What changed in this filing

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Item 1A. Risk Factors

2026-08-18 compared with 2025-08-11 · 140 added, 86 removed, 337 unchanged (40% of the section changed)

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Risks Related to Business Operations and Our Industry

We may be unable to increase production to satisfy the increasing demand for our products.

We may be unable to successfully execute our production plans and meet growing demand for our products, which could adversely affect our business, financial condition and results of operations.

Our backlog and new bookings have increased significantly, reflecting strong demand from our prime contractor customers and end users.

To convert this demand into revenue on our customers’ expected timelines, we must scale our operations, improve quality and delivery performance and ensure that our suppliers can support anticipated higher volumes.

As demand grows, our ability to execute effectively becomes increasingly critical, and any failure to do so could materially impact our financial results.

Meeting this demand requires us to:

increase throughput across our manufacturing facilities through additional shifts and workforce planning;

improve product quality and compliance with customer and regulatory requirements;

ensure timely availability of materials and components from suppliers;

and manage production schedules and costs efficiently as volumes rise, including with our contract manufacturers such as Cicor in Europe in support of our EMEA operations.

If we are unable to expand capacity at the pace required, or if we encounter operational disruptions, equipment constraints, labor shortages, supplier delays or quality issues, we may not be able to deliver products on schedule or at expected cost levels.

This could result in contractual penalties, reduced margins, loss of future business, damage to customer relationships and harm to our reputation.

Additionally, rapid scaling increases the risk of operational inefficiencies, manufacturing errors and cost overruns.

Even short‑term disruptions could have an outsized impact due to the concentration of certain programs and customers in our backlog.

Our ability to meet growing demand also depends on the performance of our suppliers, many of whom face similar capacity and labor challenges.

Any failure by a supplier to deliver materials or components on time or to required specifications could delay our production and increase costs.

If we do not successfully execute our growth plans or maintain operational performance as demand increases, our revenue, profitability and competitive position could be adversely affected.

We depend heavily on defense electronics programs that incorporate our products and services, which may be only partially funded and are subject to potential termination and reductions and delays in government spending.

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For fiscal 2027 and beyond, the potential for gridlock in Congress, a continuing budget resolution, budget sequestration, a U.S.

government shutdown, or the crowding out of defense funding due to historically high budget deficits or changes in national spending priorities toward non-defense budget items could adversely impact our revenues and increase uncertainty in our business and financial planning.

government shutdown, or the crowding out of defense funding due to historically high budget deficits or changes in national spending priorities could adversely impact our revenues and increase uncertainty in our business and financial planning.

Further, the funding of the defense programs that incorporate our products and services is subject to the overall U.S.

government budget and appropriation decisions and processes, which are driven by numerous factors beyond our control, including geo-political, macroeconomic, public health and political conditions.

We are unable to predict the likely duration and severity of adverse economic conditions in the United States and other countries, but the longer the duration or the greater the

severity, the greater the risks we face in operating our business.

The near-term potential for recessionary economic conditions and possible stagflation (persistent high inflation and stagnant economic demand) presents increased risks to our business.

government budget and appropriation decisions and other processes, which are driven by numerous factors beyond our control, including geo-political, macroeconomic, public health and political conditions.

We are unable to predict the likely duration and severity of adverse economic conditions in the United States and other countries, but the longer the duration or the greater the severity, the greater the risks we face in operating our business.

Economic, capital market and political conditions could adversely affect our business, results of operations and financial condition.

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• downward pressure on the prices of our products;

• supply chain challenges to source raw materials;

• supply chain challenges in sourcing raw materials;

• greater difficulty in collecting accounts receivable;

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Price inflation for labor and materials could adversely affect our business, results of operations and financial condition.

We have experienced considerable price inflation in our costs for labor and materials during recent years, which adversely affected our business, results of operations and financial condition.

We may not be able to pass through inflationary cost increases under our existing firm fixed price contracts and we may only be able to recoup a portion of our increased costs under our reimbursement-type contracts.

We have experienced considerable price inflation in our costs for labor and materials since the pandemic, which adversely affected our business, results of operations and financial condition.

We may not be able to pass through future inflationary cost increases under our existing firm-fixed-price (“FFP”) contracts and we may only be able to recoup a portion of our increased costs under our reimbursement-type contracts.

Our ability to raise prices to reflect increased costs may be limited by competitive conditions in the market for our products and services.

