What changed in this filing

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Item 1A. Risk Factors

2025-06-25 compared with 2024-06-26 · 148 added, 122 removed, 309 unchanged (47% of the section changed)

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Macroeconomic Risks

Geopolitical issues, conflicts, governmental actions, including the imposition of tariffs, changes in laws, regulations, and policies, and other global events could adversely affect our results of operations and financial condition.

Such factors and conditions can create trade restrictions, increase tariff costs, increase prices for raw materials and components used in our products, increase the cost of sales, decrease demand for our products, increase cost of compliance, cause material business interruptions, or have other implications on our business operations.

Additionally, such issues, actions, conflicts, or sanctions may significantly devalue various global currencies and have a negative impact on economies in geographies in which we do business.

These impacts could reduce profitability and could have a material adverse effect on our results of operations and financial condition if they escalate into geographies in which we do business, manufacture our products, or obtain raw materials and components for production.

During fiscal 2025, our business, operations, and financial results have been impacted by the changing United States import tariff laws and the resulting reactions of other countries.

Our complex manufacturing processes in the United States, which generate approximately 80 percent of our manufactured output, rely on direct components and inputs from over 40 countries.

China has been the greatest source for semiconductor type components, including LEDs, printed circuit boards, and other integrated circuits.

United States tariff rates on these imports can range from 10 percent to much higher levels, with proposed or applied rates as high as 170 percent for certain items of Chinese origin.

In addition to higher costs due directly to tariffs, some of our suppliers may be subject to tariffs in their supply chain that they will pass on to us, or alternative suppliers are increasing and charging higher prices or may not have the capacity and reliability needed, which also could result in higher prices paid by us.

In addition, some countries, like Canada, are imposing retaliatory tariffs on United States goods, which increases our cost to export United States-made displays into Canada.

Although we can mitigate some of the additional tariff costs through pricing to customers or by shifting manufacturing location, changing suppliers, or redesigning for available lower cost and/or lower tariffed components, we may not be able to avoid additional costs, increase prices to customers to completely compensate for the tariffs, or timely mitigate the cost impacts of the changing global tariff structure.

These rates and market dynamics have been changing dynamically and frequently which makes future costs and impacts for tariff related factors indeterminable.

In addition, our competitors have near-shored production or import into the United States under favorable exemptions not available to us which can create a competitive imbalance.

Impacts on our business include, but are not limited to:

• increases in raw material input costs for specific tariffs or changes in the availability of components;

• our inability to plan effective and cost efficient supply chain structures for the changing tariff landscape, causing increases in costs to operate our business and thus lower profitability;

• hesitancies or delays by customers in placing orders due to the uncertainty of tariff rates and their impact on the economy;

• charging higher prices than our competitors, creating competitive disadvantages and loss of business

Our business is sensitive to global economic conditions, including recessions, inflation, and interest rate fluctuations.

Weakened global economic or recessionary conditions may adversely affect our industry, business and results of operations.

Weakened global economic or recessionary conditions may materially and adversely affect our industry, business and results of operations.

Our overall performance depends in part on worldwide economic conditions.

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bankruptcies;

and overall uncertainty with respect to the economy.

These conditions affect consumer and entertainment spending and could adversely affect our

customers’ ability or willingness to purchase our products, delay prospective customers’ purchasing decisions, reduce the value of their contracts, or affect attrition rates, all of which could adversely affect our operating results.

These demand fluctuations and various factors may reduce our ability to effectively utilize our capacity and impact our results of operations.

and overall economic uncertainty.

These conditions affect consumer and entertainment spending and could materially and adversely affect our customers’ ability or willingness to purchase our products, delay prospective customers’ purchasing decisions, reduce the value of their contracts, or affect attrition rates, all of which could adversely affect our operating results.

In addition, these demand fluctuations may reduce our ability to effectively utilize our capacity and negatively impact our results of operations.

We rely on global supply chains, and inflationary pressures can increase our input costs faster than our ability to raise prices.

These could eliminate our ability to sell our products or receive parts and components through our global supply chains.

These could limit or eliminate our ability to sell our products or receive parts and components through our global supply chains and have a material adverse effect on our results of operations.

The rate of interest we pay on our asset-based lending facility with JPMorgan Chase Bank, N.A.

is correlated to the Standard Overnight Fund Rate (“SOFR”), which is determined by governmental policy decisions.

Increases in SOFR will increase the rate of any extended borrowing on this facility.

Geopolitical issues, conflicts, governmental actions and other global events could adversely affect our results of operations and financial condition.

Our business is subject to global political issues and conflicts and governmental actions.

Such factors can create trade restrictions, increase tariff costs, increase prices for raw materials and components used in our products, increase the cost of sales, decrease demand for our products, or have other implications on our business operations.

For example, during calendar 2024, national elections are occurring in countries accounting for 49 percent of the people of the world, including the United States, which could cause changing governmental actions and policies;

the Israeli-Palestinian conflict;

the continuing conflict arising from the invasion of Ukraine by Russia;

or tensions among Taiwan, China, the United States or other countries, could adversely impact macroeconomic conditions, give rise to regional instability, and result in heightened economic tariffs, sanctions and import-export restrictions from the United States and the international community in a manner that adversely affects our Company, including to the extent that any such actions cause material business interruptions or restrict our ability in these regions to conduct business with certain suppliers or vendors.

Additionally, such conflict or sanctions may significantly devalue various global currencies and have a negative impact on economies in geographies in which we do business.

We face risks related to actual or threatened health epidemics and other outbreaks, which have had and could have a material adverse effect on our operations, liquidity, financial conditions, and financial results.

