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Item 1A. Risk Factors

2026-03-16 compared with 2025-03-10 · 163 added, 141 removed, 296 unchanged (51% of the section changed)

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These factors, as well as additional risks and uncertainties not currently known to us or that we currently believe are immaterial, may currently have, or may have, a significant impact on our business, operating results or financial condition.

Actual results could differ materially from those projected in the forward-looking statements contained in this Form 10-K as a result of the risk factors discussed below and elsewhere in this Form 10-K.

Actual results could differ materially from those projected in the forward-looking statements contained in this Annual Report on Form 10-K as a result of the risk factors discussed below and elsewhere in this Annual Report on Form 10-K.

Business and Operational Risks

Our business could be negatively affected by cyber or other information security breaches, threats or other disruptions.

We routinely experience cybersecurity threats, threats to our information technology infrastructure and attempts to gain access to our sensitive information, as do our customers, suppliers, prime and subcontractors, and joint venture partners.

Our business could be negatively affected by cyber or other information security threats, breaches, or other disruptions.

We experience similar security threats at customer sites that we operate and manage as a contractual requirement.

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While we have security measures in place to protect our data and the data of our customers or end-users of our services, our services and underlying infrastructure may in the future be materially breached or compromised as a result of the following:

• Third-party attempts to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords or other information to gain access to our customers' data, our data or our IT systems;

• Third-party attempts to fraudulently induce employees, contractors or customers into disclosing sensitive information such as user names, passwords or other information to gain access to our customers' data, our data or our IT systems;

• Efforts by individuals or groups of hackers and sophisticated organizations, including state-sponsored organizations or nation-states;

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• Employee or contractor errors or intentional acts that compromise our security systems.

To the extent possible, these risks are mitigated by our ability to maintain and improve information security governance policies, enhanced processes and internal security controls, including our ability to escalate and respond to known and potential risks.

Although we have developed systems and processes designed to assess, identify, and manage material cybersecurity risks, we can provide no assurances that such systems and processes will provide absolute security.

In the normal course of business, we are the target of malicious cyberattack attempts.

To date, any such attempts have not been material to us, including to our reputation or business operations, or had a material financial impact, but there can be no assurance that future cyberattacks will not be material.

A security breach or incident could result in unauthorized parties obtaining access to, or the denial of authorized access to, our IT systems or data, or our customers' systems or data, including intellectual property, proprietary, sensitive, or other confidential information.

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Finally, the detection, prevention and remediation of known or potential security vulnerabilities, including those arising from third-party hardware or software, may result in additional financial burdens due to additional direct and indirect costs, such as additional infrastructure capacity spending to mitigate any system degradation.

If our customers do not renew their subscriptions or contracts for our solutions and services and expand our relationships with them, our revenue could decline and our results of operations would be adversely impacted.

To continue to maintain and grow our business, it is important that our existing customers renew their subscriptions or contracts for our solutions and services when existing contract terms expire.

Our customers have no obligation to renew or extend their subscriptions or contracts for our solutions or services after the expiration of the contractual periods, which vary in length, and in the normal course of business, some customers have elected not to renew or extend.

If our customers do not renew their contracts for our solutions and services, or subscriptions, and expand our relationships with them, our revenue could decline and our results of operations would be adversely impacted.

To continue to maintain and grow our business, it is important that our existing customers renew their contracts for our solutions and services or subscriptions when existing contract terms expire.

Our customers have no obligation to renew or extend their contracts for our solutions or services or subscriptions after the expiration of the contractual periods, which vary in length, and in the normal course of business, some customers have elected not to renew or extend.

It is difficult to predict attrition rates given the varying needs of our customer base.

Our attrition rates may increase or fluctuate as a result of a number of factors, including customer dissatisfaction with our services, customers' spending levels, mix of customer base, decreases in the number of users at our customers, competition, pricing increases or changes, and deteriorating general economic conditions or budgetary constraints.

Our attrition rates may increase or fluctuate as a result of a number of factors, including customer dissatisfaction with our solutions or services, customers' spending levels, mix of customer base, decreases in the number of users at our customers, competition, pricing increases or changes, and deteriorating general economic conditions or budgetary constraints.

Our future success also depends in part on our ability to expand our relationships with our current customers by selling additional features, solutions and services, more subscriptions or enhanced editions of our solutions and services.

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If our efforts to maintain and expand our relationships with our existing customers are not successful, our business could be harmed.

government may terminate, cancel, delay, modify or curtail our contracts at any time prior to completion and, if we do not replace them, this may adversely affect our future revenues and could adversely impact our earnings .

federal government may terminate, cancel, delay, modify or curtail our contracts at any time prior to completion and, if we do not replace them, this may adversely affect our future revenues and could adversely impact our earnings .

Many of the U.S.

government programs in which we participate, both as a contractor or subcontractor, extend for several years and include one or more base years and one or more option years.

federal government programs in which we participate, both as a contractor or subcontractor, extend for several years and include one or more base years and one or more option years.

These programs are typically funded on an annual basis.

Under these contracts, the U.S.

government generally has the right not to exercise options to extend or expand our contracts and may otherwise terminate, cancel, modify or curtail our contracts at its convenience.

First, the process may be delayed or disrupted.

Changes in congressional schedules, administration priorities, negotiations for program funding levels or unforeseen world events can interrupt the funding for a program or contract.

Second, funds for multi-year contracts can be changed in subsequent years in the appropriations process.

federal government generally has the right not to exercise options to extend or expand our contracts and may otherwise terminate, cancel, modify, delay, or curtail our contracts at its convenience.

Any decisions by the U.S.

federal government to not exercise contract options or to terminate, cancel, delay, modify or curtail our major programs or contracts (including those on which we serve as a subcontractor) would adversely affect our revenues, revenue growth and profitability.

Changes in congressional schedules, administration priorities, negotiations for program funding levels or unforeseen world events can delay or disrupt the funding for a program or contract.

Funds for multi-year contracts can be changed in subsequent years in the appropriations process.

