of $ 1,602,000 .

Related Party Transactions

Pursuant to a consulting agreement, the Company paid a board member approximately $ 76,000 and $ 36,000 for fiscal years ended April 30, 2023 and 2022, respectively, for consulting services independent of his board service.

Related party transactions are defined as transactions between the Company and entities either controlled by the Company or that the Company can significantly influence.

Prior to the Company’s sale of all of its equity interest in HAPSMobile in March 2022, the Company determined that it had the ability to exercise significant influence over HAPSMobile.

As such, HAPSMobile and SoftBank were considered related parties of the Company prior to the sale.

Subsequent to the sale, the Company had no ownership stake in HAPSMobile, and SoftBank and HAPSMobile are no longer considered related parties.

Under the DDA and related efforts with HAPSMobile, the Company designed and built prototype solar powered high altitude aircraft and ground control stations for HAPSMobile and conducted low altitude and high altitude flight tests of the prototype aircraft on a best efforts basis.

The Company will continue the development of Solar HAPS with SoftBank under the MDDA.

Upon the execution of the MDDA, SoftBank issued the first order under the MDDA, which has a maximum value of approximately $ 51,200,000 .

The Company recorded revenue under both the MDDA and DDA and preliminary design agreements between the Company and SoftBank of $ 43,325,000 for the fiscal year ended April 30, 2022.

As of April 30, 2024 and 2023, the Company had no ownership stake in HAPSMobile and SoftBank and HAPSMobile are no longer considered related parties.

Refer to Note 8— Investments in Companies Accounted for Using the Equity Method for further details.

Pursuant to a consulting agreement, the Company paid a board member approximately $ 76,000 for fiscal year ended April 30, 2023, for consulting services independent of his board service.

Commitments and Contingencies

The Company’s operations are conducted in leased facilities.

The Company’s operations are primarily conducted in leased facilities.

Refer to Note 12—Leases for additional information.

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Although adverse decisions or settlements may occur, the Company, in consultation with legal counsel, believes that the final disposition of such matters will not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.

At April 30, 2024 and 2023, the Company had outstanding letters of credit totaling $ 15,668,000 and $ 8,076,000 , respectively.

On June 29, 2018, the Company completed the sale of substantially all of the assets and related liabilities of its efficient energy systems business segment (the “EES Business”) to Webasto Charging Systems, Inc.

(“Webasto”) pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) between Webasto and the Company.

On February 22, 2019, Webasto filed a lawsuit, which was amended in April 2019, alleging several claims against the Company for breach of contract, indemnity, and bad faith, including allegations regarding inaccuracy of certain diligence disclosures and failure to provide certain consents to contract assignments, and related to a previously announced product recall.

Webasto sought to recover the costs of the recall and other damages totaling a minimum of $ 6,500,000 in addition to attorneys’ fees, costs, and punitive damages.

On August 16, 2019, the Company filed a counterclaim against Webasto seeking payment of $ 6,500,000 in additional cash consideration due under the Purchase

Agreement (the “Holdback”) and declaratory relief regarding Webasto’s cancellation of an assigned contract.

Webasto again amended the complaint in May 2021 to include additional claims.

On June 2, 2021, the Company filed an answer to Webasto’s second amended complaint filed in May 2021.

In order to avoid the future cost, expense, and distraction of continued litigation, the Company engaged in settlement negotiations with Webasto in May 2021.

The Company established a litigation reserve, which reflected the scope of a rejected offer intended to communicate the Company’s serious and good faith intention to attempt to reach a settlement for the stated purposes.

The offer did not reflect the Company’s view of the merits of the claims made;

however, as a result of the preparation of the good faith offer and the Company’s willingness to pursue settlement for that amount, the Company recorded litigation reserve expenses in the amount of $ 9,300,000 during the year ended April 30, 2021, recorded in other expense on the consolidated statements of income (loss) and in other current liabilities on the consolidated balance sheet.

On December 2, 2021, the Company agreed in principle, subject to formal documentation with Webasto, to settle all existing claims related to the sale of its former EES Business for $ 20,000,000 and Webasto keeping the Holdback.

