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Item 1. Financial Statements

2025-03-05 compared with 2024-12-04 · 226 added, 162 removed, 470 unchanged (45% of the section changed)

47 unchanged sentences

Common Stock, no par value, authorized 115,000 shares;

48,810 and 48,121 shares issued as of October 26, 2024 and April 27, 2024, respectively

49,006 and 48,121 shares issued as of January 25, 2025 and April 27, 2024, respectively

71,774 65,525

1 unchanged sentence

Retained earnings 137,335 138,031

Treasury Stock, at cost, 1,907 shares as of October 26, 2024 and April 27, 2024, respectively

Treasury Stock, at cost, 2,443 and 1,907 shares as of January 25, 2025 and April 27, 2024, respectively

( 19,301 ) ( 10,285 )

7 unchanged sentences

(in thousands, except per share data)

Three Months Ended Six Months Ended

2024 October 28,

2023 October 26,

2024 October 28,

Three Months Ended Nine Months Ended

2025 January 27,

2024 January 25,

2025 January 27,

Net sales $ 149,507 $ 170,303 $ 583,926 $ 602,203

6 unchanged sentences

40,409 33,682 117,484 99,376

Operating income 15,770 19,436 38,486 59,652

Operating (loss) income ( 3,628 ) 8,036 34,858 67,688

Nonoperating (expense) income:

Interest (expense) income, net 273 ( 1,326 ) 202 ( 2,207 )

Interest income (expense), net 508 ( 745 ) 710 ( 2,952 )

Change in fair value of convertible note ( 14,083 ) 6,340 ( 25,369 ) ( 11,570 )

Other expense and debt issuance costs write-off, net ( 613 ) ( 1,000 ) ( 2,612 ) ( 6,282 )

Income before income taxes 25,183 6,157 25,403 34,253

Income tax expense 3,777 3,992 8,943 12,892

Net income $ 21,406 $ 2,165 $ 16,460 $ 21,361

(Loss) income before income taxes ( 17,816 ) 12,631 7,587 46,884

Income tax (benefit) expense ( 660 ) 1,889 8,283 14,781

Net (loss) income $ ( 17,156 ) $ 10,742 $ ( 696 ) $ 32,103

Weighted average shares outstanding:

7 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

Three Months Ended Six Months Ended

2024 October 28,

2023 October 26,

2024 October 28,

Net income $ 21,406 $ 2,165 $ 16,460 $ 21,361

Three Months Ended Nine Months Ended

2025 January 27,

2024 January 25,

2025 January 27,

Net (loss) income $ ( 17,156 ) $ 10,742 $ ( 696 ) $ 32,103

Other comprehensive income (loss):

Cumulative translation adjustments ( 1,320 ) 1,041 ( 878 ) ( 401 )

Unrealized gain on available-for-sale securities, net of tax 20 9 20 16

Total other comprehensive income (loss), net of tax 334 ( 1,181 ) 462 ( 1,426 )

Comprehensive income $ 21,740 $ 984 $ 16,922 $ 19,935

Unrealized (loss) gain on available-for-sale securities, net of tax ( 9 ) 7 11 23

Total other comprehensive (loss) income, net of tax ( 1,329 ) 1,048 ( 867 ) ( 378 )

Comprehensive (loss) income $ ( 18,485 ) $ 11,790 $ ( 1,563 ) $ 31,725

See notes to Condensed Consolidated Financial Statements.

20 unchanged sentences

Balance as of October 26, 2024 48,810 $ 70,282 $ 52,505 $ 154,491 ( 1,907 ) $ ( 10,285 ) $ ( 6,063 ) $ 260,930

Net loss — — — ( 17,156 ) — — — ( 17,156 )

Cumulative translation adjustments — — — — — — ( 1,320 ) ( 1,320 )

Unrealized loss on available-for-sale securities, net of tax — — — — — — ( 9 ) ( 9 )

Share-based compensation — — 573 — — — — 573

Exercise of stock options 118 868 — — — — — 868

Employee savings plan activity 78 624 — — — — — 624

Treasury stock purchase — — — — ( 536 ) ( 9,016 ) — ( 9,016 )

Settlement of convertible note — — 36,797 — — — — 36,797

Balance as of January 25, 2025 49,006 $ 71,774 $ 89,875 $ 137,335 ( 2,443 ) $ ( 19,301 ) $ ( 7,392 ) $ 272,291

See notes to Condensed Consolidated Financial Statements.

21 unchanged sentences

Balance as of October 28, 2023 47,930 $ 64,643 $ 51,047 $ 124,771 ( 1,907 ) $ ( 10,285 ) $ ( 6,955 ) $ 223,221

Net income — — — 10,742 — — — 10,742

Cumulative translation adjustments — — — — — — 1,041 1,041

Unrealized gain (loss) on available-for-sale securities, net of tax — — — — — — 7 7

Share-based compensation — — 507 — — — — 507

Exercise of stock options 23 142 — — — — — 142

Employee savings plan activity 143 586 — — — — — 586

Balance as of January 27, 2024 48,096 $ 65,371 $ 51,554 $ 135,513 ( 1,907 ) $ ( 10,285 ) $ ( 5,907 ) $ 236,246

See notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

(in thousands)

Six Months Ended

2024 October 28,

Nine Months Ended

2025 January 27,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 16,460 $ 21,361

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income $ ( 696 ) $ 32,103

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

Depreciation and amortization 14,707 14,370

12 unchanged sentences

Proceeds from sales of property, equipment and other assets 212 107

Proceeds from sales or maturities of marketable securities — 550

Purchases of equity and loans to equity investees ( 3,326 ) ( 4,084 )

4 unchanged sentences

Principal payments on long-term obligations ( 310 ) ( 307 )

Payments for common shares repurchased ( 9,016 ) —

Debt issuance costs — ( 6,833 )

1 unchanged sentence

Tax payments related to RSU issuances ( 591 ) ( 303 )

Net cash provided by financing activities 2,033 15,919

Net cash (used in) provided by financing activities ( 6,594 ) 15,689

EFFECT OF EXCHANGE RATE CHANGES ON CASH 28 80

9 unchanged sentences

Purchases of property and equipment included in accounts payable 2,890 1,050

Contributions of common stock under the ESPP 569 614

Contributions of common stock under the employee stock purchase plan 1,192 1,201

Settlement of convertible note 36,797 —

See notes to Condensed Consolidated Financial Statements.

10 unchanged sentences

The balance sheet as of April 27, 2024 has been derived from the audited financial statements at that date, but it does not include all the information and disclosures required by GAAP for complete financial statements.

These financial statements should be read in conjunction with our financial statements and notes thereto for the fiscal year ended April 27, 2024, which are contained in our Annual Report on Form 10-K previously filed with the Securities and Exchange Commission ("SEC").

The financial statements and notes thereto contained in this Quarterly Report on Form 10-Q should be read in conjunction with our financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended April 27, 2024, (the "Form 10-K").

The results of operations for the interim periods presented are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year.

4 unchanged sentences

In each 53-week fiscal year, an additional week is added to the first quarter, and each of the last three quarters is comprised of a 13-week period.

