CMTL

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Certain information in this Quarterly Report on Form 10-Q contains, and oral statements made by our representatives from time to time may contain, forward-looking statements. Forward-looking statements can be identified by words such as: "anticipate," "believe," "continue," "could," "estimate," "expect," "future," "goal," "outlook," "intend," "likely," "may," "plan," "potential," "predict," "project," "seek," "should," "strategy," "target," "will," "would," and similar references to future periods, or the negative of those words and expressions, as well as statements in future tense. Forward-looking statements include, among others, statements regarding the expected completion of, the anticipated benefits of, and our plans, strategies and objectives relating to, the pending transaction with Gilat Satellite Networks Ltd, including the time frame in which such proposed transaction will occur, our expectations for further portfolio-shaping opportunities, our expectations for other operational initiatives, our expectations for completing further financing initiatives, our future performance and financial condition, the plans and objectives of our management and our assumptions regarding such future performance, financial condition, and plans and objectives that involve certain significant known and unknown risks and uncertainties and other factors not under our control which may cause our actual results, future performance and financial condition, and achievement of our plans and objectives of our management to be materially different from the results, performance or other expectations implied by these forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved. Forward-looking information is based on information available at the time and/or our good faith belief with respect to future events, and is subject to risks and uncertainties that are difficult to predict and many of which are outside of our control. Factors that could cause actual results to differ materially from current expectations include, among other things: our ability to consummate the transactions on a timely basis or at all; unexpected costs, liabilities or delays in connection with the proposed transaction; the significant transaction costs associated with the proposed transaction; negative effects of the announcement, pendency or consummation of the transaction on the market price of our common stock or operating results, including as a result of changes in key customer, supplier, employee or other business relationships; the risk of litigation or regulatory actions; our inability to retain and hire key personnel; further portfolio-shaping opportunities, other operational initiatives, and the completion of further financing activities; our ability to access capital and liquidity; changes in our executive leadership; the possibility that the expected benefits from our strategic activities will not be fully realized, or will not be realized within the anticipated time periods; the risk that acquired businesses will not be integrated successfully; impacts from, and uncertainties regarding, future actions that may be taken by activist stockholders; the possibility of disruption from acquisitions or dispositions, making it more difficult to maintain business and operational relationships or retain key personnel; the risk that we will be unsuccessful in implementing a tactical shift in our Satellite and Space Communications segment away from bidding on large commodity service contracts and toward pursuing contracts for our niche products and solutions with higher margins; the nature and timing of our receipt of, and our performance on, new or existing orders that can cause significant fluctuations in net sales and operating results; the timing and funding of government contracts; the timing and amount of adjustments to gross profits on long-term contracts; risks associated with international sales; rapid technological change; evolving industry standards; new product announcements and enhancements or rebranding; changing customer demands and/or procurement strategies and our ability to scale opportunities and deliver solutions to current and prospective customers; changes and uncertainty in prevailing economic and political conditions (including financial and capital market conditions), including as a result of military conflicts or any tariff, trade restrictions or similar matters; impact of government shutdowns; changes to government procurement practices; changes in the price of oil in global markets; changes in prevailing interest rates and foreign currency exchange rates; risks associated with our legal proceedings, customer claims for indemnification, and other similar matters; risks associated with our obligations under our credit facilities; risks associated with our large contracts; risks associated with supply chain disruptions; and other factors described in this and our other filings with the Securities and Exchange Commission ("SEC"). However, these risks are not the only risks that we face. Additional risks and uncertainties, not currently known to us or that do not currently appear to be material, may also materially adversely affect our business, financial condition and/or