As a result of the agreement in principle to settle the litigation, the Company recorded additional litigation reserve expenses in the amount of $ 10,000,000 during the three months ended October 30, 2021, in other expense on the consolidated statements of operations and in other current liabilities on the consolidated balance sheet.

The Company executed a written settlement agreement with Webasto effective December 16, 2021 to officially and fully settle all claims in the lawsuit.

Under the terms of the written settlement agreement, the Company’s payment of the settlement amount of $ 20,000,000 occurred over a 24-month period from the effective date of the settlement agreement, and Webasto retained the Holdback.

As of April 30, 2023, the entire settlement amount has been paid.

The Company’s ability to borrow under the Revolving Facility is reduced by outstanding letters of credit.

Refer to Note 11—Debt for additional information.

Contract Cost Audits

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Business Acquisitions

Tomahawk Acquisition

On September 15, 2023, the Company closed its acquisition of Tomahawk Robotics, Inc., a leader in AI-enabled robotic control systems.

1 unchanged sentence

During the three months ended January 27, 2024, the holdback was decreased $ 100,000 as part of the working capital adjustment, and the total purchase price and goodwill, therefore, decreased by $ 100,000 as well.

The remaining $ 390,000 holdback was paid during the three months ended October 26, 2024.

The fair value of the shares issued was the closing price on September 15, 2023, the close of the Tomahawk purchase agreement.

Tomahawk is incorporated into AeroVironment’s UxS segment.

The acquisition will enable deeper integration of both companies’ technology, leading to enhanced interoperability and interconnectivity of uncrewed systems through a

singular platform with similar control features.

The acquisition will enable deeper integration of both companies’ technology, leading to enhanced interoperability and interconnectivity of uncrewed systems through a singular platform with similar control

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

The following table summarizes the provisional allocation of the purchase price over the estimated fair value of the assets and liabilities assumed in the acquisition of Tomahawk.

The purchase price allocation is expected to be finalized as soon as practicable within the measurement period, but not later than one year following the acquisition date (in thousands):

The following table summarizes the final allocation of the purchase price over the estimated fair value of the assets and liabilities assumed in the acquisition of Tomahawk (in thousands):

September 15,

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The goodwill is attributable to the synergies the Company expects to achieve through leveraging the acquired technology to its existing customers, the workforce of Tomahawk and expected future customers in the UxS market.

income tax purposes the acquisition is treated as a stock acquisition, and none of the goodwill is expected to be deductible.

For income tax purposes the acquisition is treated as a stock acquisition, as such the goodwill associated with this purchase is not deductible.

Tomahawk Supplemental Pro Forma Information (unaudited)

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The following unaudited pro forma summary presents condensed consolidated information of the Company as if the business acquisition had occurred on May 1, 2022 (in thousands):

Net income (loss) attributable to AeroVironment, Inc.

The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business acquisition included in the reported pro forma revenue and earnings.

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The following unaudited pro forma summary presents consolidated information of the Company as if the business acquisition had occurred on May 1, 2021 (in thousands):

Net loss attributable to AeroVironment, Inc.

The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business acquisition included in the reported pro forma revenue and earnings.

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Telerob Acquisition

On May 3, 2021, the Company closed its acquisition of Telerob pursuant to the terms of the Telerob Purchase Agreement.

Telerob develops, manufactures, sells, and services remote-controlled uncrewed ground robots and transport vehicles for civil and defense applications.

Pursuant to the Telerob Purchase Agreement at closing, the Company paid € 37,455,000 (approximately $ 45,400,000 ) in cash to the Telerob Seller (subject to certain purchase price adjustments as set forth in the Telerob Purchase Agreement), less (a) € 3,000,000 (approximately $ 3,636,000 ) to be held in escrow for breaches of the Telerob Seller’s fundamental warranties or any other of Telerob Seller’s warranties to the extent not covered by a representation and warranty insurance policy (the “RWI Policy”) obtained by the Company in support of certain indemnifications provided by the Telerob Seller;

(b) transaction-related fees and costs incurred by the Telerob Seller, including change in control payments triggered by the transaction;

and (c) 50% of the cost of obtaining the RWI Policy.