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A significant decrease in the sales to or loss of any of our major customers would have a material adverse effect on our business and results of operations.

In fiscal 2025, RTX Corporation accounted for 13% of our total net revenues and both Lockheed Martin and U.

In fiscal 2026, RTX Corporation accounted for 15% of our total net revenues, Lockheed Martin accounted for 11% of our total net revenues, and Northrop Grumman accounted for 10% of our total net revenues.

In fiscal 2025, RTX Corporation accounted for 13% of our total net revenues and both Lockheed Martin and the U.

Navy accounted for 10% of our total net revenues.

In fiscal 2024, L3Harris accounted for 12% of our total net revenues, Lockheed Martin accounted for 11% of our total net revenues and RTX Corporation accounted for 10% of our total net revenues.

In fiscal 2023, RTX Corporation accounted for 14% of our total net revenues, Lockheed Martin accounted for 13% of our total net revenues, and Northrop Grumman accounted for 11% of our total net revenues.

Customers in the defense market generally purchase our products in connection with government programs that have a limited duration, leading to fluctuating sales to any particular customer in this market from year to year.

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No assurance can be given that our customers will not experience financial, technical or other difficulties that could adversely affect their operations and, in turn, our results of operations.

Additionally, on a limited number of programs the customer has co-manufacturing rights which could lead to a shift of production on such a program away from us which in turn could lead to lower revenues.

Going forward, we believe the F-35, F/A-18, KC-46, LTAMDS, SCAR, and THAAD programs could be a large portion of our future revenues in the coming years, and the loss or cancellation of these programs could adversely affect our future results.

Additionally, on a limited number of programs the customer has co-manufacturing rights, and customers periodically otherwise re-compete technical redesigns of components we are currently selling to them, either of which leads to a shift of production on such a program away from us which in turn could lead to lower revenues overall if not fully mitigated with gains in new or existing programs.

Further, new programs may yield lower margins than legacy programs, which could result in an overall reduction in gross margins.

Ineffective inventory management may lead to excess or obsolete stock, higher costs, operational disruptions or inaccurate valuation.

We maintain significant amounts of raw materials, work‑in‑process and finished goods to support production and customer demand.

Inaccurate demand forecasting, changes in customer requirements, supply chain disruptions or production inefficiencies may result in excess or obsolete inventory.

Failure to effectively manage our inventory could result in production delays, increased carrying costs, inventory write‑downs or misstatements in inventory valuation.

Failure to respond to competition or evolving technology could lead to customer loss and missed business opportunities.

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Competitors may offer lower pricing, superior products or better delivery, reducing demand for our offerings.

Operational challenges have impacted our on-time delivery, affecting visibility, design wins, bookings and revenue.

Operational challenges have impacted our on-time delivery, affecting visibility and revenue.

Customers may opt for lower-cost alternatives or insource previously outsourced products.

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Limited engagement with key government-funded laboratories (e.g., DARPA, MIT Lincoln Labs and MITRE) may hinder our ability to become a design partner for defense prime contractors.

As defense agencies evaluate lessons learned from modern conflicts, new entrants offering low‑cost, modular systems may gain influence in early design phases, reducing our access to future programs.

Our products are designed to operate under strict physical constraints and harsh conditions.

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However, advancing technology and evolving military requirements may increase the acceptability of such alternatives.

The entry of commercial server manufacturers and new competitors into aerospace and defense electronics could reduce demand for our products, negatively impacting revenue and operating results.

The entry of commercial server manufacturers and new

competitors into aerospace and defense electronics could reduce demand for our products, negatively impacting revenue and operating results.

Defense customers require frequent technological advancements for military superiority.

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These challenges could recur in the future on other programs.

In contrast, competitors producing simpler, lower‑cost systems may be less susceptible to similar production disruptions, further impacting our competitive position.

Competition from existing or new companies could cause us to experience downward pressure on prices, fewer customer orders, reduced margins, the inability to take advantage of new business opportunities and the loss of market share.

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There can be no assurance that these suppliers will continue to meet our requirements.

The timing and extent of these impacts remain uncertain, and we expect supply chain, inflation, and pricing pressures to persist.

These challenges may be further exacerbated by factors such as economic downturns, changes in trade policies, supplier capacity or quality issues, supplier financial instability, natural disasters, pandemics, or logistics disruptions.

If supply arrangements are interrupted, we may not be able to find another supplier on a timely or satisfactory basis.

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Carrying increased levels of inventory also increases our potential risk of future inventory obsolescence.