The six months ended October 26, 2024 and October 28, 2023 contained operating results for 26 weeks.

There have been no material changes to our significant accounting policies and estimates as described in our Annual Report on Form 10-K for the fiscal year ended April 27, 2024.

The nine months ended January 25, 2025 and January 27, 2024 contained operating results for 39 weeks.

There have been no material changes to our significant accounting policies and estimates as described in the Form 10-K.

Cash and cash equivalents and restricted cash

1 unchanged sentence

Restricted cash consists of cash and cash equivalents held in bank deposit accounts to secure certain issuances of foreign bank guarantees.

2024 October 28,

2025 January 27,

2024 April 27,

4 unchanged sentences

These accounts are impacted by changes in foreign currency rates.

Of our $ 134,352 in cash and cash equivalent balances as of October 26, 2024, $ 123,981 were denominated in United States dollars, of which $ 5,947 were held by our foreign subsidiaries.

As of October 26, 2024, we had an additional $ 10,371 in cash balances denominated in foreign currencies, of which $ 9,495 were maintained in accounts of our foreign subsidiaries.

Of our $ 132,169 in cash and cash equivalent balances as of January 25, 2025, $ 117,833 were denominated in United States dollars, of which $ 1,887 were held by our foreign subsidiaries.

As of January 25, 2025, we had an additional $ 14,336 in cash balances denominated in foreign currencies, of which $ 12,386 were maintained in accounts of our foreign subsidiaries.

Recent Accounting Pronouncements

Accounting Standards Adopted

There are no significant Accounting Standard Updates ("ASU") issued that were adopted in the six months ended October 26, 2024.

There are no significant Accounting Standard Updates ("ASU") issued that were adopted in the nine months ended January 25, 2025.

Accounting Standards Not Yet Adopted

6 unchanged sentences

ASU 2023-09 requires the disclosure of specified additional information in its income tax rate reconciliation and to provide additional information for reconciling items that meet a quantitative threshold.

ASU 2023-09 will also require disaggregation of income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions.

ASU 2023-09 will also require the disaggregation of the disclosures of income taxes paid by federal, state, and foreign taxes, with further disaggregation required for significant individual jurisdictions.

The Company is required to adopt this guidance for its annual reporting in fiscal year 2026 on a prospective basis.

2 unchanged sentences

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03"), requiring disclosure in the notes to the financial statements for specified information about certain costs and expenses.

ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027;

ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027;

however, early adoption is permitted and can be applied either prospectively or retrospectively.

3 unchanged sentences

Our judgment regarding the level of influence over each equity method investee includes considering key factors such as our ownership interest, representation on the board of directors, participation in policy-making decisions, other commercial arrangements, and material intercompany transactions.

We evaluated the nature of our investment in affiliates of Xdisplay TM ("XDC"), which is developing micro-LED mass transfer expertise and technologies, and Miortech (dba Etulipa), which is developing low power outdoor electrowetting technology.

Our ownership in Miortech was 55.9 percent and in XDC was 16.4 percent as of October 26, 2024.

The aggregate amount of our investments accounted for under the equity method was $ 257 and $ 1,813 as of October 26, 2024 and April 27, 2024, respectively.

We evaluated the nature of our investment in affiliates of Xdisplay TM ("XDC"), which is developing micro-LED mass transfer expertise and technologies, and Miortech (dba Etulipa) ("Mirotech"), which is developing low power outdoor electrowetting technology.

As of January 25, 2025, our ownership in Miortech and XDC was 55.9 percent and 16.4 percent, respectively.

The aggregate amount of our investments accounted for under the equity method was $ 0 and $ 1,813 as of January 25, 2025 and April 27, 2024, respectively.

We determined both entities are variable interest entities, and, based on management's analysis, we determined that Daktronics is not the primary beneficiary because the power criterion was not met.

1 unchanged sentence

Our proportional share of the respective affiliates' losses is included in the "Other expense and debt issuance costs write-off, net" line item in our Condensed Consolidated Statements of Operations.

For the three and six months ended October 26, 2024, our share of the losses of our affiliates was $ 901 and $ 1,832 as compared to $ 771 and $ 1,461 for the three and six months ended October 28, 2023.

For the three and nine months ended January 25, 2025, our share of the losses of our affiliates was $ 762 and $ 2,594 as compared to $ 869 and $ 2,330 for the three and nine months ended January 27, 2024.

These losses were first applied to the equity balances, and upon the equity balances being reduced to zero, the losses then reduce the book value of the promissory notes with these entities.

For the three and nine months ended January 25, 2025, the amount of losses reduced the book value of the notes by $ 505 and $ 781 , respectively.

There was no reduction of the book value of the notes during the three and nine months ended January 27, 2024.

We review our investments in affiliates for impairment indicators.

There were no impairments recorded during the three and six months ended October 26, 2024 compared to an impairments of $ 212 and $ 654 during the three and six months ended October 28, 2023.

There were no impairments recorded during the three and nine months ended January 25, 2025 compared to impairments of $ 437 and $ 1,091 during the three and nine months ended January 27, 2024.

We purchased services for research and development activities from our equity method investees.

The total of these related party transactions for the six months ended October 26, 2024 and October 28, 2023 was $ 497 and $ 123 , respectively, which is included in the "Product design and development" line item in our condensed consolidated statements of operations.

A portion of our activities remain unpaid those amounts were $ 134 and $ 14 for the six months ended

October 26, 2024 and October 28, 2023, respectively, which is included in the "Accounts payable" line item in our condensed consolidated balance sheets.

The total of these related party transactions for the nine months ended January 25, 2025 and January 27, 2024 was $ 593 and $ 162 , respectively, which is included in the "Product design and development" line item in our Condensed Consolidated Statements of Operations.

The portions of our activities that remain unpaid were $ 109 and $ 2 as of the nine months ended January 25, 2025 and January 27, 2024, respectively, which are included in the "Accounts payable" line item in our Condensed Consolidated Balance Sheets.

We also have advanced our affiliates funds under convertible and promissory notes (collectively, the "Affiliate Notes").

We advanced $ 2,049 in the six months ended October 26, 2024 and $ 5,050 in fiscal year 2024 under the Affiliate Notes.

The total outstanding amount of the Affiliate Notes was $ 16,396 and $ 14,241 as of October 26, 2024 and April 27, 2024, respectively.

We advanced $ 3,326 in the nine months ended January 25, 2025, which does not include the foreign currency translation adjustment of $ 97 , and $ 5,050 in fiscal year 2024 under the Affiliate Notes.

We have accrued interest related to the Affiliate Notes of $ 587 and $ 449 as of January 25, 2025 and April 27, 2024, respectively.

The total face value of the outstanding amount of the Affiliate Notes was $ 18,057 and $ 14,241 as of January 25, 2025 and April 27, 2024, respectively.

After equity method losses were recorded, the net balances of the Affiliate Notes were $ 17,276 and $ 14,241 as of January 25, 2025 and April 27, 2024, respectively.

The balances of the Affiliate Notes are included in the "Investments in affiliates and other assets" line item in our Condensed Consolidated Balance Sheets.

We evaluate the Affiliate Notes for impairment and credit losses.