In addition, the U.S.

government has increasingly relied on IDIQ contracts and other procurement vehicles that are subject to a competitive bidding and funding process even after the award of the basic contract, adding an element of uncertainty to future funding levels.

federal government has increasingly relied on IDIQ contracts and other procurement vehicles that are subject to a competitive bidding and funding process even after the award of the basic contract, adding an element of uncertainty to future funding levels.

Delays in the funding process or changes in funding or funding priorities can impact the timing of available funds or can lead to changes in program content, delay or termination at the government's convenience.

Any decisions by the U.S.

government to not exercise contract options or to terminate, cancel, delay, modify or curtail our major programs or contracts would adversely affect our revenues, revenue growth and profitability.

Federal government spending reductions, workforce changes, and policy shifts may impact our existing operations and future opportunities for new contracts.

Uncertainty exists regarding how future budget and program decisions will unfold, including the spending priorities of the new U.S.

Because we derive a substantial amount of our revenue from contracts with the federal government, either as a prime contractor or a subcontractor, changes in federal government budgetary priorities or policy shift could directly affect our financial performance.

Uncertainty exists regarding how future budget and program decisions will unfold, including the spending priorities of the U.S.

presidential administration and Congress, and what challenges budget reductions will present for us and our industry generally.

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As federal agencies face staffing challenges and budget constraints, there may be increased competition among contractors for limited government resources and attention, leading to more stringent contract terms and lower profit margins.

We continue to monitor these developments closely and are actively engaging with stakeholders to mitigate potential adverse impacts.

However, there can be no assurance that we will be able to fully offset the effects of any reductions in federal government spending, workforce changes, or policy shifts on our business operations and customer relationships.

We are dependent on a few key customer contracts for a significant portion of our future revenue, and a significant reduction in goods and services or delay in implementation to one or more of these contracts would reduce or delay our future revenue and could materially affect our anticipated operating results.

We rely on a few key customer contracts for a significant portion of our future revenue.

A significant reduction or delay in implementation to one or more of these contracts would materially affect our anticipated operating results.

A small number of our large customer contracts are expected to comprise a significant portion of our future revenue.

Our business will likely be harmed if any of our key customer contracts generate less revenue than we forecast, and the termination or delay of a large contract or multiple contracts could have a material adverse effect on our revenue and profitability.

Adverse events affecting the programs subject to these contracts, such as a significant decline in the traveling public or any significant supply chain delay, could also negatively affect our ability to process transactions under those contracts, which could adversely affect our revenue and the results of operations.

Adverse events affecting the programs subject to these contracts, such as inflation, labor challenges, shortage of materials, market volatility, a significant decline in the traveling public or supply chain disruption or delay, could also negatively affect our ability to process transactions under those contracts, which could adversely affect our revenue and the results of operations.

A failure to attract, train, retain and motivate key and skilled employees, including key members of our management team, would adversely affect our ability to execute our strategy and may disrupt our operations.

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Such changes in our executive management team may be disruptive to our business.

We are also substantially dependent on the continued service of our existing highly trained and skilled personnel, particularly our business development and operations group, because of the complexity of our services and technologies.

We are also substantially dependent on the continued service of our existing highly trained and skilled personnel, particularly our business development and operations groups, because of the complexity of our services and technologies.

The technology industry is subject to substantial and continuous competition for engineers and other subject matter experts with high levels of experience in designing, developing and managing software, cybersecurity, and Internet-related services, as well as competition for sales executives, data scientists and operations personnel.

Competition for skilled personnel is intense and many U.S.

government programs also require contractors to have security clearances, which can be difficult and time-consuming to obtain.

federal government contracts require us to have security clearances and employ personnel with specified levels of education, work experience, and security clearances.

Depending on the level of clearance, security clearances can be difficult and time-consuming to obtain.

Competition for skilled personnel is intense, and to the extent we cannot maintain or obtain the required level of expertise and clearances for our employees working on such contracts, we may not be able to fulfill our contractual obligations and may not generate the revenue anticipated from the contracts.

We may not be successful in attracting and retaining qualified personnel.

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Due to the competitive bidding process to obtain U.S.

government contracts, both upon initial issuance and re-competition, and the likelihood of bid protest, we may be unable to achieve or sustain revenue growth and profitability.

federal government contracts, both upon initial issuance and re-competition, and the likelihood of bid protest, we may be unable to achieve or sustain revenue growth and profitability.

Many of our U.S.

government contracts are awarded through a competitive bidding process upon initial award and renewal, and we expect this will continue.

federal government contracts are awarded through a competitive bidding process upon initial award and renewal, and we expect this will continue.

There is often significant competition and pricing pressure as a result of this process.

The competitive bidding process presents a number of risks, including the following:

• From time to time we expend substantial funds and time to prepare bids and proposals for contracts that are ultimately awarded to one of our competitors;

• From time to time we are unable to accurately estimate the resources and costs that will be required to perform any contract we are awarded, which results in substantial cost overruns and decreased margins;

• From time to time we encounter expense and delay when our competitors protest or challenge awards of contracts, and any such protest or challenge could result in a requirement to resubmit bids on modified specifications or in the termination, reduction or modification of the awarded contract;

• From time to time the protest of contracts awarded to us results in the delay of program performance and the generation of revenue while the protest is pending;

• From time to time we are not given the opportunity to re-compete for U.S.

government contracts previously awarded to us, and we may incur expenses to protest such a decision and ultimately may not succeed in competing for or winning such contract renewal.

government contracts for which we compete typically have multiple option periods, and if, as happens from time to time, we fail to win a contract or a task order, we generally will be unable to compete again for that contract for several years.

If we fail to win new contracts or to receive renewal contracts upon re-competition, it may result in additional costs and expenses and possible loss of revenue, and we will not have an opportunity to compete for these contract opportunities again until such contracts expire.