A serious global pandemic can adversely impact, shock and weaken the global economy.

These impacts can amplify other risk factors and could have a material impact on our operations, liquidity, financial conditions, and financial results.

Our business, operations, and financial results were impacted by the COVID-19 pandemic.

Impacts on our business include, but are not limited to:

• Inability to meet our customers' demand due to disruptions in our manufacturing caused by delays and disruptions in obtaining certain raw material and other manufacturing components and because of restrictions affecting our ability to conduct work at sites during shutdowns;

• Rapid increases in raw material, components, and personnel related costs and expenses;

• Rapid declines and increases in demand for our products.

Unexpected events, including natural disasters, weather events, war, terrorist acts, and pandemics, may increase our cost of doing business or disrupt our operations.

Increases in SOFR will increase the rate of any borrowing on this facility.

Unexpected events, including natural disasters, weather events, wars, terrorist acts, and pandemics, may increase our cost of doing business or disrupt our operations.

We operate manufacturing operations in three locations in the United States - Brookings, South Dakota, Sioux Falls, South Dakota, and Redwood Falls, Minnesota, and we have production facilities in Ireland and China.

Unexpected events could result in damage to, and a complete or partial closure of, one or more of our manufacturing facilities, which could make it difficult to supply our customers with product and provide our employees with work, thereby adversely affecting our business, operating results, or financial condition.

The occurrence of one or more unexpected events in the United States or in other countries in which we operate may disrupt our operations and the operations of our customers and suppliers.

Such events could create additional uncertainties, forcing customers to reduce, delay, or cancel already planned projects or cause our suppliers not to perform, resulting in parts and component shortages.

Additionally, such events could disrupt our data centers or cloud-based infrastructure, potentially rendering critical computing processes and systems temporarily unavailable, which may impair our ability to operate effectively.

The occurrence of one or more unexpected events in the United States or in other countries may impact the operations of our suppliers and customers, may disrupt our operations and could create additional uncertainties, forcing customers to reduce, delay, or cancel already planned projects or cause our suppliers not to perform, resulting in parts and component shortages.

Risks Related to Our Business and Industry

We depend on a single-source or a limited number of suppliers for our raw materials and components from countries around the world.

The loss, an interruption, or a material change in our business relationships with our suppliers or in global supply chain conditions has had and could continue to cause a disruption in our supply chains and a substantial increase in the costs of such raw materials and components.

The loss, an interruption, or a material change in our business relationships with our suppliers or in global supply chain conditions can cause a disruption in our supply chains and a substantial increase in the costs of such raw materials and components.

Geopolitical tensions can impact our ability to obtain key materials and components.

Such changes have and could continue to result in extended lead times or supply changes, which could disrupt or delay our scheduled product deliveries to our end user customers and may result in the loss of sales and end user customers and cause harm to our sales, financial condition, and results of operations.

The performance and financial condition of a supplier may cause us to alter our business terms, cease doing business with a particular supplier, or change our sourcing practices.

Our suppliers are subject to the fluctuations in global economic cycles and conditions and other business risk factors which may impact their ability to operate their businesses.

Our supply chain includes materials that are sourced or packaged directly or indirectly through suppliers in Taiwan or China.

Geopolitical tensions and shipping disruptions can impact our suppliers ability to deliver components and raw materials.

An interruption from our suppliers of raw materials or components could affect our ability to manufacture our products until a new source of supply is located and, therefore, could have a material adverse effect on our business, financial condition or results of operations.

Such changes can result in extended lead times or supply changes, which could disrupt or delay our scheduled product deliveries to our end user customers and may result in the loss of sales and end user customers and cause harm to our sales, financial condition, and results of operations.

The performance and financial condition of a supplier may cause us to alter our business terms with that supplier, cease doing business with that particular supplier, or change our sourcing practices.

Our suppliers are subject to fluctuations in global economic cycles and conditions, governmental regulations, and other business risk factors which may impact their ability to operate their businesses.

Our supply chain includes semiconductor-type components including LEDs, printed circuit boards, and other integrated circuits, which are sourced or packaged directly or indirectly primarily through suppliers in Taiwan or China.

Imports from China to the United States have been subject to increased import/export controls and tariffs.

Geopolitical tensions, governmental actions, and shipping disruptions can impact our suppliers’ ability to deliver components and raw materials.

An interruption from our suppliers of their supply of raw materials or components could affect our ability to manufacture our products until a new source of supply is located and, therefore, could have a material adverse effect on our business, financial condition, or results of operations.

Our suppliers may need to allocate available supply, and we may not be able to obtain parts needed for production.

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We operate in highly competitive markets and face significant competition and pricing pressures.

If we are unable to keep up with the rapidly changing product developments and new technologies or if we cannot compete effectively, we could lose market share and orders, which would negatively impact our results of operations.

The electronic display industry is characterized by ongoing product improvement, innovations and development.

If we are not able to continue to enhance existing products or are unable to keep up with the rapidly changing product developments and new technologies, or market and compete effectively in our new or enhanced products that respond to customer needs and preferences, we could lose market share and orders, which would negatively impact our results of operations.

The electronic display industry is characterized by ongoing product improvement, innovations, and development and low-cost competition.

We compete against products produced in foreign countries and the United States.

Our competitors may develop lower-cost or lower-featured products, may be willing to charge lower prices to increase their market share, or market new and unique product, service and controller offerings.

Our competitors may develop lower-cost or lower-featured products, may be willing to charge lower prices to increase their market share, bring new products to the market faster, or market new and unique product, service, and controller offerings.

Some competitors have more capital and other resources, which may allow them to take advantage of acquisition opportunities or adapt more quickly to changes in customer requirements.

