What changed in this filing

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Item 1. Business

2026-07-17 compared with 2025-07-18 · 124 added, 129 removed, 252 unchanged (50% of the section changed)

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Its technology is used for a wide range of space and non-space applications.

the context indicates otherwise, references to the Registrant or the Company are to Frequency Electronics, Inc.

the context indicates otherwise, references to the Registrant, Frequency Electronics or the Company are to Frequency Electronics, Inc.

and its subsidiaries.

References to “FEI” are to the parent company alone and do not refer to any of the subsidiaries.

Frequency Electronics, a

Delaware corporation, has its principal executive office at 55 Charles Lindbergh Boulevard, Mitchel Field, New York 11553.

Its telephone

number is 516-794-4500 and its website is www.frequencyelectronics.com.

Electronics, a Delaware corporation, has its principal executive office at 55 Charles Lindbergh Boulevard, Mitchel Field, New York 11553.

Its telephone number is 516-794-4500 and its website is www.frequencyelectronics.com.

Electronics was founded in 1961 as a research and development firm generating proprietary precision time and frequency technology primarily

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of many electronic systems.

STRUCTURE AND RESTRUCTURING

On April 30, 2026, FEI-Elcom

(“FEI-Elcom”) a wholly-owned subsidiary of the Company, was converted into a Delaware limited liability company.

The ongoing business operations of FEI-Elcom will continue under the FEI-NY segment.

This restructuring was a transaction between entities

under common control and did not result in a change in the consolidated financial statements of the Company.

For more information regarding

the Company’s restructuring, see Note 1 to the Consolidated Financial Statements.

Company’s principal end markets are time and frequency generation and distribution systems for use in satellite payloads and terrestrial

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software are essential for certain secure communication systems.

address these markets, the Company has several corporate entities which operate under two reportable segments primarily based on the

geographic locations of its subsidiaries.

The two reportable segments are (1) FEI-NY, which includes the subsidiaries FEI Government

Systems, Inc., FEI Communications, Inc., and FEI-Elcom Tech, Inc.

(“FEI-Elcom”) and (2) FEI-Zyfer, Inc.

address these markets, the Company has several corporate entities that operate under two reportable segments primarily based on the geographic

locations of its subsidiaries.

The two reportable segments are (1) FEI-NY, which includes the subsidiaries FEI Government Systems, Inc.

and FEI Communications, Inc., and, until April 30, 2026, included FEI-Elcom;

and (2) FEI-Zyfer, Inc.

(“FEI-Zyfer”).

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these business areas represent significant opportunities for revenue growth.

Government System, Inc.

Government Systems, Inc.

and FEI Communications, Inc.

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Long Island, New York headquarters facility.

designs and manufactures Radio Frequency (“RF”) microwave modules, devices and subsystems up to 60 GHz including fast switching,

ultra-low phase noise synthesizers, up-down converters, receivers, tuners, ceramic resonance oscillators and dielectric resonance oscillators.

These instruments and components are mission critical for multiple applications in the EW market, SATCOM communication, surveillance,

signal intelligence (COMINT, MASINT and ELINT), threat simulation, electronic attack (“EA”) and electronic prevention (“EP”)

FEI-Elcom’s RF microwave technology has also been utilized to develop new products for application in the Company’s

satellite payload end market.

April 30, 2026, FEI-Elcom designed and manufactured Radio Frequency (“RF”) microwave modules, devices and subsystems up to

60 GHz including fast switching, ultra-low phase noise synthesizers, up-down converters, receivers, tuners, ceramic resonance oscillators

and dielectric resonance oscillators.

FEI-Zyfer – Precision time references for terrestrial secure communications and command and control, and frequency

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Business – Reportable Segments and Products below.

addition to its subsidiaries, the Company made a strategic investment in and licensed certain technology to Morion, Inc.

a Russian crystal oscillator manufacturer located in St.

Petersburg, Russia.