As of October 26, 2024 and April 27, 2024, no provision for losses was recorded, as management's analysis concluded the Affiliate Notes were collectable or realizable based on the rights of these instruments and related valuation of each affiliate.

The Affiliate Notes balance combined with the investment in affiliates balance totaled $ 16,653 and $ 16,054 as of October 26, 2024 and April 27, 2024, respectively.

Earnings Per Share ("EPS")

As of January 25, 2025 and April 27, 2024, no provision for losses was recorded, as management's analysis concluded the Affiliate Notes were collectable or realizable based on the rights of these instruments and related valuation of each affiliate.

The Affiliate Notes balance combined with the investment in affiliates balance totaled $ 17,276 and $ 16,054 as of January 25, 2025 and April 27, 2024, respectively.

Earnings Per Share

We follow the provisions of Accounting Standards Codification 260, Earnings Per Share ("ASC 260"), where basic earnings per share ("EPS") is computed by dividing income attributable to common shareholders by the weighted average number of common shares outstanding for the period.

Diluted EPS reflects the potential dilution which may occur if securities or other obligations to issue common stock were exercised or converted into shares of common stock or resulted in the issuance of shares of common stock which share in our earnings.

The following is a reconciliation of the net income and common share amounts used in the calculation of basic and diluted EPS for the three and six months ended October 26, 2024 and October 28, 2023:

Three Months Ended Six Months Ended

2024 October 28,

2023 October 26,

2024 October 28,

The following is a reconciliation of the net income and common share amounts used in the calculation of basic and diluted EPS for the three and nine months ended January 25, 2025 and January 27, 2024:

Three Months Ended Nine Months Ended

2025 January 27,

2024 January 25,

2025 January 27,

Earnings per share - basic

Net income $ 21,406 $ 2,165 $ 16,460 $ 21,361

Net (loss) income $ ( 17,156 ) $ 10,742 $ ( 696 ) $ 32,103

Weighted average shares outstanding 47,764 46,173 46,944 45,975

1 unchanged sentence

Earnings per share - diluted

Net income $ 21,406 $ 2,165 $ 16,460 $ 21,361

Net (loss) income $ ( 17,156 ) $ 10,742 $ ( 696 ) $ 32,103

Change in fair value of convertible note — ( 6,340 ) — —

6 unchanged sentences

Diluted earnings per share $ ( 0.36 ) $ 0.09 $ ( 0.01 ) $ 0.69

Options outstanding to purchase 51 and 521 shares of common stock with a weighted average exercise price of $ 10.44 and $ 10.76 for the three months ended October 26, 2024 and October 28, 2023, respectively, were not included in the computation of diluted EPS because the effects would be anti-dilutive.

Options outstanding to purchase 114 shares of common stock with a weighted average exercise price of $ 12.10 for the six months ended October 26, 2024 and 1,039 shares of common stock with a weighted average exercise price of $ 9.53 for the six months ended October 28, 2023 were excluded from the computation of diluted EPS because the effects would be anti-dilutive.

During the three months ended October 26, 2024, 4,037 potential shares of common stock issuable upon conversion of the secured convertible note in the original principal payment of $ 25,000 due on May 11, 2027 issued by the Company to Alta Fox Opportunities Fund, LP (the "Convertible Note"), were included in the computation of diluted EPS.

For the six months ended October 26, 2024, 4,037 potential common shares issuable upon conversion of the Convertible Note were not included in the computation of diluted EPS, as the effect would be anti-dilutive.

During the three and six months ended October 28, 2023, 4,051 and 3,806 , respectively, potential shares of common stock issuable upon conversion of the Convertible Note were not included in the computation of diluted EPS, as the effect would be anti-dilutive.

During the three months ended January 25, 2025, a total of 934 shares of potential common stock related to stock compensation plans were excluded from the computation of diluted EPS because the effects would be anti-dilutive.

The excluded shares include options outstanding to purchase 29 shares of common stock with a weighted average exercise price of $ 11.87 .

For the three months ended January 27, 2024, options outstanding to purchase 484 shares of common stock with a weighted average exercise price of $ 10.73 were not included in the computation of diluted EPS because the effects would be anti-dilutive.

During the nine months ended January 25, 2025, a total of 992 shares of potential common stock relating to the stock compensation plan were excluded from the computation of diluted EPS because the effects would be anti-dilutive.

The excluded shares include options outstanding to purchase 51 shares of common stock with a weighted average exercise price of $ 10.43 .

For the nine months ended January 27, 2024, options outstanding to purchase 695 shares of common stock with a weighted average exercise price of $ 10.30 were not included in the computation of diluted EPS because the effects would be anti-dilutive.

During the three months ended January 25, 2025, 3,079 potential shares of common stock issuable upon conversion of the senior secured convertible note dated May 11, 2023 issued to Alta Fox Opportunities Fund, LP (the Holder," and collectively with its affiliates, "Alta Fox") during fiscal 2024 (the "Convertible Note") were not included in the computation of diluted EPS, as the effect would be anti-dilutive.

The 2,218 common shares attributed to settling a portion of the Convertible Note, but not yet been issued, were weighted for the number of days outstanding from the settlement date and included in the weighted average shares outstanding in the computation of diluted EPS.

For the nine months ended January 25, 2025, 3,697 potential common shares issuable upon conversion of the Convertible Note were not included in the computation of diluted EPS, as the effect would be anti-dilutive.

During the nine months ended January 27, 2024, 3,875 potential shares of common stock issuable upon conversion of the Convertible Note were not included in the computation of diluted EPS, as the effect would be anti-dilutive.

Revenue Recognition

1 unchanged sentence

In accordance with ASC 606-10-50, we disaggregate revenue from contracts with customers by the type of performance obligation and the timing of revenue recognition.

We determine that disaggregating revenue in these categories achieves the disclosure objective to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors and to enable users of financial statements to understand the relationship to each reportable segment.

We determined that disaggregating revenue in these categories achieves

the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors and to enable users of financial statements to understand the relationship to each reportable segment.

The following table presents our disaggregation of revenue by segments:

Three Months Ended October 26, 2024

Three Months Ended January 25, 2025

Commercial Live Events High School

10 unchanged sentences

$ 37,976 $ 46,072 $ 29,367 $ 18,789 $ 17,303 $ 149,507

Six Months Ended October 26, 2024

Nine Months Ended January 25, 2025

Commercial Live Events High School

10 unchanged sentences

$ 115,614 $ 231,887 $ 125,444 $ 62,757 $ 48,224 $ 583,926

Three Months Ended October 28, 2023

Three Months Ended January 27, 2024

Commercial Live Events High School

10 unchanged sentences

$ 33,292 $ 73,393 $ 28,764 $ 19,605 $ 15,249 $ 170,303

Six Months Ended October 28, 2023

Nine Months Ended January 27, 2024

Commercial Live Events High School

21 unchanged sentences

Contract liabilities - noncurrent 18,056 16,342 1,714 10.5

The changes in our contract assets and contract liabilities from April 27, 2024 to October 26, 2024 were due to the timing of billing schedules and revenue recognition, which can vary significantly depending on the contractual payment terms and the seasonality of the sports markets.

We had no significant impairments of contract assets for the six months ended October 26, 2024.