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In addition, our products compete with other forms of advertising, such as television, print media, digital and mobile, and fixed display signs.

To remain competitive, we must anticipate and respond quickly to provide products and services that meet our customers’ needs, enhance our existing products, introduce new products and features, and continue to price our products competitively.

To remain competitive, we must anticipate and respond quickly to provide innovative, customer-valued products and services that meet our customers’ needs, enhance our existing products, introduce new products and features, and continue to price our products competitive ly.

Relevant innovation is an important part of our growth strategy.

Product development involves complex and resource-intensive processes, including research, planning, design, engineering, testing, and marketing.

We may not always be able to develop or introduce new or improved products in a timely manner, or at all.

We may be unable to protect our intellectual property rights effectively, or we may infringe upon the intellectual property rights of others, either of which may have a material adverse effect on our operating results and financial condition.

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In particular, the laws of certain countries in which our products are sold do not protect our products and intellectual property rights to the same extent as the laws of the United States.

If litigation is necessary in the future to enforce our intellectual

property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others, such litigation could result in substantial costs and diversion of resources even if we ultimately prevail.

In addition, intellectual property rights of others also have an impact on our ability to offer some of our products and services for specific uses or at competitive prices.

If litigation is necessary in the future to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others, such litigation could result in substantial costs and diversion of resources even if we ultimately prevail.

In addition, intellectual property rights of others have an impact on our ability to offer some of our products and services for specific uses or at competitive prices.

Competitors’ patents or other intellectual property may limit our ability to offer products or services to our customers.

Any infringement or claimed infringement by us of the intellectual property rights of others could result in litigation and adversely affect our ability to continue to provide, or could increase the cost of providing, products and services, even if we are successful in defending against any such claim.

If we fail to timely and effectively obtain shipments of raw materials and components from our suppliers or to send shipments of our manufactured product to our customers, our business and operating results could be adversely affected.

We cannot control all of the various factors that might affect our suppliers’ timely and effective delivery of raw materials and components to our manufacturing facilities or the availability of freight capacity for us to deliver products to our customers.

In addition to increased costs, these factors could delay delivery of products, which may result in the assessment of liquidated damages or other contractual damages that could negatively impact our profits.

Our utilization of a complex supply chain for raw material and component imports and the global distribution of our products makes us vulnerable to many risks, including, among other things, shortages or delays because of work restrictions for various reasons like pandemic restrictions;

supply chain implications due to war or other geopolitical impacts on supply chains;

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Cost inflation in, and shortages of, raw materials, components, and related transportation and tariff costs can have a significant impact on our price competitiveness and/or ability to produce our products, which have caused and could continue to cause harm to our sales, financial condition, and results of operations.

Cost inflation and shortages of any raw materials and components used to manufacture our products have and may continue to occur due to various factors, such as worldwide demand, natural disasters, logistic disruptions, war and other conflicts, and trade regulations.

Cost inflation and shortages of the raw materials and components used to manufacture our products have and may continue to occur due to various factors, such as worldwide demand, natural disasters, logistic disruptions, war and other conflicts, and trade regulations.

Electronic and other components and materials used in our products are sometimes in short supply, which may impact our ability to meet customer demand.

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We monitor for these types of situations and evaluate ways to minimize these impacts through vendor negotiations, alternative sources, and potential price adjustments.

We may fail to continue to attract, develop and retain personnel throughout our business areas, which could negatively impact our operating results.

We depend on qualified employees, including experienced and skilled technical personnel, to design, market, fulfill, and serve our customers.

Qualified employees can be in high demand and limited in availability.

Our future success and operating results will also depend upon our ability to attract, train, motivate and retain qualified personnel to maintain and grow capacity.

Although we intend to continue to provide competitive compensation packages to attract and retain qualified personnel, market conditions for pay levels and availability may negatively impact our operations.

Our global manufacturing and sales operations expose us to risks that could materially and adversely impact our business.

Expanding our international footprint remains a key part of our growth strategy.

However, operating across multiple countries exposes us to a variety of risks that may not be present in our domestic operations.

These risks include complex and evolving regulatory environments, political and economic instability, exposure to foreign currency fluctuations, differing labor laws and employment practices, and challenges related to infrastructure, logistics, and supply chain reliability.

We may also face increased costs or delays due to tariffs, trade restrictions, customs regulations, or changes in international trade agreements and policies.

In addition, international operations often require significant upfront investment in market development, personnel, and facilities, which may not yield immediate returns.

Legal systems, intellectual property protections, and enforcement mechanisms may be less predictable or less robust in some jurisdictions, increasing our exposure to potential disputes or infringement.

These and other factors may impact our ability to operate efficiently and profitably in international markets.

While we take steps to manage these risks, there can be no assurance that our efforts will be successful or that international operations will not have a material adverse effect on our business.

We depend on third parties to complete some of our contracts.

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If we are unable to hire qualified subcontractors, find qualified manufacturers for on-site elements, find qualified contract manufacturers, or purchase specialty non-display system elements, our ability to successfully complete a project could be impaired.

If we are not able to locate qualified third party subcontractors or manufacturers, the amount we are required to pay may exceed what we have estimated, and we may suffer losses on these contracts.

If we are not able to locate qualified third party subcontractors or manufacturers, the amount we are required to pay may exceed what we have estimated, and we may suffer reduced margins or losses on these contracts.

If the subcontractor or manufacturer fails to perform, we may be required to source these services to other third parties on a delayed basis or on less favorable terms, which could impact contract profitability.