operating results in the future. We describe risks and uncertainties that could cause actual results and events to differ materially in the “Risk Factors” (Part I, Item 1A), “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part II, Item 7) and “Quantitative and Qualitative Disclosures about Market Risk” (Part II, Item 7A) sections in our Annual Report on Form 10-K filed with the SEC on November 10, 2025, as the same may be updated from time to time in our various filings with the SEC. We do not intend to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise, except as required by law. 47 Index OVERVIEW We are a leading provider of satellite and space communications technologies, terrestrial and wireless network solutions, Next Generation 9-1-1 ("NG9-1-1") and emergency services and cloud native capabilities. This includes the critical communications infrastructure that people, businesses, and governments rely on when durable, trusted connectivity is required, no matter where they are – on land, at sea, or in the air – and no matter what the circumstances – from armed conflict to a natural disaster. Our solutions are designed to fulfill our customers’ needs for secure wireless communications in the most demanding environments, including those where traditional communications are unavailable or cost-prohibitive, and in mission-critical and other scenarios where performance is crucial. Over the long-term, we anticipate future growth in our end markets due to a trend of increasing demand for global voice, video and data usage in recent years, in addition to the growth of emergency communication networks and related applications. We provide our solutions to both commercial and governmental, as well as both domestic and international customers. We manage our business through two reportable operating segments: Satellite and Space Communications and Allerium. See Part I. - Financial Information - Item 1. Notes to Condensed Consolidated Financial Statements - Note (14) - Segment Information for further description and information related our segments. Our Quarterly Financial Information Quarterly and period-to-period sales and operating results may be significantly affected by, among other things, short-term or long-term contracts with our customers, allowances for bad debt, impairments of long-lived assets (including goodwill) and changes in the estimated fair value of derivative instruments and warrants. In addition, our gross profit is affected by a variety of factors, including, among other things, the mix of products, systems and services sold, production efficiencies, provisions for excess and obsolete inventories, estimates of warranty expense, price competition and general economic conditions. Our gross profit may also be affected by the impact of any cumulative adjustments to contracts that are accounted for over time. Our contracts with the U.S. government (or prime contractors to the U.S. government) can be terminated for convenience at any time and orders are subject to unpredictable funding, deployment and technology decisions by our customers. Some of these contracts are indefinite delivery/indefinite quantity ("IDIQ") contracts and, as such, the U.S. government is not obligated to purchase any equipment or services under these contracts. We have, in the past, experienced and we continue to expect significant fluctuations in sales and operating results from quarter-to-quarter and period-to-period due to these factors. As such, comparisons between periods and our current results may not be indicative of a trend or future performance. CRITICAL ACCOUNTING POLICIES We consider certain accounting policies to be critical due to the estimation process involved in each. Revenue Recognition. In accordance with FASB ASC 606 - Revenue from Contracts with Customers ("ASC 606"), we record revenue in an amount that reflects the consideration to which we expect to be entitled in exchange for goods or services promised to customers. See Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (3) - Revenue Recognition and Part I. - Financial Information - Item 4. Controls and Procedures for further information. A cost-to-cost measure of progress is principally used to account for contracts in our Satellite and Space Communications segment and, to a lesser extent, certain location-based and messaging infrastructure contracts in our public safety and location technologies product line within our Allerium segment. For over time contracts using a cost-to-cost measure of progress, we have an estimate at completion ("EAC") process in which management reviews the progress and execution of our performance obligations and calculates an estimated contract profit based on total estimated contract revenue and cost. Since certain contracts extend over a long period of time, the impact of revisions in revenue and/or cost estimates during the progress of work may impact current period earnings through a cumulative adjustment. Additionally, if the EAC process indicates a loss, a provision is made for the total anticipated loss in the period that it becomes evident. Contract revenue and cost estimates for significant contracts are generally reviewed and reassessed at least quarterly. We perform on a broad range of contracts whose revenue