What changed in this filing

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Item 1A. Risk Factors

2026-07-17 compared with 2025-07-18 · 148 added, 131 removed, 191 unchanged (59% of the section changed)

9 unchanged sentences

Government programs, from which we derived approximately 91% and

98% of our sales in fiscal 2025 and fiscal 2024, respectively.

These U.S Government programs may be only partially or incrementally funded

and are subject to potential termination.

These programs may also be subject to funding reductions and/or delays due to changes in government

priorities or other factors.

94% of our sales in fiscal year 2026 and fiscal year 2025, respectively.

These U.S Government programs may be only partially or incrementally

funded and are subject to potential termination.

These programs may also be subject to funding reductions and/or delays due to changes

in government priorities or other factors.

Whether direct contracts with the U.S.

Government or contracts with prime contractors to the U.S.

our contracts typically are funded at a level less than the full contract value and require periodic incremental additional funding in

order to continue.

Should circumstances change regarding funding and sufficient funding become unavailable, contracts may be terminated,

delayed significantly or put on stop work status.

Government or contracts with prime contractors to the

Government, our contracts typically are funded at a level less than the full contract value and require periodic incremental additional

funding in order to continue.

Should circumstances change regarding funding and sufficient funding become unavailable, contracts may

be terminated, delayed significantly or put on stop work status.

Government contracts are subject to Congressional funding, which may be unavailable due to changes in priorities or subject to continuing

17 unchanged sentences

a subcontractor, the Company is reliant on a few large customers that generally hold the ultimate contract with the U.S.

During fiscal year 2025, only Northrop Grumman accounted for more than 10% of the Company’s consolidated revenues;

Company has other large customers that it relies on for significant portions of its consolidated revenues.

These customers typically

incorporate our products into larger programs.

If these customers encounter technical, financial or other issues unrelated to our products

that affect the larger program’s operations, the related program may be terminated or require expensive, unanticipated revisions.

These issues, although unrelated to our products, could adversely impact us if our customers’ contracts with the U.S.

become subject to re-competition or are ultimately cancelled.

Additionally, our larger customers are sophisticated corporations with

large research and development staffs and budgets.

If one or more sought to design and manufacture replacements for our products, they

could potentially discontinue their need for our products.

Alternatively, our larger customers could look to replace our products with

the products of one or more of our competitors.

During fiscal year 2026, Lockheed Martin, L3Harris, and Boeing each accounted for more than 10% of the Company’s consolidated revenues.

These customers typically incorporate our products into larger programs.

If these customers encounter technical, financial or other issues

unrelated to our products that affect the larger program’s operations, the related program may be terminated or require expensive,

unanticipated revisions.

These issues, although unrelated to our products, could adversely impact us if our customers’ contracts

with the U.S.

Government become subject to re-competition or are ultimately cancelled.

Additionally, our larger customers are sophisticated

corporations with large research and development staffs and budgets.

If one or more sought to design and manufacture replacements for

our products, they could potentially discontinue their need for our products.

Alternatively, our larger customers could look to replace

our products with the products of one or more of our competitors.

The loss of the U.S.

Government or one or more of our other larger customers or programs

could adversely affect our business, financial position, results of operations and/or cash flows.

Government or one or more of our other larger

customers or programs could adversely affect our business, financial position, results of operations and/or cash flows.

use estimates when accounting for contracts.

15 unchanged sentences

requests for additional work;

production challenges, including those resulting from the timeliness of customer funding, unavailability

production challenges, including those resulting from the timeliness of customer funding and the unavailability

or reduced productivity of qualified labor;

12 unchanged sentences

inflationary pressures, labor shortages, and increased labor rates.

In fiscal 2025, 96% of our sales were derived from fixed-price contracts.

While the Company’s management uses its best judgment to estimate costs associated with fixed-price contracts, future events may

require adjustments, which could ultimately adversely affect the Company’s operating income.

