What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-08-25 compared with 2024-08-29 · 52 added, 37 removed, 459 unchanged (16% of the section changed)

4 unchanged sentences

If operators of, or algorithms installed on, our security and inspection systems fail to detect weapons, explosives or other devices or materials that are used to commit a crime, terrorist act or other mass casualty event, we could be exposed to product and professional liability and related claims for which we may not have adequate insurance coverage.

Our business exposes us to potential product liability risks that are inherent in the development, manufacturing, sale and service of security and inspection systems, software and threat detection algorithms, as well as in the provision of training to our customers in the use and operation of such systems.

Our business exposes us to potential product liability risks that are inherent in the development, manufacturing, sale, maintenance and repair of security and inspection systems, software and threat detection algorithms, as well as in the provision of training to our customers in the use and operation of such systems.

Our customers use our security and inspection systems to help them detect items that could be used in performing terrorist acts, mass casualty events or other crimes.

Some of our security and inspection systems require that an operator interpret an image of suspicious items within a bag, parcel, container, vehicle or other vessel.

Others use algorithms to signal to the operator that further investigation is required.

In addition, the training, reliability and competence of the customer’s operator are often crucial to the detection of suspicious items.

Security inspection systems that signal to the operator that further investigation is required are sometimes referred to in the security industry as “automatic” detection systems.

If such a system were to fail to signal to an operator when an explosive, weapon or other contraband was present, resulting in loss of life or damage, we would be subject to risk of significant product liability claims.

Security inspection by technological means is circumstance and application-specific.

Others rely on threat detection algorithms, or use such algorithms to signal to the operator that further investigation is recommended.

The selection, training, supervision, reliability and competence of such operators are often crucial to the detection of suspicious items.

Security inspection systems that rely on threat detection algorithms or that use such algorithms to signal to the operator that further investigation is recommended are sometimes referred to in the security industry as “automatic” detection systems.

If such a system were to fail to signal when an explosive, weapon or other contraband was present, resulting in loss of life or damage, we would be subject to risk of significant product liability claims.

Security inspection by such technological means is circumstance and application-specific.

Our security and inspection systems offer significant capabilities, but also have performance limitations and cannot be designed to reveal or detect contraband under all circumstances, particularly if criminal actors successfully conceal such items.

They can also malfunction or underperform, including if not properly maintained.

We also offer various turnkey security screening solutions under which we perform some or all of the security screening tasks that have historically been performed by our customers.

Such projects expose us to certain professional liability risks that are inherent in performing security inspection services for the purpose of detecting contraband items, including items that could be used in performing terrorist acts, mass casualty events or other crimes.

If a contraband item were to pass through the security screening services that we perform for a customer and be used to perform a terrorist act, mass casualty event or other crime, we would be subject to risk of significant professional liability claims.

They can also malfunction or underperform, including if not properly maintained or repaired.

We also offer various turnkey security screening solutions under which we perform some or all of the security screening tasks that have historically been performed by our customers, including the development, administration and performance of security screening procedures;

operation of the security inspection systems;

and analysis of images and information generated by such systems.

Such projects expose us to professional liability risks that are inherent in performing security inspection services for the purpose of detecting contraband items, including items that could be used in performing terrorist acts, mass casualty events or other crimes.

If a contraband item were to pass through the turnkey security services that we perform for a customer and be used to perform a terrorist act, mass casualty event or other crime, we would be subject to risk of significant professional liability claims for which adequate insurance coverage may not be available.

The loss of certain of our customers, including government agencies that can modify or terminate agreements more easily than other commercial customers with which we contract, the failure to continue to diversify our customer base or the non-renewal of certain material contracts could have a negative effect on our reputation and could have a material adverse effect on our business, financial condition and results of operations.

68 unchanged sentences

The markets for our products are characterized by rapidly changing technology, changing customer needs, evolving industry or regulatory standards and certifications and frequent new product introductions and enhancements.

The emergence of new industry or regulatory standards and certification requirements in related fields may adversely affect the demand for our products.

