What changed in this filing

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Item 9A. Controls and Procedures

2025-11-10 compared with 2024-10-30 · 971 added, 610 removed, 1245 unchanged (56% of the section changed)

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Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Form 10-K, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities and Exchange Act of 1934, as amended (the "Exchange Act")), which have been designed to provide reasonable assurance that the information required to be disclosed by us, in reports filed under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this Annual Report on Form 10-K, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities and Exchange Act of 1934, as amended (the "Exchange Act")), which have been designed to provide reasonable assurance that the information required to be disclosed by us, in reports filed under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on this evaluation, carried out by us under the supervision of our Chief Executive Officer and Chief Financial Officer, and with the participation of our management, we concluded that our disclosure controls and procedures were not effective, as of July 31, 2025, as a result of the material weaknesses in our internal control over financial reporting discussed below.

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A system of controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Management’s Report on Internal Control Over Financial Reporting

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Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of July 31, 2025.

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A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

We did not design and maintain an effective control environment commensurate with our financial reporting requirements based on the criteria in the COSO framework, as we lacked a sufficient complement of resources with an appropriate level of knowledge and experience to establish effective process and controls.

The control environment material weakness contributed to other material weaknesses within our system of internal control over financial reporting at the control activity level, where we did not design and implement effective control activities, including controls related to revenue, inventory and other assets.

Deficiencies in control activities contributed to accounting errors and the potential for there to have been material accounting errors within revenue, inventory and other assets.

revenue, inventory, other assets, contract liabilities and complex accounting matters and transactions (including debt, convertible preferred stock and related embedded derivatives).

Deficiencies in control activities contributed to misstatements and the potential for there to have been material misstatements within these areas.

An international component of our Allerium segment had ineffective controls.

Specifically, we did not design and maintain effective general information technology controls (“GITCs”) and business process controls in the following areas:

(i) user access controls to ensure appropriate segregation of duties and to adequately restrict user and privileged access to financial applications, programs and data to appropriate company personnel;

(ii) program change management controls to ensure that changes to information technology (“IT”) programs and data affecting financial applications and underlying accounting records are properly identified, tested, authorized and implemented with appropriate segregation of duties;

and (iii) business process controls to ensure that journal entries were not amended prior to posting, as the enterprise resource planning (“ERP”) system which the international component operates does not restrict approvers from changing journal entries prior to posting.

While no material misstatements were identified with respect to this international component in fiscal 2025, these deficiencies impact control activities over all financial statement account balances, classes of transactions and disclosures and contributed to the potential for there to have been material misstatements within the international component.

Deloitte and Touche LLP, our independent registered public accounting firm, has performed an audit of our internal control over financial reporting as of July 31, 2025.

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Changes In Internal Control Over Financial Reporting

Other than for the material weaknesses described above, there have been no changes in our internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act that occurred during our fiscal quarter ended July 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other than for the material weakness related to our international component described above, which accounted for 5.7%, 4.1% and 3.3% of our consolidated total assets and 7.6%, 5.9% and 4.6% of our consolidated net sales as of and for the three fiscal years ended July 31, 2025, 2024 and 2023, respectively, and for the on-going remediation efforts described below, there have been no changes in our internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act that occurred during our fiscal quarter ended July 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Remediation Plan

Our remediation efforts are ongoing and we will continue our initiatives to hire additional skilled resources in program management and accounting and finance related functions, and implement and document policies, procedures, and internal controls.

Our remediation efforts are ongoing and we will continue our initiatives to hire and engage additional skilled resources in program management and accounting and finance related functions, and implement and document policies, procedures and internal controls.

Management is committed to the remediation of the material weaknesses described above.

To date, management has undertaken the following remedial actions in conjunction with its remediation plan:

• Reorganized and reassigned responsibilities for executing specific internal controls over financial reporting to staff within the finance organization whose experience aligns more closely with these responsibilities;

• Hired more qualified staff with sufficient knowledge and experience to strengthen our financial reporting;

• Engaged third-party consultants to perform a comprehensive review of our accounting and reporting functions to assist in designing our remediation plan;

• Designed and began implementing a comprehensive remediation plan to enhance our internal control environment that was approved by the Audit Committee;

• Initiated and will continue the process to document, implement and redesign controls, policies, and procedures with an appropriate level of precision to detect a material misstatement, and to retain sufficient documentation to support the operating effectiveness of controls over revenue, inventory, other assets, contract liabilities, debt, convertible preferred stock and related embedded derivatives;

• While management has made significant progress in remediating controls relating to complex accounting matters and transactions by engaging a third-party specialist with the requisite knowledge, experience and resources, the material weakness will not be considered remediated until the implemented controls operate for a sufficient period of time and management had concluded, through testing, that the related controls are effective;

• We engaged a third-party specialist with sufficient knowledge and experience to oversee our internal audit function;

such individual is independent of management and reports directly to the Audit Committee;

• With respect to our international component's operations, accounting and financial reporting, management initiated and will continue to implement proper segregation of duties and enhance control activities over GITCs.

We will continue to monitor the effectiveness of our remediation plan and refine the remediation plan as appropriate.

These actions represent significant progress in addressing the material weaknesses.

However, they do not represent the full suite of improvements that we plan to make in order to strengthen our internal control over financial reporting.

Additional components of our remediation plan include:

• Conducting training sessions for all control owners and relevant personnel to improve documentation that supports effective control activities, including evidence of the completeness and accuracy of information used in controls;

• For those employees involved in the estimate at completion (“EAC”) process, conducting specialized training sessions related to newly designed or enhanced control activities that were put in place for preparing and reviewing an EAC and its impact on the accuracy of financial reporting;

• With respect to our international component's operations, accounting and financial reporting, updating and documenting its policies and procedures, including IT policies and procedures and the enhancement of certain control activities over user access, change management and the review of third-party services organization reports.

Remediation of the identified material weaknesses and strengthening of our internal control environment will require a substantial effort throughout fiscal 2026 and beyond, as necessary.

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Securities Trading Plans of Directors and Officers

During the three months ended July 31, 2024, none of our directors or officers adopted or terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as each term is defined in Item 408(a) of Regulation S-K).

During the three months ended July 31, 2025, none of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or adopted or terminated a non-Rule 10b5-1 trading arrangement (as each term is defined in Item 408(a) of Regulation S-K).

Transaction Bonus Agreements and Restricted Stock Awards

On November 7, 2025, the Company approved transaction bonuses for several employees, including certain of its named executive officers, pursuant to which such recipients will be eligible to receive a cash bonus equal to a specified percentage of Transaction Proceeds in connection with a Qualifying Transaction.

The percentages of Transaction Proceeds payable to each named executive officer are as follows:

Bondi – 0.19%, Mr.

Walther – 0.19%, Mr.

Robertson – 0.216%, and Mr.

Traub – 0.739%.

The bonuses will be paid on the first scheduled payroll date following the closing of the Qualifying Transaction, subject to applicable tax withholdings and other authorized deductions;

provided that any portion of a bonus attributable to certain contingent proceeds will be paid on the same schedule and under the same terms and conditions as apply to such contingent proceeds (but in no event later than the fifth anniversary of the closing of the Qualifying Transaction).

Each recipient must remain in continued employment with the Company through the closing of a Qualifying Transaction in order to receive the bonus, and will forfeit the bonus if (i) the recipient resigns for any reason or is terminated for cause prior to the Qualifying Transaction or (ii) the Company terminates the recipient’s employment without cause more than three months prior to the Qualifying Transaction;

except, that if the Company terminates a recipient’s employment without cause within three months prior to the Qualifying Transaction, the recipient will remain eligible to receive the bonus.

In addition, Mr.

Traub’s agreement provides that if the Company terminates his employment without Cause or he resigns for Good Reason on or prior to first anniversary of the closing of the Qualifying Transaction, in lieu of the lump sum cash severance payment that he would otherwise be entitled to under his employment agreement, he will be entitled to a cash amount equal to one and a half (1.5) times the sum of his base salary and target bonus.

For purposes of the bonus, (a) "Qualifying Transaction" means the consummation of a Specified Permitted Individual Disposition (as defined in the Company’s Credit Facility as in effect as of November 7, 2025) on or prior to December 31, 2026, and (b) “Transaction Proceeds” means the aggregate cash and non-cash consideration received by the Company in connection with the Qualifying Transaction (before deducting any transaction expenses, indebtedness or similar purchase price reductions set forth in the definitive agreement for such Qualifying Transaction).

In addition, on November 7, 2025, the Company approved grants of restricted stock unit awards under the 2023 Plan for the fiscal year 2026, including to its named executive officers, pursuant to a form of restricted stock unit award agreement which provides that the recipients will receive pro-rated vesting upon a termination without Cause (as defined in the 2023 Plan);

provided, however, that if the recipient is terminated without Cause (as defined in the 2023 Plan) at or within 12 months following a Qualifying Transaction (as defined above) and prior to the vesting of the first vesting tranche of such award, the recipient will instead receive vesting acceleration with respect to the first vesting tranche of the award.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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Exhibit 3(a)(ii) to the Registrant’s 2017 Form 10-K

Certificate of Designations of Serie s B-1 Convertible Preferred Stock, dated June 17, 2024

Certificate of Designations of Series B-1 Convertible Preferred Stock, dated June 17, 2024

Exhibit 3.1 to the Registrant's Form 8-K filed June 18, 2024

Certificate of Elimination of Series B-1 Convertible Preferred Stock, dated October 23, 2024

Exhibit 3(a)(v) to the Registrant's 2024 Form 10-K

Certificate of Designations of Series B-2 Convertible Preferred Stock, dated October 17, 2024

Exhibit 3.1 to the Registrant’s Form 8-K, filed October 18, 2024

Certificate of Elimination eliminating the Series B- 2 Convertible Preferred Stock, dated March 4, 2025

Exhibit 3.2 to the Registrant’s Form 8-K, filed March 4, 2025

Certificate of Designations designating the Series B- 3 Convertible Preferred Stock, dated March 4, 2025

Exhibit 3.1 to the Registrant’s Form 8-K, filed March 4, 2025

Form of Warrant Agreement

Exhibit 4.1 to the Registrant’s Form 8-K, filed October 18, 2024

Exhibit 4.1 to the Registrant’s Form 8-K, filed March 4, 2025

Description of Comtech Telecommunications Corp.'s Securities Registered Pursuant to Section 12 of the Exchange Act

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Exhibit 10(h)(1) to the Registrant’s 2017 Form 10-K

Description of Exhibit

Incorporated By

Reference to Exhibit

Form of Restricted Stock Unit Agreement (eligible for dividend equivalents) for Non-employee Directors pursuant to the 2000 Stock Incentive Plan

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Exhibit 10.1 to the Registrant's Form 10-Q, filed June 3, 2020

Description of Exhibit

Incorporated By

Reference to Exhibit

10( g )( 4 )*

Form of Restricted Stock Unit Agreement (eligible for dividend equivalents) for Non-employee Directors pursuant to the 2000 Stock Incentive Plan - 2022

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Exhibit 10.1 to the Registrant’s Form 8-K, filed June 18, 2024

Description of Exhibit

Incorporated By

Reference to Exhibit

Waiver and Amendment No.

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Exhibit 10.2 to the Registrant’s Form 8-K, filed October 18, 2024

Description of Exhibit

Incorporated By

Reference to Exhibit

Subscription and Exchange Agreement, dated as of Octo ber 17, 2024, by and among Comtech Telecommunications Corp.

and the Inves tors named therein

Exhibit 10.3 to the Registrant’s Form 8-K, filed October 18, 2024

Registration Rights A greement, dated Octobe r 17, 2024, by and among Comtech Telec ommunications Corp.

Waiver and Amendment No.

2 to Credit Agreement, dated as of March 3, 2025, by and among Comtech Telecommunications Corp., as borrower, the lenders named therein, TCW Asset Management Company LLC, as term loan agent, and Wingspire Capital LLC, as revolving agent

Exhibit 10.1 to the Registrant’s Form 8-K, filed March 4, 2025

Waiver and Amendment No 1.

to Subordinated Credit Agreement, dated as of March 3, 2025, by and among Comtech Telecommunications Corp., as borrower, the guarantors named therein, the lenders named therein, and U.S.

Bank Trust Company, National Association, as agent.

Exhibit 10.2 to the Registrant’s Form 8-K, filed March 4, 2025

Amendment No.

3 to Credit Agreement, dated as of July 21, 2025, by and among Comtech Telecommunications Corp., as borrower, the lenders named therein, TCW Asset Management Company LLC, as administrative agent, and Wingspire Capital LLC, as revolving agent.

Exhibit 10.1 to the Registrant’s Form 8-K, filed July 22, 2025

Amendment No 2.

to Subordinated Credit Agreement, dated as of July 21, 2025, by and among Comtech Telecommunications Corp., as borrower, the guarantors named therein, the lenders named therein, and U.S.

Bank Trust Company, National Association, as agent.

Exhibit 10.2 to the Registrant’s Form 8-K, filed July 22, 2025

Subscription and Exchange Agreement, dated as of October 17, 2024, by and among Comtech Telecommunications Corp.

and the Investors named therein

Exhibit 10.3 to the Registrant’s Form 8-K, filed October 18, 2024

Form of Voti ng Agreement

Exhibit 10.4 to the Registrant’s Form 8-K, filed October 18, 2024

Subscription and Exchange Agreement, dated as of March 3, 2025, by and among Comtech Telecommunications Corp.

and the Investors named therein

Exhibit 10.3 to the Registrant’s Form 8-K, filed March 4, 2025

Form of Voting Agreement

Exhibit 10.4 to the Registrant’s Form 8-K, filed March 4, 2025

Registration Rights Agreement, dated as of March 3, 2025, by and among Comtech Telecommunications Corp.

and the Investors named therein

Exhibit 10.5 to the Registrant’s Form 8-K, filed March 4, 2025

Cooperation Agreement dated December 16, 2021, by and among Comtech Telecommunications Corp., Outerbridge Partners, LP, Outerbridge Capital Management, LLC, Outerbridge Partners GP, LLC, Outerbridge Bartleby Fund, LP, Outerbridge Bartleby GP, LLC, and Rory Wallace

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Exhibit 10.1 to the Registrant’s Form 8-K, filed September 13, 2022

Description of Exhibit

Incorporated By

Reference to Exhibit

Restricted Stock Unit Agreement with Ken Peterman Pursuant to the Comtech Telecommunications Corp.

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Exhibit 10.1 to the Registrant’s Form 8-K, filed April 1, 2024

Employment Agreement A mendment 1 between Comtech Telecommunications Corp.

Employment Agreement Amendment 1 between Comtech Telecommunications Corp.

and John Ratigan

Exhibit 10.2 to the Registrant’s Form 8-K, filed April 1, 2024

Form of Reten tion Bonus Agreement

Employment Agreement, dated October 28, 2024, between Comtech Telecommunications Corp.

and John Ratigan

Exhibit 10.7 to the Registrant’s Form 10-Q, filed January 13, 2025

Separation Agreement, dated January 10, 2025, by and between Comtech Telecommunications Corp.

and John Ratigan

Exhibit 10.1 to the Registrant’s Form 8-K, filed January 13, 2025

Form of Retention Bonus Agreement

Exhibit 10.1 to the Registrant’s Form 8-K, filed May 2, 2024

Comtech Telecommunications Corp.

2023 Equity and Incentive P lan

Exhibit 10.4 to the Registrant’s Form 10-Q, filed June 18, 2024

Form of Restricted Stock U n it Agreement pursuant to the C o mtech Telecommunications C o rp.

2023 Equity and Incentive Plan , as amended

Exhibit 10.9 to the Registrant’s Form 10-Q, filed March 12, 2025

Form of Restricted Stock Unit Agreement pursuant to the Comtech Telecommunications Corp.

2023 Equity and Incentive Plan

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Form of Long Term Performance Award Agreement pursuant to the Comtech Telecommunications Corp.

2023 Equi ty and Incentive Plan

2023 Equity and Incentive Plan

Exhibit 10.6 to the Registrant’s Form 10-Q, filed June 18, 2024

Description of Exhibit

Incorporated By

Reference to Exhibit

Form of Other Stock Award Agreement pursuant to the 2023 Equity and Incentive Plan

Exhibit 10(v)(3) to the Registrant’s 2024 Form 10-K

Form of Restricted Stock Unit Agreement to Non-employee Directors pursuant to the Comtech Telecommunications Corp.

2023 Equity and Incentive Plan

Exhibit 10(v)(4) to the Registrant’s 2024 Form 10-K

Form of Restricted Stock Agreement to Non-employee Directors pursuant to the Comtech Telecommunications Corp.

2023 Equity and Incentive Plan

Insider Trading Policies and Procedur es of the C o mpany

Exhibit 10(v)(5) to the Registrant’s 2024 Form 10-K

Form of Cash-Settled Performance Award Agreement Pursuant to Comtech Telecommunications Corp.

2023 Equity and Incentive Plan

Exhibit 10.9 to the Registrant’s Form 10-Q, filed January 13, 2025

Employment Agreement, dated November 27, 2024, between Comtech Telecommunications Corp.

and Kenneth H.

Exhibit 10.8 to the Registrant’s Form 10-Q, filed January 13, 2025

Employment Agreement Amendment No.

1, dated January 13, 2025, between Comtech Telecommunications Corp.

and Kenneth H.

Exhibit 10.3 to the Registrant’s Form 10-Q, filed March 12, 2025

Employment Agreement, dated February 26, 2024, between Comtech Telecommunications Corp.

and Jeffery Robertson

Exhibit 10.4 to the Registrant’s Form 10-Q, filed March 12, 2025

Employment Agreement Amendment No.

1, dated January 10, 2025, between Comtech Telecommunications Corp.

and Jeffery Robertson

Exhibit 10.5 to the Registrant’s Form 10-Q, filed March 12, 2025

Description of Exhibit

Incorporated By

Reference to Exhibit

Cooperation Agreement, dated November 17, 2024, by and among Comtech Telecommunications Corp.

and Michael Porcelain, Fred Kornberg and Oleg Timoshenko

Exhibit 10.1 to the Registrant’s Form 8-K, filed November 18, 2024

Form of Indemnification Agreement by and among Comtech Telecommunications Corp.

and the Board of Directors and Certain Officers

Exhibit 10.1 to the Registrant’s Form 8-K, filed December 13, 2024

Insider Trading Policies and Procedures of the Company

Exhibit 19 to the Registrant’s 2024 Form 10-K

Subsidiaries of the Registrant

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Clawback Policy of the Company

Exhibit 97 to the Registrant's 2024 Form 10-K

101.INS The following financial statements from the Company's Annual Report on Form 10-K for the fiscal year ended July 31, 2025, formatted in inline XBRL:

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COMTECH TELECOMMUNICATIONS CORP.

October 30, 2024 By:

/s/John Ratigan

(Date) John Ratigan, President and

Chief Executive Officer

November 10, 2025 By:

/s/Kenneth H.

(Date) Kenneth H.

Traub, Chairman of the Board

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title

October 30, 2024 /s/John Ratigan Director, President and Chief Executive Officer

(Date) John Ratigan (Principal Executive Officer)

October 30, 2024 /s/Michael A.

November 10, 2025 /s/Kenneth H.

Traub Chairman of the Board

(Date) Kenneth H.

Traub President and Chief Executive Officer

(Principal Executive Officer)

November 10, 2025 /s/Michael A.

Bondi Chief Financial Officer

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Bondi (Principal Financial and Accounting Officer)

October 30, 2024 /s/Wendi Carpenter Director

November 10, 2025 /s/Wendi Carpenter Director

(Date) Wendi Carpenter

October 30, 2024 /s/Judy Chambers Director

(Date) Judy Chambers

October 30, 2024 /s/Bruce T.

November 10, 2025 /s/Bruce T.

Crawford Director

(Date) Bruce T.

October 30, 2024 /s/Mark Quinlan Chairman of the Board

November 10, 2025 /s/Michael J.

Hildebrandt Director

(Date) Michael J.

November 10, 2025 /s/Mark Quinlan Director

(Date) Mark Quinlan

October 30, 2024 /s/Dr.

Shamash Director

October 30, 2024 /s/Lawrence J.

November 10, 2025 /s/Lloyd A.

Sprung Director

(Date) Lloyd A.

November 10, 2025 /s/Lawrence J.

Waldman Director

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In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of July 31, 2024, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated October 30, 2024, expressed an adverse opinion on the Company’s internal control over financial reporting because of material weaknesses.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses and negative cash outflows from operations, and may be unable to maintain compliance with financial covenants required by its credit agreement that raise substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of July 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 10, 2025, expressed an adverse opinion on the Company’s internal control over financial reporting because of material weaknesses.

Basis for Opinion

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• For each specific identified material contract selected, we performed the following:

◦ Evaluated whether the contract was properly included in management’s calculation of overtime revenue based on the terms and conditions of each contract, including whether continuous transfer of control to the customer occurred as progress was made toward fulfilling the performance obligation.

▪ Evaluated whether the contract was properly included in management’s calculation of over time revenue based on the terms and conditions of each contract, including whether continuous transfer of control to the customer occurred as progress was made toward fulfilling the performance obligation.

▪ Compared the transaction prices to the consideration expected to be received based on current rights and obligations under the contracts and any modifications that were agreed upon with the customers.

▪ Confirmed certain items with the customer, such as contract amount, approved change orders, invoices received, payments made, liquidated damages, if any, and amounts owed to the Company.

▪ Tested management’s identification of distinct performance obligations by evaluating whether the underlying goods, services, or both were highly interdependent and interrelated.

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Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both.

The goodwill balance was $284.2 million as of July 31, 2024, of which $174.1 million was allocated to the Terrestrial and Wireless Networks Reporting Unit (“Terrestrial and Wireless Networks”) and $110.1 million was allocated to the Satellite and Space Communications Reporting Unit (“Satellite and Space Communications”).

The fair value of Terrestrial and Wireless Networks exceeded its carrying value by 24.7% as of the measurement date and, therefore, no impairment was recognized.

The carrying value of the Satellite and Space Communications reporting unit exceeded its fair value by 10.4% primarily due to declines in financial performance.

Consequently, the Company recognized an impairment loss for goodwill, net, related to the Satellite and Space Communications reporting unit of $48,925,000 for the year ended July 31, 2024.

We identified goodwill for Terrestrial and Wireless Networks and Satellite and Space Communications as a critical audit matter because of the significant judgments made by management to estimate the fair value of the reporting unit and the differences between their fair value and carrying value.

Given the Satellite and Space Communications segment's financial performance in the first quarter of fiscal 2025, and considering triggering events within this segment prior to the issuance of the first quarter fiscal 2025 financial statements, the Company determined that they were required to perform another quantitative impairment test on an interim basis as of October 31, 2024.

Following the same approach as outlined above, ultimately, based on the quantitative evaluations, the Company determined that the carrying value of the Satellite and Space Communications reporting unit exceeded its fair value and recognized a goodwill impairment loss of $79.6 million in the first quarter of fiscal 2025.

The goodwill balance was $204.6 million as of July 31, 2025, of which $174.1 million was allocated to the Allerium Reporting Unit (formerly, Terrestrial and Wireless Networks) and $30.5 million was allocated to the Satellite and Space Communications Reporting Unit (“Satellite and Space Communications”).

The fair value of Allerium exceeded its carrying value by 7.3% as of the measurement date and, therefore, no impairment was recognized.

The fair value of the Satellite and Space Communications reporting unit exceeded its carrying value by 19.9% as of the measurement date and, therefore, no impairment was recognized.

We identified goodwill for Allerium and Satellite and Space Communications as a critical audit matter because of the significant judgments made by management to estimate the fair value of the reporting unit and the differences between their 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 selection of the discount rate and forecasts of future revenue and operating margins.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the discount rate and forecasts of future revenue and operating margins used by management to estimate the fair value of Terrestrial and Wireless Networks and Satellite and Space Communications included the following, among others:

Our audit procedures related to the discount rate and forecasts of future revenue and operating margins used by management to estimate the fair value of Allerium and Satellite and Space Communications included the following, among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of the reporting units, such as controls related to management’s selection of the discount rate and forecasts of future revenue and operating margins.

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• Assessing the concluded fair value of the sum of the aggregate reporting units relative to the business enterprise as a whole based on market prices as of the impairment assessment date.

Debt - Refer to Notes 8 and 9 to the Financial Statements

Critical Audit Matter Description

The Company has current and long-term debt of $4.1 million and $210.0 million, respectively, as of July 31, 2025.

Debt is recorded at initial fair value, which normally reflects the proceeds received by the Company, net of debt issuance costs.

Debt is subsequently stated at amortized cost.

Debt issuance costs, discounts and premiums are generally amortized to interest expense using the effective interest method, over the term of the debt.

Debt issuance costs related to a recognized debt liability are presented as a direct deduction of the carrying amount of that debt, consistent with debt discounts.

Debt issuance costs related to the Company's revolving facility are deferred and recorded as an asset.

Debt issuance costs paid to lenders related to a recognized debt liability are netted against the proceeds from the related debt while debt issuance costs paid to third parties are expensed as incurred.

Debt instruments are also evaluated by the Company for the existence of features that must be separated and accounted for as a derivative.

During the year ended July 31, 2025, the Company entered into various debt transactions that involved issuance of new debt and modification of existing debt.

We identified the accounting for debt and the related debt transactions, as a critical audit matter because of the complexity involved in (i) evaluating the accounting for the new debt agreements or debt amendments including whether such transactions resulted in a debt modification or extinguishment and the associated impact on debt issuance costs, and (ii) evaluating the existence of and accounting for features embedded in new or amended debt agreements that must be separated and accounted for as a derivative.

This required an increased extent of effort due to the potential magnitude and complexity of the debt transactions, including the assistance of our professionals with specialized knowledge and skills in the relevant technical accounting guidance required when performing audit procedures to address these matters.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the accounting for debt and related debt transactions included the following, among others:

• We tested the effectiveness of controls over debt including those over the application of relevant technical accounting guidance to complex and significant debt transactions.

• We evaluated and tested management's debt modification or extinguishment analysis by:

▪ Testing the accuracy and completeness, including mathematical accuracy, of management's analysis.