In fiscal year 2026, 95% of our sales were derived from fixed-price

While the Company’s management uses its best judgment to estimate costs associated with fixed-price contracts, future

events may require adjustments, which could ultimately adversely affect the Company’s operating income.

cost-type contracts, allowable costs incurred by the contractor are generally subject to reimbursement plus a fee.

26 unchanged sentences

has traditionally produced.

This may result in reduced market share, lower revenues and impact our business operations and financial

Additionally, competitors may have the benefit of other contracts that enable them to produce in volume with a concomitant

cost advantage that affords them a price advantage.

Many of our customers have in-house capability to develop products comparable to

ours and may opt to do so.

This may result in reduced market share, lower revenues and adversely impact our business operations and

financial conditions.

Additionally, competitors may have the benefit of other contracts that enable them to produce in volume with a

concomitant cost advantage that affords them a price advantage.

Many of our customers have in-house capability to develop products comparable

to ours and may opt to do so.

Accordingly, if we are unable to continue to compete successfully against our current or future competitors,

we may experience declines in future revenues and market share, which could have a material adverse effect on our financial position,

results of operations and/or cash flows.

we may experience declines in future revenues and market share, which could have a material adverse effect on our business, financial

position, results of operations and/or cash flows.

products, which are often incorporated into larger systems, are technologically complex and require state-of-the-art technology and manufacturing

8 unchanged sentences

Penalties and possible litigation may result from these types of problems,

with potential significant impact to our financial position, results of operations and/or cash flows.

with potential significant impact to our business, financial position, results of operations and/or cash flows.

are dependent on numerous suppliers for various parts, materials, test services, facility operations and infrastructure.

33 unchanged sentences

is also dependent upon personnel who hold security clearances and receive substantial training to work on certain programs or tasks.

If we were to experience an unanticipated attrition with respect to these employees, it will be difficult for us to replace them on a

timely basis.

If we experience unanticipated attrition with respect to these employees, it will be difficult for us to replace them on a timely basis.

changes in global economic or geopolitical conditions may adversely affect business operations and financial condition.

12 unchanged sentences

financial position, results of operations and/or cash flows.

epidemics, pandemics and similar outbreaks, such as COVID-19, create substantial risk to the Company.

Employees work in close proximity

to one another.

Therefore, if an employee is infected with a communicable disease, such as COVID-19, or suspected of being infected,

other employees he or she has come in contact with may also be infected, with a cascading effect on the workforce.

In addition to the

time off to recover, there is a need to clean and disinfect the areas where the employee was working and had frequented in the facility.

The nature of the Company’s business requires mostly “hands-on” activities related to design, manufacturing and testing.

Therefore, absenteeism resulting from infectious diseases and cleaning procedures to disinfect various areas of our facilities can have

a significant impact on a contract’s schedule, with a corresponding impact to costs.

The Company is not able to predict possible

future pandemics, but if they manifest, they could have significant adverse effects on our business, financial position, results of operations

epidemics, pandemics and similar outbreaks create substantial risk to the Company.

Employees work in close proximity to one another.

Therefore, if an employee is infected with a communicable disease or suspected of being infected, other employees he or she has come

in contact with may also be infected, with a cascading effect on the workforce.

In addition to the time off to recover, there is a need

to clean and disinfect the areas where the employee was working and had frequented in the facility.

The nature of the Company’s

business requires mostly “hands-on” activities related to design, manufacturing and testing.

Therefore, absenteeism resulting

from infectious diseases and cleaning procedures to disinfect various areas of our facilities can have a significant impact on a contract’s

schedule, with a corresponding impact to costs.

The Company is not able to predict possible future health epidemics, pandemics, or similar

outbreaks, but if they manifest, they could have significant adverse effects on our business, financial position, results of operations

and/or cash flows.

13 unchanged sentences

financial position, results of operations and/or cash flows.