is recognized over time, including the development of complex and advanced customized solutions which often require the application of new technologies. Cost estimates on fixed-price development contracts and early stage/low-rate production contracts are inherently more uncertain as to future events than on mature, full-rate production contracts. As a result, for fixed-price development contracts and early stage/low-rate production contracts, there is typically more variability in those estimates and greater financial risk associated with unanticipated cost growth. Risks include, but are not limited to: technical engineering risks related to the underlying technologies being developed; schedule risks related to completing performance obligations timely; and customer risks related to changing specifications. 48 Index The estimation of contract revenue, cost and progress toward completion requires the use of judgment, which can be affected by any number of factors over time and which may cause our actual results to differ materially from those estimates, as facts and circumstances change or become known to us. Changes in estimates can occur for a variety of reasons including, but not limited to: changes in the availability, productivity and cost of labor; the effect of change orders on contract scope; the resolution of engineering risks at lower or higher costs than anticipated; the availability and cost of material components and subcontracts, as well as the performance of our subcontractors or suppliers; the impact of unanticipated changes in our customers' schedules; and changes in indirect cost allocations, such as overhead. The impact of gross favorable and unfavorable changes in contract estimates on reported gross margin is presented in the table below: Three months ended April 30, Nine months ended April 30, 2026 2025 2026 2025 Gross favorable changes $ 573,000 2,469,000 $ 4,684,000 7,628,000 Gross unfavorable changes (1,006,000) (1,747,000) (4,691,000) (14,081,000) Net changes $ (433,000) 722,000 $ (7,000) (6,453,000) Impairment of Long-Lived Assets, Including Goodwill. As of April 30, 2026, total goodwill recorded on our Condensed Consolidated Balance Sheet aggregated $204.6 million (of which $30.5 million relates to our Satellite and Space Communications segment and $174.1 million relates to our Allerium segment). Additionally, as of April 30, 2026, net intangibles recorded on our Condensed Consolidated Balance Sheet aggregated $158.4 million (of which $37.3 million relates to our Satellite and Space Communications segment and $121.1 million relates to our Allerium segment). For purposes of reviewing impairment and the recoverability of goodwill and other intangible assets, our segments each constitute a reporting unit and we must make various assumptions in determining their estimated fair values. See Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (15) - Long-lived Assets, including Goodwill for further information. Ongoing and future actions supporting our transformation plan could result in a material impairment of our goodwill and/or intangible assets. Provision for Warranty Obligations. We provide warranty coverage for most of our products, including products under long-term contracts, for a period of at least one year from the date of shipment. We record a liability for estimated warranty expense based on historical claims, product failure rates and other factors. Costs associated with some of our warranties that are provided under long-term contracts are incorporated into our estimates of total contract costs. There exist inherent risks and uncertainties in estimating warranty expenses, particularly on larger or longer-term contracts. If we do not accurately estimate our warranty costs, any changes to our original estimates could be material to our results of operations and financial condition. Accounting for Income Taxes. Our deferred tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities and applying enacted tax rates expected to be in effect for the year in which we expect the differences to reverse. Our provision for income taxes is based on domestic (including federal, state and local) and international statutory income tax rates in the tax jurisdictions where we operate, permanent differences between financial reporting and tax reporting and available credits and incentives. The U.S. and Canadian governments are our most significant income tax jurisdictions. For tax positions taken or expected to be taken in a tax return, we account for unrecognized tax benefits using a “more-likely-than-not” threshold for financial statement recognition and measurement. We may be challenged upon review by the applicable taxing authority and positions taken by us may not be sustained. We recognize all or a portion of the benefit of income tax positions in our GAAP results only when we have made a determination that it is "more-likely-than-not" that the tax position will be sustained upon examination, based upon the technical merits of the position and other factors. For tax positions that are determined as "more-likely-than-not" to be sustained upon examination, the tax benefit recognized is the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. We recognize potential interest and penalties