From time to time, the competitive bidding process presents a number of risks, including the following:

• We expend substantial funds and time to prepare bids and proposals for contracts that are ultimately awarded to one of our competitors;

• We are unable to accurately estimate the resources and costs that will be required to perform any contract we are awarded, which results in substantial cost overruns and decreased margins;

• We encounter expense and delay when our competitors protest or challenge awards of contracts, and any such protest or challenge could result in a requirement to resubmit bids on modified specifications or in the termination, reduction or modification of the awarded contract;

• We are not given the opportunity to re-compete for U.S.

federal government contracts previously awarded to us, and we may incur expenses to protest such a decision and ultimately may not succeed in competing for or winning such contract renewal.

federal government contracts for which we compete typically have multiple option periods, and if, as happens from time to time, we fail to win a contract or a task order, we generally will be unable to compete again for that contract for several years.

If we fail to win new contracts or to receive renewal contracts upon re-competition, our business and prospects will be adversely affected and that could cause our actual results to differ materially and adversely from those anticipated.

In addition, we will not have an opportunity to compete for these contract opportunities again until such contracts expire.

In the event a bid protest of contracts awarded to us are unsuccessful, the resulting delay of program performance and funding of work under protested contract awards may adversely affect our revenue and profitability.

Our competitive position and future profitability depend, in part, on our ability to develop new technologies .

Our ability to increase revenue from existing customers and attract new customers will depend, in part, on our ability to anticipate and respond effectively to rapid technological changes and market developments.

Further, our future profitability partly depends on our ability to successfully implement our strategies to increase adoption of our solutions and services and develop new offerings.

Virtually all of the products we produce and sell are highly engineered and require sophisticated manufacturing and system integration techniques and capabilities.

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Accordingly, our future performance in part depends on our ability to identify emerging technological trends, devote adequate research and development resources, develop and manufacture competitive products, and bring those products to market quickly at cost-effective prices.

If we fail to effectively anticipate, identify and respond to these changes in product or program needs in a timely manner, our business could be negatively impacted.

Likewise, if we are unable to develop new products that meet customers' changing needs, future sales and earnings may be adversely affected.

Further, the market for identity verification solutions is still developing, and the evolution of this market may result in the development of different technologies and industry standards that may not be compatible with our current solutions, products, or technologies.

Maintaining adequate research and development resources, such as the appropriate personnel and development technology, to meet the market demands is essential.

If we fail to effectively anticipate, identify and respond to these changes in product, solutions or program needs in a timely manner, our business could be negatively impacted.

Likewise, if we are unable to develop new products that meet customers' changing needs, future sales and earnings may be materially affected.

Our failure to maintain adequate research and development resources or to compete effectively with the research and development programs of our competitors would give an advantage to such competitors and our business, results of operations and financial condition could be adversely affected.

Our financial results may fluctuate due to increasing variability in our security solutions' sales and implementation cycles .

We market the majority of our security solutions directly to U.S.

government customers.

federal government customers.

The sale and implementation of our services to these entities typically involves a lengthy education process and a significant technical evaluation and commitment of capital and other resources, which adds uncertainty to our sales cycle.

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Any errors, disruption, performance problems, or failure in their or our operational infrastructure could adversely affect our business, financial condition, and results of operations.

We rely on the technology, infrastructure, and software applications of certain third parties in order to host or operate certain key platform features or functions of our business.

We rely on the technology, infrastructure, and software applications of certain third parties in order to host or operate certain key features or functions of our business.

Additionally, we rely on third-party computer hardware and cloud capabilities in order to deliver our solutions and services.

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Moreover, to the extent that we do not effectively address capacity constraints, upgrade our systems as needed, and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business, financial condition, and results of operations could be adversely affected.

The provisioning of additional cloud hosting capacity requires lead time.

For example, the provisioning of additional cloud hosting capacity requires lead time.

These third parties have no obligation to renew their agreements with us on commercially reasonable terms, or at all.

If these third parties increase pricing terms, terminate or seek to terminate our contractual relationship, establish more favorable relationships with our competitors, or change or interpret their terms of service or policies in a manner that is unfavorable with respect to us, we may be required to transfer to other cloud providers or invest in a private cloud.

If these third parties increase pricing terms, terminate or seek to terminate our contractual relationship, establish more favorable relationships with our competitors, or change or interpret their terms of service or policies in a manner that is unfavorable with respect to us, we may be required to (among other possible consequences) transfer to other cloud providers or invest in a private cloud.

In that case, we could incur significant costs and experience possible service interruption in connection with doing so, or risk loss of customer contracts if they are unwilling to accept such a change.

A failure to maintain our relationships with our third-party providers (or obtain adequate replacements), and to receive services from such providers that do not contain any material errors or defects, could adversely affect our ability to deliver effective products and solutions to our customers and adversely affect our business and results of operations.

We depend on third parties for certain operational services and components of our products in order to fully perform under our contracts, and the failure or disruption of a third party to perform these services could have an adverse impact on our business.

We rely on subcontractors and other suppliers to provide materials, major components and subsystems for our products or to perform a portion of the services that we provide to our customers.

Occasionally, we rely on only one or two sources of supply, which, if disrupted, could have an adverse effect on our ability to meet our commitments to customers.

We depend on these subcontractors and suppliers to fulfill their contractual obligations in a timely and satisfactory manner in full compliance with customer requirements.

If one or more of our suppliers or subcontractors is unable to satisfactorily provide on a timely basis the agreed-upon supplies or perform the agreed-upon services per its contractual obligations, our ability to perform our obligations as a contractor may be adversely affected, and we may be exposed to liability.

We rely on subcontractors and other suppliers (or contracting parties) to provide materials, major components and subsystems for our products or to perform a portion of the services that we provide to our customers.

A failure by one or more of our suppliers or contracting parties to provide agreed-upon materials, components or products, or perform agreed-upon services, on a timely basis and in a cost-effective manner, may adversely affect our ability to perform our obligations and adversely impact our results of operations.

Occasionally, we rely on only one or two sources of supply, which, if disrupted, could have an adverse effect on our ability to meet our commitments to customers, and could adversely affect our business, results of operations and financial condition.