▪ Evaluating management's analysis over whether the debt transactions met the conditions to be treated as a debt modification or extinguishment by evaluating it against the relevant technical accounting guidance.

• We evaluated the conclusions reached by management on its analysis of the terms in the new or amended debt agreements to evaluate the existence of features in the new or amended debt agreements that must be separated and accounted for as a derivative by:

▪ Reading the terms for all debt agreements to evaluate the existence of features in the new or amended debt agreements that must be separated and accounted for as a derivative.

▪ Evaluating management's analysis identifying the existence of and accounting for the features in the new or amended debt agreements that must be separated and accounted for as a derivative by evaluating it against the relevant technical accounting guidance.

Liquidity - Refer to Note 1 to the financial statements

Critical Audit Matter Description

The Company’s ability to meet future anticipated liquidity needs over the next year beyond the issuance date of the financial statements will largely depend on their ability to execute on their operational strategy, generate positive cash inflows from operations, maximize the Company’s borrowing capacity under the Credit Facility.

The Company’s ability to do so may also be affected by general economic, financial and other factors which are beyond their control.

Based on the foregoing, over the next year beyond the issuance date of the financial statements, the Company believes that they will:

(i) be able to generate sufficient positive cash inflows, maximize their borrowing capacity to continue as a going concern, and (ii) comply with the covenants contained in their credit facilities.

To assess the Company's ability to meet obligations as they come due and assess future compliance with debt covenants for at least twelve months from the issuance date of the financial statements, the Company has forecasted future financial results which requires significant judgment and estimation.

Auditing management's disclosure regarding liquidity and going concern, specifically the judgments and estimates in the Company's forecasted financial results involved especially subjective judgment and significant audit effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company's evaluation and disclosure of liquidity and going concern included the following, among others:

• We tested the effectiveness of internal controls over the Company's going concern evaluation, including the inputs, estimates and assumptions used in their forecasted financial results.

• We evaluated the Company's forecasted financial results and ability to meet obligations as they come due for at least twelve months from the issuance date of the financial statements by:

▪ Testing management's key assumptions, including ability to achieve forecasted results through executing on the Company's operational strategy.

▪ Obtaining the Company's amended debt agreements and assessing whether the terms were appropriately considered when concluding on the Company's debt covenant compliance.

▪ Comparing the Company's forecasted future financial results to (1) historical results and previous forecasts, (2) internal communications to management and the Board of Directors, (3) historical variances in forecasted balances against actual results including for the first two months of fiscal year 2026 and (4) macroeconomic factors.

• We evaluated the completeness of the Company's future obligations, including whether such obligations were consistent with evidence obtained in other areas of the audit.

/s/ DELOITTE & TOUCHE LLP

Jericho, New York

October 30, 2024

November 10, 2025

We have served as the Company’s auditor since 2015.

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In our opinion, because of the effect of the material weaknesses identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of July 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended July 31, 2024, of the Company and our report dated October 30, 2024, expressed an unqualified opinion on those financial statements and financial statement schedule and included an explanatory paragraph regarding substantial doubt about the Company's ability to continue as a going concern.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended July 31, 2025, of the Company and our report dated November 10, 2025, expressed an unqualified opinion on those financial statements and financial statement schedule.

Basis for Opinion

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The Company did not design and maintain an effective control environment commensurate with their financial reporting requirements based on the criteria in the COSO framework, as the Company lacked a sufficient complement of resources with an appropriate level of knowledge and experience to establish effective process and controls.

The control environment material weakness contributed to other material weaknesses within the Company’s system of internal control over financial reporting at the control activity level, where the Company did not design and implement effective control activities, including controls related to revenue, inventory, other assets, contract liabilities, and complex accounting matters and transactions (including debt, convertible preferred stock and related embedded derivatives).

An international component of the Allerium segment (the “international component”) had ineffective controls.

Specifically, the Company did not design and maintain effective general information technology controls (“GITCs”) and business process controls in the following areas:

These deficiencies impact control activities over all financial statement account balances, classes of transactions, and disclosures within the international component.

These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements, and financial statement schedule, as of and for the year ended July 31, 2025, of the Company, and this report does not affect our report on such financial statements.

1 unchanged sentence

Jericho, New York

October 30, 2024

November 10, 2025

COMTECH TELECOMMUNICATIONS CORP.

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Accrued expenses and other current liabilities 58,423,000 62,245,000

Current portion of long-term debt 4,050,000 4,375,000

Current portion of credit facility, net 4,050,000 4,050,000

Operating lease liabilities, current 7,250,000 7,869,000

2 unchanged sentences

Total current liabilities 158,249,000 183,547,000

Non-current portion of long-term debt, net 170,486,000 160,029,000

Non-current portion of credit facility, net 114,414,000 173,527,000

Non-current portion of subordinated credit facility, net 95,588,000 —

Operating lease liabilities, non-current 29,376,000 30,258,000

Income taxes payable 2,231,000 2,208,000

Income taxes payable, non-current 1,818,000 2,231,000

Deferred tax liability, net 4,619,000 6,193,000

Long-term contract liabilities 21,005,000 21,035,000

Warrant and derivative liabilities 17,849,000 5,254,000

Other liabilities 3,950,000 4,060,000

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Convertible preferred stock, par value $ 0.10 per share;

authorized and issued 171,827 shares at July 31, 2024 (includes accrued dividends of $ 1,341,000 ) and authorized 125,000 shares;

issued 100,000 at July 31, 2023 (includes accrued dividends of $ 604,000 )

authorized and issued 178,181 shares at July 31, 2025 (redemption value of $ 204,153,000 , which includes accrued dividends of $ 1,520,000 ) and authorized and issued 171,827 shares at July 31, 2024 (redemption value of $ 180,076,000 , which includes accrued dividends of $ 1,341,000 )

189,545,000 180,076,000

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Additional paid-in capital 548,722,000 640,145,000

Retained earnings 103,580,000 238,913,000

Retained (deficit) earnings ( 6,895,000 ) 103,580,000

546,271,000 748,102,000

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CEO transition costs 2,117,000 2,916,000 9,090,000

Loss on business divestiture 1,199,000 — —

Proxy solicitation costs 2,682,000 — —

Loss on business divestiture — 1,199,000 —

266,972,000 237,069,000 199,120,000

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Interest (income) and other 155,000 678,000 1,226,000

Write-off of deferred financing costs 1,832,000 — —

Write-off of deferred financing costs and debt discounts 8,977,000 1,832,000 —

Change in fair value of warrants and derivatives ( 38,498,000 ) ( 4,273,000 ) —

Change in fair value of convertible preferred stock purchase option

liability — — ( 1,005,000 )

Loss before benefit from income taxes ( 155,382,000 ) ( 100,280,000 ) ( 30,847,000 )

1 unchanged sentence

Net loss $ ( 155,302,000 ) ( 99,985,000 ) ( 26,899,000 )

Loss on extinguishment of convertible preferred stock ( 19,555,000 ) — —

Gain (loss) on extinguishment of convertible preferred stock 51,179,000 ( 19,555,000 ) —

Adjustments to reflect redemption value of convertible preferred stock:

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Convertible preferred stock issuance costs — ( 4,349,000 ) —

Establishment of initial convertible preferred stock purchase

option liability — — ( 1,005,000 )

Net loss attributable to common stockholders $ ( 204,251,000 ) ( 135,440,000 ) ( 33,906,000 )

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Convertible Preferred Stock Common Stock Additional

Paid-in Capital Retained Earnings Treasury Stock Stockholders'

Paid-in Capital Retained Earnings

(Deficit) Treasury Stock Stockholders'

Shares Amount Shares Amount Shares Amount

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Net settlement of stock-based awards — — 275,736 29,000 ( 3,000,000 ) — — — ( 2,971,000 )

Common stock issued for settlement of UHP Networks Inc.

earn-out liability — — 961,302 96,000 8,818,000 — — — 8,914,000

Issuance of convertible preferred stock 100,000 100,000,000 — — — — — — —

Convertible preferred stock issuance costs — ( 4,007,000 ) — — — — — — —

Establishment of initial convertible preferred stock purchase option liability — ( 1,005,000 ) — — — — — — —

Adjustment to reflect redemption value of convertible preferred stock (including accrued dividends) — 7,007,000 — — — ( 7,007,000 ) — — ( 7,007,000 )

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Equity-classified stock award compensation — — — — 6,096,000 — — — 6,096,000

CEO transition costs related to equity-classified stock-based awards (See Note 11)

— — — — 3,764,000 — — — 3,764,000

Issuance of employee stock purchase plan shares — — 52,604 5,000 249,000 — — — 254,000

1 unchanged sentence

Net settlement of stock-based awards — — 619,920 62,000 ( 3,125,000 ) — — — ( 3,063,000 )

Extinguishment of convertible preferred stock ( 100,000 ) ( 115,721,000 ) — — — ( 19,555,000 ) — — ( 19,555,000 )

Issuance of convertible preferred stock 171,827 172,035,000 — — — — — — —

Convertible preferred stock issuance costs — ( 4,349,000 ) — — — — — — —

Adjustment to reflect redemption value of convertible preferred stock (including accrued dividends) — 15,900,000 — — — ( 15,900,000 ) — — ( 15,900,000 )

Cash dividends declared ($ 0.20 per share)

— — — — — ( 5,549,000 ) — — ( 5,549,000 )

Accrual of dividend equivalents, net of reversal ($ 0.20 per share)

— — — — — ( 315,000 ) — — ( 315,000 )

Reversal of dividend equivalents — — — — — 107,000 — — 107,000

Net loss — — — — — ( 99,985,000 ) — — ( 99,985,000 )

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Net settlement of stock-based awards — — 560,266 56,000 ( 915,000 ) — — — ( 859,000 )

Loss on extinguishment of convertible preferred stock ( 100,000 ) ( 115,721,000 ) — — — ( 19,555,000 ) — — ( 19,555,000 )

Issuance of convertible preferred stock 171,827 172,035,000 — — — — — — —

Convertible preferred stock issuance costs — ( 4,349,000 ) — — — — — — —

Extinguishment of convertible preferred stock ( 171,827 ) ( 183,489,000 ) — — — 51,179,000 — — 51,179,000

Issuance of convertible preferred stock (at fair value), excluding embedded derivatives 178,181 96,700,000 — — ( 3,221,000 ) — — — ( 3,221,000 )

Adjustment to reflect redemption value of convertible preferred stock (including accrued dividends) — 96,258,000 — — ( 89,879,000 ) ( 6,379,000 ) — — ( 96,258,000 )

Convertible preferred stock amendment fees — — — — ( 650,000 ) — — — ( 650,000 )

Reversal of dividend equivalents — — — — 15,000 27,000 — — 42,000

9 unchanged sentences

Net loss $ ( 155,302,000 ) ( 99,985,000 ) ( 26,899,000 )

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

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization of property, plant and equipment 11,798,000 12,159,000 11,922,000

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Amortization of stock-based compensation 3,120,000 6,096,000 10,107,000

Amortization of deferred financing costs 3,985,000 1,852,000 811,000

Amortization of cost to fulfill assets 261,000 960,000 959,000

Write-off of deferred financing costs 1,832,000 — —

CEO transition costs related to equity-classified stock-based awards — 3,764,000 7,388,000

Paid-in-kind interest under term loan 5,528,000 337,000 —

Amortization of deferred financing costs, debt discount and accreted interest

related to subordinated credit facility 8,460,000 — —

Amortization of deferred financing costs and debt discount related to credit

facility 4,968,000 3,985,000 1,852,000

Write-off of deferred financing costs and debt discounts 8,977,000 1,832,000 —

Change in fair value of warrants and derivatives ( 38,498,000 ) ( 4,273,000 ) —

CEO transition costs related to equity-classified stock-based awards — — 3,764,000

Change in fair value of convertible preferred stock purchase option liability — — —

Paid-in-kind interest under Term Loan 337,000 — —

Loss on business divestiture — 1,199,000 —

Changes in other liabilities — ( 4,110,000 ) ( 4,133,000 )

Loss (gain) on disposal of property, plant and equipment 889,000 48,000 ( 310,000 )

Provision for allowance for doubtful accounts 1,422,000 261,000 838,000

Loss on disposal of property, plant and equipment 310,000 889,000 48,000

Provision for allowance for doubtful accounts and contract assets 17,608,000 1,422,000 261,000

Provision for excess and obsolete inventory 16,202,000 2,801,000 4,871,000

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Income taxes payable ( 380,000 ) ( 2,291,000 ) 1,673,000

Net cash (used in) provided by operating activities ( 54,495,000 ) ( 4,433,000 ) 1,997,000

Net cash used in operating activities ( 8,292,000 ) ( 54,495,000 ) ( 4,433,000 )

Cash flows from investing activities:

1 unchanged sentence

Purchases of property, plant and equipment ( 8,565,000 ) ( 13,083,000 ) ( 18,311,000 )

Net cash provided by (used in) investing activities 20,142,000 ( 18,311,000 ) ( 19,619,000 )

Net cash (used in) provided by investing activities ( 8,565,000 ) 20,142,000 ( 18,311,000 )

Cash flows from financing activities:

Proceeds from term loan facilities 157,140,000 — —

Repayment of term loan facilities ( 48,800,000 ) ( 1,875,000 ) —

Proceeds from subordinated credit facility 100,000,000 — —

Contribution for constructing long-lived assets 2,814,000 — —

Proceeds from term loan — 157,140,000 —

Repayment of term loan ( 56,746,000 ) ( 48,800,000 ) ( 1,875,000 )

Net (payments) borrowings under revolving loans ( 14,859,000 ) ( 85,300,000 ) 36,900,000

Payment of deferred financing costs ( 10,294,000 ) ( 3,809,000 ) ( 140,000 )

Payment of deferred financing costs and debt discount ( 4,545,000 ) ( 10,294,000 ) ( 3,809,000 )

Proceeds from issuance of convertible preferred stock — 43,200,000 —

Payment of convertible preferred stock issuance costs ( 4,272,000 ) — ( 4,007,000 )

Payment of convertible preferred stock issuance costs and fees ( 726,000 ) ( 4,272,000 ) —

Cash dividends paid on common stock ( 158,000 ) ( 268,000 ) ( 8,661,000 )

18 unchanged sentences

Adjustment to reflect redemption value of convertible preferred stock $ 96,258,000 15,900,000 7,007,000

Accrued deferred financing costs $ 1,114,000 — —

Term loan amendment fees paid-in-kind $ 5,815,000 — —

Accrued term loan amendment fee $ 2,809,000 — —

Accrued additions to property, plant and equipment $ 317,000 961,000 993,000

Issuance of restricted stock $ 6,000 — 9,000

Accrued remittance of employees' statutory tax withholdings for fully-vested share units $ 3,000 424,000 1,204,000

Cash dividends declared on common stock but unpaid, including (reversal) accrual of dividend equivalents $ ( 42,000 ) ( 107,000 ) 315,000

Accrued deferred financing costs $ — 1,114,000 —

Accrued shelf registration costs $ — 170,000 —

Unpaid convertible preferred stock issuance costs $ — 77,000 —

Cash dividends declared on common stock but unpaid, including (reversal) accrual of dividend equivalents $ ( 107,000 ) 315,000 3,135,000

Issuance of restricted stock $ — 9,000 13,000

Common stock issued for acquisitions $ — — 9,000,000

Establishment of initial convertible preferred stock purchase option liability $ — — 1,005,000

See accompanying notes to consolidated financial statements.

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We conduct our business through two reportable operating segments:

Satellite and Space Communications and Terrestrial and Wireless Networks.

Satellite and Space Communications and Allerium (formerly, Terrestrial and Wireless Networks).

Our business is highly competitive and characterized by rapid technological change.

Our growth and financial position depends on our ability to keep pace with such changes and developments and to respond to the sophisticated requirements of an increasing variety of secure wireless communications technology users, among other things.

Our growth and financial position depends on our ability to keep pace with such changes and developments and to respond to the sophisticated requirements of an increasing variety of methods and devices used to transmit and receive secure wireless communications, among other things.

Many of our competitors are substantially larger, and have significantly greater financial, marketing and operating resources and broader product lines than our own.

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dollars, advance or milestone payments, credit insurance and irrevocable letters of credit in our favor.

Pursuant to the requirements of ASC Topic 205-40, " Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern ," we are required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern.

This evaluation does not take into consideration the potential mitigating effect of our plans that have not been fully implemented or are not within our control as of the date the audited Consolidated Financial Statements are issued.

When substantial doubt exists, we are required to evaluate whether the mitigating effect of our plans sufficiently alleviates substantial doubt about our ability to continue as a going concern.

The mitigating effect of our plans, however, is only considered if both (i) it is probable that the plans will be effectively implemented within one year after the date that the Consolidated Financial Statements are issued, and (ii) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about our ability to continue as a going concern within one year after the date that the Consolidated Financial Statements are issued.

As of the date these financial statements were issued (the "issuance date"), we evaluated whether the following adverse conditions, when considered in the aggregate, raise substantial doubt about our ability to continue as a going concern over the next twelve months beyond the issuance date.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

Over the past three fiscal years, we incurred operating losses of $ 79,890,000 , $ 14,660,000 and $ 33,752,000 in fiscal 2024, 2023 and 2022, respectively.

In addition, over the past three fiscal years, net cash used in operating activities was $ 54,495,000 and $ 4,433,000 in fiscal 2024 and 2023, respectively, and net cash provided by operating activities was $ 1,997,000 in fiscal 2022.

Our ability to meet future anticipated liquidity needs over the next year beyond the issuance date will largely depend on our ability to generate positive cash inflows from operations, maximize our borrowing capacity under our Credit Facility, as discussed further below, and or secure other sources of outside capital.

While we believe we will be able to generate sufficient positive cash inflows, maximize our borrowing capacity and secure outside capital, there can be no assurance our plans will be successfully implemented and, as such, we may be unable to continue as a going concern over the next year beyond the issuance date.

As discussed further in Note (8) – “Credit Facility,” on June 17, 2024, we entered into a $ 222,000,000 credit facility with a new syndicate of lenders, which replaced our prior credit facility.

As further discussed below, we subsequently amended the credit facility on October 17, 2024 (the "Credit Facility").

The Credit Facility consists of a committed $ 162,000,000 term loan (“Term Loan”) and $ 60,000,000 revolving loan (“Revolver Loan”).

At July 31, 2024 and October 25, 2024 (the date closest to the issuance date), total outstanding borrowings under the Credit Facility were $ 194,163,000 and $ 199,067,000 , respectively.

At both July 31, 2024 and October 25, 2024, $ 32,500,000 was drawn on the Revolver Loan.

As of the issuance date, our available sources of liquidity approximate $ 28,700,000 , consisting solely of qualified cash and cash equivalents.

That is, our available sources of liquidity do not include the remaining portion of the committed Revolver Loan due to the lenders' consent right, discussed below, to any borrowings that exceed $ 32,500,000 .

The Credit Facility, among other things, requires compliance with new restrictive and financial covenants, including:

a maximum allowable Net Leverage Ratio of 3.25 x for the fiscal quarter ending January 31, 2025;

a minimum Fixed Charge Coverage Ratio of 1.20 x for the fiscal quarter ending January 31, 2025;

a minimum Average Liquidity requirement at each quarter end of $ 20,000,000 ;

and a minimum EBITDA of $ 35,000,000 for the fiscal quarter ending October 31, 2025.

Such ratios adjust under the Credit Facility in future periods.

The Credit Facility was amended on October 17, 2024 to waive certain defaults or events of default, including in connection with our Net Leverage Ratio and Fixed Charge Coverage Ratio covenants as of July 31, 2024.

The amendment also provides for, among other things:

(i) increases the interest rate margins applicable to the loans;

(ii) modifies certain financial and collateral reporting requirements;

(iii) provides a lender consent right with respect to $ 27,500,000 of Revolver Loan borrowings above $ 32,500,000 ;

(iv) permits the incurrence of $ 25,000,000 of senior unsecured subordinated debt (as described below);

(v) amends the maturity date to the earlier of (x) July 31, 2028 or (y) 90 days prior to the earliest date that the debt under the Subordinated Credit Agreement (as defined below) becomes due and payable;

and (vi) suspends financial covenant testing through the end of our fiscal quarter ending January 31, 2025.

In addition, we entered into a Subordinated Credit Agreement with the existing holders of our Convertible Preferred Stock (the “Subordinated Credit Agreement”) on October 17, 2024, which provides a subordinated unsecured term loan facility in the aggregate principal amount of $ 25,000,000 (the “Subordinated Credit Facility”).

The proceeds of the Subordinated Credit Facility:

(i) cured our default on certain financial covenants under the Credit Facility, as discussed above;

(ii) provides additional liquidity to us;

and (iii) funds our general working capital needs, including support of our strategic transformation initiatives, as discussed below.

Our ability to meet our current obligations as they become due may be impacted by our ability to remain compliant with the financial covenants required by the Credit Facility, or to obtain future waivers or amendments from the lenders in the event compliance is not maintained.

While we believe we will be able to secure such waivers or amendments, as needed, there can be no assurance such waivers or amendments will be secured or on terms that are acceptable to us.

If we are unable to secure waivers or amendments, the lenders may declare an event of default, which would cause an immediate acceleration and repayment of all outstanding principal, interest and fees due under our Credit Facility.

Absent our ability to repay the forgoing amounts upon the declaration of an event of default, the lenders may exercise their rights and remedies under the Credit Facility, which may include, among others, a seizure of substantially all of our assets and/or the liquidation of our operations.

If an event of default occurs that allows the lenders to exercise these rights and remedies over the next year beyond the issuance date, we will be unable to continue as a going concern.

In fiscal 2025, 2024 and 2023, we reported operating losses of $ 139,098,000 , $ 79,890,000 and $ 14,660,000 , respectively, and net cash used in operating activities of $ 8,292,000 , $ 54,495,000 and $ 4,433,000 , respectively.

At July 31, 2025 and November 7, 2025 (the date closest to the issuance date), total outstanding borrowings under our Credit Facility was $ 133,901,000 and $ 135,000,000 , respectively.

Of such amounts, $ 17,641,000 was drawn on the Revolver Loan at both dates.

At July 31, 2025, October 31, 2025 and November 7, 2025, our available sources of liquidity totaled $ 46,972,000 , $ 50,988,000 and $ 50,284,000 , respectively, which includes qualified cash and cash equivalents of $ 37,363,000 , $ 41,379,000 and $ 40,675,000 , respectively, and the remaining available portion of the Revolver Loan of $ 9,609,000 as of each such date.

As of the issuance date, we expect cash and cash equivalents and cash flows from both operating and financing activities to be our principal sources of liquidity.

We also believe these sources of liquidity will be sufficient to fund our operating and cash commitments for investing and financing activities over the next year beyond the issuance date.

COMTECH TELECOMMUNICATIONS CORP.

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Notes to Consolidated Financial Statements, Continued

As of the issuance date, our plans to address our ability to continue as a going concern include, among other things:

• executing a strategy to transform Comtech into a pure-play satellite and space communications company (ongoing and future actions supporting our transformation strategy include:

an exploration of strategic alternatives for our Terrestrial and Wireless Networks segment, which is well underway;

the pursuit of further portfolio-shaping opportunities to enhance profitability, efficiency and focus;

and the implementation of additional operational initiatives to both achieve profitable results from operations as well as to align our go-forward cost structure with a pure-play focus on satellite and space communications), as discussed further in Note (18) – “Cost Reduction Activities;”

• pursuing initiatives to reduce investments in working capital, namely accounts receivable and inventory;

• improving process disciplines to attain and maintain profitable operations by entering into more favorable sales or service contracts;

• reevaluating our business plans to identify opportunities (e.g., within our Satellite and Space Communications segment) to focus future investment on our most strategic, high-margin revenue opportunities;

• reevaluating our business plans to identify opportunities to further reduce capital expenditures;

• seeking opportunities to improve liquidity through any combination of debt and/or equity financing (including possibly restructuring our Credit Facility, Convertible Preferred Stock and/or Subordinated Credit Agreement);

• seeking other strategic transactions and/or measures including, but not limited to, the potential sale or divestiture of assets.

While we believe the implementation of some or all of the elements of our plans over the next year beyond the issuance date will be successful, these plans are not all solely within management’s control and, as such, we can provide no assurance our plans are probable of being effectively implemented as of the issuance date.

Therefore, the adverse conditions and events described above are uncertainties that raise substantial doubt about our ability to continue as a going concern.

The accompanying consolidated financial statements have been prepared on the basis that we will continue to operate as a going concern, which contemplates we will be able to realize assets and settle liabilities and commitments in the normal course of business for the foreseeable future.

Accordingly, the accompanying consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties.

During fiscal 2025 and through the issuance date, we have taken the following actions, and implemented the following plans, to improve our operational and financial performance, enhance our liquidity and financial condition and ability to meet our financial covenants contained in our credit facilities:

• Engaged in portfolio-shaping opportunities to enhance profitability, efficiency and focus, including the elimination of legacy solutions that were not contributing meaningfully to net sales and or gross profits;

• Prioritized efforts to complete low or no margin non-recurring engineering contracts in order to accelerate our migration to higher volume and higher margin manufacturing related orders with improved cash conversion cycles;

• Developed and launched new products and services around differentiated technology and solutions;

• Improved operating profitability by entering into, or renegotiating, sales or service contracts with more favorable pricing and payment terms;

• Reduced our cost structure to better align operating expenses with revenue expectations, including facility and headcount rationalization and optimization;

• Through new leadership and improved accountability and process disciplines implemented throughout the organization, reduced our investments in working capital (e.g., accounts receivable and inventory), as well as capital expenditures;

• Through a series of capital injections, aggregating $ 100,000,000 in the form of subordinated debt, and amendments to our credit facilities:

(i) significantly reduced senior debt and related cash interest payments due under our Credit Facility;

(ii) increased the available portion of our Revolver Loan;

(iii) deferred the scheduled repayment of a portion of the Term Loan and the scheduled payment of certain fees due under the Credit Facility;

(iv) suspended testing of our Net Leverage Ratio, Fixed Charge Coverage Ratio and Minimum EBITDA covenants under our credit facilities until January 31, 2027;

and (v) reduced the minimum quarterly average liquidity requirement under our credit facilities.