Trade policies could increase the cost of our manufacturing operations, potentially reducing our gross margins and demand for our products.

Trade policies pose a risk to our manufacturing operations, potentially reducing our gross margins and impacting demand for our products.

There is uncertainty with respect to trade policies and treaties between the U.S.

Price escalation for semiconductor and memory components may adversely affect our profitability.

We rely on advanced electronic components, including semiconductor microchips, memory modules and specialized microelectronics, to manufacture our products and solutions.

The global market for these components has experienced, and may continue to experience, volatility and price increases.

These cost increases are driven by factors beyond our control, including escalating global demand, supply chain constraints, geopolitical tensions and inflationary pressures.

A significant portion of our business is conducted through FFP contracts, and in some cases we assume the full financial risk for all costs incurred during performance.

Consequently, a substantial increase in the cost of memory or other chips, if not mitigated through customer funded inventory purchases or other measures, may erode our operating margins.

Continued cost escalation across our broader

supply chain, combined with our inability to adjust FFP contract pricing, could materially and adversely affect our business, financial condition and results of operations.

Trade policies and export controls could significantly increase our manufacturing costs, reduce gross margins and disrupt demand for our products.

There is substantial uncertainty with respect to trade policies, enforcement and treaties between the U.S.

and other countries.

has announced broad increases in tariffs on imported components, subject to limited exceptions.

trading partners have announced retaliatory tariffs in response and some have negotiated new trade agreements.

As a result, we are exposed to increased tariffs with respect to products and components that we import into the U.S.

Our gross margins could be reduced, potentially significantly, in the event we are unable to recover tariffs or duties from our customers.

Further, although we are required to pay tariffs upon importation of the components, we may not be able to recover these amounts from our customers

until sometime later, if at all, which could materially adversely impact our operating cash flow in a given period.

For example, tariff adjustments include a 10% baseline tariff on all imports to the U.S., with higher tariffs on specific goods from a range of countries.

Any significant increase in the price of our products due to increased costs may result in a reduction in demand from our customers at such higher prices.

The impact of any tariff increases will depend on various factors, including if such increases are ultimately implemented, the timing of implementation, contractual terms and the amount, scope and nature of the tariffs.

Tariffs and other restrictive trade measures may require us to take various actions, including changing suppliers and altering business relationships.

Changing our operations in accordance with new or evolving trade restrictions can be expensive, time-consuming, disruptive to our operations and distracting to management.

Tariffs and trade restrictions can be announced with little or no advanced notice, and we may not be able to effectively mitigate all adverse impacts from such measures.

government continues to implement broad tariffs on imported goods and components, including temporary baseline duties of 10% or higher alongside sweeping country-specific reciprocal tariffs.

While certain measures face ongoing domestic legal and structural modifications, the U.S.

Trade Representative has proposed shifting these baseline duties into long-term frameworks under Section 301 and Section 232 authorities.

Concurrently, major U.S.

trading partners have enacted retaliatory tariffs.

As a result, we face direct exposure to increased costs on products and components imported into the U.S.

Our gross margins could be reduced, potentially significantly, if we cannot pass these costs to customers.

Furthermore, lag times between our tariff payments at importation and customer recovery could materially adversely impact our operating cash flow in a given period.

Any significant price increases passed along to our customers may reduce overall demand.

Beyond tariffs, the U.S.

government has continually expanded export-control restrictions under the Export Administration Regulations (“EAR”) and International Traffic in Arms Regulations (“ITAR”) targeting advanced electronics, semiconductors, and dual-use technologies.

These regulations have increased licensing requirements, added country-specific controls, and expanded definitions of controlled technologies, thereby increasing our compliance burdens and potential product redesign requirements.

Regulatory enforcement, audits and civil penalties have intensified.

Even inadvertent violations of EAR or ITAR could result in substantial fines, mandatory remediation or export restrictions, materially harming our operations and customer relationships.

Mitigating these rapidly shifting trade barriers and compliance rules can be expensive, time-consuming and highly disruptive to our management and global supply chain.

We cannot be sure of our ability to obtain any licenses required to export our products or to receive authorization from the U.S.

government for international sales or domestic sales to foreign persons including transfers of technical data or the provision of technical services.

We may not be able to effectively manage our relationships with contract manufacturers.

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Contract manufacturers also build products for other companies, and they may not have sufficient quantities of inventory available or sufficient internal resources to fill our orders on a timely basis or at all.