The changes in our contract assets and contract liabilities from April 27, 2024 to January 25, 2025 were due to the timing of billing schedules and revenue recognition, which can vary significantly depending on the contractual payment terms and the seasonality of the sports markets.

We had no significant impairments of contract assets for the nine months ended January 25, 2025.

For service-type warranty contracts, we allocate revenue to this performance obligation, recognize the revenue over time, and recognize costs as incurred.

Earned and unearned revenues for these contracts are included in the "Contract assets" and

"Contract liabilities" line items of our condensed consolidated balance sheets.

Changes in unearned service-type warranty contracts, net were as follows:

Earned and unearned revenues for these contracts are included in the "Contract assets" and "Contract liabilities" line items of our Condensed Consolidated Balance Sheets.

Changes in unearned service-type warranty contracts, net for the nine months ended January 25, 2025 were as follows:

Balance as of April 27, 2024 $ 32,159

2 unchanged sentences

Foreign currency translation and other ( 91 )

Balance as of October 26, 2024 $ 36,287

Contracts in progress identified as loss contracts as of October 26, 2024 and April 27, 2024 were immaterial.

Balance as of January 25, 2025 $ 35,676

Contracts in progress identified as loss contracts as of January 25, 2025 and April 27, 2024 were immaterial.

Loss provisions are recorded in the "Accrued expenses" line item in our Condensed Consolidated Balance Sheets.

During the six months ended October 26, 2024, we recognized revenue of $ 52,024 related to our contract liabilities as of April 27, 2024.

During the nine months ended January 25, 2025, we recognized revenue of $ 58,407 related to our contract liabilities as of April 27, 2024.

Remaining performance obligations

As of October 26, 2024, the aggregate amount of the transaction price allocated to the remaining performance obligations was $ 301,525 .

Remaining performance obligations related to product and service agreements as of October 26, 2024 were $ 235,982 and $ 65,543 , respectively.

As of January 25, 2025, the aggregate amount of the transaction price allocated to the remaining performance obligations was $ 338,339 .

Remaining performance obligations related to product and service agreements as of January 25, 2025 were $ 273,223 and $ 65,116 , respectively.

We expect approximately $ 285,680 of our remaining performance obligations to be recognized over the next 12 months, with the remainder recognized thereafter.

1 unchanged sentence

Any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations, and project deferrals are reflected or excluded in the remaining performance obligation balance, as appropriate.

The amount of revenue recognized associated with performance obligations satisfied in prior years during the six months ended October 26, 2024 and October 28, 2023 was immaterial.

The amount of revenue recognized associated with performance obligations satisfied in prior years during the nine months ended January 25, 2025 and January 27, 2024 was immaterial.

Segment Reporting

The following table sets forth certain financial information for each of our five reporting segments for the periods indicated:

Three Months Ended Six Months Ended

2024 October 28,

2023 October 26,

2024 October 28,

Three Months Ended Nine Months Ended

2025 January 27,

2024 January 25,

2025 January 27,

Commercial $ 37,976 $ 33,292 $ 115,614 $ 122,628

16 unchanged sentences

40,409 33,682 117,484 99,376

Operating income 15,770 19,436 38,486 59,652

Operating (loss) income ( 3,628 ) 8,036 34,858 67,688

Nonoperating (expense) income:

Interest (expense) income, net 273 ( 1,326 ) 202 ( 2,207 )

Interest income (expense), net 508 ( 745 ) 710 ( 2,952 )

Change in fair value of convertible note ( 14,083 ) 6,340 ( 25,369 ) ( 11,570 )

Other expense and debt issuance costs write-off, net ( 613 ) ( 1,000 ) ( 2,612 ) ( 6,282 )

Income before income taxes $ 25,183 $ 6,157 $ 25,403 $ 34,253

(Loss) Income before income taxes $ ( 17,816 ) $ 12,631 $ 7,587 $ 46,884

Depreciation and amortization:

8 unchanged sentences

The following table presents information about net sales and property and equipment, net of accumulated depreciation, in the United States and elsewhere:

Three Months Ended Six Months Ended

2024 October 28,

2023 October 26,

2024 October 28,

Three Months Ended Nine Months Ended

2025 January 27,

2024 January 25,

2025 January 27,

United States $ 127,159 $ 152,962 $ 518,816 $ 545,699

10 unchanged sentences

however, we have a complex global supply chain subject to geopolitical and transportation risks and a number of single-source suppliers that could limit our supply or cause delays in obtaining raw materials and components needed in manufacturing.

The changes in the carrying amount of goodwill related to each segment with a goodwill balance for the six months ended October 26, 2024 were as follows:

The changes in the carrying amount of goodwill related to each segment with a goodwill balance for the nine months ended January 25, 2025 were as follows:

Commercial Transportation Total

1 unchanged sentence

Foreign currency translation ( 109 ) ( 31 ) ( 140 )

Balance as of October 26, 2024 $ 3,163 $ 31 $ 3,194

Balance as of January 25, 2025 $ 3,079 $ 7 $ 3,086

We perform an analysis of goodwill on an annual basis, and it is tested for impairment more frequently if events or changes in circumstances indicate that an asset might be impaired.

Our annual analysis is performed during our third quarter of each fiscal year based on the goodwill amount as of the first business day of our third fiscal quarter.

Accumulated impairments to goodwill as of October 26, 2024 and April 27, 2024 was $ 4,576 .

We performed our annual impairment test as of October 27, 2024 and concluded no goodwill impairment existed.

The amount of accumulated impairments to goodwill as of January 25, 2025 and April 27, 2024 was $ 4,576 .

Financing Agreements

10 unchanged sentences

On May 11, 2023, we closed on a $ 75,000 senior credit facility (the "Credit Facility").

The Credit Facility consists of a $ 60,000 asset-based revolving credit facility (the "ABL") maturing on May 11, 2026, which is secured by a first priority lien on the Company's assets, and a $ 15,000 delayed draw loan (the "Delayed Draw Loan") secured by a first priority mortgage on our Brookings, South Dakota real estate (the "Mortgage").

The Credit Facility consists of a $ 60,000 asset-based revolving credit facility maturing on May 11, 2026 (the "ABL"), which is secured by a first priority lien on the Company's assets, and a $ 15,000 delayed draw loan (the "Delayed Draw Loan") secured by a first priority mortgage on our Brookings, South Dakota real estate (the "Mortgage").

Under the ABL, certain factors can impact our borrowing capacity.

As of October 26, 2024, our borrowing capacity was $ 40,758 , there were no borrowings outstanding, and there was $ 5,363 used to secure letters of credit outstanding.

As of January 25, 2025, our borrowing capacity was $ 33,397 , there were no borrowings outstanding, and there was $ 3,471 used to secure letters of credit outstanding.

The interest rate on the ABL is set on a sliding scale based on the trailing 12-month fixed charge coverage and ranges from 2.5 to 3.5 percent over the standard overnight financing rate (SOFR).

3 unchanged sentences

The interest rate on the Delayed Draw Loan is set on a sliding scale based on the trailing 12-month fixed charge coverage ratio and ranges between 1.0 and 2.0 percent over the Commercial Bank Floating Rate (CBFR).