The Company’s relationship with Morion, which includes

ownership of 4.6% of the outstanding shares of Morion’s common stock, permitted the Company to secure a cost-effective source for

high precision quartz resonators and crystal oscillators.

The Morion investment was accounted for under the cost method.

Due to the current

Russia-Ukraine conflict and resulting sanctions, the future status of FEI’s equity investment in Morion is uncertain.

to these conditions, in connection with the preparation of the audited financial statements included in the Annual Report on Form 10-K,

for the fiscal year ended April 30, 2022, as amended (the “2022 Form 10-K”), the Company impaired its investment in Morion

For more information regarding the Company’s investment in Morion, see Note 9 to the Consolidated Financial Statements.

SEGMENTS AND PRODUCTS

Company operates under two reportable segments, primarily aligned with the geographical locations of its subsidiaries:

(1) FEI-NY and

(2) FEI-Zyfer.

Within each segment the Company designs, develops, manufactures and markets precision time and frequency control products

for different markets as described below.

The Company’s Chief Operating Decision Maker (“CODM”) measures segment performance

based on total revenues, cost of revenues, and profits generated by each geographic center rather than on the specific types of customers

or end-users.

Consequently, the Company determined that the segments indicated above appropriately reflect the way the Company’s

CODM views the business.

The FEI-NY segment, which includes the parent company, FEI, and operates out of the Company’s Long Island,

New York headquarters facility, also includes the operations of the Company’s wholly-owned subsidiary, FEI-Elcom.

FEI-Elcom, in

addition to its own product line, provides design and technical support for FEI’s business.

The products manufactured by the FEI-NY

segment are principally marketed to the commercial and U.S.

Government satellite markets, to other U.S.

Department of Defense (“DOD”)

customers and to wireless communications network providers.

The FEI-Zyfer segment, which operates out of California, designs and manufactures

products which incorporate GPS technologies and high-precision clocks designed and manufactured at FEI.

FEI-Zyfer sells its products

to both commercial and U.S.

Government customers and collaborates with FEI on joint product development activities.

The Company operates under

two reportable segments, primarily aligned with the geographical locations of its subsidiaries:

(1) FEI-NY and (2) FEI-Zyfer.

segment the Company designs, develops, manufactures and markets precision time and frequency control products for different markets as

described below.

The Company’s Chief Operating Decision Maker (“CODM”) measures segment performance based on total revenues,

cost of revenues, and profits generated by each geographic center rather than on the specific types of customers or end-users.

Consequently,

the Company determined that the segments indicated above appropriately reflect the way the Company’s CODM views the business.

FEI-NY segment, which includes the parent company, FEI, operates out of the Company’s Long Island, New York headquarters facility.

The FEI-NY segment also includes the operations of FEI-Elcom.

FEI-Elcom, in addition to its own product line, provides design and technical

support for FEI’s business.

Effective as of April 30, 2026, FEI-Elcom converted into a Delaware limited liability company;

the ongoing business operations of FEI-Elcom will continue under the FEI-NY segment.

For more information regarding the Company’s

restructuring, see Note 1 to the Consolidated Financial Statements.

The products manufactured by the FEI-NY segment are precision time

and frequency products, and more recently, quantum sensing products ,principally marketed to the commercial and U.S.

Government satellite

markets, to other U.S.

Department of War (“DOW”) customers and to wireless communications network providers.

Quantum sensors

include magnetic sensors (magnetometers), and Rydberg sensors (compact receiving antennae), which utilize the same basic physics phenomena

as atomic clocks.

Because FEI-NY has manufactured atomic clocks for decades, the quantum sensor market represents a new growing market

which utilizes the underlying technology behind atomic clocks, and is a natural arena for FEI to compete in.

The FEI-Zyfer segment, which

operates out of California, designs and manufactures products that incorporate GPS technologies and high-precision clocks designed and

manufactured at FEI.

FEI-Zyfer sells its products to both commercial and U.S.