Noncompliance

with any of the covenants in the Company’s $10 million senior secured revolving credit facility (the “Credit Agreement”),

which matures on June 12, 2029, could result in any debt outstanding thereunder becoming due, which could have a material adverse effect

on its financial position, operations and liquidity.

Credit Agreement contains customary restrictive covenants and financial covenants, including those related to total leverage and minimum

fixed charge coverage, that, if violated, could restrict the Company’s operational and financial flexibility.

Failure to comply

with these covenants could result in an event of default.

If any such event of default is not cured or waived, the lender could elect

to declare any outstanding debt under the Credit Agreement at such time to be due and payable and could cease making further loans and

institute foreclosure proceedings against the Company’s assets, all of which could have a material adverse effect on the Company’s

financial position, operations and liquidity.

Related to Legal, Regulatory and Compliance Matters

failure to comply with laws, regulations and/or terms we are subject to could adversely affect our business.

operate in a highly regulated industry and are routinely audited and reviewed by the U.S.

We operate in a highly regulated

industry and are routinely audited and reviewed by the U.S.

Government and its agencies.

These agencies

review performance under our contracts, our cost structure and accounting, and our compliance with applicable laws, regulations, terms

and standards, as well as the adequacy of our systems in meeting government requirements.

If an audit uncovers improper or illegal activities,

we would be subject to possible civil and criminal penalties, sanctions, forfeiture of profits or suspension or debarment.

contracts are subject to Federal Acquisition Regulations (FARs) or Defense Federal Acquisition Regulation Supplement (DFARS).

of any of these regulations can result in significant consequences, including fines, disbarments or other punitive measures by the U.S.

Additionally, the Company has defense department security clearance that is required for performance on several contracts.

Failure to maintain compliant security procedures may result in suspension of our security clearance and inability to perform on current

contracts, as well as limit our ability to be awarded future contracts.

The Company is also subject to export control requirements, anti-boycott

regulations and Office of Foreign Assets Control (OFAC) sanctions against business dealings with certain persons and entities, including

its investment in Morion, Inc., a less than wholly-owned subsidiary of state-owned Russian bank Gazprombank.

Violation of any of these

requirements may have a material adverse effect on our financial position, results of operations and/or cash flows.

These agencies review performance under our contracts,

our cost structure and accounting, and our compliance with applicable laws, regulations, terms and standards, as well as the adequacy

of our systems in meeting government requirements.

If an audit uncovers improper or illegal activities, we would be subject to possible

civil and criminal penalties, sanctions, forfeiture of profits or suspension or debarment.

Most of our contracts are subject to Federal

Acquisition Regulations (FARs) or Defense Federal Acquisition Regulation Supplement (DFARS).

Violation of any of these regulations can

result in significant consequences, including fines, debarments or other punitive measures by the U.S.

Additionally, the Company

has defense department security clearance that is required for performance on several contracts.

Failure to maintain compliant security

procedures may result in suspension of our security clearance and inability to perform on current contracts, as well as limit our ability

to be awarded future contracts.

The Company is also subject to export control requirements, anti-boycott regulations and Office of Foreign

Assets Control (OFAC) sanctions against business dealings with certain persons and entities, including its investment in Morion, Inc.,

a less than wholly-owned subsidiary of state-owned Russian bank Gazprombank.

For example, the U.S.

Ukraine-related sanctions regime has

since 2014 included a list of sectoral sanctions identifications (“SSI”) pursuant to Executive Order 13662, which prohibits

certain transactions, including certain extensions of credit, with an entity designated as an SSI or certain affiliates of an entity designated

On July 16, 2014, after the Company’s investment in Morion, Gazprombank was designated as an SSI.

As previously disclosed,

in light of Morion’s relationship with Gazprombank, in 2020, the Company evaluated, with the assistance of external legal counsel,

certain sales to Morion and the timing of payments by Morion to the Company in connection with those sales to determine whether payments

by Morion may have inadvertently constituted extensions of credit in violation of Directive 1 under Executive Order 13662.

determined that certain payments by Morion – the majority of which occurred more than five years ago – were not timely.

the evaluation, on May 7, 2020, the Company voluntarily disclosed its findings to OFAC.