These risks may be enhanced for our International operations as we outsourced our former Swiss manufacturing operations to Cicor Group during fiscal 2025.

These risks may be enhanced for our EMEA operations as we outsourced our former Swiss manufacturing operations to Cicor Group in June 2025, and Cicor will be transitioning manufacturing from our legacy Geneva location, which they now operate, to their other facilities in Switzerland and the United Kingdom during fiscal 2027.

We are exposed to risks associated with international operations and markets.

We market and sell products in international markets and have sales offices and manufacturing and/or engineering facilities and subsidiaries in Switzerland, Spain and the United Kingdom.

Revenues from international operations accounted for 5% of our total net revenues in each fiscal 2025, 2024, and 2023.

Revenues from international operations accounted for 2% of our total net revenues in fiscal 2026, and accounted for 5% of our total net revenues in fiscal 2025 and 2024.

We also ship directly from our U.S.

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• tariffs and other trade barriers;

• less favorable intellectual property laws;

• less favorable IP laws;

• difficulties in staffing and managing foreign operations;

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• fluctuations in currency exchange rates, which may lead to lower operating margins, or may cause us to raise prices which could result in reduced revenues;

• changes in foreign national priorities and government budgets, including local manufacturing of defense-related goods and services;

• expatriation controls;

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The Plan, an independent pension fund, is part of a multi-employer plan with unrestricted joint liability for all participating companies and the economic interest in the Plan’s overfunding or underfunding is allocated to each participating company based on an allocation key determined by the Plan.

GAAP requires an employer to recognize the funded status of the defined benefit plan on the balance sheet, which we have presented in other long-term liabilities on our Consolidated Balance Sheets at June 27, 2025.

The funded status may vary from year to year due to changes in the fair value of the Plan’s assets and variations on the underlying assumptions in the Plan and we may have to record an increased liability as a result of

fluctuations in the value of the Plan’s assets.

As of June 27, 2025, we had a liability of $5.3 million in Other non-current liabilities representing the net under-funded status of the Plan.

As of July 3, 2026, we had a liability of $3.1 million in Other non-current liabilities representing the net under-funded status of the Plan.

In addition, we must comply with the Foreign Corrupt Practices Act, or the FCPA, and the anti-corruption laws of the countries in which we operate.

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If we fail to invest sufficiently in R&D, our products could become less attractive to potential customers and our business and financial condition could be materially and adversely affected.

As a result of the need to maintain spending levels in this area and the difficulty in reducing costs associated with R&D, our operating results could be materially harmed if our R&D efforts fail to result in new products or if revenues fall below expectations.

Our operating results could be materially harmed if our R&D efforts fail to result in new products or if revenues fall below expectations.

As a result of our commitment to invest in R&D, spending levels of R&D expenses as a percentage of revenues may fluctuate in the future.

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• delays in completion of internal product development projects;

• delays in shipping hardware and software or licensing design intellectual property;

• delays in shipping hardware and software or licensing design IP;

• delays in acceptance testing by customers;

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• declines in quarterly revenues from previous generations of products following announcement of replacement products containing more advanced technology;

• changes in estimates of completion (EAC) on fixed price engagements, which represent a substantial percentage of our business.

• changes in Estimates at Completion (“EAC”) on fixed price engagements, which represent a substantial percentage of our business, or inaccurate cost estimation at time of proposal, leading to unanticipated cost increases.

In addition, from time to time, we have entered into contracts, referred to as development contracts, to engineer a specific solution based on modifications to standard products.

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The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Over time revenue recognition is more reliant on estimates than the accounting for our component sales.

Changes in estimates of completion ("EACs") on fixed price engagements, which represent a substantial percentage of our business, also requires judgement, including in assessing risks, estimating contract revenue and costs, and predicting future performance.

Over time revenue recognition is more reliant on estimates than the accounting for some of our component sales.

Changes in EACs on fixed price engagements, which represent a substantial percentage of our business, also requires judgment, including in assessing risks, estimating contract revenue and costs and predicting future performance.

Actual results could differ from those estimates, and changes in estimates in subsequent periods could cause our results of operations to fluctuate.

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If we experience a local or regional disaster or other business continuity problem, such as an earthquake, terrorist attack, pandemic or other natural or man-made disaster, our continued success will depend, in part, on the availability of our personnel, our facilities and the proper functioning of our network, telecommunication and other business systems and operations.