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The performance and financial condition of the third parties may cause us to alter our business terms or to cease doing business with a particular third party or change our sourcing practices.

We may not be able to utilize our capacity efficiently or accurately plan our capacity requirements, which may negatively affect our business and operating results.

We may not be able to utilize our capacity efficiently or accurately plan our capacity requirements, which may materially and adversely affect our business and operating results.

We increase and decrease our production and services capacity and the overhead supporting order fulfillment based on anticipated market demand.

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• changes in the demand for and mix of products that our customers buy;

• tariff landscape and import/export controls;

• our ability to scale down or to add and train our manufacturing and services staff in advance of demand changes;

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Adjusting supply chain material planning and production and services capacity to meet this varied demand can increase costs.

Large contracts or customer awards include projects for college and professional sports facilities

markets, the OOH niche, the transportation market, and the large spectacular niche.

Large contracts or customer awards include projects for college and professional sports facilities markets, the OOH niche, the transportation market, and the large spectacular niche.

These projects can have short delivery time frames.

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However, because some of our exposure to credit losses is outside of our control, unanticipated events resulting in credit losses could have a material adverse impact on our operating results.

Our actual results could differ from the estimates and assumptions we make to prepare our financial statements, which could have a material impact on our financial condition and results of operations.

As of April 26, 2025, a provision for expected credit losses of $15.5 million was recorded as management’s analysis concluded the loans related to an affiliate, in which the Company has an investment, are anticipated to be uncollectible.

Our actual results could differ from the estimates and assumptions we make to prepare our financial statements, which could have a material adverse impact on our financial condition and results of operations.

In connection with the preparation of our financial statements, including the Consolidated Financial Statements included in this Form 10-K, our management is required under GAAP to make estimates and assumptions based on historical experience and other factors.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K.

These estimates and assumptions affect the timing and amount of net sales, costs, and profits or losses in applying the principles to contracts with customers under over time method of recording revenue using the cost-to-cost input method;

These estimates and assumptions affect the timing and amount of net sales, costs, and profits or losses in applying the principles to contracts with customers under the over time method of recording revenue using the cost-to-cost input method;

credit losses for accounts receivables and contract assets;

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estimated amounts for warranty and product maintenance agreement costs;

the calculation of the fair value of our notes payable;

the calculation and valuation of our investments and deferred tax assets;

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and calculating share-based compensation expense.

Although we believe these estimates and

assumptions are reasonable under the circumstances, they are subject to significant uncertainties, some of which are beyond our control.

Although we believe these estimates and assumptions are reasonable under the circumstances, they are subject to significant uncertainties, some of which are beyond our control.

If management’s estimates and assumptions change or are not correct, our financial condition or results of operations could be adversely affected.

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Remediation of a claim may take time and could result in lost or deferred revenue, lead to costly warranty expenses, and have a material adverse impact on our financial condition and operating results.

The terms and conditions of our credit facilities and convertible debt impose restrictions on our operations, and if we default on our credit facilities, it could have a material adverse effect on our results of operations and financial condition and make us vulnerable to adverse economic or industry conditions and cause liquidity issues.

The terms and conditions of our credit facilities impose restrictions on our operations, and if we default on our credit facilities, it could have a material adverse effect on our results of operations and financial condition, make us vulnerable to adverse economic or industry conditions, and cause liquidity issues.

The terms and conditions of our credit facilities impose restrictions limiting our ability to incur debt, contingent liabilities, lease obligations or liens;

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to dispose of substantially all our assets;

to acquire or purchase a business or its assets;

acquire or purchase a business or its assets;

to pay dividends;

to repurchase our shares;

or to sell our assets, among other restrictions.

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Our financial results are impacted negatively or positively from our proportionate share of our affiliates’ financial performance.

Any reduction or impairment of the value of an investment and related acquired assets, goodwill, or investments in affiliates would result in charges against earnings, which would adversely affect our results of operations in future periods.

We recorded an impairment to the value of these investments of $6.4 million and $4.5 million during fiscal year 2024 and 2023, respectively.

Any reduction or impairment of the value of an investment and related acquired assets, goodwill, or investments in affiliates would result in charge

s against earnings, which would adversely affect our results of operations in future periods.

We recorded an impairment to the value of these investments of $0 million and $6.4 million during fiscal years 2025 and 2024, respectively.

As of April 26, 2025, a provision for losses of $15.5 million was recorded, as management’s analysis concluded an affiliate note is anticipated to be uncollectible.

As of April 27, 2024, no provision for losses were recorded because management’s analysis concluded at that time that all the advanced loans to our affiliates under convertible and promissory notes (collectively, "Affiliate Notes") were collectable or realizable based on the rights of these instruments and related valuation of each affiliate.

If goodwill or other intangible assets in connection with our acquisitions become impaired, we could take significant non-cash charges against earnings.

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During fiscal year 2023, we concluded that the carrying value of the Live Events and International reporting units exceeded their respective fair values and consequently recorded a $4.6 million impairment charge.

We may fail to continue to attract, develop and retain key management personnel, which could negatively impact our operating results.

We may fail to continue to attract, develop, and retain key personnel, including management personnel, which could negatively impact our operating results.

We depend on qualified employees, including experienced and skilled technical personnel, to design, market, fulfill, and serve our customers.

Qualified employees can be in high demand and limited in availability.

We depend on the performance of our senior executives and key employees, including experienced and skilled technical personnel.

The loss of any of our senior executives could negatively impact our operating results and ability to execute our business strategy.

Our future success will also depend upon our ability to attract, train, motivate and retain qualified personnel.

Our future success will also depend upon our ability to attract, train, motivate, and retain qualified personnel to maintain and grow capacity.