Our ability to meet future anticipated liquidity needs over the next year beyond the issuance date will largely depend on our ability to execute on our operational strategy, generate positive cash inflows from operations, maximize our borrowing capacity under our Credit Facility and or secure outside capital.

Our ability to do so may also be affected by general economic, financial and other factors which are beyond our control.

Based on the foregoing, over the next year beyond the issuance date, we believe that we will:

(i) be able to generate sufficient positive cash inflows and maximize our borrowing capacity under our Credit Facility to continue as a going concern, and (ii) comply with the covenants contained in our credit facilities.

COMTECH TELECOMMUNICATIONS CORP.

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As a result, these modifications form part of an existing contract and we must update the transaction price and our measure of progress for the single performance obligation and recognize a cumulative catch-up to revenue and gross profits.

This EAC process requires management judgment relative to assessing risks, estimating contract revenue and costs, and making assumptions for schedule and technical issues.

A cost-to-cost measure of progress is principally used to account for contracts in our Satellite and Space Communications segment and, to a lesser extent, certain location-based and messaging infrastructure contracts in our public safety and location technologies product lines within our Allerium segment.

For over time contracts using a cost-to-cost measure of progress, we have an estimate at completion ("EAC") process in which management reviews the progress and execution of our performance obligations and calculates an estimated contract profit based on total estimated contract revenue and cost.

Since certain contracts extend over a long period of time, the impact of revisions in revenue and/or cost estimates during the progress of work may impact current period earnings through a cumulative adjustment.

1 unchanged sentence

Contract revenue and cost estimates for significant contracts are generally reviewed and reassessed at least quarterly.

The cost-to-cost method is principally used to account for contracts in our Satellite and Space Communications segment and, to a lesser extent, certain location-based and messaging infrastructure contracts in our public safety and location technologies product line within our Terrestrial and Wireless Networks segment.

For service-based contracts in our Terrestrial and Wireless Networks segment, we also recognize revenue over time.

For service-based contracts in our Allerium segment, we also recognize revenue over time.

These services are typically recognized as a series of services performed over the contract term using the straight-line method, or based on our customers’ actual usage of the networks and platforms which we provide.

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Notes to Consolidated Financial Statements, Continued

Point in time accounting is principally applied to contracts in our satellite ground station technologies product line (which includes satellite modem and traveling wave tube amplifiers).

Point in time accounting is principally applied to contracts in our satellite ground infrastructure product line (which includes satellite modems and traveling wave tube amplifiers).

The contracts related to these product lines do not meet the requirements for over time revenue recognition because our customers cannot utilize the equipment for its intended purpose during any phase of our manufacturing process;

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Finished products, whether built to our standard specification or to a customers’ specification, can be sold to a variety of customers and across many different end use applications with minimal rework, if needed, and without incurring a significant economic loss.

When identifying a contract with our customer, we consider when it has approval and commitment from both parties, if the rights of the parties are identified, if the payment terms are identified, if it has commercial substance and if collectability is probable.

When identifying a contract with our customer, at inception, we consider approvals and commitments from both parties, if the rights of the parties are identified, if the payment terms are identified, if it has commercial substance, the transaction price to which we are entitled and if collectability is probable.

When identifying performance obligations, we consider whether there are multiple promises and how to account for them.

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state and local governments.

For fiscal 2024, except for the U.S.

For fiscal 2025 and 2024, except for the U.S.

government, there were no customers that represented more than 10% of consolidated net sales.

For fiscal 2023 and 2022, i ncluded in domestic sales are sales to Verizon Communications Inc.

("Verizon"), which were 10.6 % and 11.1 % of consolidated net sales, respectively.

For fiscal 2023, i ncluded in domestic sales are sales to a top tier mobile network operator, which were 10.6 % of consolidated net sales.

International sales for fiscal 2025, 2024 and 2023 (which include sales to U.S.

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Fiscal Year Ended July 31, 2025

Satellite and Space Communications Terrestrial and Wireless Networks Total

Satellite and Space Communications Allerium

Geographical region and customer type

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Fiscal Year Ended July 31, 2024

Satellite and Space Communications Terrestrial and Wireless Networks Total

Satellite and Space Communications Allerium Total

Geographical region and customer type

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Fiscal Year Ended July 31, 2023

Satellite and Space Communications Terrestrial and Wireless Networks Total

Satellite and Space Communications Allerium Total

Geographical region and customer type

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Under ASC 606, unbilled receivables constitute contract assets.

There were no material impairment losses recognized on contract assets during the fiscal years ended July 31, 2024, 2023 and 2022.

Except for certain unbilled receivables (see Note (4) - "Accounts Receivable" ), there were no material impairment losses recognized on contract assets during the fiscal years ended July 31, 2025, 2024 and 2023.

On large long-term contracts, and for contracts with international customers that do not do business with us regularly, payment terms typically require advanced payments and deposits.

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otherwise, such costs are capitalized and amortized over the estimated life of the contract.

During fiscal year 2024, incremental costs to obtain or fulfill contracts with an amortization period greater than one year were $ 2,863,000 .

During fiscal year 2023, incremental costs to obtain or fulfill contracts with an amortization period greater than one year were not material.

During fiscal year 2025 and 2024, incremental costs to obtain or fulfill contracts with an amortization period greater than one year were $ 2,887,000 and $ 2,863,000 , respectively.

Commissions payable to our internal sales and marketing employees or contractors that are incremental to the acquisition of long-term customer contracts are capitalized and amortized consistent with the pattern of revenue recognition through cost of sales on our Consolidated Statements of Operations .

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Our machinery and equipment, which are recorded at cost, are depreciated or amortized over their estimated useful lives ( three to eight years) under the straight-line method.

Capitalized internal use software costs are amortized once the software is placed in service under the straight-line method over the estimated useful life of the software, which is generally three years.

Capitalized internal use software costs are amortized once the software is ready for its intended use under the straight-line method over the estimated useful life of the software, which is generally three years.

Capitalized internal use software is considered ready for its intended use after all substantial testing is completed.

Capitalized values of properties and leasehold improvements under leases are amortized over the life of the lease or the estimated life of the asset, whichever is less.

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We periodically, at least on an annual basis in the first quarter of each fiscal year, review goodwill, considering factors such as projected cash flows and revenue and earnings multiples, to determine whether the carrying value of the goodwill is impaired.

If we fail the quantitative assessment of goodwill impairment ("quantitative assessment"), we would be required to recognize an impairment loss equal to the amount that a reporting unit's carrying value exceeded its fair value;

If we fail the quantitative assessment of goodwill impairment, we would be required to recognize an impairment loss equal to the amount that a reporting unit's carrying value exceeded its fair value;

however, any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

We define our reporting units to be the same as our operating segments.

We perform our annual goodwill impairment test as of the first day of the fiscal year (August 1).

Due to triggering events that occurred in the fourth quarter of fiscal year 2024, we performed a quantitative impairment test for each of our reporting units as of July 31, 2024.

We performed our annual goodwill impairment assessment for fiscal 2026 on August 1, 2025 (the first day of our fiscal 2026).

See Note (15) - " Long-lived Assets, including Goodwill " for additional information.

The quantitative impairment test as of July 31, 2024 satisfies the Company’s annual goodwill impairment testing requirement as of August 1, 2024 due to the proximity of the testing dates.

Unless there are future indicators that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, such as a significant adverse change in our future financial performance, our next impairment assessment for goodwill will be performed and completed in the first quarter of fiscal 2027.

Any impairment charges that we may record in the future could be material to our results of operations and financial condition.

We assess the recoverability of the carrying value of our other long-lived assets, including identifiable intangible assets with finite useful lives, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

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If the sum of the expected future undiscounted cash flows were less than the carrying amount of the asset, a loss would be recognized for the difference between the fair value and the carrying amount.

Due to a triggering event relating to our subsidiary operations in Basingstoke, United Kingdom, we assessed the recoverability of the carrying value of our other long-lived assets related to these operations.

See Note (14) - "Long-lived Assets, including Goodwill" for additional information.

(h) Income Taxes

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Notes to Consolidated Financial Statements, Continued

In assessing the need for a valuation allowance for deferred tax assets, we consider all positive and negative evidence, including past financial performance, timing and judgments about future taxable income and tax planning strategies.

Valuation allowances are established, when necessary, to reduce net deferred tax assets to the amount "more-likely-than-not" expected to be realized.

We measure and account for uncertain tax positions taken or expected to be taken in income tax returns in accordance with the provisions of FASB ASC 740-10-25 " Income Taxes, " which prescribes a two-step evaluation process for tax positions.

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("UHP") and the assumed conversion of Convertible Preferred Stock, if dilutive, outstanding during each respective period.

The warrants contingently issuable to our preferred shareholders upon a repurchase of the Series B-1 Convertible Preferred Stock are not reflected in diluted EPS.

The warrants contingently issuable to our preferred shareholders upon a repurchase of the respective series of Convertible Preferred Stock are not reflected in diluted EPS.

Pursuant to FASB ASC 260 " Earnings Per Share, " shares whose issuance is contingent upon the satisfaction of certain conditions are included in diluted EPS based on the number of shares, if any, that would be issuable if the end of the reporting period were the end of the contingency period.

When calculating our diluted earnings per share, we consider the amount an employee must pay upon assumed exercise of stock-based awards and the amount of stock-based compensation cost attributed to future services and not yet recognized.

When calculating our diluted earnings per share, we consider the amount an employee must pay upon assumed exercise of stock-based awards, the amount of stock-based compensation cost attributed to future services and not yet recognized and the amount a holder must pay upon assumed exercise of warrants.

There were no repurchases of our common stock during the fiscal years ended July 31, 2025, 2024 and 2023.

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However, the numerator for EPS calculations for each respective period is reduced by the compensation expense related to these awards.

Weighted average common shares of 174,000 related to warrants issued in connection with entering the Credit Facility on June 17, 2024 were not included in our diluted EPS calculation for fiscal 2024 because their effect would have been anti-dilutive.

Weighted average common shares related to warrants issued in connection with entering the Credit Facility on June 17, 2024 of 1,389,000 and 174,000 for fiscal 2025 and 2024, respectively, were not included in our diluted EPS calculation because their effect would have been anti-dilutive.

Weighted average common shares of 98,000 and 260,000 related to our acquisition of UHP in March 2021 were not included in our diluted EPS calculation for fiscal 2024 and 2023, respectively, because their effect would have been anti-dilutive.

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Net loss $ ( 155,302,000 ) ( 99,985,000 ) ( 26,899,000 )

Loss on extinguishment of convertible

Gain (loss) on extinguishment of convertible

preferred stock 51,179,000 ( 19,555,000 ) —

Convertible preferred stock issuance costs — ( 4,349,000 ) —

Establishment of initial convertible preferred

stock purchase option liability — — ( 1,005,000 )

Dividend on convertible preferred stock ( 100,128,000 ) ( 11,551,000 ) ( 7,007,000 )

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We believe that the carrying amounts of our other current financial assets (such as accounts receivable) and other current liabilities (including accounts payable, accrued expenses and the current portion of long-term debt) approximate their fair values due to their short-term maturities.

The fair value of the non-current portion of our long-term debt approximates its carrying amount due to its variable interest rate and pricing grid that is dependent upon our leverage ratio as of such date.

Additionally, the carrying amount of the non-current portion of our Credit Facility approximated its fair value due to the variable interest rates and pricing grid related to such debt.

Level 3 inputs are unobservable inputs developed using the best available information under the circumstances.

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As of July 31, 2025, we determined the fair value of such warrants based on the Black-Scholes option pricing model using the following estimates:

exercise price of $ 0.10 , risk free rate of 4.0 %, volatility of 55.0 %, and expected life of seven years.

We also used Level 3 inputs to value the embedded derivative liability associated with our Credit Facility.

As of July 31, 2024, we determined the fair value of the embedded derivative liability using a with-and-without scenario-based discounted cash flow method, which reflected our estimates regarding the probability and timing of events that could result in additional payments of interest and/or fees to such lenders as stated in our Credit Facility.

As further discussed in Note (16) - " Convertible Preferred Stock," we used Level 3 inputs to value warrants contingently issuable under the terms of our Convertible Preferred Stock.

exercise price of $ 0.10 , risk free rate of 4.0 %, volatility of 65.0 %, and expected life of 5.9 years.

We also used Level 3 inputs to value the combined embedded derivative liability associated with our Credit Facility.

As of July 31, 2025, we determined the fair value of the combined embedded derivative liability using a with-and-without scenario-based discounted cash flow method, which reflected our estimates regarding the probability and timing of events that could result in additional payments of interest and/or fees to such lenders as stated in our Credit Facility.

As further discussed in Note (9) - "Subordinated Credit Facility," we used Level 3 inputs to value the make-whole amount and combined embedded derivative liability associated with our Subordinated Credit Facility.

As of July 31, 2025, we determined the fair value of the combined embedded derivative liability using a with-and-without scenario-based discounted cash flow method, which reflected our estimates regarding the probability and timing of events that could result in additional payments of interest and/or accelerated payments of principal and make-whole amounts to such lenders as stated in our Subordinated Credit Facility.

The calculated fair value of the debt outstanding under the Subordinated Credit Facility approximated its carry value as of July 31, 2025.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

As further discussed in Note (17) - " Convertible Preferred Stock," we used Level 3 inputs to value the warrants contingently issuable and combined embedded derivative liability associated with our Convertible Preferred Stock.

As of July 31, 2025, we determined the fair value of Convertible Preferred Stock warrants using the Monte Carlo simulation model with the following assumptions:

expected life of five months;

expected life of 6.0 years;

risk free rate of 4.0 %;

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and dividend yield of 0 %.

As of July 31, 2025, we determined the fair value of the combined embedded derivative liability using a with-and-without scenario-based discounted cash flow method, which reflected our estimates regarding the probability and timing of events that could result in additional and/or accelerated payments to our preferred shareholders, or the conversion of the Convertible Preferred Stock into common stock, pursuant to the terms of our Convertible Preferred Stock.

As of July 31, 2025 and 2024, other than the financial instruments discussed above, we had no other significant assets or liabilities included in our Consolidated Balance Sheets recorded at fair value, as such term is defined by FASB ASC 820.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(k) Use of Estimates

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We make significant estimates in many areas of our accounting, including but not limited to the following:

liquidity and going concern assessments, revenue recognition related to contracts accounted for over time, stock-based compensation, intangible assets (including goodwill) and liabilities, provision for excess and obsolete inventory, allowance for doubtful accounts, warranty obligations and income taxes.

liquidity and going concern assessments, revenue recognition related to contracts accounted for over time, stock-based compensation, recoverability of long-lived assets (including goodwill), provision for excess and obsolete inventories, allowance for doubtful accounts, warranty obligations and income taxes (including valuation allowances related to deferred tax assets).

Actual results may differ from those estimates.

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generally accepted accounting principles, which are commonly referred to as "GAAP." The FASB ASC is subject to updates by the FASB, which are known as Accounting Standards Updates ("ASUs").

During fiscal 2024 the following FASB ASUs have been issued and incorporated into the FASB ASC and have not yet been adopted by us as of July 31, 2024:

During fiscal 2025, we adopted:

• FASB ASU No.

2023-07, which requires the disclosure of significant segment expenses, by reportable segment, regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss.

The disclosure of other segment items by reportable segment are also required and would constitute the difference between segment revenues less these significant segment expenses and reported segment profit or loss.

On an annual basis, the update requires an entity to disclose the CODM's title and position, as well as describe how the CODM uses the reported measures.

Additionally, all existing annual disclosures about segment profit or loss must be provided on an interim basis in addition to the disclosure of significant segment expenses and other segment items.

This ASU is effective for fiscal years beginning after December 15, 2023 (our fiscal year beginning on August 1, 2024) and for interim periods within fiscal years beginning after December 15, 2024 (our interim period beginning on August 1, 2025), with early adoption permitted.

The adoption of this guidance will impact our disclosures only and we do not expect it to have a material impact on our consolidated financial statements.

2023-07, which among other things, requires the disclosure of significant segment expenses, by reportable segment, regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss.

Our adoption of this ASU impacted our disclosures only through the retrospective application to all prior periods presented.

See Note (13) - "Segment Information" for more information.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

During fiscal 2025, the following FASB ASUs have been issued and incorporated into the FASB ASC and have not yet been adopted by us as of July 31, 2025:

• FASB ASU No.

2023-09 enhances and establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements.

Most notably under the new requirements is greater disaggregation of information in the effective tax rate reconciliation, including the inclusion of both percentages and amounts, specific categories, and additional information for reconciling items meeting a quantitative threshold defined by the guidance.

2023-09, which among other things, enhances and establishes new income tax disclosure requirements, in addition to modifying and eliminating certain existing requirements.

Most notably, this ASU requires greater disaggregation of information in the effective tax rate reconciliation, including the inclusion of both percentages and amounts, specific categories and additional information for reconciling items meeting a quantitative threshold defined by the guidance.

Additionally, disclosures of income taxes paid and income tax expense must be disaggregated by federal, state and foreign taxes, with income taxes paid further disaggregated for individual jurisdictions that represent 5 percent or more of total income taxes paid.

This ASU is effective for fiscal years beginning after December 15, 2024 (our fiscal year beginning on August 1,

This ASU is effective for fiscal years beginning after December 15, 2024 (our fiscal year beginning on August 1, 2025), with early adoption permitted.

We are evaluating the impact of this ASU on our consolidated financial statements and disclosures.

• FASB ASU No.

2024-03, which among other things, requires more detailed disclosures of certain categories of expenses (including purchases of inventory, employee compensation, depreciation, and amortization) that are components of existing expense captions presented on the face of the income statement.

All entities are required to apply the guidance prospectively with an option for retrospective application.

This ASU is effective for annual reporting periods beginning after December 15, 2026 (our fiscal year beginning on August 1, 2027), and interim periods within annual reporting periods beginning after December 15, 2027 (our interim period beginning on August 1, 2028), with early adoption permitted, as clarified in ASU No.

2025-01 issued January 6, 2025.

The adoption of this ASU will impact our disclosures only and we do not expect it to have a material impact on our Consolidated Financial Statements.

• FASB ASU No.

2025-05, which among other things, provides all entities with a practical expedient that allows for the assumption that current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating credit losses for such assets.

This ASU is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual periods (our fiscal year beginning on August 1, 2026), with early adoption permitted.

We are evaluating the impact of this ASU on our consolidated financial statements and disclosures.

• FASB ASU 2025-06, which among other things, amends the criteria for recognizing and capitalizing costs related to internal-use software by replacing the previous project stage model with a principles-based framework.

Under this ASU, costs are capitalized when management has authorized and committed to funding a software project, and it is probable that the project will be completed and the software used as intended.

This ASU is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods (our fiscal year beginning on August 1, 2028), on either a prospective, retrospective or modified prospective transition method.

We are evaluating the impact of this ASU on our consolidated financial statements and disclosures

(2) CEO Transition Costs and Related

CEO transition-related costs are expensed in our Unallocated segment and relate to the following:

Fiscal 2025 - On October 28, 2024, the Board appointed John Ratigan as our President and Chief Executive Officer ("CEO").

On October 31, 2024, Kenneth H.

Traub was appointed as an independent member of the Board.

On November 26, 2024, Mr.

Traub was appointed Executive Chairman and Mark Quinlan resigned from his position as Chairman while remaining as a member of the Board.

Also on November 26, 2024, Lieutenant General (Retired) Bruce T.

Crawford, was appointed Lead Independent Director.

On January 13, 2025, the Board appointed Mr.

Traub as President and CEO in addition to his current role as Chairman, replacing Mr.

Ratigan effective immediately.

Pursuant to his separation agreement and release, Mr.

Ratigan resigned from his position as President and CEO and as a member of the Board.

CEO transition costs of $ 2,117,000 incurred during fiscal 2025 consisted of net legal expenses related to a former CEO, severance related to Mr.

Ratigan, third party CEO search firm expenses and expense related to Mr.

Traub's sign-on bonus.

COMTECH TELECOMMUNICATIONS CORP.

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Notes to Consolidated Financial Statements, Continued

2025), with early adoption permitted.

We are evaluating the impact of this ASU on our consolidated financial statements and disclosures.

(2) CEO Transition Costs

For the three fiscal years ended July 31, 2024, cumulative CEO transition costs aggregated $ 25,560,000 .

Fiscal 2024 - On March 12, 2024, Ken Peterman, our former Chairman of the Board, President and CEO, was terminated for cause and the Board of Directors appointed John Ratigan as interim Chief Executive Officer ("CEO") and Mark Quinlan as Chairman of the Board of Directors.

Fiscal 2024 - On March 12, 2024, Ken Peterman, our former Chairman of the Board, President and CEO, was terminated for cause and the Board of Directors appointed Mr.

Ratigan as interim CEO and Mr.

Quinlan as Chairman of the Board of Directors.

Prior to the changes, Mr.

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Peterman was deemed to have resigned from his position as Chairman of the Board of Directors and as a director pursuant to his employment contract.

CEO transition costs of $ 2,916,000 incurred during fiscal 2024 primarily consisted of legal expenses and were expensed in our Unallocated segment.

Fiscal 2023 - On August 9, 2022, our Board of Directors appointed Ken Peterman as our Chairman of the Board, President and CEO.

CEO transition costs of $ 2,916,000 incurred during fiscal 2024 primarily consisted of legal expenses.

Fiscal 2023 - On August 9, 2022, our Board of Directors appointed Mr.

Peterman as our Chairman of the Board, President and CEO.

Transition costs related to his predecessor, our former President and CEO, Michael D.

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Peterman in January 2023.

CEO transition costs related to Mr.

Porcelain and Mr.

Peterman were expensed in our Unallocated segment during the first quarter of fiscal 2023.

Fiscal 2022 - During fiscal 2022, we expensed $ 13,554,000 of transition costs related to former CEO, Fred Kornberg.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(3) Business Divestiture

On November 7, 2023, we completed the divestiture of our solid-state RF microwave high power amplifiers and control components product line, which was included in our Satellite and Space Communications segment, pursuant to a stock sale agreement entered into on October 11, 2023 (the "PST Divestiture").

The final sales price for this divestiture was $ 35,459,000 .

As of July 31, 2024, we received net cash proceeds of $ 33,277,000 , which reflects $ 2,182,000 of transaction costs.

Based on the carrying amount of net assets related to the PST Divestiture (see below table), we recognized a GAAP pre-tax loss of $ 1,199,000 .

Such loss is presented in the " Loss on Business Divestiture " line item in our Consolidated Statements of Operations .

The carrying amount of the major classes of assets and liabilities related to the PST Divestiture ("PST Disposal Group") as of November 7, 2023 are as follows:

Cash and cash equivalents $ ( 71,000 )

Accounts receivable, net 4,168,000

Inventories, net 17,822,000

Prepaid expenses and other current assets 201,000

Property, plant and equipment, net 2,790,000

Operating lease right-of-use assets, net 5,379,000

Goodwill 14,587,000

Other assets, net 35,000

Total assets of disposal group held for sale $ 44,911,000

Accounts payable $ 3,081,000

Accrued expenses and other current liabilities 1,622,000

Operating lease liabilities, current 545,000

Contract liabilities 656,000

Operating lease liabilities, non-current 4,894,000

Deferred tax liability, net ( 363,000 )

Total liabilities of disposal group held for sale $ 10,435,000

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(3) Business Divestitures

PST Divestiture - On November 7, 2023, we completed the divestiture of our solid-state RF microwave high power amplifiers and control components product line, which was included in our Satellite and Space Communications segment, pursuant to a stock sale agreement entered into on October 11, 2023 (the "PST Divestiture").

The final sales price for this divestiture was $ 35,459,000 of which we received $ 33,277,000 in cash proceeds, net of transaction costs.

Based on the carrying amount of net assets related to the PST Divestiture, we recognized a GAAP pre-tax loss of $ 1,199,000 in fiscal 2024.

CGC Divestiture - In fiscal 2024, we performed an evaluation of our Satellite and Space Communications segment's product portfolio to identify opportunities to further divest, separate and/or rationalize non-core businesses or facilities.

Consistent with this effort, in our fourth quarter of fiscal 2024, we made the decision to exit our operations in Basingstoke, United Kingdom (the "CGC Divestiture").

During fiscal 2025, we reversed $ 4,157,000 of net sales and $ 1,403,000 of related accrued contract costs, respectively, to account for the termination of various revenue contracts with customers, all of which was recorded in the first quarter of fiscal 2025.

During fiscal 2025, we expensed $ 3,485,000 in restructuring charges related to the wind-down of such operations.

In addition to such restructuring charges, we also recorded a $ 2,948,000 write-down related to inventory no longer considered salable in the first quarter of fiscal 2025.

While anticipated to improve our future profitability, actions related to the CGC Divestiture may result in additional near-term restructuring charges.

(4) Accounts Receivable

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Accounts receivable, net $ 144,837,000 195,595,000

Unbilled receivables as of July 31, 2024 relate to contracts-in-progress for which revenue has been recognized, but we have not yet earned the right to bill the customer for work performed to-date.

Unbilled receivables as of July 31, 2025 relate to contracts-in-progress for which revenue has been recognized, but for which we have not yet earned the right to bill the customer for work performed to-date.

Under ASC 606, unbilled receivables constitute contract assets.

Management estimates that a substantial portion of the amounts not yet billed at July 31, 2024 will be billed and collected within one year.

Accounts receivable in the table above excludes $ 824,000 and $ 2,993,000 of long-term unbilled receivables presented within " Other Assets, Net " in the Consolidated Balance Sheets as of July 31, 2024 and July 31, 2023, respectively.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

During the fiscal year ended July 31, 2025, we reversed cumulative revenues and associated contract receivables due to changes in estimates of revenue and costs for certain contracts.

With respect to such changes in estimates, we:

• determined that an unbilled receivable contract asset in the amount of $ 17,685,000 , related to an international customer and reseller of our troposcatter technologies, was at risk of not being invoiced or collected, principally due to a change in our customer's near-term ability to secure certain opportunities in its pipeline.