The interest rate as of October 26, 2024 for Delayed Draw Loan was 9.5 percent.

The interest rate as of January 25, 2025 for the Delayed Draw Loan was 9.5 percent.

Convertible Note

On May 11, 2023, we borrowed $ 25,000 in aggregate principal amount evidenced by the secured Convertible Note due May 11, 2027.

Alta Fox Opportunities Fund, LP, as the holder (the "Holder") of the Convertible Note, has a second priority lien on assets securing the ABL facility and a first priority lien on substantially all of the other assets of the Company, excluding all real property.

On May 11, 2023, we borrowed $ 25,000 in aggregate principal amount evidenced by the secured Convertible Note.

The Holder has a second priority lien on assets securing the ABL facility and a first priority lien on substantially all of the other assets of the Company, excluding all real property.

Conversion Features

• The Convertible Note allows the Holder and any of the Holder’s permitted transferees, donees, pledgees, assignees, or successors-in-interest (collectively, the “Selling Shareholders”) to convert all or any portion of the principal amount of the Convertible Note, together with any accrued and unpaid interest and any other unpaid amounts, including late charges, if any (together, the “Conversion Amount”), into shares of the Company’s common stock at an initial conversion price of $ 6.31 per share, subject to adjustment in accordance with the terms of the Convertible Note (the “Conversion Price”).

• The Company also has a forced conversion right, which is exercisable on the occurrence of certain conditions set forth in the Convertible Note, pursuant to which it can cause all or any portion of the outstanding and unpaid Conversion Amount to be converted into shares of common stock at the Conversion Price.

Additionally, if the Company fails other than by reason of a failure by the Holder to comply with its obligations, the Holder is permitted to cash payments from the Company until such conversion failure is cured.

On November 11, 2024, the Company issued notice to the Holder that the Company would force the conversion of $ 7,000 of the principal balance and accrued interest of the Convertible Note on December 3, 2024 at the conversion price of $ 6.31 per share into 1,109 shares of the Company's common stock (the "December Conversion").

On December 11, 2024, the Company issued notice to the Holder that the Company would force the conversion of $ 7,000 of the principal balance and accrued interest of the Convertible Note on January 3, 2025 at the conversion price of $ 6.31 per share into 1,109 shares of the Company's common stock (the "January Conversion").

On January 27, 2025, in accordance with the terms of the

Convertible Note, the Company settled $ 14,000 of the principal balance and accrued interest of the Convertible Note in exchange for the issuance of 2,218 shares of the Company's common stock (based on the Conversion Price).

On January 10, 2025, the Company issued notice to the Holder that the Company would force the conversion of $ 7,000 of the principal balance and accrued interest of the Convertible Note on February 3, 2025 at the conversion price of $ 6.31 per share into 1,109 shares of the Company's common stock (the "February Conversion").

On February 3, 2025, in accordance with the terms of the Convertible Note, the Company settled the February Conversion.

The obligation to issue a fixed number of shares to the Holder was determined to be an equity contract that met the criteria for equity classification under ASC 815-40.

See "Note 12.

Related Party Transactions" and "Note 13.

Subsequent Events" for further information on the Convertible Note.

Redemption Features

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Upon an Event of Default under the Convertible Note, the annual interest rate will increase to 12.0 percent.

The annual rate of 9.0 percent was used to calculate the interest accrued as of October 26, 2024, as interest will be paid in cash.

The annual rate of 9.0 percent was used to calculate the interest accrued as of January 25, 2025, as interest will be paid in cash.

We elected the fair value option to account for the Convertible Note as described in "Note 10.

Fair Value Measurement" of the Notes to our Condensed Consolidated Financial Statements included in this Form 10-Q.

Fair Value Measurement" of the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

The financial liability was initially measured at its issue-date fair value and is subsequently remeasured at fair value on a recurring basis at each reporting period date.

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Therefore, interest will be recognized and accrued separately in interest expense, with changes in fair value of the Convertible Note presented in the "Change in fair value of convertible note" line item in our Condensed Consolidated Statements of Operations.

The changes in fair value of the Convertible Note during the six months ended October 26, 2024 are as follows:

The estimated fair value of the Convertible Note upon its issuance date of May 11, 2023 was computed using the binomial lattice model.

Given the appreciation of the Company’s stock price since inception of the Convertible Note combined with our intent and expectation of settlement as soon as is feasible through exercise of its forced conversion right, we determined that the Monte Carlo simulation ("MCS") model was appropriately suited to determine the fair value of the Convertible Note as of January 25, 2025.

Both models incorporate significant inputs that are not observable in the market and thus represents a Level 3 measurement.

The fair value of the two principal tranches of the Convertible Note that were force converted was $ 18,116 and $ 18,681 , resulting in an additional $ 499 in changes in fair value recognized in earnings for the period ended January 25, 2025.

Upon conversion, the Company extinguished the debt at its then fair value and recorded the related settlement to equity, reflecting the obligation to deliver 2,218 shares of the Company's common stock to the Holder.

The changes in fair value of the Convertible Note during the nine months ended January 25, 2025 are as follows:

Liability Component

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Balance as of April 27, 2024 $ 41,550

Redemption of convertible promissory note —

Carrying value of note settled through conversion ( 36,797 )

Fair value change recognized 25,497

Balance as of October 26, 2024 $ 52,836

The estimated fair value of the Convertible Note upon its issuance date of May 11, 2023 was computed using the binomial lattice model.

Both models incorporate significant inputs that are not observable in the market and thus represents a Level 3 measurement.

We determined the fair value by using the following key assumptions in the MCS and binomial lattice model as of October 26, 2024 and April 27, 2024, respectively:

Balance as of January 25, 2025 $ 30,250

We determined the fair value by using the following key assumptions in the MCS and binomial lattice model as of January 25, 2025 and April 27, 2024, respectively:

2025 April 27,

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The Credit Agreement and the Convertible Note require a fixed charge coverage ratio of greater than 1.1 and include other customary non-financial covenants.

As of October 26, 2024, we were in compliance with our financial covenants under the Credit Agreement and the Convertible Note.

As of January 25, 2025, we were in compliance with our financial covenants under the Credit Agreement and the Convertible Note.

Debt Issuance Costs

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As part of these financings, we capitalized $ 8,195 in debt issuance costs.

During the six months ended

October 28, 2023, due to the Convertible Note being accounted for at fair value, we expensed $ 3,353 of the related debt issuance costs, which is included in the "Other expense and debt issuance costs write-off, net" line item in our condensed consolidated statements of operations.

During the six months ended October 26, 2024 and October 28, 2023, we amortized $ 807 and $ 744 , respectively, of debt issuance costs.

During the nine months ended January 27, 2024, due to the Convertible Note being accounted for at fair value, we expensed $ 3,353 of the related debt issuance costs, which is included in the "Other expense and debt issuance costs write-off, net" line item in our Condensed Consolidated Statements of Operations and represented the full amount of such costs related to the Convertible Note.

During the nine months ended January 25, 2025 and January 27, 2024, we amortized $ 1,211 and $ 1,148 , respectively, of debt issuance costs.