From time to time, we depend on these subcontractors and suppliers to fulfill their contractual obligations in a timely and satisfactory manner in full compliance with customer requirements.

If one or more of our subcontractors or suppliers is unable to satisfactorily provide on a timely basis the agreed-upon supplies or perform the agreed-upon services per its contractual obligations, our ability to perform our obligations as a contractor may be adversely affected.

Our subcontractors' or suppliers' deficiencies can result in a customer terminating our contract for default, and we may be exposed to liability.

Additionally, we could experience cost overruns and delays in contract performance, both of which would negatively impact our business and results of operations.

Failure to adequately protect our intellectual property, technologies and proprietary rights could harm our business, competitive position, financial condition, and results of operations.

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Our earnings and profitability may vary based on the mix of our contracts and may be adversely affected by our failure to estimate and manage costs, time, and resources accurately.

Generally, our customer contracts are either firm-fixed-price ("FFP") or cost-reimbursable.

Under FFP contracts, which represented approximately 75% of our 2024 revenues, we receive a fixed price irrespective of the actual costs we incur, and consequently, we carry the burden of any cost overruns.

Due to their nature, fixed-price contracts inherently have more risk than cost-reimbursable contracts, particularly fixed-price development contracts where the costs to complete the development stage of the program can be highly variable, uncertain and difficult to estimate.

Under cost-reimbursable contracts, subject to a contract-ceiling amount in certain cases, we are reimbursed for allowable costs and paid a fee, which may be fixed or performance-based.

We generated 73.3% of our 2025 revenues from fixed-price contracts.

Under fixed-price contracts, we receive a fixed price irrespective of the actual costs we incur, and consequently, we carry the burden of any cost overruns.

Fixed-price contracts require us to price our contracts by predicting our expenditures in advance.

Due to their nature, fixed-price contracts inherently have more risk, particularly fixed-price development contracts where the costs to complete the development stage of the program can be highly variable, uncertain and difficult to estimate.

Under cost-reimbursable contracts, we are reimbursed for allowable costs and paid a fee, which may be fixed or performance-based.

In certain cases, cost-reimbursable contracts have a contract ceiling.

If our costs exceed the contract ceiling and are not authorized by the customer or are not allowable under the contract or applicable regulations, we may not be able to obtain reimbursement for all such costs and our fees may be reduced or eliminated.

In addition, because many of our contracts involve advanced designs and innovative technologies, we may experience unforeseen technological difficulties and cost overruns.

Under both types of contracts, we must accurately estimate the likely volume of work that will occur, costs and resource requirements involved, and assess the probability of completing individual transactions or milestones within the contracted time period and amount to maximize or earn profit on these contracts.

In addition, some of our contracts have provisions relating to cost controls and audit rights, and if we fail to meet the terms specified in those contracts, we may not realize their full benefits.

Further, some of our contracts have provisions relating to cost controls and audit rights, and if we fail to meet the terms specified in these contracts, we may incur additional costs or penalties.

Cost overruns or poor cost controls could lower earnings, or may incur a net loss on a contract, and cause a negative impact on our results of operations.

In addition, some of our contracts are under a time-and-material basis.

While this type of contracts is generally subject to less uncertainty than fixed-price contracts, to the extent that our actual labor costs are higher than the contract rates, our actual results could differ materially and adversely from those anticipated.

We will face risks associated with the growth of our business in new commercial markets and with new customer verticals, and we may not be able to achieve organic growth nor have the necessary resources to dedicate to the overall growth of our business.

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Entering new verticals and expanding in the verticals in which we are already operating will continue to require significant resources and there is no guarantee that such efforts will be successful or beneficial to us.

Although sales to a new customer have often led to additional sales to the same customer or similarly situated customers, it is uncertain we will achieve the same penetration and organic growth in the future, and our reputation, business, financial condition, and results of operations could be negatively impacted.

Although sales to a new customer have often led to additional sales to the same customer or similarly situated customers, it is uncertain if we will achieve the same penetration and organic growth in the future, and our reputation, business, financial condition, and results of operations could be negatively impacted.

As we expand into and within new and emerging markets and heavily regulated industry verticals, we will likely face additional regulatory scrutiny, risks, and burdens from the governments and agencies that regulate those markets and industries.

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If our partners do not effectively market and sell our solutions or services, or use greater efforts to market and sell their solutions or those of our competitors, or fail to meet the needs of our customers, or if we are unsuccessful in establishing or maintaining our relationships with our partners, our ability to compete in the marketplace or to grow our revenue could be impaired, and our results of operations could be adversely affected.

If we are unable to license third-party technology that is used in our products and services to perform key functions, the loss could have an adverse effect on our revenues.

Moreover, our revenues and operating results could differ materially and adversely from those anticipated if these partner organizations chose to offer directly to the customers solutions or services of the type that we provide.

We rely on third-party technology that is used in our products and services to perform key functions.

If we are unable to license third-party technology or the technology is subject to a security breach, without an alternative, it may negatively impact our business and results of operations.

We currently incorporate technology that we license from third parties, including software, into our solutions.

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The loss of, or our inability to obtain or maintain, any of these technology licenses could delay the introduction of new products or services until equivalent technology, if available, is identified, licensed and integrated.

In addition, our business is dependent on the integrity, security and efficient operation of the third-party technology, and we do not necessarily control the operations or data security of the third-party providers we utilize.

Our systems and operations or those of our third-party providers and partners could be exposed to damage, interruption, security breach and other risks from, among other things, computer viruses, other malicious software, and other cyberattacks.

The vulnerability of the technology to security breaches, failure of these systems to perform as designed, or inability to find suitable alternatives could result in significant disruptions to our operations and subject us to losses, liability or costs to remediate any of these system failures.

The inability to set optimal pricing structures for our solutions and services could adversely impact our business, financial condition and results of operations.

From time to time, we change our pricing model in response to competition, global economic conditions, and general reductions in our customers' spending levels, pricing studies, or changes in how our solutions are broadly consumed.

From time to time, we change our pricing models in response to competition, global economic conditions, and general reductions in our customers' spending levels, pricing studies, or changes in how our solutions are broadly consumed.