We are currently recruiting for a new Chief Executive Officer and Chief Financial Officer, and the outcome of these searches will play an important role in shaping our future leadership and strategic direction.

Although we intend to continue to provide competitive compensation packages to attract and retain key personnel, some of our competitors for these employees have greater resources and more experience, making it difficult for us to compete successfully for key personnel.

If we cannot attract and retain sufficiently qualified technical employees for our research and development and manufacturing operations, we may be unable to achieve the synergies expected from mergers and acquisitions or to develop and commercialize new products or new applications for existing products.

possible shortages of key personnel, including engineers, could require us to pay more to hire and retain key personnel, thereby increasing our costs.

Furthermore, possible shortages of key personnel, including engineers, could require us to pay more to hire and retain key personnel, thereby increasing our costs and negatively affecting our financial condition and results of operations.

Increases in the cost of employee benefits could impact our financial results and cash flows.

Our expenses relating to employee health benefits are significant.

Our expenses relating to employee benefits, particularly health benefits, are significant.

Unfavorable changes in the cost of and the unpredictability of claims under such benefits, including the current inflationary pressures on wages and benefits, could negatively impact our financial results and cash flows.

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Legislative and private sector initiatives regarding healthcare reform could result in significant changes to the United States healthcare system.

Due to the breadth and complexity of the healthcare reform legislation and the uncertainty surrounding further reform proposals, we are not able to fully determine the impact that healthcare reform will have in the future on company sponsored medical plans.

Due to the breadth and complexity of the

healthcare reform legislation and the uncertainty surrounding further reform proposals, we are not able to fully determine the impact that any healthcare reform will have in the future on company sponsored medical plans.

The outcome of pending and future claims, investigations, or litigation can have a material adverse impact on our business, financial condition, and results of operations.

We are involved from time to time in a variety of litigation, investigations, inquires or similar matters arising in our business.

We are involved from time to time in a variety of litigation, investigations, inquiries or similar matters arising in our business.

Litigation, investigations, and regulatory proceedings are subject to inherent uncertainties, and unfavorable rulings and outcomes can and do occur.

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Information Systems, Legal, and Regulatory Risks

Our business depends on numerous complex information systems.

Any failure to maintain these systems, a network disruption, or breaches in data security could cause a material adverse effect on our business.

We rely heavily on complex information systems for the successful operation of our business, for the support of our offerings, and for the collection and retention of business data.

Our business depends on numerous complex information systems and technologies.

Any failure to maintain these systems, a network disruption, a misuse of technologies, or breaches in data security could result in business disruption or the loss of confidential or proprietary information and have a material adverse effect on our business.

We rely heavily on complex information systems and technologies for the successful operation of our business, for the support of our offerings, and for the collection and retention of business data.

Any information system failure of, or breach in security, could adversely affect our operations, at least until our data can be restored and/or the breaches remediated.

Despite the security measures we have in place, our facilities and systems and those of our third-party service providers may be vulnerable to cybersecurity breaches, acts of vandalism, computer viruses, misplaced or lost data, ransomware attacks, programming issues, and/or human errors or other similar events.

Our use and adoption of generative Artificial Intelligence (“AI”) in our business process and decision making are in the early stages and pose business risk.

The use of AI technologies can create the opportunity for potential loss or inadvertent dissemination of data and inaccurate or flawed outputs.

Any misappropriation, loss, or other unauthorized disclosure of confidential or personally identifiable information, whether by us or by our third-party service providers, could adversely affect our business and operations.

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difficulties in staffing and managing global operations;

changes in foreign and domestic governmental regulations or requirements, treaty and trade relationships;

the imposition of government orders that differ among jurisdictions, including mandatory closures, work-from-home and lock-down orders and social distancing protocols;

changes in foreign and domestic governmental regulations or requirements;

or treaty and trade relationships;

the imposition of government orders that differ among jurisdictions, including mandatory closures, work-from-home, lock-down orders, and social distancing protocols;

changes in monetary and fiscal policies;

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and burdensome taxes and tariffs and other trade regulations or barriers.

Other exposures and uncertainties that exist include changing social conditions and attitudes, terrorism, or political hostilities and war.

Other difficulties of global operations include staffing

and managing our various locations, including logistical and communication challenges.

The likelihood of such occurrences and their overall effect on us vary greatly from country to country and are not predictable.

Other exposures and uncertainties that exist include changing social conditions and attitudes, terrorism, and political hostilities and war.

In addition, difficulties of global operations include staffing and managing our various locations, including logistical and communication challenges.

The likelihood of such occurrences and their overall effect on us vary greatly from country to country, are not under our control, and are not predictable.

Our business involves the use of hazardous materials, and we must comply with environmental, health, and safety laws and regulations, which can be expensive and restrict how we do business.

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debarment from government contracts and revocations or restrictions of licenses;

as well as criminal fines and imprisonment, and could harm our reputation, create negative shareholder sentiment and affect our share value.

as well as criminal fines and imprisonment, and could harm our reputation, create negative stockholder sentiment, and affect our share value.

We have established policies and procedures with the intention of providing reasonable assurance of compliance with these laws and regulations and trained our employees to comply with these laws and regulations.

However, our employees, contractors, agents, and licensees involved in our international operations may take actions in violations of such policies.

If our employees, agents, distributors, suppliers and other third parties with whom we do business violate anti-bribery, anti-corruption or similar laws and regulations, we may incur severe fines, penalties and reputational damage even if we were

not aware of such violation.

If our employees, agents, distributors, suppliers, and other third parties with whom we do business violate anti-bribery, anti-corruption, or similar laws and regulations, we may incur severe fines, penalties, and reputational damage even if we were not aware of such violation.