As we grow our operations, the potential for natural or man-made disasters, political, economic, or infrastructure instabilities, or other country- or region-specific business continuity risks increases.

As we scale our operations, the potential for natural or man-made disasters, political, economic, or infrastructure instabilities, or other country- or region-specific business continuity risks increases.

Our insurance coverage, customer indemnifications or other liability protections may be inadequate to cover our significant business risks, which could have a material adverse effect on our financial position.

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A loss that is uninsured or which exceeds policy limits may require us to pay substantial amounts, which could adversely affect our financial condition and operating results.

Risks Related to M&A and Acquisition Integration

Risk Related to Artificial Intelligence Technologies and Agentic AI

Our use of AI tools in our internal operations and product‑development processes, as well as the integration of customer‑directed AI capabilities into the hardware and software we provide, exposes us to evolving technical, cybersecurity, regulatory and operational risks that could adversely affect our business, financial condition and results of operations.

We do not develop or commercialize proprietary AI or machine‑learning models.

However, we increasingly rely on third‑party AI tools to support engineering, software development, supply‑chain planning, quality assurance and cybersecurity monitoring.

In addition, certain defense‑electronics subsystems, modules and components that we design incorporate processing architectures, embedded software and secure data pathways intended to host or accelerate AI algorithms developed by our customers.

As a subcontractor on major defense programs and a prime contractor on select efforts, our reliance on AI‑enabled processes and AI‑capable products introduces several risks.

AI tools used internally may generate inaccurate, incomplete or biased outputs, or may behave unpredictably when applied to complex engineering or operational data.

Errors introduced by AI‑assisted design, code generation or analysis could lead to product defects, schedule delays, rework or noncompliance with customer specifications.

Because our products support mission‑critical defense applications, any such issues could result in contractual liabilities, warranty claims or reputational harm.

Our use of third‑party AI tools and cloud‑based AI services also increases our exposure to cybersecurity threats.

Emerging “agentic AI” systems, AI models capable of autonomous action, multi‑step task execution or self‑directed interaction with digital environments, may amplify cyber risks by enabling adversaries to conduct more sophisticated, adaptive and scalable attacks.

These threats may include automated vulnerability discovery, targeted phishing, model‑driven malware generation, data poisoning or attempts to manipulate or compromise AI‑assisted development pipelines.

A successful attack could compromise sensitive technical data, degrade product integrity or disrupt our operations.

The hardware and embedded software we deliver may also be targeted by adversaries seeking to exploit AI‑related interfaces, accelerators or data flows used by our customers’ AI models.

Although we do not control the AI algorithms our customers deploy, vulnerabilities in our products, whether real or perceived, could be attributed to us and may result in increased scrutiny, additional testing requirements or contractual remedies.

The regulatory environment for AI is rapidly evolving.

government or DoW requirements related to responsible AI use, algorithmic assurance, data provenance, cybersecurity or supply‑chain integrity may impose new compliance obligations on our internal processes or on the AI‑capable hardware and software we provide.

Compliance may require additional investment, redesign of certain products or changes to our development practices.

Failure to meet applicable requirements could result in bid disqualification, reduced eligibility for future awards or contract termination.

Public and stakeholder concerns regarding AI, particularly in defense applications, may also lead to increased scrutiny of our practices.

Negative perceptions, whether accurate or not, could affect customer confidence, employee recruitment or our ability to participate in certain programs.

Any of these risks, individually or in combination, could materially and adversely affect our business, financial condition and results of operations.

Risks Related to Our Growth Strategy, M&A and Acquisition Integration

Implementation of our growth strategy may not be successful, which could affect our ability to increase revenues and profits.

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The failure to do any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

In addition, we may face competition in these new markets from various companies that may have substantially greater research and development resources, marketing and financial resources, manufacturing capability and/or customer support organizations.

In addition, we may face competition in these new markets from various companies that may have substantially greater R&D resources, marketing and financial resources, manufacturing capability and/or customer support organizations.

Acquisitions may adversely affect our financial condition.

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We may incur substantial indebtedness.

On August 13, 2024, we amended our Revolver, permanently decreased borrowing capacity to $900.0 million, with a temporary reduction in credit availability to $750.0 million until we meet a minimum consolidated EBITDA level of $75.0 million excluding (a) adjustments for cost savings, operating expense reductions and synergies, (b) estimate at completion (“EAC”) charges and other non-cash expenses, charges, and losses addbacks and (c) deducts to reverse EAC charges previously added back, in each case for a last twelve-month period.