In addition, at closing the Company paid off approximately € 7,811,000 (approximately $ 9,468,000 ), of certain indebtedness of Telerob, which amount was paid in combination to the Telerob Seller and the lender under an agreement between Telerob GmbH and the lender providing for a reduced payoff amount.

This indebtedness was offset by cash on hand at Telerob at closing.

The escrow amount is to be released to the Telerob Seller, less any amounts paid or reserved, 30 months following the closing date.

In addition to the consideration paid at closing, the Telerob Seller may receive € 2,000,000 (approximately $ 2,139,000 ) in additional cash consideration if specific revenue targets for Telerob are achieved during the 12 month period after closing beginning on the first day of the calendar month following the closing (the “First Earnout Year”) and an additional € 2,000,000 (approximately $ 2,139,000 ) in cash consideration if specific revenue targets for Telerob are achieved in the 12 month period following the First Earnout Year.

The Telerob Seller was also entitled to receive up to € 2,000,000 (approximately $ 2,203,000 ) in additional cash consideration if specific awards and/or orders from the U.S.

military are achieved prior to the end of a 36-month post-closing period.

The contingent consideration was valued using a Black-Scholes option-pricing model.

The first year earnout of € 2,000,000 (approximately $ 2,139,000 ) was not achieved.

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The third earnout of € 2,000,000 (approximately $ 2,139,000 ) was not achieved.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

During the fiscal year ended April 30, 2022, the Company finalized its determination of the fair value of the assets and liabilities assumed as of the acquisition date, which is summarized in the following table (in thousands):

Fair value of assets acquired:

Accounts receivable

Unbilled receivable

Inventories, net

Prepaid and other current assets

Property and equipment, net

Operating lease assets

Customer relationships

Other intangible assets

Total assets acquired

Fair value of liabilities assumed:

Accounts payable

Wages and related accruals

Customer advances

Current operating lease liabilities

Other current liabilities

Non-current operating lease liabilities

Other non-current liabilities

Deferred income taxes

Total liabilities assumed

Total identifiable net assets

Fair value of consideration:

Cash consideration, net of cash acquired

Contingent consideration

Determining the fair value of the intangible assets acquired requires significant judgment, including the amount and timing of expected future cash flows, long-term growth rates and discount rates.

The fair value of the intangibles assets was determined using a discounted cash flow analysis, which were based on the Company’s best estimate of future sales, earnings and cash flows after considering such factors as general market conditions, anticipated customer demand, changes in working capital, long term business plans and recent operating performance.

Use of different estimates and judgments could yield materially different results.

The goodwill is attributable to the synergies the Company expects to achieve through leveraging the acquired technology to its existing customers, the workforce of Telerob and expected future customers in the UGV market.

For tax purposes the acquisition was treated as a stock purchase and the goodwill is not deductible.

Telerob Supplemental Pro Forma Information (unaudited)

Telerob revenue and loss from operations for the year ended April 30, 2022 since acquisition on May 3, 2021 was $ 29,177,000 and $ 12,115,000 , respectively.

The following unaudited pro forma summary presents consolidated information of the Company as if the business acquisition had occurred on May 1, 2020 (in thousands):

Net income attributable to AeroVironment, Inc.

The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business acquisition included in the reported pro forma revenue and earnings.

These pro forma amounts have been calculated by applying the Company’s accounting policies, assuming transaction costs had been incurred during the three months ended August 1, 2020, reflecting the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from May 1, 2020 with the consequential tax effects and including the results of Telerob prior to acquisition.

The Company incurred approximately $ 1,186,000 of acquisition-related expenses for the fiscal year ended April 30, 2022.

These expenses are included in selling, general and administrative on the Company’s consolidated statements of income (loss).