related to uncertain tax positions in income tax expense. In assessing the need for a valuation allowance for deferred tax assets, we consider all positive and negative evidence, including past financial performance, timing and judgments about future taxable income and tax planning strategies. Valuation allowances are established, when necessary, to reduce net deferred tax assets to the amount "more-likely-than-not" expected to be realized. We continuously evaluate additional facts representing positive and negative evidence in determining our ability to realize these deferred tax assets. Significant judgment is required in determining income tax provisions and tax positions. The ultimate outcome of tax exposures and risks involves significant uncertainties. If actual outcomes differ materially from these estimates, they could have a material impact on our results of operations and financial condition. 49 Index Our U.S. federal income tax returns for fiscal 2022 through 2025 are subject to Internal Revenue Service ("IRS") audit, including our fiscal 2023 income tax return which was recently selected by the IRS for examination. None of our state and foreign income tax returns prior to fiscal 2021 are subject to audit. Future tax assessments or settlements could have a material adverse effect on our consolidated results of operations and financial condition. Capitalized Engineering Costs. We generally expense all research and development costs. Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other personnel-related expenses associated with product development. Research and development expenses also include third-party development and programming costs. Costs incurred internally in researching and developing software to be sold are charged to expense until technological feasibility has been established for the software. Judgment is required in determining when technological feasibility of a product is established. Technological feasibility for our advanced communication software solutions is generally reached after all high-risk development issues have been resolved through coding and testing. Generally, this occurs shortly before the products are released to customers and when we are able to validate the marketability of such product. Once technological feasibility is established, all software costs are capitalized until the product is available for general release to customers. To date, costs capitalized related to software developed for the purpose of selling to third parties was not material, but could increase in the future. As it relates to software developed for the purpose of internal-use (e.g., hosted "SaaS" applications within our Allerium segment), costs capitalized primarily consist of direct labor and third-party vendor costs associated with creating the software. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred), the application development stage (certain costs are capitalized and certain costs are expensed as incurred) and the post-implementation/operation stage (all costs are expensed as incurred). Costs capitalized in the application development stage include costs related to the design and implementation of the selected software components, software build and configuration infrastructure, and software interfaces. Capitalization of costs requires judgment in determining when a project has reached the application development stage, the proportion of time spent in the application development stage, and the period over which we expect to benefit from the use of that software. For the three months ended April 30, 2026 and 2025, internal-use software costs capitalized were $1.4 million and $1.2 million, respectively. For the nine months ended April 30, 2026 and 2025, internal-use software costs capitalized were $4.6 million and $2.7 million, respectively. Capitalized internal use software costs are amortized once the software is placed in service on the straight-line method over the estimated useful life of the software, which is generally three years. Provisions for Excess and Obsolete Inventory. We record a provision for excess and obsolete inventory based on historical and projected usage trends. Other factors may also influence our provision, including decisions to restructure or exit a product line, technological change and new product development. These factors could result in a change in the amount of excess and obsolete inventory on hand. Additionally, our estimates of future product demand may prove to be inaccurate, in which case we may have understated or overstated the provision required for excess and obsolete inventory. In the future, if we determine that our inventory was overvalued, we would be required to recognize such costs in our financial statements at the time of such determination. Any such charge could be material to our results of operations and financial condition. Allowance for Doubtful Accounts. We perform credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness, as determined by our review of our customers’ current credit information. Generally, we will require cash in advance or payment secured by irrevocable letters of credit before an order is accepted from an international customer that we do not do business with regularly. In addition, we seek to obtain