The remaining debt issuance costs of $ 2,080 are being amortized over the remaining two-year term of the Credit Facility.

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Our assessment of whether a loss is reasonably possible or probable is based on our assessment and consultation with legal counsel regarding the ultimate outcome of the matter following all appeals.

See also “Note 13.

Subsequent Events” for a description of litigation filed against the Company after the end of our third quarter of fiscal 2025.

For other unresolved legal proceedings or claims, we do not believe there is a reasonable probability that any material loss would be incurred.

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We do not expect the ultimate liability of these unresolved legal proceedings or claims to have a material effect on our financial position, liquidity, or capital resources.

Changes in our warranty obligation for the six months ended October 26, 2024 consisted of the following:

Changes in our warranty obligation for the nine months ended January 25, 2025 consisted of the following:

Balance as of April 27, 2024 $ 37,928

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Changes in accrued warranty obligations for pre-existing warranties during the period, including expirations ( 1,733 )

Balance as of October 26, 2024 $ 38,388

Balance as of January 25, 2025 $ 36,272

Performance guarantees:

We have entered into standby letters of credit, bank guarantees, and surety bonds with financial institutions relating to the guarantee of our future performance on contracts, primarily construction-type contracts.

As of October 26, 2024, we had outstanding letters of credit and surety bonds in the amount of $ 5,363 and $ 17,567 , respectively.

As of January 25, 2025, we had outstanding letters of credit and surety bonds in the amount of $ 3,471 and $ 20,381 , respectively.

Performance guarantees are issued to certain customers to guarantee the operation and installation of the equipment and our ability to complete a contract.

These performance guarantees have various terms but generally have a term of one year .

We enter into written agreements with our customers, and those agreements often contain indemnification provisions that

require us to make the customer whole if certain acts or omissions by us cause the customer financial loss.

We enter into written agreements with our customers, and those agreements often contain indemnification provisions that require us to make the customer whole if certain acts or omissions by us cause the customer financial loss.

We make efforts to negotiate reasonable caps and limitations on the recovery of such damages.

As of October 26, 2024, we were not aware of any material indemnification claims.

Our effective tax rates for the three and six months ended October 26, 2024, were 15.0 percent and 35.2 percent, respectively.

Income before tax includes the impacts of the Convertible Note fair value adjustment, which is not deductible, in proportion to the period's increase in pre-tax income.

The effective tax rate for the three and six months ended October 28, 2023 were 64.8 percent and 37.6 percent, respectively, and were driven by the increase in the fair value adjustment to expense.

We operate both domestically and internationally and, as of October 26, 2024, the undistributed earnings of our foreign subsidiaries were considered to be reinvested indefinitely.

Additionally, as of October 26, 2024, we had $ 492 of unrecognized tax benefits which would reduce our effective tax rate if recognized.

As of January 25, 2025, we were not aware of any material indemnification claims.

Our effective tax rates for the three and nine months ended January 25, 2025 were 3.7 percent and 109.2 percent, respectively.

Income before tax includes the tax impacts of the Convertible Note fair value adjustment, which is not deductible, in proportion to the period's decrease in pre-tax income.

The effective tax rate for the three and nine months ended January 27, 2024 were 15.0 percent and 31.5 percent, respectively, and were driven by the decrease in the fair value adjustment to expense.

We operate both domestically and internationally and, as of January 25, 2025, the undistributed earnings of our foreign subsidiaries were considered to be reinvested indefinitely.

Additionally, as of January 25, 2025, we had $ 440 of unrecognized tax benefits which would reduce our effective tax rate if recognized.

Fair Value Measurement

The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of October 26, 2024 and April 27, 2024 according to the valuation techniques we used to determine their fair values.

The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of January 25, 2025 and April 27, 2024 according to the valuation techniques we used to determine their fair values.

There have been no transfers of assets or liabilities among the fair value hierarchies presented.

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Level 1 Level 2 Level 3 Total

Balance as of October 26, 2024

Balance as of January 25, 2025

Cash and cash equivalents $ 132,169 $ — $ — $ 132,169

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The fair value of the Convertible Note as of April 27, 2024 was estimated using the binomial lattice model.

The fair value of the Convertible Note as of October 26, 2024 was estimated using the MCS.

Both models allow for the examination of the value to a holder and understanding the investment decision that would occur at each node.

The fair value of the Convertible Note as of January 25, 2025 was estimated using the MCS.

Both models allow for the examination of the value to a holder and an understanding of the investment decision that would occur at each node.

The fair value of the Convertible Note entered into during the first quarter of fiscal 2024 was classified as Level 3 because certain inputs for the valuation were not readily determinable or observable.

For additional information, see our Annual Report on Form 10-K for the fiscal year ended April 27, 2024 for the methods and assumptions used to estimate the fair value of each class of financial instrument.

Financing Agreements" for the methods and assumptions used to estimate the fair value.

Financing Agreements" and the Form 10-K for additional information on the methods and assumptions used to estimate the fair value of each class of financial instrument.

Share Repurchase Program

On June 17, 2016, our Board of Directors approved a stock repurchase program under which we may purchase up to $ 40,000 of the Company's outstanding shares of common stock.

Under this program, we may repurchase shares from time to time in open market transactions and in privately negotiated transactions based on business, market, applicable legal requirements and other considerations.

On June 17, 2016, our Board of Directors (the "Board" or "Board of Directors") approved a share repurchase program (the "Repurchase Program") under which we may purchase up to $ 40,000 of the Company's outstanding shares of common stock.

Under the Repurchase Program, we may repurchase shares from time to time in open market transactions and in privately negotiated transactions based on business, market, applicable legal requirements, and other considerations.

The Repurchase Program does not require the repurchase of a specific number of shares and may be terminated at any time.

In April 2020, the Board had suspended the program.

On December 2, 2021, the Board of Directors of Daktronics voted to reauthorize the stock repurchase program.

During the six months ended October 26, 2024, we repurchased no shares of common stock.

As of October 26, 2024, we had $ 29,355 of remaining capacity under our current share repurchase program.

In April 2020, the Board suspended the Repurchase Program.

On December 2, 2021, the Board voted to reauthorize the Repurchase Program.

During the nine months ended January 25, 2025, we repurchased 536 shares of common stock at a total cost of $ 9,016 .

As of January 25, 2025, we had $ 20,339 of remaining capacity under the Repurchase Program.

Related Party Transactions

The Company's Board of Directors has adopted a written policy and procedures with respect to related party transactions, which the Audit Committee oversees.

The Board of Directors has adopted a written policy and procedures with respect to related party transactions, which the Audit Committee of the Board (the "Audit Committee") oversees (the "Policy").

Under the Policy, a "related party transaction" is generally defined as a transaction, arrangement, or relationship in which the Company was, is, or will be a participant;

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and in which any "related person" had, has, or will have a direct or indirect material interest.

The policy generally defines a "related person" as a Director, executive officer or beneficial owner of more than five percent of any class of our voting securities and any immediate family member of any of the foregoing persons.

The Policy generally defines a "related person" as a director, executive officer, or beneficial owner of

more than five percent of any class of our voting securities and any immediate family member of any of the foregoing persons.