The unaudited pro forma supplemental information is based on estimates and assumptions, which the Company believes are reasonable and are not necessarily indicative of the results that have been realized had the acquisition been consolidated in the tables above as of May 1, 2020, nor are they indicative of results of operations that may occur in the future.

As part of the Telerob acquisition, the Company acquired a small foreign-based defined benefit pension plan.

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Change in projected benefit obligation (in thousands):

Pension benefit obligation balance as of April 30, 2023 and April 30, 2022, respectively

Pension benefit obligation balance as of April 30, 2024 and 2023, respectively

Interest cost

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Foreign currency exchange rate changes

Pension benefit obligation balance as of April 30, 2024 and April 30, 2023, respectively

Pension benefit obligation balance as of April 30, 2025 and 2024, respectively

Change in plan assets (in thousands):

Fair value of plan assets as of April 30, 2023 and April 30, 2022, respectively

Fair value of plan assets as of April 30, 2024 and 2023, respectively

Expected return on plan assets

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Foreign currency exchange rate changes

Fair value of plan assets as of April 30, 2024 and April 30, 2023, respectively

Fair value of plan assets as of April 30, 2025 and 2024, respectively

The accumulated benefit obligation is approximately equal to the projected benefit obligation.

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Total expected benefit payments

Net periodic benefit cost is recorded in interest (expense) income, net.

Net periodic benefit cost is recorded in interest (expense) income, net (in thousands).

Year Ended April 30,

(In thousands)

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(In thousands)

Expected return on plan assets

Actual return on plan assets

Interest cost

Actuarial loss

Actuarial gain (loss)

Net periodic benefit cost

Effective May 1, 2023, the Company reorganized its segments.

Due to the Company’s growth as an organization, the reorganization was implemented to drive additional operational improvements, foster synergies and provide leaders with greater autonomy over their product lines.

The Company’s reportable segments are as follows:

UnCrewed Systems—The UxS segment, the renamed UAS segment which consists of the former SUAS, MUAS and UGV segments and the recently acquired Tomahawk, focuses primarily on small UAS products designed to operate reliably at lower altitudes in a wide range of environmental conditions, providing a vantage point from which to collect and deliver valuable information as well as related support including training, spare and accessory parts, product repair, product replacement, maintenance and upgrades;

medium UAS products designed to operate reliably at medium altitudes with longer range while carrying larger payloads including airborne platforms, payloads and payload integration, and ground support equipment and other items and services related generally to uncrewed aircraft systems historically including ISR services;

Uncrewed Systems (“UxS”)—The UxS segment focuses primarily on small UAS products designed to operate reliably at lower altitudes in a wide range of environmental conditions, providing a vantage point from which to collect and deliver valuable information as well as related support including training, spare and accessory parts, product repair, product replacement, maintenance and upgrades;

UGV products designed to help responders remove, contain or neutralize these hazards in situations where improvised explosive devices, caustic chemicals, nuclear, radiological or biological hazards or violent individuals represent significant danger to humans;

and AI-enabled common control and communication solutions that allow any uncrewed system to be controlled from a common user interface while aggregating data from multiple platforms to provide real time intelligence.

Loitering Munitions Systems—The LMS segment, which consists of the former Tactical Missile Systems segment, focuses primarily on tube-launched aircraft that deploy with the push of a button, fly at higher speeds than small UAS products, and perform either effects delivery or reconnaissance missions, and related support services including training, spare parts, product repair, and product replacement.

Loitering Munitions Systems (“LMS”)—The LMS segment focuses primarily on tube-launched aircraft that deploy with the push of a button, fly at higher speeds than small UAS products, and perform either effects delivery or reconnaissance missions, and related support services including training, spare parts, product repair, and product replacement.

The LMS segment also includes customer-funded research and development programs.

MacCready Works— The MW segment, which consists of the former MacCready Works and HAPS segments, focuses on customer-funded research and development in the areas of HAPS, robotics, sensors, software analytics, data intelligence and connectivity.

MacCready Works (“MW”)— The MW segment focuses on customer-funded research and development in the areas of HAPS, robotics, sensors, software analytics, data intelligence and connectivity.