Government customers and collaborates with FEI on joint

product development activities.

fiscal years 2026 and 2025, approximately 72% and 76%, respectively, of the Company’s consolidated revenues were from products

sold by the FEI-NY segment.

In fiscal years 2025 and 2024, sales for the FEI-Zyfer segment were 27% and 33% of consolidated revenues.

In fiscal years 2026 and 2025, sales for the FEI-Zyfer segment were 34% and 27%, respectively, of the Company’s

consolidated revenues.

(The sum of annual sales percentages exceeds 100% due to intersegment sales.)

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During fiscal years 2026

and 2024, foreign sales comprised 6% and 4%, respectively, of consolidated revenues.

For segment information, see Note 13 to the Consolidated

Financial Statements.

and 2025, foreign sales comprised 9% and 6%, respectively, of the Company’s consolidated revenues.

For segment information, see

Note 13 to the Consolidated Financial Statements.

Company’s sales on U.S.

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for maintaining secure communications world-wide, for obtaining vital intelligence and for enabling precision targeting capabilities.

It is the belief of management that the future success of the mission of the U.S.

military and intelligence community is dependent on

successful and timely deployment of these systems.

The Company’s products are also used in classified projects for the U.S.

It is the belief of management that the future

success of the mission of the U.S.

military and intelligence community is dependent on successful and timely deployment of these systems.

Thus, the Company anticipates that adequate funds will be provided by the U.S.

to ensure that the programs are completed.

However, the Company’s experience indicates that programs and/or product sales can be

delayed or canceled due to variations associated with periodic U.S.

Government to ensure that the programs are completed.

However, the Company’s experience indicates that programs and/or product sales can be delayed or canceled due to variations associated

with periodic U.S.

Government appropriations cycles and shifting priorities.

Government canceled or delayed, even temporarily, programs and/or purchases involving Company products, the Company’s business

could suffer a material adverse effect.

Government canceled or delayed, even temporarily,

programs and/or purchases involving Company products, the Company’s business could suffer a material adverse effect.

Government contracts are sometimes based in part on Certificates of Current Costs.

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FEI-NY has made a substantial investment in research

and development (“R&D”) to apply its core technologies to satellite payloads, non-space DOD programs and commercial and

and development (“R&D”) to apply its core technologies to satellite payloads, non-space DOW programs and commercial and

industrial markets.

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to generate substantial revenues from deployment of new and replacement satellites and other U.S.

Government/DOD applications including

Government/DOW applications including

sales of ruggedized subsystems for mobile U.S.

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Commercial satellite programs

which utilize the Company’s space-qualified products include Iridium NEXT Constellation, Intelsat EPIC, O3B, WAAS, MexSat, MSV,

that utilize the Company’s space-qualified products include Iridium NEXT Constellation, Intelsat EPIC, O3B, WAAS, MexSat, MSV,

ICO, TerreStar, EchoStar, Inmarsat and others.

The Company is also pursuing core product opportunities for planned satellite constellations

that will operate in low- or mid-earth orbits.

the years ahead, the Company expects that the DOD will require more secure communication capabilities, more assets in space and greater

that will operate in Low- or Medium-Earth Orbits.

the years ahead, the Company expects that the DOW will require more secure communication capabilities, more assets in space and greater

The Global Positioning Satellite System, the MILSTAR Satellite System and the AEHF Satellite System are examples of the programs

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Government’s communication, intelligence and Precision Navigation and Timing (“PNT”) needs.

It is likely that the DOD

It is likely that the DOW

will move to adopt smaller and less expensive satellites for LEO applications, which the Company anticipates will necessitate the adaptation

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Government- Non-space

addition to space-based programs, the Company’s proprietary products have been used in airborne and ground-based guidance, navigation,

communications, radar, sonar and electronic countermeasures and timing systems.

The Company has developed and patented a low acceleration-sensitive

technology which offers an approximate 100 times improvement in performance under shock, vibration and other environmental effects as

compared to devices not so designed.