As a result, and considering that we offered a price concession (i.e., variable consideration) to our customer in the first quarter of fiscal 2025, we reversed $ 1,551,000 of cumulative revenue and associated unbilled receivable contract assets related to this transaction, and recorded a non-cash charge to fully reserve for the remaining $ 16,134,000 unbilled receivable contract asset within our allowance for doubtful accounts;

• reversed $ 4,157,000 of cumulative revenue and $ 3,003,000 of associated unbilled receivable contract assets as a result of terminating certain customer contracts during the first quarter of fiscal 2025 in connection with the CGC Divestiture;

• reversed $ 3,030,000 of cumulative revenue and $ 2,324,000 of associated unbilled receivable contract assets due to an increase in our estimates of engineering activities, budgeted time and related costs to complete a development project that commenced in fiscal 2023 in our Satellite and Space Communications segment and with an international customer;

• reversed $ 2,286,000 of cumulative revenue and $ 2,234,000 of associated unbilled receivable contract assets due to higher expected costs at completion identified during fiscal 2025, as we advanced certain nonrecurring engineering related projects in our satellite ground infrastructure product line through development and toward production.

After adjusting for those amounts identified above, and excluding unbilled receivables related to the U.S.

Marine Corps contract discussed below, management estimates that a substantial portion of the remaining contract assets not yet billed at July 31, 2025 will be billed and collected within one year .

Accounts receivable in the table above excludes $ 824,000 of long-term unbilled receivables presented within "Other assets, net" in the Consolidated Balance Sheets as of July 31, 2024.

As of July 31, 2025, the U.S.

government (and its agencies), one U.K.

based international customer of troposcatter related technologies and AT&T represented 36.4 %, 11.3 % and 10.9 % of total accounts receivable, respectively.

There were no other customers which accounted for greater than 10.0% of total accounts receivable.

As of July 31, 2023, except for the U.S.

government (and its agencies) and AT&T, which represented 35.3 % and 11.0 % of total accounts receivable, respectively, there were no other customers which accounted for greater than 10.0% of total accounts receivable.

government (and its agencies) and two domestic top tier mobile network operators represented 25.1 %, 14.5 % and 10.5% of net accounts receivable, respectively.

There were no other customers which accounted for greater than 10.0% of net accounts receivable.

As of July 31, 2024, the U.S.

government (and its agencies), an international customer and reseller of our troposcatter related technologies and a domestic top tier mobile network operator represented 36.7 %, 11.4 %, and 11.0 % of net accounts receivable, respectively.

There were no other customers which accounted for greater than 10.0% of net accounts receivable.

In our troposcatter product line, throughout most of fiscal 2024, we experienced elevated levels of receivables due to the timing of our performance on and billings and collections related to certain large U.S.

government and international customer contracts.

During principally the first half of fiscal 2025, we maintained deliveries of next-generation troposcatter terminals related to our U.S.

Marine Corps and Army end user contracts, contributing to a 26% year-over-year reduction in our consolidated receivables as of July 31, 2025.

In December 2024, however, we received a notice from our prime contractor to stop work associated with the U.S.

Marine Corps contract.

Such contract was subsequently terminated.

We have initiated litigation against the prime contractor in order to enforce our rights and recover $ 15,701,000 of total receivables related to this contract as of July 31, 2025.

While we believe that we have meritorious claims, some or all of such receivables could be at risk of not being collected.

Future results of operations related to our troposcatter solutions product line depend, in part, on the nature, timing and amount associated with resolving this matter.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(5) Inventories

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As of July 31, 2025 and 2024, the amount of inventory directly related to long-term contracts (including contracts-in-progress) was $ 2,612,000 and $ 2,869,000 , respectively, and the amount of inventory related to contracts from third-party commercial customers who outsource their manufacturing to us was $ 1,583,000 and $ 2,204,000 , respectively.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

As discussed in Note (1)(c) – Summary of Significant Accounting and Reporting Policies – Liquidity, in connection with our initiatives to transform our Company (e.g., reevaluating our business plans to identify opportunities to focus future investment on our most strategic, high-margin revenue opportunities), during the first quarter of fiscal 2025, we recorded a non-cash charge of $ 11,369,000 within Cost of sales on our Consolidated Statement of Operations.

Such non-cash charge primarily related to the write down of inventory associated with approximately 70 products within our satellite ground infrastructure product line that were discontinued.

As discussed in Note (3) – Business Divestitures , such non-cash charge also included the write down of inventory associated with the CGC Divestiture, which inventory was determined during the first quarter of fiscal 2025 to no longer be salable.

During fiscal 2025, we also expensed $ 1,082,000 of work in process inventory related to certain loss contracts in our satellite ground infrastructure product line accounted for under the point in time revenue recognition model.

(6) Property, Plant and Equipment

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Depreciation and amortization expense on property, plant and equipment amounted to $ 11,798,000 , $ 12,159,000 and $ 11,917,000 for the fiscal years ended July 31, 2025, 2024 and 2023, respectively.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(7) Accrued Expenses and Other Current Liabilities

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Accrued commissions and royalties 4,867,000 5,396,000

Accrued contributions for constructing long-lived assets 2,789,000 —

Accrued legal costs 830,000 3,092,000

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Provision for warranty obligations 4,172,000 1,213,000

Adjustments for changes in estimates ( 493,000 ) ( 2,300,000 )

Charges incurred ( 2,746,000 ) ( 1,538,000 )

Adjustments for changes in estimates — ( 493,000 )

PST Divestiture — ( 418,000 )

Balance at end of year $ 8,475,000 7,049,000

During fiscal 2023, we recorded benefits of $ 2,300,000 to cost of sales in our Terrestrial and Wireless Networks segment due to lower than expected warranty claims associated with previously acquired NG-911 technologies.

Accrued contributions for constructing long-lived assets represents our obligation to utilize amounts received in fiscal 2025 from the City of Gatineau, a province in Quebec, Canada, to fund the relocation of our existing leased facility to a new location.

(8) Credit Facility

On June 17, 2024, we entered into a senior secured loan facility with a syndicate of lenders, which replaced our prior credit facility.

As further discussed below, we subsequently amended the credit facility on October 17, 2024, March 3, 2025 and July 21, 2025 (the "Credit Facility").

At July 31, 2025, the Credit Facility consists of a remaining $ 116,260,000 term loan (the "Term Loan" facility) and (ii) an asset-based revolving credit facility with revolving commitments in an aggregate principal amount of $ 54,750,000 , subject to borrowing base limitations as described below (the "Revolving Loan" facility).

At closing, the proceeds were used to repay the prior credit facility in full and for working capital and other general corporate purposes.

The obligations under the Credit Facility are guaranteed by certain of our domestic and foreign subsidiaries (the "Guarantors"), who have granted for the benefit of the lenders, a lien on, and first priority security interest in, substantially all of our tangible and intangible assets.

COMTECH TELECOMMUNICATIONS CORP.

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Notes to Consolidated Financial Statements, Continued

(8) Credit Facility

On November 30, 2022, we entered into a Second Amended and Restated Credit Agreement which provided a senior secured loan facility up to $ 300,000,000 , consisting of (i) a revolving loan facility with a borrowing limit up to $ 150,000,000 ;

and (ii) a $ 50,000,000 term loan.

At July 31, 2023, the amount outstanding under the credit facility was $ 164,404,000 , of which $ 160,029,000 , net of deferred financing fees of $ 621,000 , is reflected in the non-current portion of long-term debt on our Consolidated Balance Sheets.

On Nov ember 7, 2023, we entered into a Third Amended and Restated Credit Agreement (the "Prior Credit Facility " ), which provided f or a senior secured loan facility of up to $ 200,000,000 consisting of:

(i) a revolving loan facility with an initial borrowing limit of $ 150,000,000 ;

and (ii) a $ 50,000,000 te rm loan .

The Prior Credit Fac ility also provided for the following, among other things:

effective January 31, 2024 and April 30, 2024, (a) our borrowing limit under the revolving loan facility reduced to $ 140,000,000 and $ 135,000,000 , respectively;

(b) the term loa n amortization increased from $ 1,250,000 to $ 1,875,000 per quarter, with the remaining balance due upon maturity;

and (c) the Applicable Rate increased 0.25 %.

In connection with entering the Prior Credit Facility, we capitalized $ 5,941,000 of total financing costs and accounted for the amendments as debt modifications.

On June 17, 2024, we entered into a $ 222,000,000 senior secured loan facility with a new syndicate of lenders (the “Credit Facility”), which replaced our Prior Credit Facility.

The Credit Facility consists of:

(i) a $ 162,000,000 term loan (the "Term Loan" facility) and an asset-based revolving credit facility with revolving commitments in an aggregate principal amount of $ 60,000,000 , subject to borrowing base limitations as described below (the "Revolving Loan" facility).

At closing, $ 25,000,000 of the Revolving Loan was funded and, together with the Term Loan, the proceeds were used to repay the Prior Credit Facility in full and for working capital and other general corporate purposes.

The obligations under the Credit Facility are guaranteed by certain of our domestic and foreign subsidiaries (the “Guarantors), who have granted for the benefit of the lenders, a lien on, and first priority security interest in, substantially all of our tangible and intangible assets.

The Credit Facility, which was amended October 17, 2024, has a maturity date which is the earlier of (x) July 31, 2028 or (y) 90 days prior to the earliest date that the debt under the Subordinated Credit Facility becomes due and payable (the "Maturity Date"), as discussed further below.

The Credit Facility was amended on October 17, 2024 (the "First Amendment") which, among other things:

(i) waived all defaults under the Credit Facility, specifically in connection with our Net Leverage Ratio and Fixed Charge Coverage Ratio covenants as of July 31, 2024;

(ii) increased the interest rate margins applicable to the Term Loan to 12.00 % per annum for Base Rate Loans and 13.00 % per annum for SOFR Loans and increased interest rate margins applicable to the Revolving Loan by 1.00 % at each level;

(iii) permitted the incurrence of $ 25,000,000 of total unsecured subordinated debt (as described below);

(iv) suspended testing of the Net Leverage Ratio and the Fixed Charge Coverage Ratio covenants until January 31, 2025;

(v) provided the lenders a consent right with respect to Revolver Loan borrowings above $ 32,500,000 ;

and (vi) amended the maturity date to the earlier of:

(x) July 31, 2028;

or (y) 90 days prior to the earliest date that the debt under the Subordinated Credit Facility (as defined below) becomes due and payable.

The Credit Facility was amended again on March 3, 2025 (the "Second Amendment") which, among other things:

(i) waived all defaults under the Credit Facility, specifically in connection with our Net Leverage Ratio and Fixed Charge Coverage Ratio covenants as of January 31, 2025;

(ii) decreased the interest rate margins applicable to the Term Loan from 12.00 % per annum to 9.50 % per annum for Base Rate Loans and from 13.00 % per annum to 10.50 % per annum for SOFR Loans;

(iii) permitted the incurrence of an additional $ 40,000,000 of total unsecured subordinated debt (as described below);

(iv) suspended testing of the Net Leverage Ratio and the Fixed Charge Coverage Ratio covenants until October 31, 2025;

(v) suspended our ability to pay interest in-kind until after the interest rate margins are tested based on net leverage ratios;

(vi) permitted partial principal repayments of $ 27,252,000 and $ 9,084,000 on the Term Loan and Revolving Loan, respectively, and waived the prepayment fees that would have been payable under the Credit Facility with regard to such repayments;

(vii) permanently reduced commitments under the Revolving Loan Facility by $ 3,179,000 and provided the lenders a consent right with respect to Revolver Loan borrowings above $ 29,321,000 ;

(viii) reduced the minimum quarterly average liquidity requirement from $ 20,000,000 to $ 17,500,000 ;

and (ix) provided the lenders the right to appoint an independent director to our Board of Directors after May 31, 2025 (which has been satisfied as of the issuance date).

The Credit Facility was further amended on July 21, 2025 (the "Third Amendment") which, among other things:

(i) suspends, until the four-quarter period ending January 31, 2027, testing of the Net Leverage Ratio, the Fixed Charge Coverage Ratio and the Minimum EBITDA covenants;

(ii) altered the interest rate margins applicable to Term Loans (as described in further detail below);

(iii) delays the scheduled repayment of a portion of the principal of the Term Loans (as described in further detail below);

(iv) delays the scheduled repayment of fees due pursuant to the Second Amendment;

(v) reduced the minimum EBITDA requirement (as described in further detail below);

(vi) reduced the minimum quarterly average liquidity requirement from $ 17,500,000 to $ 15,000,000 ;

(vii) permits us to engage in the sale or disposition of certain properties and assets approved by the Administrative Agent (the “Specified Permitted Individual Disposition”), on the terms, and subject to documentation, reasonably acceptable to the Administrative Agent, so long as 65 % of the net cash proceeds are applied against the outstanding principal amount of the obligations under the Credit Facility and 35 % of the net cash proceeds are applied against the outstanding principal amount of the subordinated term loans under the Subordinated Credit Facility (as defined below);

and (viii) required us to adopt management incentive and retention arrangements for our key personnel in connection with the contemplation of our strategic alternatives.

The Third Amendment provides that the interest rate margins on the Term Loans are 9.50 % and 10.50 % for Base Rate Loans and SOFR Loans, respectively, until the first business day of the month following January 31, 2027, when we have delivered financial statements demonstrating compliance with the financial covenants under the Credit Facility.

If demonstrated, the interest rate margins revert to:

(i) for Base Rate Loans, a margin ranging from 7.50 % to 9.00 % and (ii) for SOFR Loans, a margin ranging from 8.50 % to 10.00 %, in each case, based on whether our Net Leverage Ratio during the applicable determination period ranges from less than 1.75 x to greater than or equal to 3.25 x, respectively.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

The Third Amendment defers $ 3,037,500 of scheduled term loan repayments otherwise due on July 31, 2025 until:

(x) the maturity of the Credit Facility, or (y) January 31, 2026, in the case that we had not filed by December 31, 2025, either (i) a Form 10-K annual report accompanied by an opinion of our independent registered public accounting firm free from any “going concern” or like qualification or exception with respect to our consolidated financial statements for the relevant fiscal year ended, or (ii) a Form 10-Q quarterly report that included footnote disclosure (with which our independent registered public accounting firm would not disagree) in the financial statements accompanied thereby that affirmatively included management's assessment that there is no longer a substantial doubt about our ability to continue as a going concern.

With the filing of our Form 10-K for the fiscal year ended July 31, 2025, we have determined that the $ 3,037,500 will be due upon the maturity of the Credit Facility.

Under the Third Amendment, once financial covenant testing resumes on January 31, 2027, in addition to complying with the minimum quarterly average liquidity requirement, we will be required to comply with:

(i) a maximum Net Leverage Ratio of 2.75 x as of January 31, 2027;

2.75 x as of April 30, 2027 and 2.65 x as of July 31, 2027 and thereafter;

(ii) a minimum Fixed Charge Coverage Ratio of 1.30 x commencing with the four fiscal quarter period ending January 31, 2027 and 1.35 x commencing with the four fiscal quarter period ending July 31, 2027 and thereafter;

and (iii) minimum EBITDA of:

(a) $ 32,500,000 for the four-quarter period ending January 31, 2027;

(b) $ 35,000,000 for the four-quarter period ending April 30, 2027;

and $ 40,000,000 for the four-quarter period ending October 31, 2027 and thereafter.

We accounted for the October 17, 2024, March 3, 2025 and July 21, 2025 amendments to our Credit Facility as debt modifications.

At the time of entering into the Third Amendment, and through and including the issuance date, there were no ongoing events of default.

Over the next twelve months beyond the issuance date, we believe that it is probable we will be able to comply with the covenants required by the Credit Facility.

As a result, we have presented our debt obligations as either current or long-term on the Consolidated Balance Sheet , based on their scheduled repayment or maturity dates.

Additional Credit Facility Details

In connection with entering the Credit Facility, the Term Loan lenders received 1,435,884 detachable warrants ("Lender warrants") granted at an exercise price of $ 0.10 per common share which entitles the Term Loan lenders to purchase 1,435,884 shares of our common stock from us at any time and from time to time after the Closing Date and on or prior to June 17, 2031, subject to certain adjustments.

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We established an initial Lender warrant liability of $ 3,011,000 which was allocated as a discount against the Term Loan proceeds.

The Lender warrant liability is classified in "Other Liabilities" on the Consolidated Balance Sheets and is remeasured to its estimated fair value each reporting period, using Level 3 fair value inputs, until the Lender warrants are exercised or expire.

The Lender warrant liability is classified in "Warrant and derivative liabilities" on the Consolidated Balance Sheets and is remeasured to its estimated fair value each reporting period, using Level 3 fair value inputs, until the Lender warrants are exercised or expire.

Changes in the estimated fair value of the Lender warrant liability are recognized in our Consolidated Statement of Operations as a non-cash expense or benefit.

As of July 31, 2024, the Lender warrant liability was remeasured to $ 4,544,000 , resulting in a non-cash expense of $ 1,533,000 recorded in "Other expenses (income)" on the Consolidated Statements of Operations .

Additionally, we identified several embedded derivatives that require bifurcation from the Credit Facility under ASC 815-40 "Derivatives and Hedging - Contracts in Entity's Own Equity." Certain of these embedded features include events of default and contingent fee and interest rate increases and were determined to qualify as embedded derivatives, accounted for as one compound embedded derivative liability.

We established an initial embedded derivative liability of $ 3,116,000 , which was allocated as a discount against the Term Loan proceeds.

The embedded derivative liability is classified in "Other Liabilities" on the Consolidated Balance Sheets and is remeasured to its estimated fair value each reporting period, using Level 3 fair value inputs, until the embedded derivative features have zero probability of occurring or expire.

Changes in the estimated fair value of the embedded derivative liability are recognized in our Consolidated Statement of Operations as a non-cash expense or benefit.

As of July 31, 2024, the embedded derivative liability was remeasured to $ 3,041,000 , resulting in $ 75,000 of income recorded in " Other expenses (income) " on the Consolidated Statements of Operations .

As of July 31, 2025 and 2024, the Lender warrant liability was remeasured to $ 3,007,000 and $ 4,544,000 , respectively, resulting in a non-cash benefit of $ 1,537,000 and a non-cash expense of $ 1,533,000 for the years ended July 31, 2025 and 2024, respectively, recorded in "Other expenses (income) - Change in fair value of warrants and derivatives" on the Consolidated Statements of Operations .

COMTECH TELECOMMUNICATIONS CORP.

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Notes to Consolidated Financial Statements, Continued

In connection with entering the Credit Facility, we paid fees of $ 15,035,000 , including:

(i) $ 9,979,000 of financing fees, of which $ 6,626,000 is attributable to the Term Loan and $ 3,353,000 is attributable to the Revolving Loan;

and (ii) $ 5,056,000 of closing fees, representing approximately 3.0 % of the Term Loan commitment plus certain other reimbursable expenses paid directly to the Term Loan lenders and accounted for as a discount against the Term Loan proceeds.

Additionally, a $ 2,430,000 Term Loan exit fee, which was earned on the closing date and is payable directly to the Term Loan lenders at maturity or earlier, as defined, was accounted for as a discount against the Term Loan proceeds.

The financing fees and discounts attributable to the Term Loan are amortized as interest expense over the life of the debt and are presented as a deduction to the borrowings outstanding under the Term Loan.

The financing fees attributable to the Revolving Loan are capitalized on the Consolidated Balance Sheets and amortized as interest expense over the life of the debt.

As of July 31, 2024, the amount outstanding under our Credit Facility was as follows:

July 31, 2024

Additionally, we identified several embedded derivatives that require bifurcation from the Credit Facility under ASC 815-15 - "Embedded Derivatives," ("ASC 815").

Certain of these embedded features include contingent event of default and going concern interest rate increases and/or fees, which qualify for accounting as one combined embedded derivative liability.

We established an initial embedded derivative liability of $ 3,116,000 , which was allocated as a discount against the Term Loan proceeds.

The combined embedded derivative liability is presented with the host instrument as part of the amount outstanding under the Credit Facility on the Consolidated Balance Sheets and is remeasured to its estimated fair value each reporting period, using Level 3 fair value inputs, until the embedded derivative features have zero probability of occurring or expire.

Changes in the estimated fair value of the combined embedded derivative liability are recognized in our Consolidated Statement of Operations as a non-cash expense or benefit.

As of July 31, 2025 and 2024, the combined embedded derivative liability was remeasured to $ 1,890,000 and $ 3,041,000 , respectively, resulting in non-cash benefits of $ 1,151,000 and $ 75,000 , for the years ended July 31, 2025 and 2024, respectively, recorded in "Other expenses (income) - Change in fair value of warrants and derivatives" on the Consolidated Statements of Operations .

The following table summarizes the activity relating to deferred financing costs and discounts under the Credit Facility:

Deferred Financing Costs Discount

Term Loan Revolver Total Term Loan Total

Credit facility fees $ 6,626,000 3,353,000 $ 9,979,000 $ 7,486,000 $ 17,465,000

Term loan proceeds allocated to lender

warrants — — — 3,011,000 3,011,000

Term loan proceeds allocated to

embedded derivative — — — 3,116,000 3,116,000

Amortization ( 201,000 ) ( 102,000 ) ( 303,000 ) ( 411,000 ) ( 714,000 )

Balance at July 31, 2024

$ 6,425,000 3,251,000 $ 9,676,000 $ 13,202,000 $ 22,878,000

Amendment fees — 975,000 975,000 9,326,000 10,301,000

Write-off due to prepayments and

reduced commitments ( 1,788,000 ) ( 1,707,000 ) ( 3,495,000 ) ( 5,482,000 ) ( 8,977,000 )

Amortization ( 1,114,000 ) ( 612,000 ) ( 1,726,000 ) ( 3,242,000 ) ( 4,968,000 )

Balance at July 31, 2025

$ 3,523,000 1,907,000 $ 5,430,000 $ 13,804,000 $ 19,234,000

Deferred financing fees and discounts attributable to the Term Loan are amortized as interest expense over the life of the debt through the maturity date using the effective interest method and are presented as a deduction to the non-current borrowings outstanding under the Term Loan.

Deferred financing fees attributable to the Revolving Loan are capitalized on the Consolidated Balance Sheets and amortized as interest expense over the life of the debt using the straight-line method.

T he amount outstanding under our Credit Facility was as follows:

July 31, 2025 July 31, 2024

Term loan $ 116,260,000 161,663,000

Less unamortized deferred financing costs related to Term Loan 6,425,000

Less unamortized discount related to Term Loan 13,202,000

Unamortized deferred financing costs related to term loan 3,523,000 6,425,000

Unamortized discount related to term loan 13,804,000 13,202,000

Term loan, net 98,933,000 142,036,000

Revolving loan 17,641,000 32,500,000

Embedded derivative related to credit facility 1,890,000 3,041,000

Amount outstanding under credit facility, net 118,464,000 177,577,000

Less current portion of long-term debt 4,050,000

Non-current portion of long-term debt $ 170,486,000

During the fiscal year ended July 31, 2024, we had outstanding balances under our credit facilities ranging from $ 156,241,000 to $ 202,000,000 .

As of July 31, 2024, total net deferred financing costs related to the Credit Facility were $ 9,676,000 and are being amortized over the term of the Credit Facility through the Maturity Date.

The refinancing of our Prior Credit Facility is considered a debt extinguishment and, as such, $ 1,832,000 of net deferred financing costs primarily related to the Prior Credit Facility were expensed in fiscal 2024 and included in interest expense reported on our Consolidated Statement of Operations .

Interest expense related to our Credit Facility and Prior Credit Facility, including amortization of deferred financing costs and discounts, recorded during the fiscal years ended July 31, 2024, 2023 and 2022 was $ 22,058,000 , $ 14,931,000 and $ 4,933,000 , respectively.

Our blended interest rate approximated 12.26 %, 8.89 % and 3.41 % for fiscal 2024, 2023 and 2022, respectively.

Availability under the Revolving Loan is subject to eligibility criteria set forth in the Credit Facility, and equal to a borrowing base in an amount equal to, from time to time:

(a) 85 % of the net book value of billed and invoiced accounts receivables of the Borrowing Base Parties, as defined;

plus (b) 85 % of the net book value of accounts receivables that the Borrowing Base Parties have the right to bill but have not yet billed up to the lesser of (i) 12.5 % of the amount calculated pursuant to the sum of clauses (a) and (b) and (ii) $ 15.0 million of such accounts;

plus (c) 60 % of the net book value of all inventory of the Borrowing Base Parties, less (d) customary reserves.

The Credit Facility provides that (a) Revolving Loans comprised of (i) Base Rate Loans shall bear interest at the Base Rate plus an additional margin ranging from 3.75 % to 4.25 %, depending on the average quarterly revolving loan usage during the applicable determination period and (ii) SOFR Loans shall bear interest at the Term SOFR rate plus an additional margin ranging from 4.75 % to 5.25 %, depending on the average quarterly revolving loan usage during the applicable determination period and (b) Term Loans comprised of (i) Base Rate Loans shall bear interest at the Base Rate plus an additional margin ranging from 7.50 % to 9.00 %, depending on our net leverage ratio during the applicable determination period and (ii) SOFR Loans shall bear interest at the Term SOFR rate plus an additional margin ranging from 8.50 % to 10.00 %, depending on our net leverage ratio during the applicable determination period.

The Term Loans bear both cash interest and interest paid-in-kind ("PIK").

PIK interest is fixed at 2.50 % and is to be capitalized and added to the outstanding principal on each interest payment date.

Current portion of credit facility 4,050,000 4,050,000

Non-current portion of credit facility, net $ 114,414,000 173,527,000

COMTECH TELECOMMUNICATIONS CORP.

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Notes to Consolidated Financial Statements, Continued

The Term Loan is subject to 2.50 % amortization per annum, payable on the last day of each fiscal quarter.

The first Term Loan repayment of $ 675,000 was paid on July 31, 2024 and quarterly Term Loan repayments thereafter are $ 1,012,500 , with the remaining Term Loan balance due on the Maturity Date.

The Credit Facility contains (a) customary representations, warranties and affirmative covenants;

(b) customary conditions to drawing the Revolver;

During the fiscal year ended July 31, 2025, we reclassified the combined embedded derivative liability balance as of July 31, 2024 from "Other liabilities" on the Consolidated Balance Sheets to conform to the current period presentation.