insurance for certain domestic and international customers. We monitor billing events, collections and payments from our customers and maintain an allowance for doubtful accounts based upon our historical experience and any specific customer collection issues that we have identified. In light of ongoing tight credit market conditions and high interest rates, we continue to see requests from our customers for higher credit limits and longer payment terms. We have, on a limited basis, approved certain customer requests. Also, we can from time to time experience significant increases in the overall level of contract assets (i.e., unbilled receivables) related to large, long-term contracts with certain U.S. government, domestic and international customers. We continuously monitor our accounts receivable credit portfolio. 50 Index We may not be able to accurately predict our future credit loss experience. Measurement of credit losses requires consideration of historical loss experience, including the need to adjust for changing business conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates and the financial health of specific customers. Future changes to the estimated allowance for doubtful accounts could be material to our results of operations and financial condition. Derivative Instruments and Warrant Liabilities. With the assistance of a third party expert, we evaluate our financial instruments, including our Credit Facility, Subordinated Credit Facility, Convertible Preferred Stock and warrants to issue our common stock pursuant to the terms of such instruments, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. Such evaluation considers a qualitative and quantitative assessment of whether the host instrument is more debt or equity-like, and if embedded derivatives should be bifurcated from the host instrument and/or combined for accounting purposes. For derivatives that are accounted for as liabilities, the derivative is initially recorded at its estimated fair value and is then re-valued at each reporting date, with changes in its estimated fair value reported in our Condensed Consolidated Financial Statements. To estimate such fair values, with the assistance of a third party valuation expert, we primarily use Monte Carlo simulation models, on a with and without basis, or Black-Scholes option pricing models, each adjusted for instrument-specific terms. Due to the nature of our derivative instruments and warrant liabilities, we must use Level 3 inputs for estimating fair value, which are unobservable inputs developed using the best available information under the circumstances. Level 3 inputs are supported by little or no market activity, are significant to the fair value of the assets or liabilities and reflect our assumptions related to how market participants would use similar inputs to price the asset or liability. Accordingly, our estimates and assumptions could prove to be inaccurate. Also, changes in such estimates and assumptions from period to period could be material to our results of operations and financial condition. See Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (4) - Fair Value Measurements and Financial Instruments for further information. Fiscal 2026: Third Quarter Results and Business Outlook On June 14, 2026, subsequent to quarter end, we entered into a transaction to sell most of Comtech's Satellite and Space Communications ("S&S") business to an affiliate of Gilat Satellite Networks Ltd. As the criteria for reporting the portion of the S&S business being sold as "held for sale" was not met as of April 30, 2026, the Condensed Consolidated Financial Statements as of and for the three and nine months ended April 30, 2026 and 2025 reflect the portion of the S&S business being sold as "held and used." The portion of the S&S business being retained by Comtech principally includes advanced cybersecurity training in support of U.S. government and certain commercial and university customers. In connection with the above transaction, on June 14, 2026, we also entered into additional amendments and or exchange agreements related to our Credit Facility, Subordinated Credit Facility and Convertible Preferred Stock agreements. See Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (1) General - Subsequent Events, and Current Report on Form 8-K filed by us with the SEC on June 15, 2026, for more detailed information about these transactions. Financial results for the third quarter of fiscal 2026 include: •Consolidated net sales were $106.0 million, compared to $126.8 million in the third quarter of fiscal 2025. Approximately 17% of the decrease in consolidated sales occurred in the Allerium segment – Allerium reported net sales consistent with the third quarter of fiscal 2025, excluding $3.0 million of net sales in the prior year period related to a negotiated, retroactive billing event to recover costs incurred in previous quarters. As anticipated, the decline in net sales in the Satellite and Space Communications (“S&S”) segment primarily reflects the decision to phase out and eliminate certain low margin and working capital intensive revenues, such as the Very Small Aperture Terminal (“VSAT”) Satellite Systems and Services contract, as well as the impact of the U.S. government