This segment contains the Company’s center of excellence for the development of machine learning, object identification and autonomy solutions and also seeks to identify new products, services and businesses for the Company.

Prior period segment information has been recast to align with the new segment structure.

The accounting policies of the segments are the same as those described in Note 1–Organization and Significant Accounting Policies.

The operating segments do not make sales to each other.

The following table (in thousands) sets forth segment revenue and adjusted operating income (loss) from operations for the periods indicated.

Segment adjusted operating income (loss) is defined as operating income (loss) before impairment of goodwill and accelerated amortization, intangible amortization, amortization of purchase accounting adjustments related to increasing the carrying value of certain assets to fair value, and acquisition related expenses.

Segment adjusted income (loss) from operations is the measure of profitability used by the CODM for purposes of making decisions about allocating resources to the segments and assessing performance.

The following table (in thousands) sets forth segment revenue and segment adjusted gross margin for the periods indicated.

Segment adjusted gross margin is defined as gross margin before intangible amortization and amortization of other purchase accounting adjustments related to increasing the carrying value of certain assets to fair value.

Segment adjusted gross margin is the measure of profitability used by the CODM for purposes of making decisions about allocating resources to the segments and assessing performance.

Year Ended April 30, 2025

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Contract services

Segment adjusted income (loss) from operations

Cost of sales

Intangible amortization included in cost of sales

Segment adjusted gross margin

Depreciation and amortization

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Contract services

Segment adjusted income from operations

Cost of sales

Intangible amortization included in cost of sales

Segment adjusted gross margin

Depreciation and amortization

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Contract services

Segment adjusted income (loss) from operations

Cost of sales

Intangible amortization included in cost of sales

Segment adjusted gross margin

Depreciation and amortization

The following table (in thousands) provides a reconciliation from segment adjusted income from operations to income (loss) before taxes:

Year Ended April 30,

Segment adjusted income from operations

Impairment of goodwill and accelerated amortization

Amortization of acquired intangible assets and other purchase accounting adjustments

Acquisition-related expenses

The following table (in thousands) provides a reconciliation from segment adjusted gross margin to income (loss) before taxes:

Segment adjusted gross margin

Intangible amortization included in cost of sales

Selling, general and administrative

Research and development

Impairment of goodwill

Interest expense, net

Other expense, net

Sale of ownership in HAPSMobile Inc.

joint venture

Other income (expense), net

Income (loss) before income taxes

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Corporate assets primarily consist of cash and cash equivalents, prepaid expenses and other current assets, long-term investments, property and equipment, net, operating lease right-of-use assets, deferred income taxes and other assets managed centrally on behalf of the business segments.

April 30, 2024

Identifiable assets

April 30, 2023

Identifiable assets

As of April 30, 2025

As of April 30, 2024

Capital expenditures are summarized in the table below (in thousands):

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government foreign military sales in which an end user is a foreign government, accounted for 52 %, 62 % and 53 % of revenue for each of the fiscal years ended April 30, 2025, 2024 and 2023, respectively.

For the fiscal year ended April 30, 2024 and 2023, Ukraine represented $ 274,136,000 , or 38 %, and $ 100,095,000 , or 19 %, respectively, of the Company’s consolidated revenues.

The Company’s international revenues from customers in each foreign country were less than 10 % of consolidated revenues for fiscal year 2022.

The Company’s internationally deployed in-service assets for UGV was $ 2,912,000 and $ 1,798,000 as of April 30, 2024 and 2023, respectively.

For the fiscal year ended April 30, 2025, 2024 and 2023, Ukraine represented $ 149,600,000 , or 18 %, $ 274,136,000 , or 38 %, and $ 100,095,000 , or 19 %, respectively, of the Company’s consolidated revenues.

The Company’s internationally deployed fixed assets for UGV was $ 5,033,000 and $ 2,912,000 as of April 30, 2025 and 2024, respectively.