Additionally, there can be no assurance that our policies and procedures will effectively prevent us from violating these regulations in every transaction in which we may engage or provide a defense to any alleged violation.

In particular, we may be held liable for the actions that our partners take inside or outside of the United States even though we are not aware of such actions or our partners may not be subject to these laws.

In particular, we may be held liable for the actions that our partners take inside or outside of the United

States even though we are not aware of such actions or our partners may not be subject to these laws.

Such a violation, even if our policies prohibit it, could have an adverse effect on our reputation, business, financial condition, and results of operations.

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Regulation in the areas of privacy, data protection, and information security could increase our costs and affect or limit our business opportunities and how we collect or use personal information.

As privacy, data protection and information security laws, including data localization laws, are interpreted and applied, compliance costs may increase, particularly in the context of ensuring that adequate data protection and data transfer mechanisms are in place.

As privacy, data protection, and information security laws, including data localization laws, are interpreted and applied, our compliance costs may increase, particularly in the context of ensuring that adequate data protection and data transfer mechanisms are in place.

In recent years, there have been increasing regulatory enforcement and litigation activities in the areas of privacy, data protection, and information security in the United States and in various countries in which we operate.

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Our failure to comply with privacy, data protection, and information security laws could result in potentially significant regulatory and/or governmental investigations and/or actions, litigation, fines, sanctions, ongoing regulatory monitoring, customer attrition, customer indemnity claims, decreases in the use or acceptance of our products and services, and damage to our reputation and our brand.

Environmental, society, and governance ("ESG") regulations and disclosures may impact our reputation, expose us to additional costs, or have other impacts which could adversely affect our business, financial condition, or results of operations.

Environmental, social, and governance (“ESG”) regulations and disclosures may impact our reputation, expose us to additional costs, or have other impacts which could adversely affect our business, financial condition, or results of operations.

There has been an increased focus from regulators, investors, employees, consumers, and other stakeholders relating to ESG practices.

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Simultaneously, there are efforts by some stakeholders to reduce companies’ efforts on certain ESG-related matters.

Both advocates and opponents to certain ESG matters are increasingly resorting to a range of activism forms, including media campaigns and litigation, to advance their perspectives.

Both advocates of and opponents to certain ESG matters are increasingly resorting to a range of activism forms, including media campaigns and litigation, to advance their perspectives.

In addition, this emphasis on ESG matters has resulted and may result in the adoption of new laws and regulations, including new reporting requirements.

Our failure to respond to regulatory requirements or to advance our initiatives could adversely impact our reputation, as well as the demand for our products.

Our failure to respond to any such regulatory requirements or to advance our initiatives could adversely impact our reputation, as well as the demand for our products.

In addition, achieving these initiatives may result in increased costs, which could have a material adverse impact on our business, financial condition, or results of operations.

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We are subject to the income tax laws of the United States and its various state and local governments as well as several foreign tax jurisdictions.

Our future income taxes could be materially adversely affected by changes in the amount or mix

of earnings amongst countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax rates or the interpretation of tax rules and regulations in jurisdictions in which we do business, changes in tax laws, or the outcome of income tax audits and any related litigation.

Our future income taxes could be materially adversely affected by changes in the amount or mix of earnings amongst countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax rates or the interpretation of tax rules and regulations in jurisdictions in which we do business,

changes in tax laws, or the outcome of income tax audits and any related litigation.

The United States Tax Cuts and Jobs Act of 2017 is one such example of legislation that has impacted our effective tax rate.

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Ineffective internal control over financial reporting could result in errors in our financial statements, reduce investor confidence, and adversely affect our stock price.

As discussed in Part II, Item 9A “Controls and Procedures” in this Form 10-K, during the year-end closing processes for fiscal 2023, we identified a material weakness in our internal control related to the ineffective operation of certain transactional level controls over revenue recognition, specifically related to revenue contracts recognized over time, which resulted from insufficient precision of processes and insufficient training of the relevant control operators.

These internal controls are important to accurately reflect our financial position and results of operations in our financial reports.

We performed additional procedures over contracts for which revenue is recognized over time, including leveraging the expertise of a third-party specialist, and we did not identify any material errors in our reported revenue balance.

However, due to the material weakness described above, there was a reasonable possibility that our existing controls would not have detected a material misstatement in a timely manner if it were to be material.

Management has determined, through its current year testing, that the Company's enhanced policy and control activities were designed and operated effectively for a sufficient period of time during fiscal year 2024 to conclude that the previously identified material weakness has been remediated as of April 27, 2024.

In the future, if we identify additional control deficiencies that individually or together constitute significant deficiencies or material weaknesses, our ability to accurately record, process, and report financial information and, consequently, our ability to prepare financial statements within required time periods, could be adversely affected.

If we identify control deficiencies that individually or together constitute significant deficiencies or material weaknesses, our ability to accurately record, process, and report financial information and, consequently, our ability to prepare financial statements within required time periods, could be adversely affected.

Our failure to maintain effective internal control over financial reporting could result in violations of applicable securities laws and stock exchange listing requirements;

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and adversely impact our stock price and ability to access capital markets.

Insurance coverage can be difficult or expensive to obtain, and our failure to obtain adequate insurance coverage could adversely affect our financial condition or results of operations.

Insurance coverage can be difficult or expensive to obtain, and our failure to obtain adequate insurance coverage at reasonable costs could adversely affect our financial condition or results of operations.

We maintain insurance both as a corporate risk management strategy and to satisfy the requirements of many of our contracts with customers.