Similarly, as we introduce new products and services, or as a result of the evolution of our existing solutions and services, we may have difficulty determining the appropriate price structure for our products and services.

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Moreover, as we continue to target selling our solutions and services to larger organizations, these larger organizations may demand substantial price concessions.

We may also need to change pricing policies to accommodate government pricing guidelines for our contracts with federal, state, local, and foreign governments and government agencies.

We may also need to change pricing policies to accommodate government pricing guidelines for our contracts with federal, state, and local governments, and foreign governments.

If we are unable to modify or develop pricing models and strategies that are attractive to existing and prospective customers, while enabling us to significantly grow our sales and revenue relative to our associated costs and expenses in a reasonable period of time, our business, financial condition, and results of operations may be adversely impacted.

Sales to customers outside the United States expose us to risks inherent in international operations.

We sell our services outside the United States and are subject to unique risks and challenges associated with international business.

These risks and challenges include, but are not limited to, (a) compliance with governmental laws and regulations, (b) foreign business practices, (c) tax environments, (d) protection of our intellectual property, and (e) regional economic and geopolitical conditions.

Although our international operations have historically generated a small proportion of our revenues, any of these factors could negatively impact our business and results of operations.

In addition, these factors may also negatively impact our ability to successfully expand into emerging market countries, where we have little or no operating experience, where it can be costly and challenging to establish and maintain operations, including hiring and managing required personnel, and difficult to promote our brand, and where we may not benefit from any first-to-market advantage or otherwise succeed.

Artificial Intelligence ("AI") is an emerging technology and we may not be successful in our AI initiatives.

The field of AI is characterized by rapid technological advancements and is subject to significant risks and uncertainties.

Our future success may be dependent, in part, on our ability to develop, integrate, and effectively utilize AI technologies in our solutions or offerings.

Given that this is a new and complex technology, we may face challenges related to the designing, developing, and implementing AI processes and procedures.

There are significant risks involved in using AI and no assurances can be provided that our use of AI will enhance our products or services, produce the intended results or keep pace with the use of AI by our competitors.

For example, AI algorithms may be flawed, insufficient, of poor quality, rely upon incorrect or inaccurate data, reflect unwanted forms of bias, or contain other errors or inadequacies, any of which may not be easily detectable;

AI has been known to produce false or “hallucinatory” inferences or outputs;

our use of AI can present ethical issues and may subject us to new or heightened legal, regulatory, ethical, or other challenges;

and inappropriate or controversial data practices by developers and end-users, or other factors adversely affecting public opinion of AI, could impair the acceptance of AI solutions, including those incorporated in our products and services.

Further, this technology is subject to evolving industry standards and regulatory constraints.

Failures to effectively address these risks and uncertainties may materially and adversely affect our business and results of operations.

Recently, we launched Xacta.ai, the artificial intelligence capability at the core of our Xacta platform.

The use of AI in our solutions may carry considerable risk, and we cannot guarantee the achievement of the intended outcome.

The use of AI technologies involves issues associated with intellectual property, data privacy and security, consumer protection and equal opportunity laws.

Given the nature of AI technology, we may face significant competition from other companies and evolving regulatory landscape.

Our AI efforts may not be successful and our competitors may incorporate AI into their products or services more successfully than us.

Further, AI-related changes to our products and services may affect our customers' expectation or requirements in ways we cannot adequately anticipate or adapt to;

and may result to unsatisfied customers or inability to operate profitably and sustainably.

We may be subject to legal proceedings, regulatory disputes and governmental inquiries that could materially harm our business, operating results, and financial condition.

From time to time, in the ordinary course of business, we have been involved in legal proceedings and, in the future, may be subject to lawsuits, claims, government investigations and other proceedings.

From time to time, in the ordinary course of business, we are subject to a variety of legal proceedings and, in the future, may be subject to lawsuits, claims, government investigations and other proceedings.

These may include lawsuits and claims related to securities compliance, contracts, subcontracts, intellectual property, employment and wage claims, and other matters.

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potential adverse effects on reported operating results due to possible write-down of goodwill and other intangible assets associated with acquisitions;

• Unavailability of acquisition financing or unavailability of such financing on reasonable terms.

and unavailability of acquisition financing or unavailability of such financing on reasonable terms.

Any acquired business, technology, service or product could significantly underperform relative to our expectations and may not achieve the benefits we expect from possible acquisitions.

For all these reasons, our pursuit of an acquisition, partnership, investment, divestiture, merger, or joint venture could cause its actual results to differ materially from those anticipated and/or negatively affect our business.

Public confidence in, and acceptance of, identity platforms and biometrics generally, and our solutions specifically, will be a key factor in our business’s continued growth.

Public confidence in, and acceptance of, identity platforms and biometrics generally, and our solutions and services specifically, will be a key factor in our business’s continued growth.

Our future profitability will depend, in part, on public confidence in and acceptance of identity platforms and biometrics generally.

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While both identity platforms and biometrics have become more widely adopted, they may not achieve universal acceptance.

The attractiveness of our solutions to our customers is impacted by a number of factors, including the willingness of individuals to provide their personal information, including biometric information, to private or governmental entities, the level of confidence that such information can be stored safely and securely, and trust that such information will not be misused or breached.

The attractiveness of some of our solutions to our customers is impacted by a number of factors, including the willingness of individuals to provide their personal information, including biometric information, to private or governmental entities, the level of confidence that such information can be stored safely and securely, and trust that such information will not be misused or breached.

Certain individuals may never accept the use of biometrics as being safe.

If identity platforms and biometrics do not achieve universal acceptance, or our solutions are not competitive with our industry players, our growth could be limited, which could materially adversely affect our business, results of operations and financial condition.

On the other hand, any negative associations or perceptions with our solutions or biometrics could impede our business growth and could adversely affect our business, results of operations and financial condition.

Likewise, any breaches of our information technology systems, particularly on the use and collection of biometric information, may subject us to significant reputational, financial, legal or operational consequences.