The Company’s internationally deployed in-service assets for MUAS was $ 1,486,000 and $ 0 as of April 30, 2025 and 2024, respectively.

Subsequent Events

On May 1, 2025, the Company closed its acquisition of BlueHalo, pursuant to the Agreement and Plan of Merger, dated as of November 18, 2024 (the “Merger Agreement”) by and among the Company, Merger Sub, BlueHalo, and BlueHalo Holdings Parent, LLC, a Delaware limited liability company and sole member of BlueHalo (“Seller”).

Under the terms of the Merger Agreement, all of the equity interests of BlueHalo issued and outstanding immediately prior to the effective time of the acquisition were converted into the right to receive an aggregate of 17,425,849 shares of the Company’s common stock, fair value of $ 2,640,365,000 .

Due to the size, complexity and timing of the close of the acquisition, the purchase accounting for the business combination is incomplete at the time of this filing.

As a result, the Company is unable to provide the amounts recognized as of the acquisition date for the major classes of assets acquired and liabilities assumed, pre-acquisition contingencies and goodwill.

In addition, the Company is unable to provide pro forma revenues and earnings of the combined entity.

All required disclosures will be included in the Company's Quarterly Report on Form 10-Q for the fiscal first quarter ending August 2, 2025.

On June 2, 2025, the Company completed its purchase of a facility in Dayton, Ohio for $ 6,704,000 .

The facility will support the Cyber and Mission Systems business from the BlueHalo acquisition.

SUPPLEMENTARY DATA

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Other Informatio n.

On March 19, 2024 , Kevin McDonnell , our Senior Vice President and Chief Financial Officer , adopted a trading arrangement (the “McDonnell Rule 10b5-1 Trading Plan”) for the sale of shares of Common Stock that is intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c).

The McDonnell Rule 10b5-1 Trading Plan, which has a term of approximately 9 months , provides for the sale of shares of Common Stock issuable under the terms of certain restricted stock awards granted to Mr.

McDonnell by the Company.

The aggregate number of shares of Common Stock that will be subject to sale pursuant to the terms of the McDonnell Rule 10b5-1 Trading Plan, is 3,202 shares.

Other than with respect to the McDonnell Rule 10b5-1 Trading Plan, none of our directors or officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408 during the three-month period ended April 30, 2024.

None of our directors or officers informed us of the adoption or termination of a “ Rule 10b5-1 trading arrangement” or “ non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408 during the three-month period ended April 30, 2025.

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of AeroVironment, Inc.

To the stockholders and the Board of Directors of AeroVironment, Inc.

Opinion on Internal Control over Financial Reporting

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Insider Trading Policy

We have adopted an Insider Trading Policy addressing our policies and procedures governing securities trading by our directors, officers, employees and certain other service providers and the company itself, intended to promote compliance with insider trading laws, rules and regulations, including Nasdaq listing standards, applicable to the company and such personnel.

We have adopted an Insider Trading Policy addressing our policies and procedures governing securities trading by our directors, officers, employees and certain other service providers, intended to promote compliance with insider trading laws, rules and regulations, including Nasdaq listing standards, applicable to the company and such personnel.

A copy of the current Insider Trading Policy is filed with this Annual Report on Form 10-K as Exhibit 19.

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Agreement and Plan of Merger, dated as of August 18, 2023, by and among AeroVironment, Inc., Tropic Merger Sub, Inc., Tomahawk Robotics, Inc., and Shareholder Representative Services LLC, solely in its capacity as the Stockholder Representative.

Agreement and Plan of Merger, dated November 18, 2024, by and among the Company, Merger Sub, BlueHalo and Seller

Amended and Restated Certificate of Incorporation of AeroVironment, Inc.