The emergence of new industry or regulatory standards and certification requirements may adversely affect the demand for our current products.

In addition, any products or processes that we currently offer or plan to develop may become obsolete or uneconomical before we recover all or any of the expenses incurred in connection with their development.

3 unchanged sentences

Such standards change as threat and risk assessments evolve and as new technology becomes available within the industry, which enables regulators to demand performance improvements.

We may not ultimately be able to develop, or develop in a timely way, solutions that are ultimately able to meet the new standards.

Certain of our U.S.

Government contracts are dependent upon our employees obtaining and maintaining required security clearances, as well as our ability to obtain security clearances for the facilities in which we perform sensitive government work.

Certain of our U.S.

Government contracts require our employees to maintain various levels of security clearances, and we are required to maintain certain facility security clearances.

If we cannot maintain or obtain the required security clearances for our facilities and our employees, or obtain these clearances in a timely manner, we may be unable to perform certain U.S.

Government contracts.

Further, loss of a facility clearance, or an employee’s failure to obtain or maintain a security clearance, could result in a U.S.

Government customer terminating an existing contract or choosing not to renew a contract.

Lack of required clearances could also impede our ability to bid on or win new U.S.

Government contracts.

We may not ultimately be able to develop, or develop in a timely way, solutions that meet the new standards.

Certain of our government contracts are dependent upon our employees obtaining and maintaining required security clearances, as well as our ability to obtain security clearances for the facilities in which we perform sensitive government work.

Certain of our government contracts require our employees to maintain various levels of security clearances, and we are required to maintain certain facility security clearances.

If we cannot maintain or obtain the required security clearances for our facilities and our employees, or obtain these clearances in a timely manner, we may be unable to perform certain government contracts.

Further, loss of a facility clearance, or an employee’s failure to obtain or maintain a security clearance, could result in a government customer terminating an existing contract or choosing not to renew a contract.

Lack of required clearances could also impede our ability to bid on or win new government contracts.

This could damage our reputation and adversely affect our business, financial condition and results of operations.

37 unchanged sentences

Government agencies and the agencies of many other governments with which we contract can terminate their contracts with us for convenience, and in that event, we generally may recover only our incurred costs and expenses on the work completed prior to termination.

If an agency terminates a contract with us for default, we may be denied any recovery and may be liable for excess costs incurred by the agency in procuring undelivered items from an alternative source.

If an agency terminates a contract with us for default, we may be denied any recovery and may be liable for excess costs

incurred by the agency in procuring undelivered items from an alternative source.

Decisions by an agency to terminate one of our contracts for default could negatively affect our ability to win future awards not only from such agency, but also from other government agencies and commercial customers, many of whom evaluate past performance, or are required to review past performance information, when making their procurement decisions.

34 unchanged sentences

If we fail to accurately foresee our customers’ needs and future activities, we may invest heavily in research and development of products that do not lead to significant revenues.

Interruptions in our ability to purchase raw materials and subcomponents may adversely affect our profitability.

We purchase raw materials and certain subcomponents from third parties.

Increased prices for, and interruptions in our ability to purchase, raw materials and subcomponents may adversely affect our profitability.

In recent years, inflation and supply chain constraints have resulted in increases in the prices we pay third parties for many of the subcomponents and raw materials used in our products.

We generally do not have guaranteed long-term supply arrangements with our suppliers.

33 unchanged sentences

and (xi) compliance with export control and anticorruption legislation.

In 2025, the U.S.

government announced the imposition of additional tariffs on certain goods imported from numerous countries.

Multiple nations responded with reciprocal tariffs and other trade actions.

The recent enactment of tariffs by the U.S.

government, along with the unpredictability of the rates and other potential actions that may be taken by the U.S.

government and foreign governments (including trade restrictions, new or increased tariffs or quotas, embargoes, sanctions and counter sanctions, safeguards or customs restrictions) may materially increase our costs and reduce our margins.

These actions may also lead to higher pricing for our products, potentially reducing consumer demand and impacting our sales.