The Company’s voluntary disclosure to OFAC

related solely to delays in collection of accounts receivable that exceeded then-applicable payment windows set forth in sanctions regulations

and did not relate to any other type of payment or transaction.

On February 17, 2021, the Company received a Cautionary Letter from OFAC

indicating that OFAC has completed its review of the matter.

According to OFAC, the Cautionary Letter was issued instead of pursuing a

civil monetary penalty or taking other enforcement action.

On October 30, 2024, OFAC designated Morion as a Specially Designated National,

resulting in the blocking of all Morion property and property interests and the termination of all commercial relationships between the

Company and Morion.

Although the Company’s prior voluntary disclosure to OFAC discussed above did not lead to any civil monetary

penalty or other enforcement action and although the Company has terminated all commercial relationships with Morion following Morion’s

designation as a Specially Designated National, the Company continues to hold a minority equity interest in Morion, and there can be no

assurance that the Company’s historical or continuing relationship with Morion will not result in additional regulatory scrutiny

or liability.

Any future violation of any of the requirements, governmental regulations discussed above, including OFAC sanctions, or

other similar laws, regulations, terms or standards could have a material adverse effect on our financial position, results of operations

and/or cash flows.

are subject to various investigations, claims, disputes, enforcement actions, litigation, and other legal proceedings that could ultimately

be resolved against us.

have and may in the future become subject to investigations, claims, disputes, enforcement actions and administrative, civil or criminal

litigation, arbitration or other legal proceedings across a broad array of matters, including government contracts, commercial transactions,

false claims, false statements, compliance with government orders, mischarging, contract performance, fraud, procurement integrity, securities

laws and requirements, products liability, warranties, hazardous materials, personal injury claims, environmental, stockholder derivative

actions, acquisitions and divestitures, intellectual property, tax, corporate law and obligations, employment, export/import, anti-corruption,

debt and equity, labor, health and safety, the COVID-19 pandemic and the Company’s response to it, accidents, and employee benefits

and plans, including plan administration, improper payments and issues related to privacy and security (cyber and physical).

These matters

can divert financial and management resources;

result in administrative, civil or criminal fines, penalties or other sanctions (including

judgments, convictions, consent or other voluntary decrees or agreements), compensatory, treble or other damages, non-monetary relief

or other liabilities;

and otherwise harm our business and our ability to obtain and retain new business.

Certain allegations against

us can lead to suspension or debarment from government contracts.

A suspension or debarment could have a material adverse effect on the

Company because of our reliance on U.S.

We have and may in the future

become subject to investigations, claims, disputes, enforcement actions and administrative, civil or criminal litigation, arbitration

or other legal proceedings across a broad array of matters, including government contracts, commercial transactions, false claims, false

statements, compliance with government orders, mischarging, contract performance, fraud, procurement integrity, securities laws and requirements,

products liability, warranties, hazardous materials, personal injury claims, environmental, stockholder derivative actions, acquisitions

and divestitures, intellectual property, tax, corporate law and obligations, employment, export/import, anti-corruption, debt and equity,

labor, health and safety, accidents, and employee benefits and plans, including plan administration, improper payments and issues related

to privacy and security (cyber and physical).

These matters can divert financial and management resources;

result in administrative, civil

or criminal fines, penalties or other sanctions (including judgments, convictions, consent or other voluntary decrees or agreements),

compensatory, treble or other damages, non-monetary relief or other liabilities;

and otherwise harm our business and our ability to obtain

and retain new business.

Certain allegations against us can lead to suspension or debarment from government contracts.

A suspension or

debarment could have a material adverse effect on the Company because of our reliance on U.S.

Government contracts.