shutdown on funding for certain programs; •Gross margin increased to 34.0%, compared to 30.7% in our third quarter of fiscal 2025; the improvement in our gross margin percentage builds upon the quarterly trend achieved throughout fiscal 2025 and the first two quarters of fiscal 2026 to reduce cost of goods sold and to improve overall product mix; •GAAP net loss attributable to common stockholders was $14.3 million and included, among other things: (i) non-cash net charges of $11.3 million, of which (a) $10.8 million related to net paid-in-kind dividends associated with our Convertible Preferred Stock; (b) $7.2 million related to the amortization of deferred financing costs, debt discount, accreted interest and interest paid-in-kind associated with our senior and subordinated credit facilities; (c) $4.6 million related to the amortization of intangible assets and (d) $1.2 million related to the amortization of stock-based compensation; offset in part by (e) a $12.5 million benefit related to the remeasurement of warrants and derivatives; and (ii) cash charges of $2.4 million consisting primarily of restructuring costs; 51 Index •GAAP EPS net loss of $0.47 and Non-GAAP EPS net loss of $0.22; •Adjusted EBITDA (a Non-GAAP financial measure discussed below) of $8.2 million, compared to $12.6 million for the third quarter of fiscal 2025; •New bookings (also referred to as orders) of $70.5 million, resulting in a quarterly book-to-bill ratio of 0.67x (a measure defined as bookings divided by net sales); as part of our transformation plan, we have refocused and prioritized our product development and sales efforts to target higher margin opportunities in which we have greater differentiation; •Backlog of $696.1 million as of April 30, 2026, compared to $672.1 million as of July 31, 2025 and $708.1 million as of April 30, 2025; •Revenue visibility of approximately $1.1 billion as of April 30, 2026; we measure this revenue visibility as the sum of our $696.1 million of funded backlog, plus the total unfunded value of certain multi-year contracts that we have received and from which we expect future orders; and •Cash flows provided by operating activities were $6.1 million, our fifth consecutive quarter of positive operating cash flows; this includes $2.4 million in aggregate payments for restructuring costs, including severance, and CEO transition costs; cash flows provided by operating activities would have been $8.5 million without these costs; operating cash flows in the third quarter of fiscal 2026 include $4.1 million of total net cash paid principally for interest and, to a much lesser extent, income taxes. Non-GAAP financial measures discussed above are reconciled to the most directly comparable GAAP financial measures in the table included in the below section “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Comparison of the Results of Operations for the Three Months Ended April 30, 2026 and 2025” and “Comparison of the Results of Operations for the Nine Months Ended April 30, 2026 and 2025.” Other Key Business Developments and Updates Satellite and Space Communications (or "S&S") Our Satellite and Space Communications segment continues to focus on capitalizing on our differentiated capabilities, thoughtfully evaluating the product portfolio and implementing initiatives to improve margins and cash flow generation. In the third quarter of fiscal 2026, S&S experienced a strengthening in its funded orders, resulting in a strong book-to-bill ratio of 1.04x. The last time S&S achieved a book-to-bill ratio greater than 1.0x was in the first quarter of fiscal 2024. The significant improvement in S&S bookings during the third quarter of fiscal 2026 includes the receipt of a troposcatter order from an international customer, in addition to the release of pent up orders and funding which we believe were delayed as a result of the prolonged U.S. government shutdown earlier in the fiscal year. During the third quarter of fiscal 2026, some of the larger orders awarded to S&S include: •over $7.0 million in funding for several of our rapidly deployable troposcatter Modular Transportable Transmission Systems ("MTTS"), intended for use by an international government end customer; •approximately $6.0 million in incremental funding for ongoing training and support of complex cybersecurity operations for U.S. government customers; •approximately $4.9 million in incremental funding to design and manufacture antenna related equipment for a U.S. government end customer; •over $4.2 million in funded orders from a long-time international customer for the procurement of ongoing maintenance and support services related to long range missile and rocket launch tracking systems; •over $3.2 million of funded orders for various types of antennas and radio feeds for a domestic prime contractor to the U.S. government; 52 Index •approximately $2.4 million in aggregate orders related to satellite ground infrastructure solutions, including production units, intended for use in a new LEO satellite constellation network being deployed; subsequent to quarter end, we received orders totaling over $10.0 million to develop and deliver initial prototypes for high frequency LEO satellite communications equipment; and •in excess of $2.0 million in