Any decline or disruption in the travel industry could materially adversely affect our business, results of operations and financial condition.

Any decline or disruption in the travel industry or general economic downturn could materially and adversely affect our business, results of operations and financial condition.

One of our growth strategies is to increase revenue from our TSA PreCheck enrollment offerings.

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Because these events or concerns, and the full impact of their effects, are largely unpredictable, they can dramatically and suddenly affect travel behavior and other activities by consumers, and therefore demand for our TSA PreCheck services, which could materially adversely affect our business, results of operations and financial condition.

Additionally, as the Real ID Act will require passengers having compliant identification to travel by air in the United States by May 7, 2025, such regulation, if not extended, may decrease the number of travelers with compliant identification and, therefore, negatively impact the demand for our PreCheck services, which could materially adversely affect our business, results of operations and financial condition.

Actions that we are taking to restructure our business to improve profitability may not be as effective as anticipated.

We committed to a restructuring plan to streamline our workforce and realign our cost structure with the volume of our business.

We executed the restructuring plan in early 2023, incurring restructuring-related costs, including employee severance and related benefit costs and external consulting and advisory fees related to the implementation of the restructuring plan.

In addition, we undertook another restructuring action in the third quarter of 2024 in an effort to optimize our strategic priorities, and incurred severance and related benefit costs.

From time to time, the Company initiates restructuring activities to execute management's strategy and optimize its cost structure.

We executed a restructuring plan in early 2023 and implemented additional restructuring actions in the third quarter of 2024 and fourth quarter of 2025 to better align our operations with strategic priorities, resulting in restructuring-related costs.

We may be unable to realize the expected improved profitability and efficiency from our restructuring efforts.

We are subject to payment processing risk.

In certain instances, our customers pay for our products and services using their credit or debit cards as a payment method.

Under this arrangement, we rely on third-party systems to process payments.

Acceptance and processing of these payment methods are subject to certain rules and regulations, and require payment of interchange and other fees.

The increases in payment processing fees, any disruption in our payment processing systems, material changes in the payment network, delays in receiving payments from third-party payment processors, or changes to rules or regulations concerning payment processing could adversely impact our results of operations.

Goodwill and intangible assets represent significant assets on our balance sheet and any impairment on these assets could negatively impact our results of operations, and shareholders' equity.

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Adverse changes in macroeconomic conditions, industry and market consideration, overall financial performance, market capitalization and relevant entity-specific events could result in an impairment of goodwill and intangible assets.

For instance, in the third quarter of 2024, we decided to discontinue the development and/or sale of all or part of certain solutions for selected capitalized software projects, and certain projects which we ceased to use before the end of its useful life.

In the fourth quarter of 2025, we conducted a quantitative goodwill impairment analysis on the Secure Networks reporting unit.

The impairment analysis determined that the reporting unit's carrying value exceeded its estimated fair value as a result of continued contraction of Secure Networks' backlog in 2025.

Accordingly, we recognized a non-cash goodwill impairment of $14.9 million as of December 31, 2025.

Likewise, in the third quarter of 2024, we decided to discontinue the development and/or sale of all or part of certain solutions for selected capitalized software projects, and certain projects which we ceased to use before the end of their useful life.

As a result, we recognized an impairment loss on intangible assets of $11.7 million as of December 31, 2024.

Any future impairment of goodwill and intangible assets could have a negative impact on our results of operations and shareholders' equity in the period in which they are recognized.

Artificial Intelligence is an emerging technology and may involve significant risks and uncertainties.

The field of AI is characterized by rapid technological advancements and is subject to significant risks and uncertainties.

Our future success is dependent on our ability to develop, integrate, and effectively utilize AI technologies especially in our Xacta solution.

Given that this is a new and complex technology, we may face challenges related to the designing, developing, and implementing AI processes and procedures, including the risk of unforeseen operational failures.

Further, this technology is subject to evolving industry standards and regulatory constraints.

Failures to effectively address these risks and uncertainties may materially and adversely affect our business and results of operations.

Industry, Legal and Regulatory Risks

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A decline in the federal budget, changes in spending or budgetary priorities of the U.S.

government, a prolonged U.S.

government shutdown or delays in contract awards may significantly and adversely affect our future revenues, cash flow and financial results.

federal government, a prolonged U.S.

federal government shutdown or delays in contract awards may significantly and adversely affect our future revenues, cash flow and financial results.

Our customers are substantially U.S.

government agencies.

federal government.

The customer relationship with the U.S.

government involves certain unique risks.

federal government involves certain unique risks.

The programs we participate in must compete with other programs and policy imperatives during the budget and appropriations process.

If government funding relating to our contracts with the U.S.

government becomes unavailable, or is reduced or delayed, or planned orders are reduced, our contracts or subcontracts may be terminated or adjusted by the U.S.

government or the prime contractor.

federal government becomes unavailable, or is reduced or delayed, or planned orders are reduced, our contracts or subcontracts may be terminated or adjusted by the U.S.

federal government or the prime contractor.

Our operating results could also be adversely affected by spending caps or changes in the budgetary priorities of the U.S.

government, as well as delays in program starts or the award of contracts or task orders under contracts.

In recent years, U.S.

government appropriations have been affected by larger U.S.

government budgetary issues and related legislation.

As a result, DoD funding levels have fluctuated and have been difficult to predict.

federal government, as well as delays in program starts or the award of contracts or task orders under contracts.

In the past few years, U.S.

federal government appropriations have been affected by larger U.S.

federal government budgetary issues and related legislation.

As a result, federal government funding levels have fluctuated and have been difficult to predict.

Future spending levels are subject to a wide range of factors, including Congressional action.

In addition, over the last few years, the U.S.

government has been unable to complete its budget process before the end of its fiscal year, resulting in a series of continuing resolutions to extend sufficient funds only for U.S.

government agencies to continue operating.

federal government has been unable to complete its budget process before the end of its fiscal year, resulting in a series of continuing resolutions to extend sufficient funds only for U.S.

federal government agencies to continue operating.