Additionally, an investigation, claim, dispute, enforcement action or litigation,

even if pending or not ultimately substantiated or if fully indemnified or insured, can also negatively impact our reputation among our

customers, and make it substantially more difficult for us to compete effectively for business in the future.

Accordingly, investigations,

claims, disputes, enforcement actions, litigation or other legal proceedings could have a material adverse effect on our financial position,

results of operations and/or cash flows.

Company has identified a material weakness in its internal control over financial reporting for the fiscal year ended April 30, 2024.

We may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls,

which may result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations.

effective internal control over financial reporting is necessary for us to produce reliable financial statements.

As more fully disclosed

in Part II, Item 9A “Controls and Procedures,” in the course of preparing the audited consolidated financial statements for

the prior Annual Report on Form 10-K, the Company identified an error related to the calculation of the provision for losses on contracts.

We determined that we did not maintain adequate controls over to the review of the calculation of the loss provision, which the Company

concluded constituted a material weakness in the Company’s internal control over financial reporting as of April 30, 2024.

standards established by the PCAOB, a material weakness is defined as a deficiency, or a combination of deficiencies, in internal control

over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial

statements will not be prevented or detected on a timely basis.

A material weakness in the design of monitoring controls indicates that

the Company has not sufficiently developed and/or documented internal controls by which management can review and oversee the Company’s

financial information to detect and correct material errors or that the personnel responsible for performing the review did not have

the sufficient skill set or knowledge of the subject matter to perform a proper assessment.

remediate the material weakness, the Company has implemented changes to its loss provision calculation and enhanced its controls over

the review of the loss provision calculation to ensure appropriateness.

The Company believes that its remediation plan was sufficient

to remediate the identified material weakness and strengthen its internal control over financial reporting.

As of April 30, 2025, the

Company’s management believes the identified material weakness have been remediated.

As the Company continues to evaluate and work

to improve its internal control over financial reporting, management may determine to take additional measures to address control deficiencies

or determine to modify the remediation plan.

Moreover, the Company cannot assure you that additional material weaknesses will not arise

in the future.

to remediate the material weakness, or the development of new material weaknesses in the Company’s internal control over financial

reporting, could result in future material misstatements in its consolidated financial statements and cause the Company to fail to meet

its reporting and financial obligations, which in turn could have a negative impact on the Company’s financial condition.

Additionally, an investigation,

claim, dispute, enforcement action or litigation, even if pending or not ultimately substantiated or if fully indemnified or insured,

can also negatively impact our reputation among our customers, and make it substantially more difficult for us to compete effectively

for business in the future.

Accordingly, investigations, claims, disputes, enforcement actions, litigation or other legal proceedings

could have a material adverse effect on our financial position, results of operations and/or cash flows.

Related to Information Technology and Intellectual Property

17 unchanged sentences

stock price may continue to be volatile.

trading price of our common stock may continue to be volatile.

As a result, investors in our common stock may experience substantial

This volatility may or may not be related to our operating performance.

Our operating results, from time to time, may be below

the expectations of public market analysts and investors, which could have a material adverse effect on the market price of our common

The trading price of our common

stock has been, and may continue to be volatile and subject to wide fluctuations in response to various factors, many of which we cannot

As a result, investors in our common stock may experience substantial losses.

This volatility may or may not be related to our

operating performance.

Our operating results, from time to time, may be below the expectations of public market analysts and investors,

which could have a material adverse effect on the market price of our common stock.

significant existing stockholders sell large numbers of shares of our common stock, our common stock price could decline.

Approximately

41.2% of our outstanding common stock is held by 5 individuals or entities.

The market price of our common stock could decline if a large

number of our shares of outstanding common stock are sold in the public market by our existing stockholders or as a result of the perception

that such sales could occur.

Approximately 38.5% of our

outstanding common stock is held by 5 individuals or entities.

The market price of our common stock could decline if a large number of

our shares of outstanding common stock are sold in the public market by our existing stockholders or as a result of the perception that

such sales could occur.

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