funded orders from a domestic prime contractor to the U.S. government for certain types of amplifiers. In September 2025, as part of our operational efficiency and cost savings plans, we made the decision to migrate certain production capabilities and operational functions to our manufacturing operations in Chandler, Arizona. Such initiative is expected to be substantially completed in fiscal 2026, result in increased manufacturing efficiencies, allow us to further optimize our facilities footprint and result in recurring annualized cost savings over time of approximately $3.0 million. In March 2025, we announced the delivery of our first Digital Common Ground 7000 ("DCG-7000") high speed, small form factor, software-defined modems to Lite Coms for integration, interoperability and performance testing across diverse government and commercial satellite communications applications and ground terminal configurations. DCG-7000 modems support DVB-S2X, along with other protected waveforms, and incorporates modern cybersecurity design principles, including integrated Transmission Security (“TRANSEC”) for over-the-air transmission. In December 2024 (fiscal 2025), we received notice from our prime contractor to stop work associated with a legacy U.S. Marine Corps contract, which has since been terminated for convenience and for which we have submitted a termination claim. Total receivables related to such contract were $10.5 million as of April 30, 2026. While we believe that we have meritorious termination claims, some or all of our receivable could be at risk of not being collected. Future results of operations related to our troposcatter solutions product line depend, in part, on the nature, timing and amount associated with resolving this matter. Allerium With strategic wins in the U.S., Canada and Australia, we believe Allerium's position as a trusted leader in 9-1-1, NG9-1-1 and public safety applications positions us increasingly well to deliver similarly sophisticated solutions for other types of emergencies. New emergency-requesting devices, such as "wearables," vehicles, smart speakers and AI-capable cameras, along with new delivery methods, such as satellite networks, are expected to drive innovation and growth within the public safety market over time. During the third quarter of fiscal 2026, we were awarded various orders including: •approximately $6.0 million of additional funding related to a renewal of NG9-1-1 services for a customer in the midwestern region of the U.S.; •$2.0 million in funding from a domestic Tier 1 mobile network operator to support the development and migration of various web-based mobile network services; and •over $1.6 million in funded orders from another domestic Tier 1 mobile network operator in support of various mobile network services. In April 2026, we announced that Allerium has reached a significant milestone in its statewide contract to design, deploy, and operate NG9-1-1 services for the Commonwealth of Kentucky. In December 2025, Allerium migrated the first Public Safety Answering Point (“PSAP”), Bluegrass 911 Communications, onto the Commonwealth’s new service and delivered the first NG9-1-1 text and voice calls to this Lancaster, Kentucky agency. After months of planning leading to the first cutover, the program has already migrated 12 PSAPs in its first four months of operation, establishing a strong foundation for the continued statewide transition to NG9-1-1 across Kentucky. The milestone comes just over one year after Allerium first announced its NG9-1-1 partnership with the Commonwealth and the Kentucky 911 Services Board in March 2025. Under this multi-year contract, Allerium’s public safety-grade service will deliver seamless interoperability and integration while enabling new and advanced communication capabilities, such as geospatial location routing, all backed by proven products, processes, and statewide PSAP and OSP migration success spanning multiple Emergency Services Internet Protocol Network (“ESInet”) and Next Generation Core Services (“NGCS”) deployments. 53 Index In May 2026, we announced the opening of our new purpose-built facility in Gatineau, Quebec. The new office reflects Allerium’s continued commitment to Canada and its long-standing presence in the region. The City of Gatineau and the Province of Quebec helped enable this next phase of growth, funding the development of Allerium’s new facility. Allerium’s new facility in Canada builds on strong operational momentum. This includes the recent go-live of the Gatineau 9-1-1 agency, as well as more than a dozen NG9-1-1 upgrades in Canada this fiscal year. These milestones reflect Allerium’s expanding role in modernizing emergency communications infrastructure and supporting public safety agencies in Canada and worldwide. The Gatineau facility strengthens Allerium’s ability to support customers across Canada, while contributing to a broader footprint of public safety agencies across North America and internationally. Business Outlook While our operational and financial performance have improved over the past several quarters, the operating environment remains largely unpredictable due to many factors, including but not limited to those matters discussed throughout this Form 10-Q and in our Cautionary