The Audit Committee reviews and, if appropriate, approves related party transactions, including certain transactions which are deemed to be pre-approved under the Policy.

On an annual basis, the Audit Committee reviews any previously approved related party transaction that is ongoing.

As reported in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the section entitled “Liquidity and Capital Resources” of our Annual Report on Form 10-K for the fiscal year ended April 27, 2024, effective on May 11, 2023, the Company entered into the Securities Purchase Agreement with the Holder of the Convertible Note.

Under the Securities Purchase Agreement, the Company sold and issued to the Holder the Convertible Note in exchange for the payment by the Holder to the Company of $ 25,000 .

Related Party Transactions with Alta Fox:

As reported in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the section entitled “Liquidity and Capital Resources” of the Form 10-K, effective May 11, 2023, the Company entered into a Securities Purchase Agreement with the Holder under which the Company sold and issued to the Holder the Convertible Note in exchange for the payment by the Holder to the Company of $ 25,000 (the "Securities Purchase Agreement").

As of May 11, 2023, and based on Amendment No.

2 to the Schedule 13D filed by the Holder and its affiliates named therein on May 15, 2023 with the SEC, the Holder and its affiliates beneficially owned 4,768 shares of common stock of the Company, representing 9.99 percent of the Company’s common stock, causing the Holder to be a “related party” of the Company under the Company’s written policy and procedures and the applicable definitions under the Securities Act of 1933.

The Securities Purchase Agreement, the Convertible Note, the Pledge and Security Agreement dated as of May 11, 2023 by and between the Holder and the Company, and the Registration Rights Agreement were approved in advance of their execution by the Company’s Strategy and Financing Review Committee, the members of which include all members of the Company’s Audit Committee.

Since May 11, 2023, the largest aggregate amount outstanding under the Convertible Note was $ 25,563 , consisting of $ 25,000 of principal and $ 563 of interest.

In the first six months of fiscal 2025, we made interest payments of $ 1,125 under the Convertible Note.

The description of the Securities Purchase Agreement, the Convertible Note, the Pledge and Security Agreement, and the Registration Rights Agreement dated as of May 11, 2023 by and between the Holder and the Company and their respective terms set forth in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the section entitled “Liquidity and Capital Resources” of the Company's Annual Report on Form 10-K for the fiscal year ended April 27, 2024 is hereby incorporated by reference into this Report.

2 to the Schedule 13D filed by Alta Fox on May 15, 2023 with the Securities and Exchange Commission ("SEC"), Alta Fox beneficially owned 4,768 shares of common stock of the Company, representing 9.99 percent of the Company’s common stock, causing the Holder to be a “related party” of the Company under the Policy and the applicable provisions of the Securities Act of 1933, as amended (the "Securities Act"), and the rules promulgated thereunder.

The Securities Purchase Agreement, the Convertible Note, the Pledge and Security Agreement dated as of May 11, 2023 by and between the Holder and the Company (the "Pledge and Security Agreement"), and the Registration Rights Agreement dated as of May 11, 2023 (the "Registration Rights Agreement") were approved in advance of their execution by the Strategy and Financing Review Committee of the Board of Directors, the members of which include all members of the Audit Committee.

In addition, the Company was a party to the Standstill and Voting Agreement dated as of March 19, 2023 with Alta Fox Management, LLC and Connor Haley (the “Standstill Agreement”), who are affiliates of the Holder, which expired in accordance with its terms on September 5, 2024.

Since May 11, 2023, the largest aggregate amount outstanding under the Convertible Note was $ 25,563 , consisting of $ 25,000 of principal and $ 563 of interest.

In the first nine months of fiscal 2025, we made interest payments or settlements of interest through conversions of $ 1,816 under the Convertible Note.

The description of the Securities Purchase Agreement, the Convertible Note, the Pledge and Security Agreement, and the Registration Rights Agreement and their respective terms set forth in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the section entitled “Liquidity and Capital Resources” of the Form 10-K.

The Standstill Agreement filed as Exhibit 10.13 to the Form 10-K are hereby incorporated by reference into this Quarterly Report on Form 10-Q.

As described in Amendment No.

3 (“Amendment No.

3”) to the Schedule 13D filed by the Holder and its affiliates named therein on June 9, 2023 with the SEC, and based on other information provided by the Holder, the following persons may be deemed to be beneficial owners of the shares of the Company’s common stock beneficially owned by the Holder:

3”) to the Schedule 13D filed by Alta Fox on June 9, 2023 with the SEC, and based on other information provided by the Holder, the following persons may be deemed to be beneficial owners of the shares of the Company’s common stock beneficially owned by the Holder:

Alta Fox GenPar, LP, as the general partner of Alta Fox Opportunities Fund, LP;

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Connor Haley, as the sole owner, member and manager of each of Alta Fox Capital Management, LLC and Alta Fox Equity LLC.

On June 7, 2023, the Company received from the Holder a written notice of a decrease in the “Percentage Cap” (as such term is defined in the Convertible Note) from 9.99 percent to 4.99 percent, and on October 21, 2024, the Company received from the Holder a written notice to further decrease the Percentage Cap to 3.00 percent, and on November 25, 2024, the Company received from the Holder a written notice to increase the Percentage Cap to 14.99 percent.

Each decrease became

effective immediately upon the Company’s receipt of such written notice and any increase becomes effective 61 days after receipt of such written notice.

On June 7, 2023, the Company received from the Holder a written notice of a decrease in the Percentage Cap from 9.99 percent to 4.99 percent;

on October 21, 2024, the Company received from the Holder a written notice to further decrease the Percentage Cap to 3.00 percent;

and on November 25, 2024, the Company received from the Holder a written notice to increase the Percentage Cap to 14.99 percent.

Each decrease became effective immediately upon the Company’s receipt of such written notice, and each increase became effective 61 days after receipt of such written notice.

The Percentage Cap generally represents the maximum percentage of shares of the Company’s common stock the Holder may own.

In Amendment No.

3, the Holder and its affiliates identified in Amendment No.

3 owned 2,293 shares of common stock on June 9, 2023, representing 4.99 percent of the common stock of the Company, meaning the Holder and its affiliates the were no longer “related parties” of the Company under the Company’s written policy and procedures and the applicable definitions under the Securities Act of 1933.

However, according to information provided by the Holder to the Company in November 2024, the Holder owns 1,923 shares of the Company’s common stock.

With these shares, along with the 3,962 shares subject to the Convertible Note, the Holder beneficially owns 11.15 percent of the Company’s common stock.

3, Alta Fox owned 2,293 shares of the Company's common stock on June 9, 2023, representing 4.99 percent of the common stock of the Company, meaning Alta Fox was then no longer a “related party” of the Company under the Policy and the applicable provisions of the Securities Act and the rules promulgated thereunder.

However, according to Schedule 13D filed by Alta Fox on December 11, 2024 with the SEC, Alta Fox owns 1,965 shares of the Company’s common stock.

With these shares, along with the 4,009 shares subject to the Convertible Note and related interest accrual, Alta Fox beneficially owns 11.79 percent of the Company’s common stock.

This percentage assumes all of the shares subject to the Convertible Note are outstanding and thus are added to the denominator in determining the percentage.