The temporary reduction in credit availability was removed as of the filing of our Q2 compliance certificate, and capacity returned to $900.0 million.

As of June 27, 2025, we had $591.5 million of outstanding borrowings on the Revolver.

On November 4, 2025, we amended our Revolver, providing for a new five-year revolving credit facility with a borrowing capacity of $850.0 million.

As of July 3, 2026, we had $441.5 million of outstanding borrowings on the Revolver.

The Revolver accrues interest, at our option, at floating rates tied to Secured Overnight Financing Rate (“SOFR”) or the prime rate plus an applicable percentage.

The applicable percentage is set at SOFR plus 1.25% and is established pursuant to a pricing grid based on our total net leverage ratio.

The applicable percentage is established pursuant to a pricing grid based on our total net leverage ratio.

We are exposed to the impact of interest rate changes primarily through our borrowing activities.

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We may also incur costs related to interest rate hedges, including the termination of any such hedges.

As of June 27, 2025, we had a swap agreement in effect that fixed $300.0 million of the total $591.5 million of outstanding borrowings under the Revolver at a rate of 4.66%.

As of July 3, 2026, we had a swap agreement in effect that fixed $300.0 million of the total $441.5 million of outstanding borrowings under the Revolver at a rate of 4.66%.

The movement of interest rates would affect the value of such swap agreement.

Limited or negative free cash flow as we experienced during certain prior periods could eventually lead to a challenge in servicing our debt.

We are subject to refinancing risk as we expect to need to refinance our debt prior to the expiration of the Revolver.

We have a significant amount of goodwill and intangible assets on our consolidated financial statements that are subject to impairment based upon future adverse changes in our business or prospects.

At June 27, 2025, the carrying values of goodwill and identifiable intangible assets on our balance sheet were $938.1 million and $210.6 million, respectively.

At July 3, 2026, the carrying values of goodwill and identifiable intangible assets on our balance sheet were $942.4 million and $175.8 million, respectively.

We evaluate indefinite lived intangible assets and goodwill for impairment annually in the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

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Termination for convenience provisions generally only entitle us to recover costs incurred, settlement expenses and profit on work completed prior to termination.

• Because we contract to supply goods and services to the U.S.

and foreign governments and their prime and subcontractors, we compete for contracts in a competitive bidding process.

• We compete for contracts in a competitive bidding process.

We may not be awarded the contract if the pricing or product offering is not competitive, either at our level or the prime or subcontractor level.

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and international defense contractors or directly to the U.S.

government on a commercial item basis, eliminating the requirement to disclose and certify cost data.

government on a commercial item basis, eliminating the requirement to certify cost or pricing data.

To the extent that there are interpretations or changes in the Federal Acquisition Regulations (“FAR”) regarding the qualifications necessary to sell commercial items, there could be a material impact on our business and operating results.

For example, there have been legislative proposals to narrow the definition of a “commercial item” (as defined in the FAR) or to require cost and pricing data on commercial items that could limit or adversely impact our ability to contract under commercial item terms.

Changes could be accelerated due to changes in our mix of business, in federal regulations, or in the interpretation of federal regulations, which may subject us to increased oversight by the Defense Contract Audit

Agency (“DCAA”) for certain of our products or services.

Such changes could also trigger contract coverage for a larger percentage of our contracts under the Cost Accounting Standards (“CAS”), requiring compliance with a defined set of business systems criteria.

Failure to comply with applicable CAS requirements could adversely impact our ability to win future CAS-type contracts and subject us to 5% billing withholding on open cost type contracts.

We may also need to implement or enhance our processes and information systems to support certified cost and pricing and earned value management systems.

• We are subject to the Department of Defense Cybersecurity Maturity Model Certification (“CMMC”) in connection with our defense work for the U.S.

Failure to comply with applicable CAS requirements could adversely impact our ability to win future CAS-type contracts and subject us to 5% billing withholding on open cost type contracts and those subject to progress payment financing.

For example, one of our business entities is currently operating on a disapproved CAS system and that business is subject to billing withholding which has resulted in approximately $0.4 million of cash withheld.

We have recently completed a pre-award accounting system audit with DCAA to allow this business to perform cost-type contracts while the system remains disapproved, and we anticipate the system to be approved during fiscal 2027 upon completion of a full

system audit by DCAA.