As the costs and availability of insurance change, we may decide not to be covered against certain losses where, in the judgment of management, the insurance is not warranted due to the cost or availability of coverage or the remoteness of the perceived risk.

We cannot provide assurance that all necessary or appropriate insurances will be available, cover every type of loss incurred, or be able to be economically obtained.

We cannot provide assurance that all necessary or appropriate insurance will be available, cover every type of loss incurred, or be able to be economically obtained.

For example, some insurers limit or refuse coverages, increase premium costs, or increase deductibles when global catastrophic events occur.

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Risks Related to an Investment in Our Common Stock

The protections we have adopted and to which we are subject may discourage takeover offers favored by our shareholders.

Our articles of incorporation, by-laws and other corporate governance documents and the South Dakota Business Corporation Act (which is codified as Chapter 47-1A to the South Dakota statutes) ("SD Act") contain provisions that could have an anti-takeover effect and discourage, delay or prevent a change in control or an acquisition that many shareholders may find attractive.

These provisions make it more difficult for our shareholders to take some corporate actions and include provisions relating to:

• the ability of our Board of Directors, without shareholder approval, to authorize and issue shares of stock with voting, liquidation, dividend and other rights and preferences that are superior to our common stock;

• the classification of our Board of Directors, which effectively prevents shareholders from electing a majority of the directors at any one meeting of shareholders;

• the adoption of a shareholder rights agreement providing for the exercise of junior participating preferred stock purchase rights when a person becomes the beneficial owner of 20 percent or more of our outstanding common stock and upon the occurrence of certain similar events (subject to certain exceptions);

• under the SD Act, limitations on the voting rights of shares acquired in specified types of acquisitions and restrictions on specified types of business combinations;

• under the SD Act, prohibitions against engaging in a “business combination” with an “interested shareholder” for a period of four years after the date of the transaction in which the person became an interested shareholder unless the business combination is duly approved.

These provisions may deny shareholders the receipt of a premium on their common stock, which in turn may have a depressive effect on the market price of our common stock.

The protections we have adopted and to which we are subject may discourage takeover offers favored by our stockholders.

Our certificate of incorporation (the “Certificate of Incorporation”), by-laws, and other corporate governance documents, as well as the General Corporation Law of the State of Delaware (the “DGCL”) and other applicable Delaware laws, contain protections that could have an anti-takeover effect and discourage, delay, or prevent a change in control or an acquisition that some stockholders may find attractive.

These protections under Delaware law and our governance documents, which may make it more difficult for our stockholders to take certain corporate actions related to a change in control of the Company, include, without limitation:

• the ability of our Board of Directors (the “Board” or the “Board of Directors”), without stockholder approval, to authorize and issue shares of stock with voting, liquidation, dividend, and other rights and preferences that are superior to our common stock;

• the classification of our Board, which effectively prevents stockholders from electing a majority of the directors at any one meeting of stockholders;

• the requirement for stockholders to provide advance notice to raise business matters or nominate directors at annual meetings of stockholders;

• the prohibition of cumulative voting in the election of directors;

• under the DGCL, stockholders who do not approve a change in control cannot demand the fair value of their shares or any premium for such shares;

• in general, Section 203 of the DGCL (the “Delaware Business Combination Statute”) prohibits us from engaging in a Business Combination (as defined below) with and Interested Stockholder (as defined below) for a period of three years after the date of the transaction in which the person became an Interested Stockholder unless:

(i) our Board approved either the Business Combination or the transaction in which the stockholder became an Interested Stockholder prior to the date the interested stockholder became an Interested Stockholder;

(ii) the Interested Stockholder acquires at least 85 percent of our common stock (excluding shares owned by our directors, officers, and certain participants in employee stock purchase plans) in the transaction in which it became an Interested Stockholder;

or (iii) the business combination is approved by our Board and the affirmative vote of at least two-thirds of the votes entitled to be cast by disinterested stockholders at an annual or special meeting of our stockholders.

The DGCL permits a corporation to opt out of, or choose not to be governed by, the Delaware Business Combination Statute by expressly stating so in its original certificate of incorporation (or subsequent amendment to its certificate of incorporation or bylaws approved by its stockholders).

The Certificate of Incorporation does not contain a provision expressly opting out of the application of the Delaware Business Combination Statute.

Therefore, the Company is subject to the Delaware Business Combination Statute.

A “Business Combination” is defined under the Delaware Business Combination Statute broadly to include mergers, consolidations, asset sales, and other transactions resulting in a financial benefit to an interested stockholder.

The Delaware Business Combination Statute generally defines an “Interested Stockholder” as an entity or person beneficially owning 15 percent or more of the outstanding voting stock of a corporation and any entity or person affiliated with or controlling or controlled by such entity or person.

The above protections may deny our stockholders a premium on a sale of their common stock, which, in turn, may have a material adverse effect on the market price of our common stock.

Our common stock has at times been thinly traded, which may result in low liquidity and price volatility.

The daily trading volume of our common stock has at times been relatively low.

If this were to occur in the future, the liquidity and appreciation of our common stock may not meet our shareholders’ expectations, and the price at which our stock trades may be volatile.

The market price of our common stock could be adversely impacted as a result of sales by existing shareholders of a large number of shares of common stock in the market or by the perception such sales could cause.

If this were to occur in the future, the liquidity and appreciation of our common stock may not meet our stockholders’ expectations, and the price at which our stock trades may be volatile.

The market price of our common stock could be adversely impacted as a result of sales by existing stockholders of a large number of shares of common stock in the market or by the perception such sales could cause.

Significant changes in the market price of our common stock could result in securities litigation claims against us.