Products are built in accordance with DOD standards and are in use on many of the U.S.

important military applications.

The Company anticipates that adequate funds will be provided by the U.S.

Government to ensure that these

programs are sustained.

addresses RF microwave modules and subsystems up to 60 GHz including fast switching, ultra-low phase noise synthesizers, up-down converters,

receivers, tuners, ceramic resonance oscillators and dielectric resonance oscillators.

These instruments and components are mission critical

for many applications in the EW market, including SATCOM communication, surveillance, intelligence collection (SIGINT, COMINT, MASINT,

and ELINT) and threat simulation systems.

designs, develops and manufactures products which provide PNT, primarily incorporating Global Navigation Satellite System(s) technology.

addition to space-based programs, the Company’s proprietary products are used in airborne and ground-based guidance,

navigation, communications, radar, sonar and electronic countermeasures and timing systems.

The Company has developed and patented a

low acceleration-sensitive technology which offers an approximate 100 times improvement in performance under shock, vibration and

other environmental effects as compared to other devices.

Products are built in accordance with DOW standards and are in use on many

Government’s important military applications.

The Company anticipates that the U.S.

government will provide

adequate funds to sustain these programs.

April 30, 2026, FEI-Elcom addressed RF microwave modules and subsystems up to 60 GHz including fast switching, ultra-low phase noise

synthesizers, up-down converters, receivers, tuners, ceramic resonance oscillators and dielectric resonance oscillators.

designs, develops and manufactures products that provide PNT, primarily incorporating Global Navigation Satellite System(s) technology.

FEI-Zyfer’s products make use of both “in-the-clear” civil and “crypto-secured” military signals for GPS.

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Government or subcontracts for U.S.

fiscal year 2026, Lockheed Martin Corporation (“Lockheed Martin”), L3Harris Technologies, Inc.

(“L3Harris”),

and The Boeing Company (“Boeing”) each accounted for more than 10% of the Company’s consolidated revenues.

fiscal year 2025, Northrop Grumman Company (“Northrop Grumman”) accounted for more than 10% of the Company’s consolidated

fiscal year 2024, Lockheed Martin Corporation (“Lockheed Martin”), Northrop Grumman, Office of Naval Research and BAE Systems

each accounted for more than 10% of the Company’s consolidated revenues.

loss by the Company of any one of these customers could have a material adverse effect on the Company’s business.

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of the Company’s commercial or existing U.S.

Government contracts could also have a material adverse effect of the Company’s

Government contracts could have a material adverse effect on the Company’s business.

Company purchases a variety of electrical and other components and materials for use in the manufacture of its products.

is not dependent upon any one supplier or source of supply for any of its materials and maintains alternative sources of supply for all

of its purchases.

The Company has found its suppliers generally reliable and price-competitive;

however, recent quotes for various parts

and materials reflect increased delivery schedules and price increases.

Where supply chain issues have been encountered, the Company

has responded by changing the source of supply or redesigning products and replacing unavailable parts and materials with alternates

wherever possible.

is not dependent upon any one supplier or source of supply for any of its materials and maintains alternative sources of supply for

all of its purchases.

The Company has found its suppliers to be generally reliable and price-competitive;

however, recent quotes for

various parts and materials reflect longer delivery schedules and price increases.

Where supply chain issues have been encountered,

the Company has responded by changing the source of supply or redesigning products and replacing unavailable parts and materials

with alternates wherever possible.

FEI-NY is dependent on a limited number of suppliers for space qualified parts.

If these suppliers were unable to

deliver in reasonable time frames, then the prompt qualification of alternate suppliers may not be feasible or cost effective.

Consequently,

the Company could experience delays in delivery of its end products or costs in excess of what was originally quoted.

suppliers were unable to deliver in reasonable time frames, then the prompt qualification of alternate suppliers may not be feasible

or cost effective.

Consequently, the Company could experience delays in delivery of its end products or costs in excess of what was

originally quoted.