During the fiscal year ended July 31, 2025, we had outstanding balances under our Credit Facility ranging from $ 133,901,000 to $ 202,940,000 .

Availability under the Revolving Loan is subject to eligibility criteria set forth in the Credit Facility, and equal to a borrowing base in an amount equal to, from time to time:

(a) 85 % of the net book value of billed and invoiced accounts receivables;

plus (b) 85 % of the net book value of accounts receivables we have the right to bill but have not yet billed up to the lesser of (i) 12.5 % of the amount calculated pursuant to the sum of clauses (a) and (b) and (ii) $ 15,000,000 of such accounts;

plus (c) 60 % of the net book value of all inventory, less (d) customary reserves.

As of July 31, 2025 and July 31, 2024, our eligible Borrowing Base collateral, as defined under the Revolving Loan, was $ 101,222,000 and $ 114,661,000 , respectively.

Interest expense related to our Credit Facility (both current and prior), including amortization of deferred financing costs and debt discount, recorded during the fiscal years ended July 31, 2025, 2024 and 2023 was $ 34,713,000 , $ 22,058,000 and $ 14,931,000 , respectively.

Our blended interest rate approximated 18.51 %, 12.26 % and 8.89 % for fiscal 2025, 2024 and 2023, respectively.

Interest expense related to our Credit Facility also includes an unused line fee of 0.50 % per annum on the average unused Revolver Loan commitment, with no fee payable on the $ 27,500,000 of the $ 54,750,000 commitment that is subject to the consent right of the revolving lender and Agent.

The Term Loan is subject to 2.50 % amortization per annum.

The first Term Loan repayment of $ 675,000 was paid on July 31, 2024.

The next Term Loan repayment of $ 1,012,500 was paid on July 31, 2025, reflecting the deferral of $ 3,037,500 provided by the Third Amendment.

Future quarterly Term Loan repayments of $ 1,012,500 are payable on the last business day of each fiscal quarter, with the remaining Term Loan balance due on the maturity date.

The Credit Facility contains:

(a) customary representations, warranties and affirmative covenants;

(b) customary conditions to drawing the Revolver Loan;

(i) liens, (ii) investments, (iii) indebtedness, (iv) significant corporate changes, including mergers and acquisitions, (v) dispositions, including the disposition of assets by any Loan Party to any Subsidiary that is not a Subsidiary Loan Party, (vi) restricted payments, including stockholder dividends, (vii) distributions, including the repayment of subordinated intercompany and third party indebtedness, and (viii) certain other restrictive agreements;

(d) certain financial covenants, including a maximum Net Leverage Ratio, minimum Fixed Charge Coverage Ratio, Minimum Average Liquidity and Minimum EBITDA;

(i) liens, (ii) investments, (iii) indebtedness, (iv) significant corporate changes, including mergers and acquisitions, (v) dispositions, including the disposition of assets by any Loan Party to any Subsidiary that is not a Loan Party, (vi) restricted payments, including stockholder dividends, (vii) distributions, including the repayment of subordinated intercompany and third party indebtedness, and (viii) certain other restrictive agreements;

(d) certain financial covenants (see above);

(e) customary optional and mandatory prepayment events;

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In addition, under certain circumstances, we may be required to enter into amendments to the Credit Facility in connection with any further syndication of the Credit Facility.

Under the Credit Facility, for the trailing twelve months ("TTM") ended July 31, 2024, we were required to maintain a maximum Net Leverage Ratio of 3.25 x TTM Adjusted EBITDA, a minimum Fixed Charge Coverage Ratio of 1.20 x TTM Adjusted EBITDA and Minimum Average Liquidity of $ 20,000,000 .

As discussed below, on October 17, 2024, we entered into an amendment to the Credit Facility to waive a Net Leverage Ratio and Fixed Charge Coverage Ratio event of default as of July 31, 2024.

Capitalized terms used but not defined herein have the meanings set forth for such terms in the Credit Facility, which has been documented and filed with the SEC.

Subsequent Event

On October 17, 2024, we entered into an amendment to the Credit Facility (the “Amended Credit Facility”) in order to (i) waive certain events of default that occurred under the Credit Facility, including in connection with our Net Leverage Ratio and Fixed Charge Coverage Ratio for the 4 quarter period ended July 31, 2024.

and (ii) amend the Credit Facility.

As a result the Amended Credit Facility, there are no ongoing events of default under the Credit Facility.

The Amended Credit Facility also amends the Credit Agreement to, amongst other things;

(i) increase the interest rate margins applicable to the loans (as described in further detail below);

(ii) modify certain financial and collateral reporting requirements;

(iii) provide the lenders a consent right with respect to $ 27,500,000 of revolver borrowings above $ 32,500,000 (i.e., the current amount of revolver borrowings outstanding);

(iv) permit the incurrence of $ 25,000,000 of senior unsecured subordinated debt (the "Subordinated Credit Agreement") (as described in further Note (19) – “Subsequent Event - Subordinated Credit Agreement” );

(v) amend the Maturity Date;

and (vi) suspend financial covenant testing through the end of our fiscal quarter ending January 31, 2025.

Under the Amended Credit Facility, the interest rate margins that are applicable to the Revolving Loan are increased by 1.00 % at each level.

Accordingly, the Amended Credit Facility provides that Revolving Loans comprised of (i) Base Rate Loans shall bear interest at the Base Rate plus an additional margin ranging from 4.75 % to 5.25 %;

and (ii) SOFR Loans shall bear interest at the Term SOFR rate plus an additional margin ranging from 5.75 % to 6.25 %, each depending on the average quarterly revolving loan usage during the applicable determination period.

The Amended Credit Facility provides that the interest rate margins on the Term Loans are 12.00 % per annum for Base Rate Loans and 13.00 % per annum for SOFR Loans until the first business day of the month following January 31, 2025, when the Company has delivered financial statements demonstrating compliance with the financial covenants under the Amended Credit Facility.

If demonstrated, the interest rate margins revert to the margins provided under the Existing Credit Facility with respect to Term Loans, specifically, (i) Base Rate Loans shall bear interest at the Base Rate plus an additional margin ranging from 7.50 % to 9.00 %;

and (ii) SOFR Loans shall bear interest at the Term SOFR rate plus an additional margin ranging from 8.50 % to 10.00 %, each depending on our Net Leverage Ratio during the applicable determination period.

Capitalized terms used but not defined herein have the meanings set forth for such terms in the Prior Credit Facility, the Credit Facility and the Amended Credit Facility, all of which have been documented and filed with the SEC.

In connection with our filing of Form 12b-25 with the SEC on October 30, 2025, we entered into an agreement, effective October 29, 2025, with our Credit Facility lenders to allow for an extension of time to deliver certain items that were originally due on October 29, 2025 and October 31, 2025.

COMTECH TELECOMMUNICATIONS CORP.

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Notes to Consolidated Financial Statements, Continued

(9) Subordinated Credit Facility

On October 17, 2024, we entered into a subordinated credit facility with the existing holders of our convertible preferred stock and U.S.

Bank Trust Company, National Association, as agent, which provided an initial subordinated unsecured term loan facility in the aggregate principal amount of $ 25,000,000 (the “Subordinated Credit Agreement”).

As further discussed below, on March 3, 2025 and July 21, 2025, we entered into amendments to the Subordinated Credit Agreement (the "Subordinated Credit Facility”).

On March 3, 2025, we entered into an amendment ("Amendment No.

1") which, in addition to providing incremental aggregate principal of $ 40,000,000 , waived all defaults under the Subordinated Credit Facility, specifically in connection with our Net Leverage Ratio and Fixed Charge Coverage Ratio covenants as of January 31, 2025 and suspended testing of the Net Leverage Ratio and the Fixed Charge Coverage Ratio covenants under the Subordinated Credit Facility until October 31, 2025.

The net proceeds were principally used to repay a portion of the Term Loan and Revolver Loan on March 3, 2025, fund our general working capital needs and enabled us to negotiate the Second Amendment to the Credit Facility, including the waiver of existing defaults.

On July 21, 2025, we entered into a second amendment (“Amendment No.

2”) which, among other things:

(i) provided for the incurrence of a $ 35,000,000 incremental facility (as described in further detail below);

(ii) suspends, until the four-quarter period ending January 31, 2027, testing of the Net Leverage Ratio, the Fixed Charge Coverage Ratio and the Minimum EBITDA covenants in the Subordinated Credit Facility;

(iii) modified the interest rate applicable to the subordinated term loans (as described in further detail below);

(iv) reduced the minimum EBITDA requirement (as described in further detail below);

(v) reduced the minimum quarterly average liquidity requirement from $ 17,500,000 to $ 15,000,000 ;

(vi) permits us to engage in the Specified Permitted Individual Disposition, on the terms, and subject to documentation, reasonably acceptable to the Subordinated Agent (subject to the same requirement with respect to the application of any net cash proceeds as discussed in Note (8) - Credit Facility;

and (vii) required us to adopt management incentive and retention arrangements for its key personnel in connection with the contemplation of our strategic alternatives (also as discussed Note (8) - Credit Facility ).

Amendment No.

2 provides for an incremental priority subordinated unsecured term loan facility in the aggregate principal amount of $ 35,000,000 .

We used the net proceeds to pay certain transaction costs, fees and expenses incurred in connection with amendments to our credit facilities and to prepay, without premium:

(i) $ 28,481,000 of the outstanding Term Loans under the Credit Facility, and (ii) $ 5,775,000 of the outstanding Revolver Loan under the Credit Facility.

As part of this prepayment, we permanently reduced Revolver Loan commitments under the Credit Facility by $ 2,071,000 .

The interest on the $ 35,000,000 shall be paid-in-kind quarterly, in arrears, by capitalizing and adding the unpaid and accrued amount of such interest to the aggregate outstanding principal amount of the incremental priority subordinated credit facility on the last business day of each quarter.

This tranche of subordinated debt will rank senior in right of payment to the existing subordinated term loans under the Subordinated Credit Facility.

Unlike the existing subordinated term loans, the incremental priority subordinated credit facility is not subject to any make-whole premium.

Under Amendment No.

2, the interest rate applicable to the incremental priority subordinated credit facility shall be the greater of:

(x) the highest per annum interest rate then-applicable to the Term Loans under the Credit Facility, and (y) Term SOFR (as defined in the Credit Facility) plus 10.5 %.

Under Amendment No.

2, once financial covenant testing resumes on January 31, 2027, in addition to complying with the minimum quarterly average liquidity requirement, we will be required to comply with:

(i) a maximum Net Leverage Ratio of 3.30 x as of January 31, 2027, 3.30 x as of April 30, 2027 and 3.18 x as of July 31, 2027 and thereafter;

(ii) a minimum Fixed Charge Coverage Ratio of 1.04 x commencing with the four fiscal quarter period ending January 31, 2027 and 1.08 x commencing with the four fiscal quarter period ending July 31, 2027 and thereafter;

and (iii) minimum EBITDA of:

(a) $ 26,000,000 for the four-quarter period ending January 31, 2027;

(b) $ 28,000,000 for the four-quarter period ending April 30, 2027;

and $ 32,000,000 for the four-quarter period ending October 31, 2027 and thereafter.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

At the time of entering into Amendment No.

2, and through and including the issuance date, there were no ongoing events of default.

Over the next twelve months beyond the issuance date, we believe that it is probable we will be able to comply with the covenants required by the Subordinated Credit Facility.

As a result, we have presented our debt obligations as long-term on the Consolidated Balance Sheet , based on their scheduled maturity dates.

The outstanding portion of debt related to the Subordinated Credit Facility will not be considered debt for purposes of our financial covenant testing under the Credit Facility.

However, the Subordinated Credit Facility includes a cross-default provision, whereby a default under the Credit Facility constitutes a default under the Subordinated Credit Facility.

Additional Subordinated Credit Facility Details

The obligations under the Subordinated Credit Facility mature 90 days after the Credit Facility.

Unlike the $ 35,000,000 tranche discussed above, the other two tranches of the Subordinated Credit Facility, which aggregate $ 65,000,000 of principal, are subject to Make-Whole Amounts with respect to certain repayments or prepayments equal to:

(i) from the respective closing date of each tranche through (but not including) the date that is nine months thereafter, the principal repayment amount multiplied by 33.0 %;

(ii) from the date that is nine months after the applicable closing date through (but not including) the date that is the second anniversary of such closing date, the principal repayment amount multiplied by 50.0 %;

(iii) from the second anniversary of the applicable closing date and thereafter, the principal repayment amount multiplied by 75.0 % plus, in the case of clause (iii), interest accrued on the principal amount outstanding at the Make-Whole Interest Rate (as defined below) starting on the second anniversary of the applicable closing date and calculated as of any such date of determination.

The Make-Whole Interest Rate is a rate equal to 16.0 % per annum, which is increased by 2.0 % per annum upon the occurrence and during the continuation of an event of default under the Subordinated Credit Facility.

We identified an embedded derivative related to redemption features that requires bifurcation from the Subordinated Credit Facility under ASC 815 .

We established a total embedded derivative liability of $ 16,864,000 , which was allocated as a discount against the Subordinated Credit Facility proceeds.

The embedded derivative liability is presented with the "Non-current portion of subordinated credit facility, net" on the Consolidated Balance Sheet and is remeasured to its estimated fair value each reporting period, using Level 3 fair value inputs.

Changes in the estimated fair value of the embedded derivative liability are recognized in our Consolidated Statements of Operations as a non-cash expense or benefit.

As of July 31, 2025, the embedded derivative liability was remeasured to $ 5,753,000 .

For the fiscal year ended July 31, 2025, we recorded a non-cash benefit of $ 11,111,000 , in "Other expenses (income) - Change in fair value of warrants and derivatives" on the Consolidated Statements of Operations .

Deferred financing costs, discounts and the Make-Whole Amount are amortized as interest expense through the Subordinated Credit Facility maturity date using the effective interest method, and are presented as adjustments to the borrowings outstanding under such debt.

Interest expense related to our Subordinated Credit Facility for the fiscal year ended July 31, 2025 was $ 10,876,000 , which included $ 2,416,000 of immediately expensed financing fees related to Amendment No.

1 and Amendment No.

2 due to accounting for such amendments as debt modifications.

The following table reconciles the amount outstanding under the Subordinated Credit Facility to its net carrying value:

July 31, 2025

Subordinated credit facility $ 100,144,000

Unamortized deferred financing costs 1,528,000

Unamortized discount 15,404,000

Accretion of make-whole amount 6,623,000

Subordinated credit facility, net - subtotal 89,835,000

Embedded derivative related to redemption features 5,753,000

Amount outstanding under the subordinated credit facility, net 95,588,000

Current portion of subordinated credit facility —

Non-current portion of subordinated credit facility, net $ 95,588,000

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

The obligations under the Subordinated Credit Facility are guaranteed by the same guarantors under the Credit Facility and contain customary representations, warranties and affirmative covenants, in each case substantially consistent with the representations and warranties and affirmative covenants under the Credit Facility.

The Subordinated Credit Facility contains customary negative covenants, subject to negotiated exceptions, including but not limited to:

(i) liens, (ii) investments, (iii) indebtedness, (iv) significant corporate changes, including mergers and acquisitions, (v) dispositions, (vi) restricted payments, including stockholder dividends, (vii) customary optional and mandatory prepayment events, and (viii) certain other restrictive agreements.

Capitalized terms used but not defined herein have the meanings set forth for such terms in the Subordinated Credit Facility, which has been documented and filed with the SEC.

Subsequent Event

In connection with our filing of Form 12b-25 with the SEC on October 30, 2025, we entered into an agreement, effective October 29, 2025, with our Subordinated Credit Facility lenders to allow for an extension of time to deliver certain items that were originally due on October 29, 2025 and October 31, 2025.

Our leases historically relate to the leasing of facilities and equipment.

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At lease commencement, we recognize a right-of-use ("ROU") asset and lease liability based on the present value of the future lease payments over the estimated lease term.

We have elected to not recognize a ROU asset or lease liability for any leases with terms of twelve months or less.

We elected to not recognize a ROU asset or lease liability for any leases with terms of twelve months or less.

Instead, for such short-term leases, we recognize lease expense on a straight-line basis over the lease term.

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As of July 31, 2025, none of our leases contained a residual value guarantee and covenants included in our lease agreements are customary for the types of facilities and equipment being leased.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

The components of lease expense are as follows:

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Amortization of ROU assets $ — — 5,000

Interest on lease liabilities — — 1,000

Operating lease expense 7,489,000 8,414,000 10,439,000

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Total lease expense $ 12,158,000 13,021,000 14,843,000

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

Additional information related to leases is as follows:

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2025 2024 2023

Cash paid for amounts included in the measurement of lease

Cash paid for amounts included in the measurement of lease liabilities:

Operating leases - Operating cash outflows $ 8,277,000 8,983,000 10,604,000

Finance leases - Operating cash outflows — — 1,000

Finance leases - Financing cash outflows — — 4,000

ROU assets obtained in the exchange for lease liabilities

ROU assets obtained in the exchange for lease liabilities (non-cash):

Operating leases $ 5,428,000 677,000 3,211,000

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Computed "expected" tax benefit $ ( 32,630,000 ) 21.0 % ( 21,059,000 ) 21.0 % ( 6,478,000 ) 21.0 %

Increase (reduction) in income taxes resulting from:

State and local income taxes, net of federal benefit ( 127,000 ) 0.1 440,000 ( 1.4 ) 227,000 ( 0.6 )

Increase (reduction) in income taxes due to:

State and local income taxes, net of valuation allowance and federal benefit 406,000 ( 0.2 ) ( 127,000 ) 0.1 440,000 ( 1.4 )

Stock-based compensation 1,017,000 ( 0.6 ) 1,891,000 ( 1.9 ) 692,000 ( 2.2 )

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Foreign-derived intangible income deduction — — 43,000 — ( 517,000 ) 1.7

Revaluation of convertible preferred stock option liability — — — — ( 211,000 ) 0.6

Revaluation of warrants ( 897,000 ) 0.9 — — — —

Revaluation of warrants and embedded derivatives ( 8,085,000 ) 5.2 ( 897,000 ) 0.9 — —

Nondeductible executive compensation 102,000 ( 0.1 ) — — 1,484,000 ( 4.8 )

PST Divestiture — — 1,384,000 ( 1.4 ) — —

Change in valuation allowance 10,177,000 ( 10.0 ) 2,834,000 ( 9.2 ) 2,009,000 ( 5.4 )

Remeasurement of deferred taxes — — — — ( 396,000 ) 1.1

Foreign income taxes ( 389,000 ) 0.4 ( 269,000 ) 0.9 ( 478,000 ) 1.3

Change in U.S.

federal and foreign valuation allowances 24,929,000 ( 16.0 ) 10,177,000 ( 10.0 ) 2,834,000 ( 9.2 )

Foreign income tax rate differential ( 804,000 ) 0.5 ( 389,000 ) 0.4 ( 269,000 ) 0.9

Goodwill impairment 15,975,000 ( 10.3 ) 9,549,000 ( 9.5 ) — —

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Deferred revenue, non-current 3,390,000 4,664,000

163(j) Interest Expense Limitation 3,423,000 549,000

Interest expense limitation 13,411,000 3,423,000

Other 7,054,000 1,278,000

valuation allowance ( 70,973,000 ) ( 44,888,000 )

Total deferred tax assets 48,189,000 57,333,000

Total deferred tax assets, net 44,456,000 48,189,000

Deferred tax liabilities:

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Net deferred tax liabilities $ ( 4,432,000 ) ( 6,271,000 )

At July 31, 2024, our net deferred tax liability of $ 6,271,000 includes $ 78,000 of foreign net deferred tax liabilities that were recorded as other liabilities, net in our Consolidated Balance Sheets.

At July 31, 2025, our net deferred tax liability of $ 4,432,000 includes $ 187,000 of foreign net deferred tax assets that were recorded as "Other assets, net" in our Consolidated Balance Sheets .

We account for income taxes pursuant to ASC 740, which requires an asset and liability based approach in accounting for income taxes.

In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of them will not be realized.

If management determines that it is more-likely-than-not that some or all of its deferred tax assets will not be realized, a valuation allowance will be recorded against such deferred tax assets.

At July 31, 2024, we have federal research and experimentation credits carryforwards of $ 7,991,000 which begin to expire in 2033.

At July 31, 2024, our net deferred tax liability of $ 6,271,000 includes $ 78,000 of foreign net deferred tax liabilities that were recorded as "Other liabilities" in our Consolidated Balance Sheets .

Federal and State

At July 31, 2025, we have federal research and experimentation credit carryforwards of $ 8,447,000 which begin to expire in 2032.

We have state research and experimentation credit carryforwards of $ 9,048,000 which begin to expire in 2026.

We believe that it is more-likely-than-not that the benefit from certain state research and experimentation credits will not be realized.

In recognition of this risk, we have provided a valuation allowance of $ 8,502,000 on the deferred tax assets relating to these state credits.

At July 31, 2024, we have a nominal amount of federal net operating loss carryforwards which begin to expire in 2038.

We believe that it is more-likely-than-not that the benefit from these credits will not be realized.

In recognition of this risk, we have provided for a valuation allowance of $ 17,495,000 on the deferred tax assets relating to these credits.

At July 31, 2025, we have $ 962,000 of federal net operating loss carryforwards, which do not expire (but are subject to annual deduction limitations based on a percentage of taxable income).

We have state net operating loss carryforwards of $ 3,758,000 , which begin to expire in 2026.

We believe it to be more-likely-than-not that the benefit from certain state net operating loss carryforwards will not be realized.

In recognition of this risk, we have provided a valuation allowance of $ 3,448,000 on the deferred tax assets relating to these state net operating loss carryforwards.

We believe that it is more-likely-than-not that the benefit from these carryforwards will not be realized.

In recognition of this risk, we have provided for a valuation allowance of $ 4,720,000 on the deferred tax assets relating to these carryforwards.

At July 31, 2025, we have federal and state capital loss carryforwards of $ 14,473,000 , which expire in 2026.

We believe it is more-likely-than-not that the benefit from these carryforwards will not be realized.

In recognition of this risk, we have provided for a full valuation allowance on the deferred tax assets relating to these carryforwards.

COMTECH TELECOMMUNICATIONS CORP.

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Notes to Consolidated Financial Statements, Continued

At July 31, 2024, we have federal and state capital loss carryforwards of $ 14,473,000 which mostly expire in 2026.

We believe it to be more-likely-than-not that the benefit from these federal and state capital loss carryforwards will not be realized.

In recognition of this risk, we have provided a full valuation allowance on the deferred tax assets relating to these federal and state capital loss carryforwards.

With respect to our remaining U.S.

federal and state net deferred tax assets as of July 31, 2024, we believe it to be more-likely-than-not that the benefit from such assets will not be realized.

federal and state net deferred tax assets as of July 31, 2025, we believe it is more-likely-than-not that the benefit from such assets will not be realized.

In recognition of this risk, we have provided a valuation allowance of $ 13,456,000 on these net deferred tax assets.

At July 31, 2025, we have foreign deferred tax assets relating to research and experimentation credits of $ 489,000 , which begin to expire in 2043.

We have foreign deferred tax assets relating to net operating loss carryforwards of $ 14,624,000 which begin to expire in 2032.

We believe that it is more-likely-than-not that certain foreign deferred tax assets, which include these net operating loss carryforwards, may not be realized.

In recognition of this risk, we have provided a valuation allowance of $ 15,666,000 on these deferred tax assets.

We have foreign deferred tax assets relating to net operating loss carryforwards of $ 19,513,000 in the United Kingdom that do not expire.

We believe that it is more-likely-than-not that certain foreign deferred tax assets, including these net operating loss carryforwards, may not be realized.

In recognition of this risk, we have provided for a valuation allowance of $ 20,829,000 on these deferred tax assets.

Our foreign earnings and profits are not material and, as such, we have not recorded any deferred tax liability on unremitted foreign earnings.

Unrecognized Tax Positions

At July 31, 2025 and 2024, total unrecognized tax benefits were $ 8,084,000 and $ 8,605,000 , respectively, including interest of $ 240,000 and $ 224,000 , respectively.

At July 31, 2025 and 2024, $ 1,818,000 and $ 2,231,000 , respectively, of our unrecognized tax benefits were recorded as non-current income taxes payable on our Consolidated Balance Sheets .

The remaining unrecognized tax benefits of $ 6,374,000 and $ 6,958,000 at July 31, 2024 and 2023, respectively, were presented as an offset to the associated non-current deferred tax assets on our Consolidated Balance Sheets.

The remaining unrecognized tax benefits of $ 6,266,000 and $ 6,374,000 at July 31, 2025 and 2024, respectively, were presented as an offset to the associated deferred tax assets on our Consolidated Balance Sheets .

Of the total unrecognized tax benefits, $ 7,180,000 and $ 7,679,000 at July 31, 2025 and 2024, respectively, net of the reversal of the federal benefit recognized as a deferred tax asset relating to state reserves, would favorably impact our effective tax rate, if recognized.

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federal income tax returns for fiscal 2022 through 2025 are subject to potential future Internal Revenue Service ("IRS") audit.

None of our state income tax returns prior to fiscal 2020 are subject to audit.

None of our state and foreign income tax returns prior to fiscal 2021 are subject to audit.

Future tax assessments or settlements could have a material adverse effect on our consolidated results of operations and financial condition.

In July 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted, resulting in significant changes to U.S.

GAAP, specifically ASC 740, requires that the effects of an applicable change in tax law be recognized in the period of enactment.

Accordingly, our financial statements and footnote disclosures for fiscal 2025 reflect the impact of those provisions of the OBBBA that are currently applicable to us, such as changes to bonus depreciation rules which resulted in an estimated increased deduction of $ 1,254,000 .

We continue to assess the potential impacts of certain other provisions of the OBBBA which go into effect in the future and are not currently applicable to us, such as those provisions related to changes in the tax treatment of U.S.

research and experimental expenditures (and related deductions) and limitations imposed on business interest expense deductions.

Such provisions, once applicable to us, could materially affect our results of operations in the future.

COMTECH TELECOMMUNICATIONS CORP.

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In December 2023, our stockholders approved the Comtech Telecommunications Corp.

2023 Equity and Incentive Plan (the “2023 Plan”).

The 2023 Plan replaced the Comtech Telecommunications Corp.