When the U.S.

federal government fails to complete its appropriations process or provide for a continuing resolution, a full or partial government shutdown may occur.

A federal government shutdown could disrupt our performance, delay or cancellation of key programs, delay or cancel contract payments, or require us to incur substantial costs without reimbursement under the existing contracts.

Moreover, the national debt threatened to reach the statutory debt ceiling, and such an event in future years could result in the U.S.

government defaulting on its debts.

federal government defaulting on its debts.

As a result, government spending levels are difficult to predict beyond the near term due to numerous factors, including the external threat environment, future government priorities and the state of government finances.

Significant changes in government spending or changes in U.S.

government priorities, policies and requirements could have a material adverse effect on our results of operations, financial condition or liquidity.

Significant changes in government spending, changes in U.S.

federal government priorities, policies and requirements, or another prolonged government shutdown could have a material and adverse effect on our results of operations, financial condition or liquidity.

The Administration's actions, such as tariffs and other changes in international trade policies, could adversely and unexpectedly impact our business.

In January 2025, the then-new Administration began increasing tariff rates on numerous products from a range of nations.

The duration and extent of the tariffs and reciprocal tariffs, including the availability of certain exemption on some products, continue to evolve.

Changes in international trade policies, including higher tariffs on imported goods and materials, may increase the procurement costs of certain IT hardware we use, both internally or on our contracts, or sell to our customers.

These actions could adversely affect the Company and our supply chain, business partners, or customers, and have a negative effect on our business, results of operations, or financial condition.

We are subject to the seasonality of U.S.

government spending.

federal government spending.

We derive a substantial portion of our revenues from U.S.

government contracting, and as a result, we are subject to the annual seasonality of U.S.

government purchasing.

federal government contracting, and as a result, we are subject to the annual seasonality of U.S.

federal government purchasing.

Because the U.S.

government fiscal year ends on September 30, it is common for U.S.

government agencies to award extra tasks in the weeks immediately prior to the end of its fiscal year in order to avoid the loss of unexpended fiscal year funds.

federal government fiscal year ends on September 30, it is common for U.S.

federal government agencies to award extra tasks in the weeks immediately prior to the end of its fiscal year in order to avoid the loss of unexpended fiscal year funds.

As a result of this seasonality, we have historically experienced higher revenues in the second half of our fiscal year, with the pace of orders typically substantially reduced during the first half of our fiscal year.

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We are subject to substantial oversight from federal agencies that have the authority to suspend our ability to bid on contracts .

government contractor, we are subject to oversight by many agencies and entities of the U.S.

government that may investigate and make inquiries about our business practices and conduct audits of contract performance and cost accounting.

federal government contractor, we are subject to oversight by many agencies and entities of the U.S.

federal government that may investigate and make inquiries about our business practices and conduct audits of contract performance and cost accounting.

Depending on the results of any such audits and investigations, the U.S.

government may make claims against us.

government procurement regulations and practices, an indictment of a U.S.

government contractor could result in that contractor being fined and/or suspended for a period of time from eligibility for bidding on, or for the award of, new U.S.

government contracts.

federal government may make claims against us.

federal government procurement regulations and practices, an indictment of a U.S.

federal government contractor could result in that contractor being fined and/or suspended for a period of time from eligibility for bidding on, or for the award of, new U.S.

federal government contracts.

A conviction could result in debarment for a specified period of time, and debarment could materially and negatively affect our business and operating results.

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We may fail to meet our publicly announced guidance and other expectations about our business and operating results, which may cause our stock price to decline.

From time to time, we release guidance in our quarterly earnings conference calls, quarterly earnings releases, or otherwise, regarding our future performance that represents our management's estimates as of the date of release.

From time to time, we release or confirm guidance in our quarterly earnings conference calls, quarterly earnings releases, or otherwise, regarding our future performance that represents our management's estimates as of the date of release.

This guidance, which includes forward-looking statements, is based on projections prepared by our management.

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Our quarterly operating results fluctuate and may fall short of prior periods, our projections or the expectations of securities analysts or investors, which could adversely affect the trading price of our stock.

Our operating results have fluctuated from quarter to quarter at points in the past, and they may do so in the future.

Our operating and financial results have historically varied from quarter to quarter, and we expect that they may continue to do so in the future as a result of a number of factors, many of which are difficult to predict and outside of our control.

Therefore, the results of any one quarter may not be a reliable indication of results to be expected for any other quarter or for any year.

If we fail to increase our results over prior periods, to achieve our projected results or to meet the expectations of securities analysts or investors, our stock price may decline, and the decrease in the stock price may be disproportionate to the shortfall in our financial performance.

Results may be affected by various factors, including those described in these risk factors.

This variability and unpredictability could result in our failing to achieve our projected results or to meet the expectations of securities analysts or investors for any period.

As a result, our stock price may decline, and the decrease in the stock price may be disproportionate to the shortfall in our financial performance.

Certain of our U.S.

federal government contracts involve work of a confidential nature, which may limit investor insight into portions of our business.

We have historically had, and from time to time continue to have, contracts with or for the U.S.

federal government that are subject to confidentiality and/or security restrictions (for example, and without limitation, contracts involving classified information and classified programs).

We do not provide information about these contracts and programs, their risks or any disputes or claims relating to such contracts or programs.

As a result, investors have less insight into our confidential business or our business overall.

However, historically the business risks associated with our work on confidential or classified programs have not differed materially from those of our other government contracts.

We cannot guarantee that our share repurchase program will be fully implemented or that it will enhance long-term stockholder value.

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We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), the rules and regulations of Nasdaq, and other securities rules and regulations that impose various requirements on public companies.

Our management and other personnel devote substantial time and resources to comply with these rules and regulations.

Such compliance has increased, and will continue to increase, our legal, accounting and financial compliance costs, makes some activities more difficult, time-consuming and costly, and places significant strain on our personnel, systems and resources.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting, and to report any material weaknesses in such internal control.