We are actively monitoring the impact of any tariffs that become effective, as well as potential retaliatory actions by other countries.

We are currently taking actions to mitigate this cost pressure, including accelerating, increasing or canceling inventory, further diversifying suppliers and re-sourcing to countries with lower tariffs, working with longstanding factory partners to reduce costs, identifying further cost reductions across our business and planning for

strategic price increases.

However, there can be no assurance that we will be able to implement any strategies in a timely fashion, that these measures will be successful, or that they will offset the negative impact of the tariffs and other government actions on our business.

Given the uncertainty regarding scope and duration of the current and potential tariffs, as well as the potential for additional trade actions by the U.S.

or other countries, the specific impact to our business, results of operations, cash flows and financial condition is uncertain but could be material.

There are inherent risks associated with operations in Mexico.

8 unchanged sentences

(vii) high rate of crime in Mexico where we conduct operations;

and (viii) change in the value of the Mexican peso.

(viii) change in the value of the Mexican peso;

and (ix) changes in administration of various departments in the Mexican government associated with our agreements.

Our operations are vulnerable to interruption or loss due to natural disasters, epidemics or pandemics such as COVID-19, terrorist acts and other events beyond our control, which could adversely impact our operations.

20 unchanged sentences

Any adverse event involving our products, whether in the United States or abroad, could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection, mandatory recall, orders of repair, replacement or refund or other enforcement action.

Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital and may harm our reputation and financial results.

Any corrective action, whether

voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital and may harm our reputation and financial results.

We rely on third parties and our own systems for interaction with our customers and suppliers and employees, and a failure of a key information technology system, process or site or any other failure or interruption in the services provided by these third parties or our own systems could have a material adverse impact on our ability to conduct business.

7 unchanged sentences

We may be subject to cyber-attacks and breaches of the information technology systems we use for these purposes.

Experienced programmers and hackers may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third parties, create system disruptions, or cause shutdowns.

Experienced programmers and hackers may be able to penetrate our network and application security and misappropriate or compromise our confidential information or that of third parties, create system disruptions, or cause shutdowns.

Hackers may also be able to develop and deploy viruses, worms, malware, ransomware and other malicious software programs that attack our systems or otherwise exploit security vulnerabilities in our systems or products.

2 unchanged sentences

We expend significant capital and resources to protect against the threat of security breaches, including cyber-attacks, viruses, worms, malware, ransomware and other malicious software programs.

Substantial additional expenditures may be required before or after a cyber attack to mitigate or alleviate problems caused by the unauthorized access, theft of data stored within our information systems, or the introduction of computer malware or ransomware to our environment.

Substantial additional expenditures may be required before or after a cyber-attack to mitigate or alleviate problems caused by unauthorized access, theft of data stored within our information systems, or the introduction of computer malware or ransomware to our environment.

Our remediation efforts may not be successful, and there could be interruptions, delays, or cessation of service due to cyber-attacks or other data security breaches.

20 unchanged sentences

We are currently modernizing and upgrading our information technology systems while also simultaneously integrating systems from our various acquisitions, including making changes to legacy systems, and replacing some legacy systems with new and advanced functionality.

While upgrading and implementing change to any one of our systems could present challenges, the age of our systems and architecture may present unique challenges that we have not previously encountered as we undertake these efforts.

While upgrading and implementing changes to any one of our systems could present challenges, the age of our systems and architecture may present unique challenges that we have not previously encountered as we undertake these efforts.

There are inherent costs and risks associated with integrating, replacing and changing these systems and implementing new systems, including potential disruption of our sales and operations, potential disruption of our internal control structure, substantial capital expenditures, additional administration and operating expenses, demands on management time, securing our systems along with dependent processes from cybersecurity threats, and other risks and costs of delays or difficulties in transitioning to new systems or of integrating new systems into our current systems.

26 unchanged sentences

If we are not able to refinance existing indebtedness on acceptable terms, our ability to finance our operations, engage in strategic acquisitions, and otherwise meet our capital needs would be significantly impaired.