Fourth Amended and Restated Bylaws of AeroVironment, Inc., amended as of December 1, 2022

d ated October 1, 2024

Fifth Amended and Restated Bylaws of AeroVironment, Inc., amended as of October 1, 2024

Form of AeroVironment, Inc.’s Common Stock Certificate

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Second Amendment to Lease Agreement dated as of May 13, 2020, by and between the Company and Hillside III LLC for the property located at 900 Enchanted Way, Simi Valley, CA 93065

Third Amendment to Lease Agreement dated as of October 16, 2024 by and between AeroVironment, Inc.

and Hillside III LLC related to 900 Innovators Way, Simi Valley, CA 93065, and related agreements

Fourth Amendment to Lease Agreement, dated April 2, 2025

Standard Industrial/Commercial Single-Tenant Lease, dated April 21, 2008, between AeroVironment, Inc.

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and certain non-employee director

Asset Purchase Agreement by and between Webasto Charging Systems, Inc.

and AeroVironment, Inc.

dated as of June 1, 2018

Side Letter Agreement by and between Webasto Charging Systems, Inc.

and AeroVironment, Inc.

dated as of June 29, 2018

AeroVironment, Inc.

Executive Severance Plan and Summary Description, effective January 1, 2019

Special Consulting Agreement by and between AeroVironment, Inc.

and Kirk Flittie dated as of July 13, 2019

Amended and Restated Executive Severance Plan of AeroVironment, Inc.

Executive Transaction Severance Plan of AeroVironment, Inc.

Stock Purchase Agreement, dated January 11, 2021, by and among AeroVironment, Inc., Arcturus UAV, Inc., and the shareholders and other equity interest holders of Arcturus UAV, Inc.

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Bank National Association

Third Amendment to Credit Agreement, dated October 4, 2024, by and among AeroVironment, Inc., certain lenders, letter of credit issuers, Bank of America, N.A., as the administrative agent and the swingline lender, and Bank of America, N.A., JPMorgan Chase Bank, N.A., U.S.

Bank National Association and Citibank, N.A.

Fourth Amendment to Credit Agreement, Amendment to Security and Pledge Agreement, and Joinder Agreement, dated May 1, 2025, by and among AeroVironment, Inc., certain lenders, letter of credit issuers, Bank of America, N.A., as the administrative agent and the swingline lender, and Bank of America, N.A., JPMorgan Chase Bank, N.A., U.S.

Bank National Association and Citibank, N.A, as co-syndication agents for the Term A facility.

Joinder Agreement, dated October 30, 2023, between AeroVironment, Inc.

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2023 Employee Stock Purchase Plan

Form of Seller and Sponsor Member Support Agreement

Form of Joinder and Lock-Up Agreement

Shareholder’s Agreement, dated as of November 18, 2024, by and among the Company and the Sponsor Members

Insider Trading Policy

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Cover Page Interactive Data File formatted as Inline XBRL and contained in Exhibit 101

(1) Incorporated by reference herein to the exhibits to the Company’s Quarterly Report on Form 10-Q filed March 9, 2007 (File No.

(2) Incorporated by reference herein to the exhibits to the Company’s Current Report on Form 8-K filed March 3, 2022 (File No.

(1) Incorporated by reference herein to the exhibits to the Company’s Registration Statement on Form S-1 (File No.

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(14) Incorporated by reference herein to the exhibits to the Company’s Quarterly Report on Form 10-Q filed March 9, 2016 (File No.

The representations and warranties contained in the Asset Purchase Agreement were made for the purposes of allocating contractual risk between the parties and not as a means of establishing facts and are qualified by information in disclosure schedules that the parties exchanged in connection with the signing of the Asset Purchase Agreement.

Moreover, the representations and warranties were made only as of the date of execution of the Asset Purchase Agreement and information concerning the subject matter of the representations and warranties may change after the date of the Asset Purchase Agreement.

Only parties to the Asset Purchase Agreement have a right to enforce the agreement.

Accordingly, security holders should not rely on the representations and warranties in the Asset Purchase Agreement.

(16) All schedules (or similar attachments) have been omitted from this filing pursuant to Item 601 of Regulation S-K.

The Company will furnish copies of any schedules to the Securities and Exchange Commission upon request.

(15) Incorporated by reference herein to the exhibits to the Company’s Quarterly Report on Form 10-Q filed March 7, 2018 (File No.