We are continuing to develop and refine our disclosure controls, internal control over financial reporting and other procedures that are designed to ensure information required to be disclosed by us in our consolidated financial statements and in the reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.

Our current controls and any new controls we develop may become inadequate because of changes in conditions in our business.

Additionally, to the extent we acquire other businesses, the acquired company may not have a sufficiently robust system of internal controls and we may uncover new deficiencies.

Weaknesses in our internal controls may be discovered in the future.

Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our results of operations, may result in a restatement of our consolidated financial statements for prior periods, could cause us to fail to meet our reporting obligations, and could result in an adverse opinion regarding our internal control over financial reporting from our independent registered public accounting firm, and lead to investigations or sanctions by regulatory authorities.

Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and results of operations and could cause a decline in the price of our stock.

Section 404 of the Sarbanes-Oxley Act requires our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting.

We are also required to have our independent registered public accounting firm attest to, and issue an opinion on, the effectiveness of our internal control over financial reporting.

We may identify weaknesses or deficiencies that we may be unable to remedy before the requisite deadlines on those reports.

Our ability to comply with the annual internal control reporting requirements will depend on the effectiveness of our financial reporting and data system and controls across the Company.

We expect these systems and controls to involve greater expenditures and to become increasingly complex as our business grows.

To effectively manage this complexity, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures.

If we are unable to assert that our internal control over financial reporting is effective, or if, when required, our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline.

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Significant judgments, estimates, and assumptions used in preparing our consolidated financial statements include, or may in the future include, those related to revenue recognition, goodwill and other long-lived assets, and income taxes.

Weakened global economic conditions may adversely affect our industry, business, operating results and financial condition.

Global inflationary pressures and weakened global economic and political conditions may adversely affect our industry, business, operating results and financial condition.

For a variety of reasons, including geopolitical factors, the global economy in which we operate has faced, and may continue to face, heightened inflationary pressure, impacting the cost of doing business in both supply and labor markets.

These inflationary pressures have been and could continue to be exacerbated by geopolitical turmoil and economic policy actions.

With the U.S.

federal government being our primary customer, we generate a substantial portion of our revenue through various fixed-price and multi-year government contracts.

However, our approach to include modest price escalations in our bids for multi-year work may be insufficient to account and mitigate inflationary pressures, which may result in significant cost overruns on each contract.

Our overall performance depends in part on worldwide economic and geopolitical conditions.

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These economic conditions can arise suddenly and the full impact of such conditions can remain uncertain at any point in time.

In addition, geopolitical developments, such as the invasion of Ukraine by Russia and the conflict in Gaza, can increase levels of political and economic unpredictability globally and increase the volatility of global financial markets.

In addition, the heightened geopolitical risks, stemming from the Administration's foreign policy, Middle East instability, and the Ukraine-Russia war, can increase levels of political and economic unpredictability globally and increase the volatility of global financial markets.

Moreover, these conditions can affect the rate of information technology spending and could adversely affect our customers' ability or willingness to purchase our solutions and services, delay prospective customers' purchasing decisions, reduce the value or duration of their subscription contracts, or affect attrition rates, all of which could adversely affect our future sales and operating results.

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Because we do not carry insurance for all these possible losses, and significant recovery time could be required to resume operations, our financial condition and operating results could be materially adversely affected by such an event outside our control.

Increased scrutiny of our environmental, social and governance responsibilities may result in additional costs and risks, and may adversely impact our reputation, employee retention, and willingness of customers and suppliers to do business with us.

Investor advocacy groups, institutional investors, investment funds, proxy advisory services, stockholders, and customers are increasingly focused on companies' ESG practices.

Additionally, public interest and legislative pressure related to public companies' ESG practices continue to change.

If our ESG practices fail to meet regulatory requirements or investor or other industry stakeholders' evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, Board of Director and employee diversity, human capital management, employee health and safety practices, product quality, supply chain management, corporate governance and transparency and employing ESG strategies in our operations, our brand, reputation and employee retention may be negatively impacted and customers and suppliers may be unwilling to do business with us.

In addition, as we work to align our ESG practices with industry standards, we may expand our disclosures in these areas and doing so may result in additional costs and require additional resources to monitor, report, and comply with our various ESG practices.

If we fail to adopt ESG standards or practices as quickly as stakeholders desire, report on our ESG efforts or practices accurately, or satisfy the expectations of stakeholders, our reputation, business, financial performance and growth may be adversely impacted.

Changes in accounting principles or their application to us could result in unfavorable accounting charges or effects, which could adversely affect our results of operations and growth prospects.

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There are inherent climate-related risks wherever business is conducted.

Access to clean water and reliable energy in the communities where we conduct our business, whether for our offices, vendors, customers or other stakeholders, is a priority.

Any of our primary locations may be vulnerable to the adverse effects of climate change.

Climate-related events, including the increasing frequency of extreme weather events and their impact on U.S.

critical infrastructure, have the potential to disrupt our business, our third-party suppliers, or the operations and business of our customers, and may cause us to experience higher attrition, losses and additional costs to maintain or resume operations.

Increased public awareness and concern regarding global climate change may result in state, federal or international requirements to reduce or mitigate global warming, such as the imposition of carbon pricing mechanisms or stricter limits on greenhouse gas emissions.

If environmental or climate-change laws or regulations are adopted or changed that impose significant new costs, operational restrictions or compliance requirements upon our business or our products, they could increase our capital expenditures, reduce our margins and adversely affect our financial position.

In addition, our reputation and client relationships may be damaged as a result of our practices related to climate change, including our involvement, or our clients' involvement, in certain industries or projects associated with causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.

critical infrastructure, have the potential to disrupt our business and the businesses of our suppliers, customers, and partners, and may cause us to experience additional costs to maintain or resume operations.

In addition, current and emerging legal and regulatory requirements with respect to climate change may result in increased compliance requirements on our business, which could increase our capital expenditures, reduce our margins and adversely affect our financial position.

Further, our reputation and client relationships may be damaged as a result of our practices related to climate change, including our involvement, or our clients' involvement, in certain industries or projects associated with causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.

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