Going forward, we may also need to enhance our processes and information systems to support cost estimating, accounting, purchasing and earned value management systems.

• We are subject to the Department of War Cybersecurity Maturity Model Certification (“CMMC”) in connection with our defense work for the U.S.

government and defense prime contractors.

Inability to meet the qualifications to the CMMC and any amendments may increase our costs or delay the award of contracts if we are unable to certify that we satisfy such cybersecurity requirements at our Company level and into our supply chain.

While currently suspended, our inability to meet the qualifications to the CMMC and any amendments may increase our costs or delay the award of contracts if we are unable to certify that we satisfy such cybersecurity requirements at our enterprise level and into our supply chain.

Further, our suppliers in general are not as prepared to comply with CMMC requirements today as we are, and thus we may have to change suppliers or delay production to the extent the application of such requirements materially effects our supply chain.

government or a defense prime contractor customer could require us to relinquish data rights to a product in connection with performing work on a defense contract, which could lead to a loss of valuable technology and intellectual property in order to participate in a government program.

government or a defense prime contractor customer could require us to relinquish data rights to a product in connection with performing work on a defense contract, which could lead to a loss of valuable technology and IP in order to participate in a government program.

government or a defense prime contractor customer could require us to enter into cost reimbursable contracts that could offset our cost efficiency initiatives.

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In addition, we may need to invest in additional secure laboratory space to integrate efficiently subsystem level solutions and maintain quality assurance on current and future programs.

If we are unable to continue to obtain U.S.

government authorization regarding the export of our products, or if current or future export laws limit or otherwise restrict our business, we could be prohibited from shipping our products to certain countries, which would harm our ability to generate revenue.

We must comply with U.S.

laws regulating the export of our products and technology.

In addition, we are required to obtain a license from the U.S.

government to export certain of our products and technical data as well as to provide technical services to foreign persons related to such products and technical data.

We cannot be sure of our ability to obtain any licenses required to export our products or to receive authorization from the U.S.

government for international sales or domestic sales to foreign persons including transfers of technical data or the provision of technical services.

Likewise, our international operations are subject to the export laws of the countries in which they conduct business.

Moreover, the export regimes and the governing policies applicable to our business are subject to change.

If we cannot obtain required government approvals under applicable regulations in a timely manner or at all, we could be delayed or prevented from selling our products in certain jurisdictions, which could adversely affect our business and financial results.

Our products are complex, and undetected defects may increase our costs, harm our reputation with customers or lead to costly litigation.

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Undetected errors may adversely affect our product’s ease of use and may create customer satisfaction issues.

If we are unable to repair these problems in a timely manner, we may experience a loss

of or delay in revenue and significant damage to our reputation and business prospects.

If we are unable to repair these problems in a timely manner, we may experience a loss of or delay in revenue and significant damage to our reputation and business prospects.

Many of our customers rely upon our products for mission-critical applications.

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Our information technology and business systems and infrastructure could create product development or production work stoppages, unnecessarily increase our inventory, negatively impact product delivery times and quality and increase our compliance costs.

In addition, an inability to maximize the utility and benefit of our current information technology and business tools could impact our ability to meet cost reduction and planned efficiency and operational improvement goals.

In addition, an inability to maximize the utility

and benefit of our current information technology and business tools could impact our ability to meet cost reduction and planned efficiency and operational improvement goals.

We rely on enterprise resource planning systems and other complementary information technology systems to keep financial records, process orders, manage inventory and operate other critical functions.

We have invested, and will continue to invest, significant capital and human resources in our systems and training, and we regularly implement new systems, consolidate systems or remove systems as necessary to operate our business.

Any disruptions, delays or deficiencies in the transition, design or implementation of these changes could have a negative impact on our results of operations and cash flows.

If we suffer ransomware breaches, data breaches, or phishing diversions involving the designs, schematics or source code for our products or other sensitive information, our business and financial results could be adversely affected.

Our business is subject to constant attempts at cyber intrusion as nation-state hackers seek access to technology used in U.S.

defense programs and criminal enterprise hackers, which may or may not be affiliated with foreign governments, use ransomware attacks to disable critical infrastructure and extort companies for ransom payments.

defense programs and criminal enterprise hackers, which may or may not be affiliated with foreign governments, use attacks to disable critical infrastructure and extort companies for ransom payments or sell proprietary information to third parties.

We are also regularly targeted by spear phishing attacks in which an email directed at a specific individual or department is disguised to appear to be from a trusted source to obtain sensitive information.