Amended and Restated 2000 Stock Incentive Plan (the "Prior Plan" and collectively, the "Plans").

Under the 2023 Plan, the number of shares of common stock initially available for all awards, other than substitute awards granted in connection with a corporate transaction, will be (i) 1,600,000 shares plus (ii) 69,683 shares of common stock that were available for awards under the Prior Plan, as of the effective date of the 2023 Plan and (iii) certain expired or cancelled awards recycled back into the 2023 Plan.

2023 Equity and Incentive Plan (the “2023 Plan”), which replaced the Amended and Restated 2000 Stock Incentive Plan.

Under the 2023 Plan, the initial number of shares of common stock available for all awards, other than substitute awards granted in connection with a corporate transaction, was 1,669,683 shares of common stock plus certain expired or cancelled awards recycled back into the 2023 Plan.

Also, on November 25, 2024, our Board of Directors approved an amendment to the 2023 Plan to increase the number of available shares of common stock authorized for issuance under the 2023 Plan by 2,195,000 shares.

Stockholders approved the amendment to the 2023 Plan at the 2024 Annual Meeting on January 13, 2025.

We issue stock-based awards to certain of our employees and our Board of Directors pursuant to the 2023 Plan, as amended and/or restated from time to time and our 2001 Employee Stock Purchase Plan, as amended and/or restated from time to time (the "ESPP"), and recognize related stock-based compensation in our consolidated financial statements.

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Our non-employee directors are eligible to receive non-discretionary grants of stock-based awards, subject to certain limitations.

As of July 31, 2024, the aggregate number of shares of common stock which may be issued, pursuant to the Plan, may not exceed 13,562,500 .

As of July 31, 2025, the aggregate number of shares of common stock which may be issued may not exceed 15,757,500 .

Stock options granted may not have a term exceeding ten years or, in the case of an incentive stock award granted to a stockholder who owns stock representing more than 10.0 % of the voting power, no more than five years .

We expect to settle all outstanding awards under the Plan and employee purchases under the ESPP with the issuance of new shares of our common stock.

As of July 31, 2024, we had granted stock-based awards pursuant to the Plan representing the right to purchase and/or acquire an aggregate of 11,468,463 shares (net of 6,679,364 expired and canceled awards), of which an aggregate of 9,526,985 have been exercised or settled.

As of July 31, 2025, we had granted stock-based awards representing the right to purchase and/or acquire an aggregate of 12,182,430 shares (net of 7,643,074 expired and canceled awards), of which an aggregate of 10,382,855 have been exercised or settled.

As of July 31, 2025, the following stock-based awards, by award type, were outstanding:

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There are no liability-classified stock-based awards outstanding as of July 31, 2025 or 2024.

Selling, general and administrative expenses included in the table above, for fiscal 2022, includes $ 827,000 of amortization of stock-based compensation related to three , long-standing members of our Board of Directors who retired in December 2021.

Stock-based compensation expense, by award type, is summarized as follows:

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Net stock-based compensation expense $ 3,120,000 4,798,000 11,319,000

In connection with the March 12, 2024 termination of our former CEO for cause, a combined total of 581,021 performance shares and RSUs were cancelled.

During fiscal 2025, we reversed a portion of our stock-based compensation expense related to performance shares due to lower-than-estimated achievement of fiscal 2022 and 2023 performance share goals.

Stock-based compensation expense for the more recent period also reflects the forfeiture of awards related to our former Chief Operating Officer and Chief Executive Officer, whose employment were both terminated during fiscal 2025.

With respect to stock-based compensation expense reported in the prior year period, we had determined to settle fiscal 2024 non-equity annual incentive awards accrued during such period with stock-based awards in lieu of cash.

Also, contributing to the higher stock-based compensation expense in the prior year period was our annual grant of stock-based awards to non-executive employees.

Such grants of stock-based awards to non-executive employees did not occur during fiscal 2025.

ESPP stock-based compensation expense primarily relates to the 15 % discount offered to participants in the ESPP.

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Notes to Consolidated Financial Statements, Continued

The estimated income tax benefit as shown in the above table was computed using income tax rates expected to apply when the awards are settled.

The estimated income tax benefit as shown in the above tables was computed using income tax rates expected to apply when the awards are settled.

Such deferred tax asset was recorded net as part of our non-current deferred tax liability on our Consolidated Balance Sheet as of July 31, 2025 and 2024.

The actual income tax benefit recognized for tax reporting is based on the fair market value of our common stock at the time of settlement and can significantly differ from the estimated income tax benefit recorded for financial reporting.

There is no estimated income tax benefit recognized for fiscal 2025 in light of the valuation allowance established on all U.S.

deferred tax assets.

Stock Options

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Expired/canceled ( 242,970 ) 24.89

Exercised ( 1,220 ) 17.88

Outstanding at July 31, 2023 240,510 23.96

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Stock options outstanding as of July 31, 2025 have exercise prices ranging from $ 17.88 - $ 28.35 , representing the fair market value of our common stock on the date of grant, a contractual term of ten years and a vesting period of five years .

The total intrinsic value relating to stock options exercised during the fiscal year ended July 31 2022 was $ 7,000 .

There were no stock options exercised during the fiscal years ended July 31, 2024 and 2023.

During fiscal 2022, at the election of certain holders of vested stock options, 1,220 stock options were net settled upon exercise.

As a result, 220 shares of our common stock were issued during the fiscal year ended July 31, 2022, net of shares retained to satisfy the exercise price and minimum statutory tax withholding requirements.

There were no stock options granted during fiscal years ended July 31, 2024, 2023 or 2022.

COMTECH TELECOMMUNICATIONS CORP.

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The performance shares granted to employees principally vest over a three-year performance period, if pre-established performance goals are attained, or as specified pursuant to the Plan and related agreements.

As of July 31, 2024, the number of outstanding performance shares included in the above table, and the related compensation expense prior to consideration of estimated pre-vesting forfeitures, assume achievement of the pre-established goals at a target level, except for two of our former CEO's, whose achievement was based on maximum performance pursuant to their pre-existing change-in-control agreements.

As of July 31, 2025, the number of outstanding performance shares included in the above table, and the related compensation expense prior to consideration of estimated pre-vesting forfeitures, assume achievement of the pre-established goals at a target level, except for performance shares granted in fiscal 2023 which reflect lower-than-estimated achievement.

RSUs and restricted stock granted to non-employee directors prior to August 2022 had a vesting period of five years and were convertible into shares of our common stock generally at the time of termination, on a one -for-one basis for no cash consideration, or earlier under certain circumstances.

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Notes to Consolidated Financial Statements, Continued

On July 31, 2024, 479,257 other stock-based awards were granted to certain employees in lieu of fiscal 2024 non-equity incentive compensation.

Also, on July 27, 2024, 243,098 fully vested share units (previously granted in lieu of fiscal 2023 non-equity incentive compensation) were settled by delivery of 158,941 shares of our common stock after reduction of share units retained to satisfy employees’ statutory tax withholding requirements.

Cumulatively, through July 31, 2024, 2,147,701 share units and other stock-based awards granted have been settled.

The fair value of performance shares, RSUs, restricted stock, share units and other stock-based awards is determined using the closing market price of our common stock on the date of grant, less the present value of any estimated future dividend equivalents such awards are not entitled to receive and an applicable estimated discount for any post-vesting transfer restrictions.

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Dividend equivalents are subject to forfeiture, similar to the terms of the underlying stock-based awards, and are payable in cash generally at the time of settlement of the underlying award.

During fiscal 2024, we reversed $ 107,000 of previously accrued dividend equivalents due to forfeitures and paid out $ 268,000 .

During fiscal 2023 and 2022, we accrued $ 315,000 and $ 389,000 , respectively, of dividend equivalents (net of forfeitures) and paid out $ 366,000 and $ 531,000 , respectively.

During fiscal 2025 and 2024, we reversed $ 42,000 and $ 107,000 of previously accrued dividend equivalents due to forfeitures and paid out $ 157,000 and $ 268,000 , respectively.

During fiscal 2023, we accrued $ 315,000 of dividend equivalents (net of forfeitures) and paid out $ 366,000 .

Accrued dividend equivalents were recorded as a reduction to retained earnings.

As of July 31, 2025 and 2024, accrued dividend equivalents were $ 117,000 and $ 316,000 , respectively.

With respect to the actual settlement of stock-based awards for income tax reporting, during the fiscal years ended July 31, 2024, 2023 and 2022, we recorded an income tax expense of $ 723,000 , $ 591,000 and $ 924,000 , respectively.

Subsequent Events

With respect to the actual settlement of stock-based awards for income tax reporting, for the fiscal year ended July 31, 2025, we have not recognized any tax benefit or expense in light of the valuation allowance established for all U.S.

deferred tax assets.

For fiscal years ended July 31, 2024 and 2023, we recorded an income tax expense of $ 723,000 and $ 591,000 , respectively.

Subsequent Event

In the first quarter of fiscal 2026, our Board of Directors authorized the issuance of stock-based awards with a total unrecognized compensation expense, net of estimated forfeitures, of approximately $ 6,700,000 .

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Reportable operating segments are determined based on Comtech’s management approach.

The management approach, as defined by FASB ASC 280 "Segment Reporting" is based on the way that the CODM organizes the segments within an enterprise for making decisions about resources to be allocated and assessing their performance.

Our CODM, for purposes of FASB ASC 280, is our Chief Executive Officer.

Satellite and Space Communications is organized into is organized into four technology areas:

satellite modem and amplifier technologies, troposcatter technologies, government services and space components.

The management approach, as defined by FASB ASC 280 "Segment Reporting" ("ASC 280") is based on the way that the CODM organizes the segments within an enterprise for making decisions about resources to be allocated and assessing their performance.

On January 13, 2025, the Board of Directors appointed Kenneth H.

Traub as President and Chief Executive Officer in addition to his role as Chairman.

Traub is our CODM for purposes of ASC 280.

Our two reportable operating segments are described below.

Our Satellite and Space Communications reportable operating segment is organized into four technology areas:

satellite modem and amplifier technologies, troposcatter technologies, cybersecurity training (formerly, known as government services) and space components.

This segment offers customers:

satellite ground station technologies, services and system integration that facilitate the transmission of voice, video and data over GEO, MEO and LEO satellite constellations, including traveling wave tube power amplifiers, modems, VSAT platforms and frequency converters;

satellite ground infrastructure technologies, services and system integration that facilitate the transmission of voice, video and data over GEO, MEO and LEO satellite constellations, including traveling wave tube power amplifiers, satellite modems, VSAT platforms and frequency converters;

over-the-horizon microwave solutions that can transmit digitized voice, video, and data over distances up to 200 miles using the troposphere and diffraction;

professional engineering, training and field support services, including cybersecurity, for multiple U.S.

government agencies;

advanced cybersecurity training in support of U.S.

government and certain commercial and university customers;

and procurement and supply chain management of high reliability Electrical, Electronic and Electromechanical ("EEE") parts for satellite, launch vehicle and manned space applications.

Terrestrial and Wireless Networks is organized into three service areas:

next generation 911 and call delivery, Solacom call handling solutions, and trusted location and messaging solutions.

Our Allerium reportable operating segment (formerly, Terrestrial and Wireless Networks) is organized into three service areas:

next generation 911 and call delivery, call handling solutions, and trusted location and messaging solutions.

This segment offers customers:

Wireless/VolP 911 location and routing services to connect emergency calls to Public Safety Answering Points ("PSAPs");

SMS text to 911 services, providing alternate paths for individuals who need to request assistance (via text messaging) a method to reach PSAPs;

next generation 911 solutions, providing emergency call routing, location validation, policy-based routing rules, logging and security functionality;

SMS text to 911 services;

next generation 911 solutions, providing emergency call routing, location validation, and policy-based routing rules, logging and security functionality;

Emergency Services IP Network transport infrastructure for emergency services communications and support of next generation 911 services;

call handling applications for PSAPs;

wireless emergency alerts solutions for network operators;

wireless emergency alert solutions for network operators;

and software and equipment for location-based and text messaging services for various applications, including for public safety, commercial and government services.

The rebranding to Allerium did not change the composition of this reportable operating segment.

COMTECH TELECOMMUNICATIONS CORP.

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Notes to Consolidated Financial Statements, Continued

Our CODM primarily uses a metric that we refer to as Adjusted EBITDA to measure an operating segment’s performance and to make decisions about resources to be allocated.

Our Adjusted EBITDA metric for the Satellite and Space Communications and Terrestrial and Wireless Networks segments do not consider allocation of any indirect expenses that are unrelated to the segment's operations, or any of the following:

income taxes, interest, change in fair value of the convertible preferred stock purchase option liability, change in fair value of warrants, write-off of deferred financing costs, amortization of stock-based compensation, amortization of intangibles, depreciation expense, amortization of cost to fulfill assets, acquisition plan expenses, restructuring costs, COVID-19 related costs, strategic emerging technology costs (for next-generation satellite technology), facility exit costs, CEO transition costs, proxy solicitation costs, strategic alternatives expenses and other.

These items, while periodically affecting our results, may vary significantly from period to period and may have a disproportionate effect in a given period, thereby affecting the comparability of results.

Any amounts shown in the Adjusted EBITDA calculation for our Satellite and Space Communications and Terrestrial and Wireless Networks segments are directly attributable to those segments.

Our Adjusted EBITDA is also used by our management in assessing the Company's operating results.

Although closely aligned, the Company's definition of Adjusted EBITDA is different than the Consolidated EBITDA or EBITDA (as such terms are defined in our Prior Credit Facility and Credit Facility) utilized for financial covenant calculations and also may differ from the definition of EBITDA or Adjusted EBITDA used by other companies and, therefore, may not be comparable to similarly titled measures used by other companies.

Operating segment information, along with a reconciliation of segment net income (loss) and consolidated net income (loss) to Adjusted EBITDA is presented in the tables below:

In connection with our adoption of ASU No.

2023-07 in fiscal 2025, and considering our transformation plan and most recent CODM's increased focus on profitability and cash flow generation on a GAAP basis, our CODM determined to use GAAP operating income to measure our reportable operating segments' performance and to make decisions about resources to be allocated to each segment.

Accordingly, the segment tables below have been recast on that basis.

The CODM uses GAAP operating income to assess the results of each reportable operating segment against their respective plans and forecasts and, more generally, to peers and competitors in the markets in which we operate.

The CODM also uses this metric to make decisions about allocating capital and personnel resources to the segments, evaluating which project(s) to undertake and or to prioritize, and determining the compensation of employees.

The amounts shown for segment GAAP operating income include expenses which are directly attributable to the segment and considers both cash and non-cash expenses such as:

depreciation, amortization of intangibles, impairment of long-lived assets, including goodwill, amortization of cost to fulfill assets, restructuring costs and strategic emerging technology costs (for next-generation satellite technology).

Our GAAP operating income metric for each segment does not include the allocation of any indirect expenses which are unrelated to the segment's operations.

Reportable operating segment information, along with a reconciliation of segment GAAP operating income to consolidated income (loss) before income taxes is presented in the tables below:

Fiscal Year Ended July 31, 2025

Satellite and Space Communications Terrestrial and Wireless Networks Unallocated Total

Satellite and Space Communications Allerium Total

Net sales $ 269,265,000 230,263,000 $ 499,528,000

Operating (loss) income $ ( 54,202,000 ) 21,670,000 ( 47,358,000 ) $ ( 79,890,000 )

Net (loss) income $ ( 55,491,000 ) 20,955,000 ( 65,449,000 ) $ ( 99,985,000 )

Provision for (benefit from) income taxes 666,000 669,000 ( 1,630,000 ) ( 295,000 )

Cost of sales 227,786,000 143,475,000

Selling, general and administrative 60,699,000 36,602,000

Research and development 5,590,000 11,570,000

Amortization of intangibles 7,254,000 14,469,000

Impairment of long-lived assets, including goodwill 79,555,000 —

Segment operating (loss) income $ ( 111,619,000 ) 24,147,000 $ ( 87,472,000 )

Unallocated corporate expenses 46,827,000

Proxy solicitation costs 2,682,000

CEO transition costs 2,117,000

Interest expense 45,650,000

1 unchanged sentence

Write-off of deferred financing costs 8,977,000

Change in fair value of warrants and

derivatives — — ( 4,273,000 ) ( 4,273,000 )

Amortization of stock-based compensation — — 6,096,000 6,096,000

Amortization of intangibles 6,685,000 14,469,000 — 21,154,000

Depreciation 3,867,000 7,927,000 365,000 12,159,000

Impairment of long-lived assets, including

goodwill 64,525,000 — — 64,525,000

Amortization of cost to fulfill assets 960,000 — — 960,000

CEO transition costs — — 2,916,000 2,916,000

Restructuring costs 3,822,000 605,000 8,043,000 12,470,000

Strategic emerging technology costs 4,110,000 — — 4,110,000

Loss on business divestiture — — 1,199,000 1,199,000

Adjusted EBITDA $ 29,767,000 44,671,000 ( 28,739,000 ) $ 45,699,000

Change in fair value of warrants and derivatives ( 38,498,000 )

Loss before income taxes $ ( 155,382,000 )

Purchases of property, plant and equipment $ 338,000 7,816,000 $ 8,154,000

Total assets at July 31, 2024 $ 421,780,000 456,425,000 34,229,000 $ 912,434,000

Unallocated purchases of property, plant and equipment 411,000

Consolidated purchases of property, plant and equipment $ 8,565,000

Depreciation expense $ 8,300,000 3,010,000 $ 11,310,000

Unallocated depreciation expense 488,000

Consolidated depreciation expense $ 11,798,000

Total segment assets as of July 31, 2025 $ 249,465,000 454,200,000 $ 703,665,000

Unallocated assets as of July 31, 2025 37,170,000

Consolidated assets as of July 31, 2025 $ 740,835,000

COMTECH TELECOMMUNICATIONS CORP.

2 unchanged sentences

Fiscal Year Ended July 31, 2024

Satellite and Space Communications Terrestrial and Wireless Networks Unallocated Total

Satellite and Space Communications Allerium Total

Net sales $ 324,069,000 216,334,000 $ 540,403,000

Operating income (loss) $ 15,041,000 12,323,000 ( 42,024,000 ) $ ( 14,660,000 )

Net income (loss) $ 15,539,000 12,297,000 ( 54,735,000 ) $ ( 26,899,000 )

Benefit from income taxes ( 1,724,000 ) ( 193,000 ) ( 2,031,000 ) ( 3,948,000 )

Interest expense 2,000 — 14,959,000 14,961,000

Interest (income) and other 1,224,000 219,000 ( 217,000 ) 1,226,000

Amortization of stock-based compensation — — 10,107,000 10,107,000

Cost of sales 245,346,000 137,100,000

Selling, general and administrative 48,799,000 32,475,000

Research and development 12,916,000 10,620,000

Amortization of intangibles 6,685,000 14,469,000

Depreciation 4,121,000 7,637,000 164,000 11,922,000

Amortization of cost to fulfill assets 959,000 — — 959,000

Restructuring costs 5,725,000 1,220,000 3,907,000 10,852,000

Strategic emerging technology costs 3,833,000 — — 3,833,000

Impairment of long-lived assets, including goodwill 64,525,000 —

Segment operating (loss) income $ ( 54,202,000 ) 21,670,000 $ ( 32,532,000 )

Unallocated corporate expenses 44,442,000

CEO transition costs 2,916,000

Adjusted EBITDA $ 36,991,000 35,264,000 ( 18,756,000 ) $ 53,499,000

Interest expense 22,153,000

Interest (income) and other 678,000

Write-off of deferred financing costs 1,832,000

Change in fair value of warrants and derivatives ( 4,273,000 )

Loss before income taxes $ ( 100,280,000 )

Purchases of property, plant and equipment $ 2,890,000 8,569,000 $ 11,459,000

Total assets at July 31, 2023 $ 515,449,000 460,034,000 20,754,000 $ 996,237,000

Unallocated purchases of property, plant and equipment 1,624,000

Consolidated purchases of property, plant and equipment $ 13,083,000

Depreciation expense $ 3,867,000 7,927,000 $ 11,794,000

Unallocated depreciation expense 365,000

Consolidated depreciation expense $ 12,159,000

Total segment assets as of July 31, 2024 $ 421,780,000 456,425,000 $ 878,205,000

Unallocated assets as of July 31, 2024 34,229,000

Consolidated assets as of July 31, 2024 $ 912,434,000

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

Fiscal Year Ended July 31, 2023

Satellite and Space Communications Terrestrial and Wireless Networks Unallocated Total

Satellite and Space Communications Allerium Total

Net sales $ 337,756,000 212,238,000 $ 549,994,000

Operating (loss) income $ ( 5,671,000 ) 18,925,000 ( 47,006,000 ) $ ( 33,752,000 )

Net (loss) income $ ( 3,852,000 ) 18,796,000 ( 47,996,000 ) $ ( 33,052,000 )

(Benefit from) provision for income taxes ( 1,120,000 ) 19,000 ( 2,922,000 ) ( 4,023,000 )

Interest expense 98,000 — 4,933,000 5,031,000

Interest (income) and other ( 797,000 ) 110,000 ( 16,000 ) ( 703,000 )

Change in fair value of convertible

preferred stock purchase option liability — — ( 1,005,000 ) ( 1,005,000 )

Amortization of stock-based compensation — — 7,767,000 7,767,000

Cost of sales 241,544,000 123,670,000

Selling, general and administrative 51,505,000 36,920,000

Research and development 22,354,000 25,241,000

Amortization of intangibles 7,312,000 14,084,000

Depreciation 4,049,000 6,069,000 196,000 10,314,000

Amortization of cost to fulfill assets 469,000 — — 469,000

Restructuring costs 5,666,000 — 299,000 5,965,000

COVID-19 related costs 1,105,000 — — $ 1,105,000

Strategic emerging technology costs 1,197,000 — — $ 1,197,000

Segment operating income $ 15,041,000 12,323,000 $ 27,364,000

Unallocated corporate expenses 32,934,000

CEO transition costs 9,090,000

Proxy solicitation costs — — 11,248,000 11,248,000

Adjusted EBITDA $ 14,127,000 39,078,000 ( 13,942,000 ) $ 39,263,000

Interest expense 14,961,000

Interest (income) and other 1,226,000

Loss before income taxes $ ( 30,847,000 )

Purchases of property, plant and equipment $ 7,244,000 10,075,000 $ 17,319,000

Total assets at July 31, 2022 $ 487,235,000 461,443,000 25,619,000 $ 974,297,000

Unallocated purchases of property, plant and equipment 992,000

Consolidated purchases of property, plant and equipment $ 18,311,000

Depreciation expense $ 4,121,000 7,637,000 $ 11,758,000

Unallocated depreciation expense 164,000

Consolidated depreciation expense $ 11,922,000

Total segment assets as of July 31, 2023 $ 515,449,000 460,034,000 $ 975,483,000

Unallocated assets as of July 31, 2023 20,754,000

Consolidated assets as of July 31, 2023 $ 996,237,000

Unallocated expenses result from corporate expenses, such as executive compensation, accounting, legal and other regulatory compliance related costs and also includes all of our amortization of stock-based compensation.

During fiscal 2025, 2024 and 2023, our Unallocated segment incurred $ 9,512,000 , $ 8,043,000 and $ 3,907,000 , respectively, of restructuring costs primarily focused on legal and other expenses related to strategic alternatives and divestiture activities, as well as other initiatives to streamline our operations, align our cost structure with our future anticipated business and improve our liquidity.

During fiscal 2025, our Unallocated segment incurred $ 2,682,000 of proxy solicitation costs, consisting principally of legal and advisory fees.

In November 2024, we entered into a cooperation agreement (the “Cooperation Agreement”) with Fred Kornberg, Michael Porcelain and Oleg Timoshenko (collectively the “Investor Group”).

Pursuant to the Cooperation Agreement, our Board appointed Michael J.

Hildebrandt to serve on the Board and agreed to nominate, support and recommend Mr.

Hildebrandt for election at our Fiscal 2024 Annual Meeting of Stockholders (the "2024 Annual Meeting").

Also, we agreed not to renominate two incumbent directors for election at the 2024 Annual Meeting and the Investor Group agreed to withdraw its nomination of candidates for election to the Board at the 2024 Annual Meeting to, instead, support our slate of directors for election.

Pursuant to the Cooperation Agreement, we and the Investor Group will cooperate to identify an additional candidate to be appointed to the Board at a later date as an independent director.

In September 2025, we provided notice to the Investor Group regarding our renomination of Mr.

Hildebrandt at the Fiscal 2025 Annual Meeting of Stockholders.

Accordingly, the Cooperation Agreement was extended until 30 days prior to the nomination deadline of our Fiscal 2026 Annual Meeting of Stockholders.

During fiscal 2025, 2024 and 2023, our Unallocated segment incurred $ 2,117,000 , $ 2,916,000 and $ 9,090,000 , respectively, of CEO transition costs.

See Note (2) - CEO Transition Costs for further information.

Interest expense in the above tables includes accreted interest related to our Subordinated Credit Facility, the amortization of deferred financing costs and debt discounts related to both credit facilities and the immediate expensing of certain financing fees related to refinancing and or amending our credit facilities.

See Note (8) - Credit Facility and Note (9) - Subordinated Credit Facility for further discussion.

COMTECH TELECOMMUNICATIONS CORP.

1 unchanged sentence

Notes to Consolidated Financial Statements, Continued

Unallocated expenses result from corporate expenses such as executive compensation, accounting, legal and other regulatory compliance related costs and also includes all of our amortization of stock-based compensation.

See Note (2) - " CEO Transition Costs " for information related to such costs.

During fiscal 2024, our Unallocated segment incurred $ 8,043,000 of restructuring costs focused on:

(i) streamlining our operations and supply chain, (ii) legal and other expenses primarily related to divestiture activities, and (iii) efforts to refinance our Prior Credit Facility and improve liquidity.

During fiscal 2023, we incurred $ 3,907,000 of restructuring costs focused on streamlining our operations.

During fiscal 2022, we incurred $ 11,248,000 of proxy solicitation costs (including legal and advisory fees and costs associated with a related lawsuit) as a result of a now-settled proxy contest and expensed $ 13,554,000 of transition costs related to the former CEO, Fred Kornberg.