Thus, the Holder is again subject to the Company’s policy and procedures with respect to related party transactions administered by the Audit Committee.

During the first six months of fiscal 2024, the Company and the South Dakota Board of Regents entered into a contract for a video display system for Dakota State University.

The amount of the contract was $ 150 .

A member of the Company's Board of Directors is the President of Dakota State University.

Investments in Affiliates" for further details of related party transactions with our investments in the Affiliate Notes issued by our affiliates.

Thus, Alta Fox is again subject to the Policy and the applicable provisions of the Securities Act and the rules promulgated thereunder.

As stated in “Note 7.

Financing Agreements,” the Company effected the December Conversion and January Conversion, resulting in settlement of $ 14,000 of the principal balance and accrued interest of the Convertible Note as of January 25, 2025.

Other Related Party Transactions:

During the first nine months of fiscal 2024, the Company and the South Dakota Board of Regents entered into contracts for a video display systems for Dakota State University.

The amount of the contracts was $ 1,178 .

A member of the Board of Directors is the President of Dakota State University.

Investments in Affiliates" for further details of related party transactions with our investments in the Affiliate Notes issued by our affiliates and "Note 13.

Subsequent Events" for a discussion of other related party transactions with Alta Fox.

Subsequent Events

On November 11, 2024, the Company issued notice to the Holder to force the conversion of $ 7.0 million of the principal balance on December 3, 2024 of the Convertible Note at the conversion price of $ 6.31 per share into 1,109 common shares.

Convertible Note.

On January 27, 2025, the first trading day after the effective date of the Percentage Cap increase, the Company issued and delivered 2,218 common shares owed under the December Conversion and the January Conversion to the Holder.

Alta Fox certified that the delivery of shares would not cause its ownership to exceed the allowable beneficial ownership of 14.99 percent.

On January 10, 2025, the Company issued notice to the Holder that the Company would force the conversion of the third tranche of $ 7,000 of the principal balance and accrued interest of the Convertible Note on February 3, 2025 at the conversion price of $ 6.31 per share into 1,109 common shares.

Subsequent to the end of the quarter, on February 3, 2025, the 1,109 common shares were issued to the Holder.

On February 10, 2025, the Company issued notice to the Holder that the Company would force the conversion of the fourth and final tranche of $ 4,294 on March 4, 2025, representing the remaining principal and interest balance of the Convertible Note.

We will issue the shares upon the Holder’s indicating the ability to take delivery of the shares under the maximum ownership provisions of the Convertible Note.

In addition, on November 25, 2024, the Company received from the Holder a written notice to increase the Percentage Cap to 14.99 percent.

This increase from the in-effect 3.00 percent maximum ownership takes effect 61 days after receipt of notice.

See "Note 12.

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Financing Agreements" for further information of the Convertible Note.

Effective on November 19, 2024, the Board approved a Second Amendment to Rights Agreement, dated as of November 19, 2024 (the "Second Amendment ").

The Second Amendment amends the Rights Agreements dated as of November 16, 2018 (the "Original Rights Agreement") between the Company and the Rights Agent, as amended by the First Amendment to Rights Agreement, dated as of November 19, 2021 (the "First Amendment," and collectively with the Original Right Agreement and the Second Amendment, the "Rights Agreement").

The Second Amendment extends the “Final Expiration Date” (as that term is defined in the Rights Agreement) of the rights (the “Rights”) from the close of business on November 19, 2024 to the close of business on November 19, 2025.

The Second Amendment also changes the “Exercise Price” (as that term is defined in the Rights Agreement) to $ 40.00 per Right.The Second Amendment provides for the addition of the defined terms “Triggering Percentage,” which is defined to mean 15.00 percent, and “13G Triggering Percentage,” which is defined to mean 20.00 percent.

The terms of the Rights are more fully described in Item 1.01 of the Company's Current Report 8-K filed with the Securities and Exchange Commission on November 19, 2024, including the First Amendment filed as Exhibit 4.3 to such Current Report on Form 8-K.

Cooperation Agreement.

On January 21, 2025, Daktronics filed a preliminary proxy statement with the SEC relating to a special meeting of shareholders (the "Special Meeting") to consider and vote on a proposal to change its legal domicile from South Dakota to Delaware (the "Reincorporation Proposal").

On January 31, 2025, the Holder filed a preliminary proxy statement with the SEC disclosing its intention to solicit proxies against the Reincorporation Proposal.

On February 6, 2025, the Holder commenced an action in the United States District Court for the District of South Dakota, Southern Division (the “Court”).

Named as defendants in the complaint filed in the action (the "Complaint") are the Company and Reece Kurtenbach.

The Complaint asserts, among other things, that the defendants breached fiduciary duties in connection with the Reincorporation Proposal and Holder's own claimed intention to call a special meeting of shareholders.

The Complaint seeks to preliminarily and permanently enjoin the Defendants from setting a record date and holding a special meeting to vote on the Reincorporation Proposal and from soliciting votes and proxies in connection with that meeting until after the Holder can call for and conduct a special meeting to consider and vote on de-classifying the Board of Directors and other governance changes, and for certain other declaratory and monetary relief.

On February 25, 2025, the South Dakota District Court issued a memorandum to counsel indicating its intention to deny Alta Fox's preliminary injunction motion in a forthcoming written opinion and order.

On March 3, 2025, the Company entered into a Cooperation Agreement with Alta Fox (the "Cooperation Agreement").

In connection with the Cooperation Agreement, among other things, Alta Fox agreed to dismiss with prejudice all claims against the Company and its directors and/or officers, including its pending litigation against the Company with the Court.

Pursuant to the Cooperation Agreement, Alta Fox also agreed to vote all shares of the Company's common stock that it beneficially owns in favor of the Reincorporation Proposal at the Special Meeting.

For further information on the Cooperation Agreement, please refer to Item 1.01 of the Current Report on Form 8-K filed with the SEC on March 3, 2025, which is incorporated herein by reference.

Expiration of Rights Agreement:

Pursuant to the Cooperation Agreement, the Company agreed to amend that certain Rights Agreement, dated as of November 16, 2018, by and between the Company and Equiniti Trust Company, LLC (the “Rights Agent”), as amended on November 19, 2021 and November 19, 2024 (as amended, the “Rights Agreement”) to accelerate its expiration.

On March 3, 2025, the Company and the Rights Agent entered into the Third Amendment to Rights Agreement (the “Third Amendment”).

The Third Amendment amends the Rights Agreement by accelerating the Final Expiration Date (as defined in the Rights Agreement) of the Company’s Series A Junior Participating Preferred Stock purchase rights (the “Rights”) from the Close of Business (as defined in the Rights Agreement) on November 19, 2025 to the Close of Business on March 3, 2025.

As a result of the Third Amendment, effective as of the Close of Business on

March 3, 2025, all of the Rights, which were previously distributed to holders of the Company’s common stock pursuant to the Rights Agreement, have expired and cease to be outstanding.

For further information on the Third Amendment and the expiration of the Rights Agreement, please refer to Items 1.01 and 3.03 of the Current Report on Form 8-K filed with the SEC on March 3, 2025, which is incorporated herein by reference.

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-Q

Item 1. Financial Statements