Like all DoD contractors that process, store, or transmit controlled unclassified information, we must meet minimum security standards or risk losing our DoD contracts.

Like all DoW contractors that process, store or transmit controlled unclassified information, we must meet minimum security standards or risk losing our DoW contracts.

A breach, whether physical, electronic or otherwise, of the systems on which this sensitive data is stored could lead to damage or piracy of our products or to the shutdown of business systems.

If we experience a data security breach from an external source or a data exfiltration from an insider threat, we may have a loss in sales or increased costs arising from the restoration or implementation of additional security measures, either of which could adversely affect our business and financial results.

Other potential costs could include damage to our reputation, loss of brand value, incident response costs, loss of stock market value, regulatory inquiries, litigation and management distraction.

If we experience a data security breach from an external source or a data exfiltration from an insider threat, we may have incident response costs, management distraction, regulatory inquiries, a loss in sales or increased costs arising from the restoration or implementation of additional security measures, any of which could adversely affect our business and financial results.

Other potential costs could include damage to our reputation, loss of brand value, loss of stock market value and litigation.

A security breach that involves classified information could subject us to civil or criminal penalties, loss of a government contract, loss of access to classified information or debarment as a government contractor.

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In addition, we may incur substantial costs in attempting to protect our proprietary rights.

We have been subject to claims that we infringe the intellectual property rights of others and we may become subject to such claims in the future.

We have been subject to claims that we infringe the IP rights of others and we may become subject to such claims in the future.

We cannot assure you that, if made, these claims will not be successful.

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Any judgment against us could require substantial payment in damages and could also include an injunction or other court order that could prevent us from offering certain products.

The unauthorized disclosure of our trade secrets could harm our business.

We attempt to protect our trade secrets by entering into confidentiality agreements and intellectual property assignment agreements with our employees, contractors and third parties.

We also protect our trade secrets with our IT systems, internal policies, restrictive agreements and other protective actions.

The people who receive our trade secrets may breach their agreements by disclosing the information to others without our authorization.

If the agreements are breached and our other protective measures are bypassed or ignored, then there may not be an adequate remedy available to us because it can be expensive and time-consuming to effectively enforce our rights with no guarantees of success.

The unauthorized disclosure of our trade secrets could result in harm to our business, such as a negative impact on our reputation or the ability of our competitors to sell products and services that are similar to ours and therefore reduce the demand for our products and services.

Risks Related to Our Common Stock

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On December 13, 2023, a securities class action complaint was filed against us in the U.S.

District Court for the District of Massachusetts.

The complaint alleged that our public disclosures in SEC filings and on earnings calls were false and/or misleading .

We are currently defending that securities litigation.

District Court for the District of Massachusetts, and subsequent derivative lawsuits have been filed related to the matters asserted in the securities class action.

The securities class action complaint alleged that our public disclosures in SEC filings and on earnings calls were false and/or misleading.

During fiscal 2026, we settled the securities class action litigation, and our settlement in principle of the derivative claims is subject to court approval.

In April 2026, five funds associated with Starboard Value LP (“Starboard”), representing approximately 14% of the class in the securities class action litigation, requested exclusion from the class by sending notice to the settlement administrator.

In June 2026, Starboard filed a separate legal action against the Company in Massachusetts state court with similar allegations as the securities class action and additional claims related to its prior standstill agreement with the Company.

We have never paid cash dividends on our common stock and we do not anticipate paying any dividends in the foreseeable future.

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The Massachusetts Business Corporation Act permits directors to look beyond the interests of shareholders and consider other constituencies in discharging their duties.

In determining what the director of a Massachusetts corporation reasonably believes to be in the best interests of the corporation, a director may consider the interests of the corporation's employees, suppliers, creditors, and customers, the economy of the state, the region, and the nation, community and societal considerations and the long-term and short-term interests of the corporation

and its shareholders, including the possibility that these interests may be best served by the continued independence of the corporation.

determining what the director of a Massachusetts corporation reasonably believes to be in the best interests of the corporation, a director may consider the interests of the corporation's employees, suppliers, creditors, and customers, the economy of the state, the region, and the nation, community and societal considerations and the long-term and short-term interests of the corporation and its shareholders, including the possibility that these interests may be best served by the continued independence of the corporation.

Shareholder activism could cause us to incur significant expense, disrupt our business, result in a proxy contest or litigation and impact our stock price.

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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 1A. Risk Factors