During fiscal 2024, 2023 and 2022, our Satellite and Space Communications segment recorded $ 3,822,000 , $ 5,725,000 and $ 5,666,000 , respectively, of restructuring costs primarily incurred to streamline our operations and improve efficiency, including costs related to the relocation of certain of our satellite ground station production facilities to our new 146,000 square foot facility in Chandler, Arizona.

In addition, during fiscal 2024, 2023 and 2022, we incurred $ 4,110,000 , $ 3,833,000 and $ 1,197,000 , respectively, of strategic emerging technology costs for next-generation satellite technology to advance our solutions offerings to be used with new broadband satellite constellations.

Furthermore, during fiscal 2022, this segment recorded $ 1,105,000 of incremental operating costs related to our antenna facility located in the United Kingdom due to the impact of the COVID-19 pandemic.

There were no similar incremental operating costs recorded in fiscal 2024 or 2023.

Interest expense in the tables above primarily relates to our Credit Facility, and includes the amortization of deferred financing costs.

See Note (8) - " Credit Facility " for further discussion.

Intersegment sales in fiscal 2024, 2023 and 2022 between the Satellite and Space Communications segment and the Terrestrial and Wireless Networks segment were nominal.

Intersegment sales in fiscal 2025, 2024 and 2023 between the Satellite and Space Communications segment and the Allerium segment were nominal.

All intersegment sales are eliminated in consolidation and are excluded from the tables above.

3 unchanged sentences

(a) Legal Proceedings and Other Matters

Former CEO Related Matters

On March 12, 2024, we terminated Ken Peterman, our President and CEO at the time, for Cause pursuant to the terms of his employment agreement dated September 12, 2022 (the “Employment Agreement”).

On November 21, 2024 (as amended on December 31, 2024), Mr.

Peterman filed a claim with the American Arbitration Association, alleging that Comtech materially breached the Employment Agreement in the termination for Cause and that the termination was a retaliation for whistleblowing by Mr.

Peterman in connection with certain of our prior financial and accounting practices.

Peterman claims he is owed direct contractual damages in an amount in excess of $ 6,000,000 and consequential damages for injury to his professional reputation in excess of $ 35,000,000 .

We believe Mr.

Peterman's claims are entirely without merit and will defend ourselves vigorously in the matter.

We filed a Counterclaim against Mr.

Peterman alleging that his misconduct and attempts to conceal the same constituted a breach of his fiduciary duties.

Peterman later filed a separate administrative complaint with the Department of Labor (Occupational Safety and Health Administration) making similar allegations and claiming that we retaliated against him in violation of the Sarbanes-Oxley Act of 2002.

We independently investigated, with the assistance of an outside advisor, Mr.

Peterman's allegations that he was a whistleblower and determined that such allegations were not substantiated.

Department of Labor dismissed Mr.

Peterman’s administrative complaint on or about April 22, 2025.

The appeal period has now expired.

Nevertheless, on July 18, 2025, Peterman filed a complaint in the USDC Southern District of New York, largely reciting the same claims he included in the prior Sarbanes-Oxley complaint.

We promptly informed Peterman’s attorney that the suit was frivolous and sought leave of the Court to seek dismissal.

Peterman’s counsel responded by withdrawing the lawsuit on September 5, 2025.

Separately, on December 11, 2024, Mr.

Peterman was indicted by the United States Attorney for the Eastern District of New York and arrested on charges of insider trading and securities fraud.

He was also charged with similar allegations by the SEC in a civil lawsuit filed in the Eastern District of New York the same day.

We are not named as a defendant in either proceeding.

Export Matter

In late 2023, we initiated an export compliance review pertaining to certain variants of our modems and determined that we potentially violated U.S.

export compliance laws.

Upon learning of the potential violations and due to our commitment to comply with global export compliance laws, we immediately and voluntarily initiated a historical review of our exports of the associated products, as well as related documentation submitted to export control authorities.

Based on such review, in February and June 2024, we voluntarily disclosed to the Directorate of Defense Trade Controls (“DDTC”) a potential misclassification of certain exports under an EAR classification and promptly sought export licenses under the more restrictive ITAR classification for future exports pending the outcome of the matter.

At that time, we concluded that the likelihood of a loss contingency associated with such potential violations was remote.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

While our review is ongoing, we estimate there were approximately 70 exports for which export licenses were not obtained, with an estimated total transaction value of less than $ 2,000,000 .

Our review efforts to date indicate that the countries exported to were:

the United Kingdom, Canada, Italy, Singapore, India, Germany, Australia, Hungary, Spain, Denmark, South Korea, Greece, Indonesia, Philippines and New Zealand.

DDTC may choose to close the matter without penalty or to impose penalties on us in connection with the above-referenced shipments.

Penalties, if imposed, can be the greater of twice the amount of the transaction that is the basis for the violation, or $ 1,271,078 per violation, with discretionary adjustment downward by the DDTC for voluntary disclosure and other positive mitigating factors.

On May 22, 2025, DDTC issued a Request for Information, to which we replied.

The DDTC investigation remains pending, however, in light of this request, we reevaluated our prior assessment of loss contingencies associated with this matter and determined that we may no longer conclude that the likelihood of a loss contingency is remote.

Rather, it is now reasonably possible that a loss contingency (e.g., monetary penalties) exists related to this matter.

Such penalties, if any, are not currently estimable by us given the early stage of our review, as well as that of the DDTC, and multiple positive mitigating factors that could affect the ultimate outcome, including but not limited to:

the voluntary nature of our disclosure;

our historical compliance record;

the number of exports involved;

the parties to whom the units were shipped;

and the nature of the potential violation(s).

In parallel, we submitted a Classification Jurisdiction ("CJ") request to DDTC on July 30, 2025, in support of its initial classifications of the exports under investigation.

The CJ remains pending.

Based on such determination, we have not accrued for any loss contingencies related to this matter as of July 31, 2025.

Other Matters

6 unchanged sentences

Accordingly, pending or future claims asserted against us by a party that we are obligated to indemnify could result in legal costs and damages that could have a material adverse effect on our consolidated results of operations and financial condition.

There are certain other pending and threatened legal actions which arise in the normal course of business, in addition to certain matters related to the termination of our former CEO for cause in March 2024.

There are also certain other pending and threatened legal actions which arise in the normal course of business.

Although the ultimate outcome of these matters is difficult to accurately predict, we believe that the outcome of these other matters will not have a material adverse effect on our consolidated financial condition or results of operations.

(b) Employment Change of Control and Indemnification Agreements

We have entered into employment and/or change of control agreements, as well as indemnification agreements with certain of our executive officers and certain key employees.

All of these agreements may require payments by us, in certain circumstances, including, but not limited to, a change in control of the Company or termination of the employee.

COMTECH TELECOMMUNICATIONS CORP.

1 unchanged sentence

Notes to Consolidated Financial Statements, Continued

(b) Employment Change of Control and Indemnification Agreements

As of July 31, 2023, we had an employment agreement with Ken Peterman, our former Chairman of the Board, President and CEO, which was entered into on August 9, 2022.

The employment agreement generally provided for an annual salary, bonus award, sign-on bonus, equity incentive awards and, under certain termination of employment, severance payment.

On March 12, 2024, we announced the termination of Mr.

Peterman for cause and upon termination of his employment, Mr.

Peterman was deemed to have resigned from his position as Chairman of the Board of Directors and as a director pursuant to his employment contract.

As of July 31, 2022, we had an employment agreement with Michael Porcelain, our former President and CEO.

The employment agreement generally provided for an annual salary and bonus award.

On August 10, 2022, we announced the mutually agreed separation between the Company and Mr.

Porcelain as President and CEO and member of the Board of Directors.

The Company entered into a separation agreement with Mr.

Fiscal 2024 transition costs of $ 2,916,000 primarily consisted of legal expenses associated with the termination of Mr.

In fiscal 2023 transition costs related to Mr.

Porcelain, pursuant to his separation agreement with the Company, were approximately $ 7,424,000 , of which $ 3,764,000 related to the acceleration of unamortized stock-based compensation, with the remaining $ 3,660,000 related to his severance payments and benefits upon termination of employment.

The cash portion of the transition costs of $ 3,660,000 was paid to Mr.

Porcelain in October 2022.

Also in fiscal 2023, in connection with Mr.

Peterman entering into an employment agreement with the Company, effective as of August 9, 2022, we incurred a $ 1,000,000 expense related to a cash sign-on bonus.

CEO transition costs related to Mr.

Porcelain and Mr.

Peterman were expensed in our Unallocated segment.

We have also entered into employment and/or change of control agreements with certain of our executive officers and certain key employees.

All of these agreements may require payments by us, in certain circumstances, including, but not limited to, a change in control of the Company or termination of the employee.

(15) Long-lived Assets, including Goodwill

The following table represents goodwill by reportable operating segment as of July 31, 2025 and July 31, 2024:

Satellite and Space Communications Terrestrial and Wireless Networks Total

Satellite and Space Communications Allerium

Balance as of July 31, 2024 $ 110,090,000 174,090,000 $ 284,180,000

PST Divestiture ( 14,587,000 ) — ( 14,587,000 )

Goodwill impairment ( 79,555,000 ) — ( 79,555,000 )

Balance as of July 31, 2025 $ 30,535,000 174,090,000 $ 204,625,000

During the first quarter of fiscal 2024, we determined that the PST Disposal Group met the criteria to be classified as held for sale.

Because the PST Disposal Group represented the disposal of a portion of the Satellite and Space Communications reporting unit, we assigned $ 14,587,000 of goodwill to the PST Disposal Group on a relative fair value basis.

For purposes of allocating goodwill to the PST Disposal Group, we determined the fair value of the PST Disposal Group (based on consideration received from the sale transaction) and the fair value of the retained businesses of the Satellite and Space Communications reporting unit (based on a combination of the income and market approach).

In conjunction with the relative fair value allocation, we tested goodwill assigned to the PST Disposal Group and retained businesses of the Satellite and Space Communications reporting unit for impairment and concluded that no impairment existed at the time the held for sale criteria were met.

As discussed further in Note (3) - " Business Divestiture ," we completed the PST Divestiture in the second quarter of fiscal 2024 and reduced goodwill by $ 14,587,000 as part of determining the loss on business divestiture.

In accordance with FASB ASC 350, we perform a goodwill impairment analysis at least annually (in the first quarter of each fiscal year), unless indicators of impairment exist in interim periods.

In accordance with FASB ASC 350, we perform a goodwill impairment analysis at least annually (on the first day of the first quarter of each fiscal year, or August 1st), unless indicators of impairment exist in interim periods.

however, any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

During the fourth quarter of fiscal year 2024, our lower than expected financial performance, default on certain credit facility covenants and the sustained decrease in stock price since August 1, 2023 were considered triggering events which required a quantitative impairment test as of July 31, 2024.

At July 31, 2025 and July 31, 2024, accumulated goodwill impairment losses related to our Satellite and Space Communications segment totaled $ 128,480,000 and $ 48,925,000 , respectively.

There are no accumulated impairments for our Allerium segment.

Fiscal 2025 and Prior Assessments

During the fourth quarter of fiscal year 2024, our lower-than-expected financial performance in our Satellite and Space Communications segment, default on certain credit facility covenants and the sustained decrease in stock price since August 1, 2023 were considered triggering events which required a quantitative impairment test as of July 31, 2024.

We performed a quantitative assessment using market participant assumptions to determine if the fair value of each of our reporting units with goodwill exceeded its carrying value.

In making this assessment, we considered, among other things, expectations of projected net sales and cash flows, assumptions impacting the weighted average cost of capital, trends in trading multiples of comparable companies, changes in our stock price and changes in the carrying values of our reporting units with goodwill.

We also considered overall business conditions.

In performing the quantitative assessment, we estimated the fair value of each of our reporting units using a combination of the income and market approaches.

Ultimately, based on our quantitative evaluations, we determined that the carrying value of our Satellite and Space Communications reporting unit exceeded its fair value and recognized a goodwill impairment loss of $ 48,925,000 in fiscal 2024.

We also determined that our Allerium reporting unit had an estimated fair value in excess of its carrying value of at least 24.7 % and concluded that our goodwill for this reporting unit was not impaired.

Given our Satellite and Space Communications segment's financial performance in the first quarter of fiscal 2025, and considering triggering events within this segment prior to the issuance of our first quarter fiscal 2025 financial statements, we determined that we were required to perform another quantitative impairment test on an interim basis as of October 31, 2024.

Ultimately, based on our quantitative evaluations, we determined that the carrying value of our Satellite and Space Communications reporting unit exceeded its fair value and recognized another goodwill impairment loss of $ 79,555,000 in the first quarter of fiscal 2025.

In performing the above quantitative assessments, we estimated the fair value of each of our reporting units using a combination of the income and market approaches.

The income approach, also known as the discounted cash flow ("DCF") method, utilizes the present value of cash flows to estimate fair value.

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Under the market approach, we estimated a fair value based on comparable companies' market multiples of revenues and earnings before interest, taxes, depreciation and amortization and factored in a control premium.

Finally, we compared our estimates of fair values to our total public market capitalization and assessed implied control premiums based on our common stock price of $ 3.17 as of the date of testing.

Ultimately, based on our quantitative evaluation, we determined that the carrying value of our Satellite and Space Communications reporting unit exceeded its fair value and recognized a goodwill impairment loss of $ 48,925,000 in fiscal 2024 in our Consolidated Statements of Operations.

We also determined that our Terrestrial and Wireless Networks reporting unit had an estimated fair value in excess of its carrying value of at least 24.7 % and concluded that our goodwill for this reporting unit was not impaired.

In connection with our decision in July 2024 to exit our subsidiary operations in Basingstoke, United Kingdom, such operations became a separate asset group (the “U.K.

Asset Group”) and we assessed the recoverability of the carrying value of the U.K.

Asset Group under the accounting standards for assets held and used as of July 31, 2024.

The undiscounted future cash flows to complete the exit of our Basingstoke operations indicated that the carrying amount of the asset group is not recoverable.

The fair value of the U.K.

Asset Group was estimated using an income approach and was lower than the U.K Asset Group’s carrying amount.

As a result, we recorded a long-lived asset impairment charge of $ 15,600,000 within the Satellite and Space Communications segment in our fiscal 2024 Consolidated Statements of Operations.

We allocated $ 9,925,000 of this impairment to the carrying value of Intangibles with Finite Lives, net, $ 2,651,000 to Property, Plant & Equipment, net, $ 1,873,000 to Other Assets, net and $ 1,151,000 to Operating Lease Right-of-Use Assets, net.

In addition, as disclosed in Note (1) Summary of Significant Accounting and Reporting Policies, Liquidity and Going Concern , the Credit Facility was amended on October 17, 2024 to waive certain defaults or events of default, including in connection with our Net Leverage Ratio and a Fixed Charge Coverage Ratio covenants as of July 31, 2024.

Although we have cured our defaults under the Credit Facility, a sustained significant decline in our actual operating performance, as compared to our forecast, and/or a continued sustained decline in our common stock price, may require us to perform another interim quantitative impairment test, which may result in an impairment of the goodwill assigned to both of our reporting units by an amount that could be material if we conclude our forecasted operating results will be adversely impacted for the foreseeable future.

Finally, we compared our estimates of fair values to our total public market capitalization and assessed implied control premiums based on our common stock price of $ 3.72 and $ 3.17 as of the dates of testing (October 31, 2024 and July 31, 2024, respectively).

COMTECH TELECOMMUNICATIONS CORP.

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Notes to Consolidated Financial Statements, Continued

In any event, we are required to perform the next annual goodwill impairment analysis on August 1, 2025 (the start of our fiscal 2026).

In tandem with our quantitative impairment test as of July 31, 2024 and decision in July 2024 to exit our operations in Basingstoke, United Kingdom (which became a separate asset group, the “U.K.

Asset Group”), we assessed the recoverability of the carrying value of the U.K.

Asset Group under the accounting standards for assets held and used as of July 31, 2024 and determined that the undiscounted future cash flows to complete the exit of our Basingstoke operations indicated that the carrying amount of the U.K.

Asset Group was not recoverable.

As a result, we recorded a $ 15,600,000 non-cash long-lived asset impairment charge within the Satellite and Space Communications segment in fiscal 2024.

We allocated $ 9,925,000 of this impairment to the carrying value of Intangibles with Finite Lives, net, $ 2,651,000 to Property, Plant & Equipment, net , $ 1,873,000 to Other Assets, net and $ 1,151,000 to Operating Lease Right-of-Use Assets, net .

In light of our quantitative interim impairment tests as of July 31, 2024 and October 31, 2024, we assessed the recoverability of the remaining carrying values of long-lived assets within the Satellite and Space Communications segment.

The undiscounted future cash flows of the asset group indicated that the carrying amount of the asset group was recoverable.

Fiscal 2026 Assessment and Forward

On August 1, 2025 (the first day of fiscal 2026), we performed our annual quantitative assessment using market participant assumptions to determine if the fair value of each of our reporting units with goodwill exceeded its carrying value.

We also considered overall business conditions.

In performing the quantitative assessment, we estimated the fair value of each of our reporting units using a combination of the income and market approaches, as discussed above.

We compared our estimates of fair values to our total public market capitalization and assessed implied control premiums based on our common stock price of $ 2.05 as of the date of testing.

Ultimately, based on our quantitative evaluation, we determined that our Satellite and Space Communications and Allerium reporting units had estimated fair values in excess of their carrying values of at least 19.9 % and 7.3 %, respectively, and concluded that our goodwill was not impaired and that neither of our two reporting units was at risk of failing the quantitative assessment.

It is possible that, during the remainder of fiscal 2026 or beyond, business conditions (both in the U.S.

and internationally) could deteriorate from the current state, our current or prospective customers could materially postpone, reduce or even forgo purchases of our products and services to a greater extent than we currently anticipate, or our common stock price could further fluctuate.

A significant decline in our customers' spending that is greater than we anticipate or a shift in funding priorities may also have a negative effect on future orders, sales, income and cash flows and we might be required to perform a quantitative assessment during fiscal 2026 or beyond.

If assumed net sales and cash flow projections are not achieved in future periods, our common stock price significantly declines from current levels, and or we complete certain actions related to our transformation plan, our Satellite and Space Communications and Allerium reporting units could be at risk of failing the quantitative assessment and goodwill and intangibles assigned to the respective reporting units could be impaired.

In any event, we are required to perform our next annual goodwill impairment analysis on August 1, 2026 (the start of our fiscal 2027).

If our assumptions and related estimates change in the future, or if we change our reporting unit structure or other events and circumstances change (e.g., a sustained decrease in the price of our common stock (considered on both absolute terms and relative to peers)), we may be required to record impairment charges when we perform these tests, or in other future periods.

Any impairment charges that we may record in the future could be material to our results of operations and financial condition.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(16) Intangible Assets

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Amortization expense for the fiscal years ended July 31, 2025, 2024 and 2023 was $ 21,723,000 , $ 21,154,000 and $ 21,396,000 , respectively.

Amortization expense for the fiscal year ended July 31, 2025 includes $ 1,343,000 of accelerated amortization, recorded in the first quarter of fiscal 2025, due to the impact of the CGC Divestiture.

Also, during the first quarter of fiscal 2025, we wrote-off all $ 15,900,000 of fully amortized intangible assets related to the CGC Divestiture.

The estimated amortization expense consists of the following for the fiscal years ending July 31:

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2030 14,446,000

We review net intangible assets with finite lives for impairment when an event occurs indicating the potential for impairment.

Based on our fiscal 2025 assessment, we believe that the carrying values of our net intangible assets were recoverable as of July 31, 2025.

Based on our fiscal 2024 assessment, we recognized an impairment loss of $ 9,925,000 related to net intangible assets with finite lives within our Satellite and Space Communications segment.

See Note (1)(g) - " Summary of Significant Accounting and Reporting Policies, Long-Lived Assets " for more information.

If business conditions deteriorate, we may be required to record impairment losses, and/or increase the amortization of intangibles in the future.

Any impairment charges that we may record in the future could be material to our results of operations and financial condition.

COMTECH TELECOMMUNICATIONS CORP.

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Notes to Consolidated Financial Statements, Continued

We review net intangible assets with finite lives for impairment when an event occurs indicating the potential for impairment.

Based on our last assessment, we performed an impairment assessment of our Satellite and Space Communications segment’s long-lived assets in response to triggering events indicating potential impairment, namely the overall decline in financial performance of the segment and the Company’s decision to either complete a sale or wind-down our steerable antenna operations in the United Kingdom by the end of the first quarter of fiscal 2025.

As such, we recognized an impairment loss of $ 9,925,000 , related to net intangible assets with definite lives, which is included within intangible asset accumulated amortization in the table above.

See Note (1)(h) - " Summary of Significant Accounting and Reporting Policies, Long-Lived Assets " for more information We believe that the carrying values of our remaining net intangible assets were recoverable as of July 31, 2024.

However, if business conditions deteriorate, we may be required to record impairment losses, and/or increase the amortization of intangibles in the future.

Any impairment charges that we may record in the future could be material to our results of operations and financial condition.

(17) Convertible Preferred Stock

On October 18, 2021, we entered into a Subscription Agreement (the “Subscription Agreement”) with certain affiliates and related funds of White Hat Capital Partners LP and Magnetar Capital LLC (collectively, the “Investors”), relating to the issuance and sale of up to 125,000 shares of our Series A Convertible Preferred Stock, par value $ 0.10 per share (the “Series A Convertible Preferred Stock”), for an aggregate purchase price of up to $ 125,000,000 , or $ 1,000 per share.

On October 19, 2021, pursuant to the terms of the Subscription Agreement, the Investors purchased an aggregate of 100,000 shares of Series A Convertible Preferred Stock for an aggregate purchase price of $ 100,000,000 .

White Hat Capital Partners LP is affiliated with Mark Quinlan, who serves as Chairman of our Board of Directors.

On December 13, 2023, we and the Investors agreed to change certain terms of the Series A Convertible Preferred Stock, effected through an Exchange Agreement (the “Exchange Agreement”), pursuant to which the Investors exchanged (the “Series A Exchange”) all 100,000 shares of Series A Convertible Preferred Stock outstanding for 100,000 shares of our newly issued Series A-1 Convertible Preferred Stock, par value $ 0.10 per share (the “Series A-1 Convertible Preferred Stock”), with an initial liquidation preference of $ 1,134.20 per share.

Fiscal 2024 and Prior

On October 19, 2021, pursuant to the terms of the Subscription Agreement, the Investors purchased an aggregate of 100,000 shares of Series A Convertible Preferred Stock, with a par value of $ 0.10 per share, for an aggregate purchase price of $ 100,000,000 .

White Hat Capital Partners LP is affiliated with Mark Quinlan, who serves as a member of our Board of Directors.

On December 13, 2023, we and the Investors agreed to change certain terms of the Series A Convertible Preferred Stock, effected through an Exchange Agreement, pursuant to which the Investors exchanged (the “Series A Exchange”) all 100,000 shares of Series A Convertible Preferred Stock outstanding for 100,000 shares of our newly issued Series A-1 Convertible Preferred Stock, par value $ 0.10 per share (the “Series A-1 Convertible Preferred Stock”), with an initial liquidation preference of $ 1,134.20 per share.

As a result of the Series A Exchange, no shares of Series A Convertible Preferred Stock remain outstanding.

On January 22, 2024, we entered into a Subscription and Exchange Agreement (the “Subscription and Exchange Agreement”) with the Investors, relating to:

(i) the issuance and sale of 45,000 shares of Series B Convertible Preferred Stock, par value $ 0.10 per share (the “Series B Convertible Preferred Stock”), for an aggregate purchase price of $ 45,000,000 , or $ 1,000 per share (the “Primary Issuance”), (ii) the exchange of 100,000 shares of our Series A-1 Convertible Preferred Stock for 115,721.22 shares of Series B Convertible Preferred Stock (the “Series B Exchange”) and (iii) the issuance to the Investors of 5,400 shares of Series B Convertible Preferred Stock in lieu of cash for certain expense reimbursements (the “Additional Issuance” and, together with the Primary Issuance and the Series B Exchange, the “Series B Issuance”).

On January 22, 2024, we entered into a Subscription and Exchange Agreement with the Investors, relating to:

(i) the issuance and sale of 45,000 shares of Series B Convertible Preferred Stock, par value $ 0.10 per share (the “Series B Convertible Preferred Stock”), for an aggregate purchase price of $ 45,000,000 , or $ 1,000 per share (the “Primary Issuance”), (ii) the exchange of 100,000 shares of our Series A-1 Convertible Preferred Stock for 115,721.22 shares of Series B Convertible Preferred Stock (the “Series B Exchange”) and (iii) the issuance to the Investors of 5,400 shares of Series B Convertible Preferred Stock in lieu of cash for certain expense reimbursements (the “Series B Reimbursement” and, together with the Primary Issuance and the Series B Exchange, the “Series B Issuance”).

As a result of the Series B Exchange, no shares of Series A-1 Convertible Preferred Stock remain outstanding.

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The changes altered the preferred holders’ existing consent rights and existing put rights alongside payments upon a change of control following specified asset sales, in each case consistent with the Credit Facility.

To effect these changes, we and the Investors entered into a Subscription and Exchange Agreement (the “Series B-1 Exchange”), pursuant to which the Investors:

(i) exchanged, in a transaction exempt from registration under the Securities Act of 1933, all of the 166,121.22 shares of Series B Convertible Preferred Stock outstanding for 166,121.22 shares of our newly issued Series B-1 Convertible Preferred Stock, par value $ 0.10 per share, with an initial liquidation preference of $ 1,036.58 per share, and (ii) received 5,705.83 additional shares of Series B-1 Convertible Preferred Stock.

Also, on June 17, 2024, we and the Investors entered into a Voting Agreement and Registration Rights Agreement and filed a Series B-1 Certificate of Designations with the Secretary of State of Delaware, complete copies of which are documented and filed with the SEC.