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In the past, companies that have experienced significant changes in the market price of their stock have been subject to securities litigation claims.

We may be the target of this type of litigation in the future.

be the target of this type of litigation in the future.

Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns even if we prevail in the litigation, which could harm our business.

Additionally, if we fail to meet or exceed the expectations of securities analysts and investors, or if one or more of the securities analysts who cover us adversely change their recommendation regarding our stock, the market price of our

common stock could decline.

Moreover, our stock price may be based on expectations, estimates, and forecasts of our future performance that may be unrealistic or that may not be met.

Further, our stock price may fluctuate based on reporting by the financial media, including television, radio, press reports, and blogs.

Our business could be negatively affected as a result of actions of activist shareholders, and such activism could impact the trading value of our securities.

Responding to actions by activist shareholders can be costly and time-consuming, and impact our brand, disrupt our operations and divert the attention of management and our employees.

Such activities could interfere with our ability to execute our strategic plan.

In addition, a proxy contest for the election of directors would require us to incur significant legal fees and proxy solicitation expenses and require significant time and attention by management and our board of directors.

The perceived uncertainties as to our future direction also could affect the market price and volatility of our securities.

Our executive officers, directors and principal shareholders have the ability to significantly influence all matters submitted to our shareholders for approval.

Co-founder Dr.

Activist stockholder activity has impacted, and may continue to impact, our governance, operations, strategic directions, and the value of our common stock.

We have experienced activist stockholder activity that has led to changes in our Board composition and governance practices, and the possibility of future activism could have a material adverse effect on our business, financial condition, or results of operations.

On July 23, 2022, we entered into a cooperation agreement with Prairieland Holdco, LLC (together with certain of its affiliates, “Prairieland”) (the “Prairieland Cooperation Agreement”).

Pursuant to the Prairieland Cooperation Agreement, two Prairieland-recommended candidates were appointed to our Board of Directors.

Prairieland has agreed to customary standstill and voting provisions through our 2025 annual meeting of stockholders.

On March 3, 2025, we entered into a cooperation agreement with Alta Fox Capital Management, LLC (together with certain of its affiliates, “Alta Fox”) (the “Alta Fox Cooperation Agreement”), our largest stockholder.

Pursuant to the Cooperation Agreement, an Alta Fox-recommended candidate was appointed to our Board of Directors and our Transformation Committee, and we committed to various governance and investor engagement initiatives, including hosting an Investor Day and seeking Alta Fox’s input on our search for a new Chief Financial Officer (“CFO”).

Alta Fox has agreed to customary standstill and voting provisions through our 2027 annual meeting of stockholders and has withdrawn its litigation against the Company with prejudice.

Any future activist campaigns—whether by Prairieland, Alta Fox, or other stockholders—could be costly and time-consuming, disrupt our operations, divert the attention of management and our Board, interfere with our ability to execute our strategic plans, and create uncertainty among employees, customers, and investors.

These impacts, alone or in combination, could materially adversely affect the market price and volatility of our securities.

Our executive officers, directors and principal stockholders have the ability to significantly influence all matters submitted to our stockholders for approval.

Daktronics co-founder Dr.

Aelred Kurtenbach served as our Chairman of the Board until September 3, 2014.

Aelred Kurtenbach’s family members currently serve as executive officers of the Company.

Reece Kurtenbach, serves as our Chairman of the Board and Chief Executive Officer, and two other children serve as our Vice President of Human Resources and as our Vice President of Manufacturing.

Together, these individuals, in the aggregate, beneficially owned 10.0 percent of our outstanding common stock as of June 3, 2024, assuming the exercise by them of all of their options that were currently exercisable or that vest within 60 days of June 3, 2024.

Kurtenbach, serves on our Board of Directors and was Chief Executive Officer (“CEO”) of Daktronics until March 5, 2025, and two other of Dr.

Aelred Kurtenbach’s children serve as our Vice President of Human Resources and as our Vice President of Manufacturing.

Together, these individuals, in the aggregate, beneficially owned 9.0 percent of the shares of our outstanding common stock as of June 9, 2025, assuming the exercise by them of all of their options that were currently exercisable or that vest within 60 days of June 9, 2025.

Our other executive officers and directors, in the aggregate, beneficially owned an additional 1.5 percent of our outstanding common stock as of June 9, 2025, assuming the exercise by them of all of their options currently exercisable or that vest within 60 days of June 9, 2025.

Although this does not represent a majority of our outstanding common stock, if these shareholders were to choose to act together, they would be able to significantly influence all matters submitted to our shareholders for approval, as well as our management and affairs.

For example, these persons, if they choose to act together, could significantly influence the election of directors and the approval of any merger, consolidation, sale of all or substantially all of our assets or other business combination or reorganization requiring shareholder approval.

This concentration of voting power could delay or prevent an acquisition of us on terms that other shareholders may desire.

The interests of this group of shareholders may not always coincide with the interests of other shareholders, and they may act in a manner that advances their best interests and not necessarily those of other shareholders, including seeking a premium value for their common stock, that might affect the prevailing market price for our common stock.

Although this does not represent a majority of our outstanding common stock, if these stockholders were to choose to act together, they would be able to significantly influence all matters submitted to our stockholders for approval, as well as our management and affairs.

This concentration of voting power could delay or prevent an acquisition of us on terms that other stockholders may desire.

The interests of this group of stockholders may not always coincide with the interests of other stockholders, and they may act in a manner that advances their best interests and not necessarily those of other stockholders, including seeking a premium value for their common stock, that might affect the prevailing market price for our common stock.

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

What changed 10-K

Item 1A. Risk Factors