As further discussed in Note 8, we amended and extended our credit facility in July 2025.

Shares of our common stock issuable upon conversion of the 2.25% Convertible Senior Notes due 2029 (the “2029 Notes”) may dilute the ownership interest of our stockholders or may adversely affect the market price of our common stock.

The conversion of the 2029 Notes may dilute the ownership interests of our stockholders.

Upon conversion of the Notes, we have the option to pay or deliver, as the case may be, cash or a combination of cash and shares of our common stock as described in Note 8.

If we elect to settle our conversion obligation by a combination of cash and shares of our common stock, any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.

Upon conversion of the 2029 Notes, the default settlement method is a combination settlement with a specified dollar amount of $1,000 per $1,000 principal amount of notes and shares of our common stock as described in Note 8.

Any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.

Also the existence of the 2029 Notes may encourage short selling by market participants because the conversion of the 2029 Notes could be used to satisfy short positions, or anticipated conversion of the 2029 Notes into shares of our common stock could depress the price of our common stock.

10 unchanged sentences

Noteholders may, subject to a limited exception, require us to repurchase their 2029 Notes following a fundamental change (as defined in the Convertible Note Indenture) at a cash repurchase price generally equal to the principal amount of the 2029 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the related fundamental change repurchase date.

In addition, all conversions of Notes are to be settled partially or entirely in cash.

In addition, all conversions of 2029 Notes require the principal amount to be settled in cash.

We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the 2029 Notes or pay the cash amounts due upon conversion.

11 unchanged sentences

The accounting method for reflecting the 2029 Notes on our balance sheet, accruing interest expense for the 2029 Notes and potential inclusion of underlying shares of our common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.

In accordance with applicable accounting standards, the Notes will be reflected as a liability on our balance sheets, with the initial carrying amount equal to the principal amount of the Notes, net of issuance costs.

The issuance costs will be treated as a debt discount for accounting purposes, which will be amortized into interest expense over the term of the Notes.

In accordance with applicable accounting standards, the 2029 Notes are reflected as a liability on our balance sheets, with the initial carrying amount equal to the principal amount of the 2029 Notes, net of issuance costs.

The issuance costs are treated as a debt discount for accounting purposes, which are being amortized into interest expense over the term of the 2029 Notes.

As a result of this amortization, the interest expense that we expect to recognize for the 2029 Notes for accounting purposes will be greater than the cash interest payments we will pay on the 2029 Notes, which will result in lower reported income.

In addition, the shares underlying the 2029 Notes will be reflected in our diluted earnings per share using the “if converted” method.

Under that method, if the conversion value of the Notes exceeds their principal amount for a reporting period, then we will calculate our diluted earnings per share assuming that all of the Notes were converted at the beginning of the reporting period and that we issued shares of our common stock to settle the excess.

Under that method, the underlying equity component of the 2029 Notes will have a net impact on diluted earnings per share when the average price of our common stock exceeds the conversion price of $191.98 because the principal amount of the 2029 Notes will be settled in cash upon conversion,, then we will calculate our diluted earnings per share assuming that all of the 2029 Notes were converted at the beginning of the reporting period and that we issued shares of our common stock to settle the excess.

The after-tax interest expense associated with the 2029 Notes will not be added back to the numerator of the diluted earnings per share calculation for these purposes.

99 unchanged sentences

Our failure to comply with applicable foreign regulatory requirements, including those administered by authorities of the EEA countries, could result in enforcement actions against us and impair our ability to market products in the EEA in the future.

Any changes to the membership of the EU, such as the departure of the United Kingdom under Brexit, may impact the regulatory requirements for impacted countries and impair our business operations and our ability to market products in such countries.

Any changes to the membership of the EU, such as the departure of the United Kingdom under Brexit, may impact the regulatory requirements for

impacted countries and impair our business operations and our ability to market products in such countries.

For further discussion of the EU MDR, see Part I, Item 1, “Business - Regulation of Medical Devices.”

40 unchanged sentences

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