Except for the changes described above, the powers, preferences and rights of the Series B-1 Convertible Preferred Stock are substantially the same as those of the Series B Convertible Preferred Stock, including, without limitation, that the shares of Series B-1 Convertible Preferred Stock are convertible into shares of common stock at a conversion price of $ 7.99 per share (the same as the current conversion price of the Series B Convertible

To effect these changes, we and the Investors entered into a Subscription and Exchange Agreement, pursuant to which the Investors:

(i) exchanged, in a transaction exempt from registration under the Securities Act of 1933, all of the 166,121.22 shares of Series B Convertible Preferred Stock outstanding for 166,121.22 shares of our newly issued Series B-1 Convertible Preferred Stock, par value $ 0.10 per share (the "Series B-1 Exchange"), with an initial liquidation preference of $ 1,036.58 per share, and (ii) received 5,705.83 additional shares of Series B-1 Convertible Preferred Stock as a consent fee (the "Series B-1 Fee").

As a result of the Series B-1 Exchange, no shares of Series B Convertible Preferred Stock remain outstanding.

We did not receive any cash proceeds from the Series B-1 Exchange.

COMTECH TELECOMMUNICATIONS CORP.

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Notes to Consolidated Financial Statements, Continued

Preferred Stock, and subject to the same adjustments).

On October 17, 2024, in connection with amending the Credit Facility, we and the Investors agreed to change certain terms of the Series B-1 Convertible Preferred Stock.

altered the date on which preferred holders can opt to have us repurchase their Series B-2 Convertible Preferred Shares (as discussed below) in certain circumstances;

provided for increases to the dividend rate in certain circumstances;

and provided for an option for the preferred holders to elect to receive dividends in cash (to the extent permitted by law).

To effect the changes described above, we and the Investors entered into a Subscription and Exchange Agreement, pursuant to which the Investors:

(i) exchanged all of the 171,827.05 shares of Series B-1 Convertible Preferred Stock outstanding for 171,827.05 shares of our newly issued Series B-2 Convertible Preferred Stock, par value $ 0.10 per share (the “Series B-2 Exchange”), with an initial liquidation preference of $ 1,067.87 per share;

and (ii) received 3,436.53 additional shares of Series B-2 Convertible Preferred Stock as a consent fee (the "Series B-2 Fee").

As a result of the Series B-2 Exchange, no shares of Series B-1 Convertible Preferred Stock remain outstanding.

We did not receive any cash proceeds from the Series B-2 Exchange.

On March 3, 2025, in connection with amending the Credit Facility and Subordinated Credit Facility (as discussed in Note (9) - "Subordinated Credit Facility") , we and the Investors agreed to change certain terms of the Series B-2 Convertible Preferred Stock.

The changes provided the Investors with a board observer right and certain information access rights.

These changes were effected through a Subscription and Exchange Agreement (the "Series B-3 Subscription and Exchange Agreement"), pursuant to which the Investors:

(i) exchanged (the “Series B-3 Exchange”) all of the 175,263.58 shares of Series B-2 Convertible Preferred Stock outstanding for 175,263.58 shares of our newly issued Series B-3 Convertible Preferred Stock, par value $ 0.10 per share, with an initial liquidation preference of $ 1,104.48 per share (the per share liquidation preference of the Series B-2 Convertible Preferred Stock as of the date of issuance);

and (ii) received 2,916.76 additional shares of Series B-3 Convertible Preferred Stock (the “Series B-3 Fee” and, together with the Series B Reimbursement, the Series B-1 Fee and the Series B-2 Fee, the “Additional Issuances”) and $ 650,000.00 in cash as a consent fee.

As a result of the Series B-3 Exchange, no shares of Series B-2 Convertible Preferred Stock remain outstanding.

We did not receive any cash proceeds from the Series B-3 Exchange.

The Series B-3 Convertible Preferred Stock ranks senior to the shares of our common stock, with respect to the payment of dividends and the distribution of assets upon a liquidation, dissolution or winding up of the Company.

The Series B-1 Convertible Preferred Stock has an initial liquidation preference of $ 1,036.58 per share with each share entitled to a cumulative dividend (the “Dividend”) at the rate of 9.00 % per annum, compounding quarterly, paid-in-kind, or 7.75 % per annum, compounding quarterly, paid in cash, at our election, or 6.50 % per annum, in respect of any shares of Series B-1 Convertible Preferred Stock that remain outstanding following the redemption of at least fifty percent ( 50 %) of the Series B-1 Preferred Stock pursuant to the exercise of an asset sale put right and/or an asset sale call right as described below.

For any quarter in which we elect not to pay the Dividend in cash, such Dividend becomes part of the liquidation preference of the Series B-1 Convertible Preferred Stock.

Each share of Series B-3 Convertible Preferred Stock is entitled to a cumulative dividend (the “Dividend”) at the rate of 9.00 % per annum, compounding quarterly, paid-in-kind, or 7.75 % per annum, compounding quarterly, paid in cash, at our election (except as described below), or 6.50 % per annum, in respect of any shares of Series B-3 Convertible Preferred Stock that remain outstanding following the redemption of at least fifty percent ( 50 %) of the Series B-3 Convertible Preferred Stock pursuant to the exercise of an asset sale or change in control put right or an asset sale call right, as described below.

The Dividend rate may also increase following certain events, including certain asset sales that constitute a change in control, as set forth in the certificate of designations governing the Series B-3 Convertible Preferred Stock (the "Series B-3 Certificate of Designations").

For any quarter in which the Dividend is not paid in cash, such Dividend becomes part of the liquidation preference of the Series B-3 Convertible Preferred Stock.

In addition, no dividend or other distribution on our common stock will be declared or paid on our common stock unless, at the time of such declaration and payment, an equivalent dividend or distribution is declared and paid on the Series B-3 Convertible Preferred Stock (the “Participating Dividend”), provided that in the case of any such dividend in the form of cash, in lieu of a cash payment, such Participating Dividend will become part of the liquidation preference of the Series B-3 Convertible Preferred Stock.

Such Participating Dividend results in the Series B-3 Convertible Preferred Stock meeting the definition of a "participating security" for purposes of our earnings per share calculations.

Following the satisfaction of all obligations under the Credit Facility in full and the termination of all of commitments under the Credit Facility (a “CA Satisfaction”), and (i) our failure to fully satisfy an exercised put right (other than a put right exercised in connection with an Asset Sale that constitutes a change in control) or (ii) beginning on or after April 30, 2027 (or later in certain circumstances), holders of the Series B-3 Convertible Preferred Stock will be entitled to elect to have us pay the Dividend in cash (to the extent permitted by law).

The shares of Series B-3 Convertible Preferred Stock are convertible into shares of common stock at the option of the holder thereof at any time.

At any time after July 22, 2027, we have the right to mandate conversion of the Series B-3 Convertible Preferred Stock, subject to certain restrictions based on the price of our common stock in the preceding thirty ( 30 ) trading days.

The conversion price for the Series B-1 Convertible Preferred Stock is $ 7.99 , subject to certain adjustments set forth in the certificate of designations governing the Series B-1 Convertible Preferred Stock (the "Series B-1 Certificate of Designations").

Holders of the Series B-1 Convertible Preferred Stock are entitled to vote with the holders of our common stock on an as-converted basis, and are entitled to a separate class vote with respect to, among other things, amendments to our organizational documents that have an adverse effect on the Series B-1 Convertible Preferred Stock, authorizations or issuances of securities of the Company (other than the issuance of up $ 50,000,000 of shares of common stock), the payment of dividends, related party transactions, repurchases or redemptions of securities of the Company, dispositions of businesses or assets involving consideration having a fair value in excess of $ 75,000,000 , the incurrence of certain indebtedness and certain amendments or extensions of our Credit Facility on terms and conditions that, taken as a whole, (A) are materially different from the existing Credit Facility or (B) adversely affect our ability to perform our obligations in connection with an optional repurchase of the Series B-1 Convertible Preferred Stock, in each case, subject to the exceptions and qualifications set forth in the Series B-1 Certificate of Designations.

The conversion price for the Series B-3 Convertible Preferred Stock is $ 7.99 , subject to certain adjustments set forth in the Series B-3 Certificate of Designations.

COMTECH TELECOMMUNICATIONS CORP.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

Holders of the Series B-3 Convertible Preferred Stock are entitled to vote with the holders of our common stock on an as-converted basis, and are entitled to a separate class vote with respect to, among other things, amendments to our organizational documents that have an adverse effect on the Series B-3 Convertible Preferred Stock, authorizations or issuances of securities of the Company (other than certain qualified or private offerings of up to $ 50,000,000 of shares of common stock), the payment of dividends, related party transactions, repurchases or redemptions of securities of the Company, dispositions of businesses or assets involving consideration having a fair value in excess of $ 75,000,000 (or $ 20,000,000 following a CA Satisfaction), the incurrence of certain indebtedness and certain amendments or extensions of our Credit Facility on terms and conditions that, taken as a whole, (A) are materially different from the existing Credit Facility or (B) adversely affect our ability to perform our obligations in connection with an optional repurchase of the Series B-3 Convertible Preferred Stock, in each case, subject to the exceptions and qualifications set forth in the Series B-3 Certificate of Designations.

Holders have the right to require us to repurchase their Series B-3 Convertible Preferred Stock (at 1.0 x the liquidation preference, plus accrued and unpaid dividends) on a date occurring either:

(a) on or after October 31, 2028 or (b) upon the consummation of an asset sale meeting certain criteria.

(a) on or after October 31, 2028, (b) upon the consummation of an asset sale meeting certain criteria, or (c) on or after April 30, 2027 following a CA Satisfaction.

We have the right to repurchase all, or less than all, of the Series B-3 Convertible Preferred Stock upon the consummation of an asset sale meeting the same criteria, other than an asset sale that would result in a change-of-control.

In addition, each holder will have the right to cause us to repurchase its Series B-1 Convertible Preferred Stock in connection with a Change of Ccontrol (as defined in the Series B-1 Certificate of Designations) at 1.5 x (or 1.0x in the case of Series B-1 Convertible Preferred Stock issued in the Additional Issuance) the liquidation preference, plus accrued and unpaid dividends.

In addition, each holder will have the right to cause us to repurchase its Series B-3 Convertible Preferred Stock in connection with a Change of Control (as defined in the Series B-3 Certificate of Designations) at 1.5 x (or 1.0x in the case of Series B-3 Convertible Preferred Stock issued in the Additional Issuances) the liquidation preference, plus accrued and unpaid dividends.

Any repurchase described above would be subject to the terms set forth in the Series B-3 Certificate of Designations.

Upon a repurchase of the Series B-1 Convertible Preferred Stock occurring as a result of an asset sale described above, we will issue each respective holder a warrant (a “Warrant”).

A Warrant will represent the right to acquire our common stock, as further described in the Subscription and Exchange Agreement, for a term of five years and six months from the issuance of such Warrant, at an initial exercise price equal to the conversion price on the date of issuance of such Warrant, subject to certain adjustments.

Upon a repurchase of the Series B-3 Convertible Preferred Stock at 1.0 x the liquidation preference, we will issue each respective holder a warrant (a “Warrant”).

A Warrant will represent the right to acquire our common stock, as further described in the Series B-3 Subscription and Exchange Agreement, for a term of five years and six months from the issuance of such Warrant, at an initial exercise price equal to the conversion price on the date of issuance of such Warrant, subject to certain adjustments.

We determined that our obligation to issue a Warrant met the definition of a freestanding financial instrument that should be accounted for as a liability.

We established an initial Warrant liability of $ 6,440,000 , which was included in the consideration given to the Investors for purposes of determining the loss on extinguishment of the Series A-1 Convertible Preferred Stock as of January 31, 2024.

The Warrant liability is classified in "Warrant and Derivative Liabilities" on the Consolidated Balance Sheets and is remeasured to its estimated fair value each reporting period, using Level 3 fair value inputs, until the Warrant is exercised or expires.

Changes in the estimated fair value of the Warrant are recognized in our Consolidated Statements of Operations as a non-cash expense or benefit.

As of July 31, 2025 and July 31, 2024, the Warrant liability was remeasured to $ 234,000 and $ 710,000 , resulting in non-cash benefits of $ 476,000 and $ 5,730,000 , respectively, recorded in " Other expenses (income) - Change in fair value of warrants and derivatives " on the Consolidated Statements of Operations .

We accounted for the cancellation of our Series B-1 Convertible Preferred Stock as an extinguishment based on a qualitative and quantitative assessment of the terms of the preferred shares exchanged.

We recognized a $ 51,179,000 gain on extinguishment in the first quarter of fiscal 2025, representing the difference between the carrying value of the Series B-1 Convertible Preferred Stock and the issuance date fair value of the Series B-2 Convertible Preferred Stock.

As the Series B-1 Convertible Preferred Stock was classified as temporary equity, the gain on extinguishment was included as an offset in determining net loss attributable to common stockholders and credited to retained earnings as a return from the holders.

We accounted for the Series B-3 Exchange as a modification.

COMTECH TELECOMMUNICATIONS CORP.

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Notes to Consolidated Financial Statements, Continued

Warrant liability is classified in " Other Liabilities " on the Consolidated Balance Sheets and is remeasured to its estimated fair value each reporting period, using Level 3 fair value inputs, until the Warrant is exercised or expires.

Changes in the estimated fair value of the Warrant will be recognized in our Consolidated Statement of Operations as a non-cash expense or benefit.

As of July 31, 2024, the Warrant liability was remeasured, resulting in a $ 5,730,000 reduction to its estimated fair value.

We accounted for the cancellation of our Series A-1 Convertible Preferred Stock and Series B Convertible Preferred Stock as extinguishments based on a qualitative assessment of the terms of the preferred shares exchanged.

We recognized a $ 19,555,000 loss on extinguishment, representing the aggregate value of the Warrant and additional issuances related to certain expense reimbursements.

As the Series A-1 Convertible Preferred Stock and Series B Convertible Preferred Stock were each classified as temporary equity, the loss on extinguishment was accounted for as a dividend to the holders and charged against retained earnings, and included in net loss attributable to common shareholders.

We identified several embedded derivatives that require bifurcation from the Series B-2 Convertible Preferred Stock (and subsequent issuance of the Series B-3 Convertible Preferred Stock) under ASC 815, including the holders' right to:

(i) require us to repurchase Series B-3 Convertible Preferred Stock upon the consummation of an asset sale meeting certain criteria, or in connection with a change in control;

(ii) convert Series B-3 Convertible Preferred Shares into shares of our common stock;

(iii) increase the dividend rate in certain circumstances;

and (iv) elect to receive cash dividends in certain circumstances.

When evaluating such embedded derivatives, we determined that the Series B-3 Convertible Preferred Stock was more akin to a debt-like host than an equity-like host.

We also determined that such features qualify for accounting as one combined embedded derivative liability.

We established an initial embedded derivative liability of $ 38,832,000 , which was recorded as a reduction to the initial fair value of the Series B-2 Convertible Preferred Stock and presented with "Warrant and Derivative Liabilities" on the Consolidated Balance Sheets.

The combined embedded derivative liability is remeasured to its estimated fair value each reporting period, using Level 3 fair value inputs.

Changes in the estimated fair value of the combined embedded derivative liability are recognized in our Consolidated Statements of Operations as a non-cash expense or benefit.

As of July 31, 2025, the embedded derivative liability was remeasured to $ 14,608,000 , resulting in a non-cash benefit of $ 24,224,000 for the fiscal year ended July 31, 2025, recorded in " Other expenses (income) - Change in fair value of warrants and derivatives " on the Consolidated Statements of Operations.

Upon the Series B-2 Exchange, the initial estimated fair value of the Series B-2 Convertible Preferred Stock was $ 132,310,000 .

We reduced the initial estimated fair value of the Series B-2 Convertible Preferred Stock to establish the initial combined embedded derivative liability, as discussed above.

We also adjusted the carrying value of the Series B-3 Convertible Preferred Stock at July 31, 2025 based on its redemption value of $ 204,153,000 , which includes $ 5,978,000 of accumulated and unpaid dividends.

During the fiscal year ended July 31, 2025, as presented in the table below, the adjustments charged against retained earnings and additional paid in capital to increase the carrying value of each respective Series B Convertible Preferred Stock, while outstanding, to their respective redemption values totaled $ 96,258,000 .

The following table presents the allocation of the initial estimated fair value of the Series B-2 Convertible Preferred Stock to its host instrument and combined embedded derivatives on October 17, 2024:

Initial estimated fair value of Series B-2 Convertible Preferred Stock $ 132,310,000

Initial estimated fair value and carrying value of combined embedded derivatives 38,832,000

Initial carrying value of Series B-2 Convertible Preferred Stock $ 93,478,000

The following table presents a reconciliation of the adjustments to increase the carrying values of the Convertible Preferred Stock to their redemption values while outstanding:

Redemption value of Series B-3 Convertible Preferred Stock at July 31, 2025

$ 204,153,000

Carrying value of combined embedded derivatives at July 31, 2025

Carrying value of Series B-3 Convertible Preferred Stock at July 31, 2025

Initial carrying value of Series B-2 Convertible Preferred Stock on October 17, 2024

Initial carrying value of Series B-3 Fee on March 3, 2025 3,221,000

Adjustment to increase the carrying value of Series B-3 Convertible Preferred Stock

to its redemption value at July 31, 2025 and Series B-2 Convertible Preferred Stock

(while outstanding)

Adjustment to increase carrying value of Series B-1 Convertible Preferred Stock to

its redemption value (while outstanding) 3,412,000

Total adjustments to redemption values charged to Stockholder's Equity for the

fiscal year ended July 31, 2025

In accordance with ASC 480, Distinguishing Liabilities from Equity , specifically ASC 480-10-S99-3A(2), SEC Staff Announcement:

Classification and Measurement of Redeemable Securities , we classified the Series B-1 Convertible Preferred Stock outside of permanent equity as temporary equity since the redemption of such shares is not solely within our control and we could be required by the holder to redeem the shares for cash or other assets, at their option.

Upon the Series B-1 Exchange, the initial redemption value (and estimated fair value) of the Series B-1 Convertible Preferred Stock was $ 178,112,000 .

We have elected to adjust the carrying value of the Series B-1 Convertible Preferred Stock to its current redemption value of $ 180,076,000 , which includes $ 623,000 of cumulative dividends paid-in-kind and $ 1,341,000 of accumulated and unpaid dividends.

During fiscal 2024, the adjustments charged against retained earnings to increase the carrying value of outstanding convertible preferred stock to their respective redemption values totaled $ 15,900,000 , of which $ 12,390,000 related to the Series B and B-1 Convertible Preferred Stock and $ 3,510,000 related to the Series A and A-1 Convertible Preferred Stock (while outstanding).

Subsequent Event

On October 17, 2024, we and the Investors agreed to change certain terms of the Series B-1 Convertible Preferred Stock.

The changes (i) altered the date on which preferred holders can opt to have us repurchase their Series B-2 Convertible Preferred Shares (as defined below) in certain circumstances, (ii) provided for increases to the dividend rate in certain circumstances and provided for an option for the preferred holders to elect to receive dividends in cash (to the extent permitted by law), and (iii) clarified the preferred holders’ existing consent rights, among other things.

To effect the changes described above, we and the Investors entered into a Subscription and Exchange Agreement, pursuant to which the Investors (i) exchanged (the “Series B-2 Exchange”) all of the 171,827.05 shares of Series B-1 Convertible Preferred Stock outstanding for 171,827.05 shares of our newly issued Series B-2 Convertible Preferred Stock, par value $ 0.10 per share, with an initial liquidation preference of $ 1,067.87 per share (the per share liquidation preference of the Series B-1 Convertible Preferred Stock as of the date of issuance), and (ii) received 3,436.53 additional shares of Series B-2 Convertible Preferred Stock (collectively, the “Series B-2 Convertible Preferred Stock”).

We did not receive any cash proceeds from the exchange and issuance of Series B-2 Convertible Preferred Stock.

As a result of the Series B-2 Exchange, no shares of Series B-1 Convertible Preferred Stock remain outstanding as of October 17, 2024.

(17) Stockholders’ Equity

Shelf Registration

On July 13, 2022, we filed a $ 200,000,000 shelf registration statement with the SEC for the sale of various types of securities, including debt securities.

This shelf registration statement was declared effective by the SEC as of July 25, 2022 and expires on July 25, 2025.

To-date, we have not issued any securities pursuant to our $ 200,000,000 shelf registration statement.

Classification and Measurement of Redeemable Securities , we classified the respective Series B Convertible Preferred Stock outside of permanent equity, as temporary equity, since the redemption of such shares is at the option of the holder on a fixed date or upon the occurrence of certain events that are not solely within our control.

COMTECH TELECOMMUNICATIONS CORP.

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Notes to Consolidated Financial Statements, Continued

(18) Stockholders’ Equity

Common Stock Repurchase Program

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There were no repurchases made during the fiscal years ended July 31, 2025 or 2024.

(18) Cost Reduction Activities

In fiscal 2023, we transformed and integrated our individual businesses into two segments to improve operational performance.

This transformation has provided insight into opportunities to manage costs, streamline operations, improve efficiency, and accelerate decision-making by eliminating management layers and other redundancies.

In doing so, during fiscal 2023, we recorded $ 3,872,000 of severance costs in selling, general and administrative expenses in our Consolidated Statements of Operations, of which $ 1,989,000 , $ 1,220,000 and $ 663,000 related to our Satellite and Space Communications, Terrestrial and Wireless Networks and Unallocated segments, respectively.

We paid $ 2,320,000 of severance costs during fiscal 2023 and our severance liability as of July 31, 2023 was $ 1,552,000 .

In fiscal 2024, we continued to transform and integrate our businesses, and in July 2024 made a decision to exit our subsidiary operations in Basingstoke U.K.

and recorded total severance costs of $ 2,616,000 in selling, general and administrative expenses in our Consolidated Statements of Operations, of which a substantial portion was related to our Satellite and Space Communications segment.

After net payments of $ 3,139,000 during fiscal 2024, our severance liability as of July 31, 2024 was $ 1,029,000 .

(19) Subsequent Event

Subordinated Credit Agreement

On October 17, 2024 (the "closing date"), we entered into a subordinated credit agreement with the existing holders of our convertible preferred stock and U.S.

Bank Trust Company, National Association, as agent (the “Subordinated Credit Agreement”) which provides a subordinated unsecured term loan facility in the aggregate principal amount of $ 25,000,000 (the “Subordinated Credit Facility”).

The proceeds of the Subordinated Credit Facility (i) cured our default on certain financial covenants under the Amended Credit Agreement with respect to the fourth quarter of fiscal 2024, (ii) provide us with additional liquidity and (iii) will fund our general working capital needs, including support of our transformation initiatives.

The Subordinated Credit Facility is subject to a Make-Whole Amount with respect to certain repayments or prepayments.

The Make-Whole Amount is an amount equal to (i) from the closing date through (but not including) the date that is nine months thereafter, $ 25,000,000 multiplied by 33.0 %, (ii) from the date that is nine months after the closing date through (but not including) the date that is the second anniversary of the closing date, $ 25,000,000 multiplied by 50.0 %, (iii) from the second anniversary of the closing date and thereafter, $ 25,000,000 multiplied by 75.0 % plus, in the case of clause (iii), interest accrued on $ 25,000,000 at the Make-Whole Interest Rate (as defined below) starting on the second anniversary of the closing date and calculated as of any such date of determination.

The obligations under the Subordinated Credit Facility are guaranteed by the same guarantors under the Amended Credit Facility and matures 90 days after the Maturity Date under the Amended Credit Facility as discussed in Note (8) – “Credit Facility.” The Subordinated Credit Facility contains customary representations, warranties and affirmative covenants, in each case substantially consistent with the representations and warranties and affirmative covenants under the Amended Credit Agreement.

The Subordinated Credit Facility contains customary negative covenants, subject to negotiated exceptions, including but not limited to:

The outstanding Subordinated Credit Facility will not be considered debt for purposes of our financial covenant testing under the Credit Facility.

Capitalized terms used but not defined herein have the meanings set forth for such terms in the Subordinated Credit Facility, which has been documented and filed with the SEC.

Additional Paid in Capital

During the fiscal year ended July 31, 2025, $ 89,879,000 of the adjustments to the carrying values of outstanding Convertible Preferred Stock to their respective redemption values, while outstanding, were charged to additional paid in capital so as not to exceed the available amount of retained earnings as of July 31, 2025.

(19) Cost Reduction and Related Restructuring Activities

In fiscal 2025, in connection with our transformation strategy, we implemented multiple reductions in force throughout our organization and in all of our segments.

Inclusive of actions taken in August 2025 (i.e., the start of our fiscal 2026), such reductions approximated 23 % of our workforce as of July 31, 2024, or approximately $ 47,000,000 in annualized labor costs.

Related to these activities, in fiscal 2025, we recorded $ 3,633,000 of severance costs within selling, general and administrative expenses in our Consolidated Statements of Operations .

After net payments of $ 3,900,000 during fiscal 2025, our severance liability as of July 31, 2024 decreased from $ 1,029,000 to $ 762,000 as of July 31, 2025.

At July 31, 2025, we had approximately 1,385 employees (including contractors), compared to 1,676 as of July 31, 2024.

As of the issuance date, we had approximately 1,347 employees (including temporary employees and contractors), which reflects the completion of a reduction in force within our Allerium segment in August 2025.

We recorded severance costs of $ 2,616,000 and $ 3,872,000 during fiscal 2024 and 2023, respectively.

COMTECH TELECOMMUNICATIONS CORP.

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(A) Provision for doubtful accounts.

(B) Write-off of uncollectible receivables and allowance for doubtful account receivables relating to the PST Divestiture.

See Note (4) - "Accounts Receivable" for further discussion of the fiscal 2025 provision.

(B) Write-off of uncollectible receivables.

Fiscal 2024 reflects the PST Divestiture.

See Note (3) - "Business Divestitures" for further discussion.

(D) Write-off of inventory and PST inventory reserve relating to the PST Divestiture.

See Note (5) - "Inventories" for further discussion of the fiscal 2025 provision.

(D) Write-off of inventory.

Fiscal 2025 includes $ 2,900,000 related to our decision to wind-down our Basingstoke, U.K.

Fiscal 2024 reflects the PST Divestiture.

See Note (3) - "Business Divestitures" for further discussion.

(E) Change in valuation allowance.

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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 9A. Controls and Procedures