AND DEVELOPMENT

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reduce its production costs through product redesign and process improvements and other measures to take advantage of lower cost components.

Company continues to focus a significant portion of its own resources and efforts on developing hardware for satellites (commercial and

Company continues to focus a significant portion of its own resources and efforts on developing hardware for satellites (commercial

Government) and terrestrial commercial communications systems, including wireless and GPS-related systems.

During fiscal years 2025

and 2024, the Company expended $6.1 million and $3.4 million of its own funds, respectively, on such R&D activity.

During fiscal

years 2026 and 2025, the Company expended $6.1 million on such R&D activity in both years.

See Item 7, Management’s

Discussion and Analysis of Financial Condition and Results of Operations.

Additionally, the Company receives customer funding for specific

R&D projects and anticipates additional funding from customers for future R&D initiatives.

Although funding is obtained from

customers, the Company retains the rights to any products developed.

During fiscal years 2025 and 2024, some of the Company’s development

resources were applied to the design-stage of fixed-price satellite payload sub-system programs.

For fiscal year 2026, the resources

to be allocated to R&D will depend on market conditions and identification of new opportunities, as was the case in fiscal year 2025.

Additionally, the Company receives customer funding for

specific R&D projects and anticipates additional funding from customers for future R&D initiatives.

Although funding is

obtained from customers, the Company retains the rights to any products developed.

During fiscal years 2026 and 2025, some of the

Company’s development resources were applied to the design-stage of fixed-price satellite payload sub-system programs.

fiscal year 2027, the resources to be allocated to R&D will depend on market conditions and identification of new opportunities,

as was the case in fiscal year 2026.

Company believes that its business is generally not dependent on patent or license protection.

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for lower precision products for which there are a significant number of suppliers.

Company’s principal competition for space products is the in-house capability of its major customers such as the Boeing Company,

Northrop Grumman and Lockheed Martin, as well as a number of other firms capable of providing high-reliability microwave frequency generators.

With respect to non-space products, such as systems for precision time for terrestrial secure communication and command and control,

and products for multiple applications in the EW market, the Company competes with larger domestic companies such as Microchip Technology

Incorporated.

Company’s principal competition for space products is the in-house capability of its major customers such as Boeing, Northrop Grumman

and Lockheed Martin, as well as a number of other firms capable of providing high-reliability microwave frequency generators.

to non-space products, such as systems for precision time for terrestrial secure communication and command and control, and products

for multiple applications in the EW market, the Company competes with larger domestic companies such as Microchip Technology Incorporated

and Mercury Systems, Inc.

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offering competitive compensation and benefits.

Company currently employs 226 employees (216 full-time and 10 part-time), all based in the U.S.

Company currently employs 242 employees (232 full-time and 10 part-time), 99% based in the U.S.

No employees are represented by labor

We believe our relationships with our employees are favorable as reflected in high retention rates and increasing average length

Due to low turnover of employees, the average age of the workforce is increasing with time.

Depending on growth in total

employment and the average age of newly hired employees, replacement of key technical staff may be an issue in the future due to increased

We believe our relationships with our employees are favorable as reflected in our high retention rates.

“Risk Factors” for further discussion regarding risks related to our workforce and employee relations.

Company’s business is not seasonal although it expects to experience some fluctuation in revenues during the second fiscal quarter

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to earlier removal by the Board of Directors.

names of all executive officers of the Company and all positions and offices with the Company which they presently hold are as follows:

names of all executive officers of the Company and all positions and offices with the Company that they presently hold are as follows:

Thomas McClelland

President and Chief Executive Officer

and Chief Executive Officer

Oleandro Mancini

Senior Vice President,

Business Development

Chief Financial Officer

and Secretary and Treasurer

Vice President, Business Development

Financial Officer and Secretary and Treasurer

McClelland, age 71, joined the Company as an engineer in 1984 and was elected Vice President, Commercial Products in March 1999.

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

What changed 10-K

Item 1. Business