(18) Incorporated by reference herein to the exhibits to the Company’s Current Report on Form 8-K/A filed October 22, 2019 (File No.

(19) Incorporated by reference herein to the exhibits to the Company's Annual Report on Form 10-K filed June 29, 2021 (File No.

The representations and warranties contained in the Stock Purchase Agreement were made for the purposes of allocating contractual risk between the parties and not as a means of establishing facts and are qualified by information in disclosure schedules that the parties exchanged in connection with the signing of the Stock Purchase Agreement.

Moreover, the representations and warranties were made only as of the date of execution of the Stock Purchase Agreement and information concerning the subject matter of the representations and warranties may change after the date of the Stock Purchase Agreement.

Only parties to the Stock Purchase Agreement have a right to enforce the agreement.

Accordingly, security holders should not rely on the representations and warranties in the Stock Purchase Agreement.

All schedules (or similar attachments) have been omitted from this filing pursuant to Item 601 of Regulation S-K.

The Company will furnish copies of any schedules to the Securities and Exchange Commission upon request.

(16) Incorporated by reference herein to the exhibits to the Company's Quarterly Report on Form 10-Q filed March 4, 2022 (File No.

(17) Incorporated by reference herein to the exhibits to the Company's Annual Report on Form 10-K filed June 28, 2022 (File No.

The representations and warranties contained in the Share Purchase Agreement were made for the purposes of allocating contractual risk between the parties and not as a means of establishing facts and are qualified by information in disclosure schedules that the parties exchanged in connection with the signing of the Share Purchase Agreement.

Moreover, the representations and warranties were made only as of the date of execution of the Share Purchase Agreement and information concerning the subject matter of the representations and warranties may change after the date of the Stock Purchase Agreement.

Only parties to the Share Purchase Agreement have a right to enforce the agreement.

Accordingly, security holders should not rely on the representations and warranties in the Share Purchase Agreement.

All schedules (or similar attachments) have been omitted from this filing pursuant to Item 601 of Regulation S-K.

The Company will furnish copies of any schedules to the Securities and Exchange Commission upon request.

(18) Incorporated by reference herein to the exhibits to the Company's Quarterly Report on Form 10-Q filed December 7, 2022 (File No.

(19) Incorporated by reference herein to the exhibits to the Company's Annual Report on Form 10-K filed June 27, 2023 (File No.

Incorporated by reference herein to the exhibits to the Company's Annual Report on Form 10-K filed June 27, 2023 (File No.

(20) Incorporated by reference herein to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed August 17, 2023 (File No.

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(22) Incorporated by reference herein to the exhibits to the Company's Quarterly Report on Form 10-Q filed December 5, 2023 (File No.

(23) Incorporated by reference herein to the exhibits to the Company's Annual Report on Form 10-K filed June 26, 2024 (File No.

(24) Incorporated by reference herein to the exhibits to the Company's Current Report on Form 8-K filed October 3, 2024 (File No.

001 ‑ 33261).

(25) Incorporated by reference herein to the exhibits to the Company's Current Report on Form 8-K filed November 19, 2024 (File No.

001 ‑ 33261).

(26) Incorporated by reference herein to the exhibits to the Company's Quarterly Report on Form 10-Q filed December 4, 2024 (File No.

(27) Incorporated by reference herein to the exhibits to the Company's Current Report on Form 8-K filed April 7, 2025 (File No.

(28) Incorporated by reference herein to the exhibits to the Company's Current Report on Form 8-K filed May 1, 2025 (File No.

Pursuant to Items 601(b)(2) and/or 601(b)(10) of Regulation S-K, certain immaterial provisions of the agreement that would likely cause competitive harm to the Company if publicly disclosed have been redacted or omitted.

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(Principal Executive Officer)

Senior Vice President and

Executive Vice President and

June 24, 2025

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June 24, 2025

/s/ David Wodlinger

June 24, 2025

David Wodlinger

/s/ Henry Albers

June 24, 2025

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 8. Financial Statements and Supplementary Data