Statement Regarding Forward-Looking Statements in this Form 10-Q. Such conditions and factors have caused and could cause variability in our financial results from period to period. Accordingly, we are not providing forward-looking guidance on a GAAP or Non-GAAP basis. Additional information related to our Business Outlook for Fiscal 2026 and a definition and explanation of Adjusted EBITDA is included in the below section Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Comparison of the Results of Operations for the Three Months Ended April 30, 2026 and 2025” and “Comparison of the Results of Operations for the Nine Months Ended April 30, 2026 and 2025.” COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED APRIL 30, 2026 AND 2025 Net Sales. Consolidated net sales were $106.0 million and $126.8 million for the three months ended April 30, 2026 and 2025, respectively, representing a decrease of $20.8 million, or 16.4%. Such decrease primarily reflects lower net sales in our Satellite and Space Communications segment and, to a lesser extent, our Allerium segment. Satellite and Space Communications Net sales in our Satellite and Space Communications segment were $50.3 million for the three months ended April 30, 2026, as compared to $67.6 million for the three months ended April 30, 2025, a decrease of $17.3 million, or 25.6%. As anticipated, the decline in net sales primarily reflects the decision to phase out and eliminate certain low margin and working capital intensive revenues, such as the Very Small Aperture Terminal (“VSAT”) Satellite Systems and Services contract, as well as the impact of the U.S. government shutdown on funding for certain programs. As part of this repositioning, S&S is pursuing sales of innovative, higher-margin solutions such as digital common ground modems, network solutions and rapidly deployable troposcatter Modular Transportable Transmission Systems ("MTTS") and multi-path radios ("MPRs"). This segment represented 47.5% of consolidated net sales for the three months ended April 30, 2026, as compared to 53.3% for the three months ended April 30, 2025. Our book-to-bill ratio (a measure defined as bookings divided by net sales) in this segment for the three months ended April 30, 2026 and 2025 was 1.04x and 0.80x (excluding a $36.4 million debooking in the prior fiscal year associated with the U.S. Army GFSR contract), respectively. In the more recent quarter, S&S experienced a strengthening in its funded orders. The last time S&S achieved a book-to-bill ratio greater than 1.0x was in the first quarter of fiscal 2024. The significant improvement in S&S bookings during the third quarter of fiscal 2026 includes the receipt of a large troposcatter order from an international customer, in addition to the release of pent up orders and funding which we believe were delayed as a result of the prolonged U.S. government shutdown earlier in the fiscal year. Allerium Net sales in our Allerium segment were $55.7 million for the three months ended April 30, 2026, as compared to $59.2 million for the three months ended April 30, 2025, a decrease of $3.5 million, or 5.9%. Net sales in the more recent period primarily reflect lower net sales of next-generation 9-1-1 ("NG9-1-1") and call routing solutions. In particular, net sales for the third quarter of fiscal 2025 included over $3.0 million of incremental NG9-1-1 services revenue due to reaching an agreement with a statewide customer to retroactively invoice for certain recurring services provided in the past. Such benefit did not repeat in fiscal 2026. This segment represented 52.5% of consolidated net sales for the three months ended April 30, 2026, as compared to 46.7% for the three months ended April 30, 2025. Our book-to-bill ratio in this segment for the three months ended April 30, 2026 and 2025 was 0.32x and 0.91x, respectively. The ratio for the most recent quarter reflects the timing of large, multi-year contract awards, and is not unusual given Allerium's strong book-to-bill ratios of 1.06x and 2.51x, respectively, in the first and second quarters of fiscal 2026. 54 Index Bookings, sales and profitability in both segments can fluctuate from period-to-period due to many factors, including unpredictable funding, deployment and technology decisions by our customers and changes in the general business environment. Period-to-period fluctuations in bookings are normal for our segments. As such, period-to-period comparisons of our results may not be indicative of a trend or future performance. Also, we announced that we are exploring strategic alternatives for our businesses. Accordingly, future results of operations can be impacted by the timing and outcome of such initiatives. There can be no assurance that the exploration of strategic alternatives will result in a transaction or other strategic changes or outcomes. Geography and Customer Type Sales by geography and customer type, as a percentage of related sales, for the three months ended April 30, 2026 and 2025 are as follows: Three months ended April 30, 2026 2025 2026 2025 2026 2025 Satellite and Space Communications Allerium Consolidated U.S. government 45.4 % 47.1 % 0.9 % 1.1 % 22.0 % 25.6 % Domestic 14.9 % 14.9 % 90.4 % 92.2 % 54.6 % 51.0 % Total U.S. 60.3 % 62.0 % 91.3 % 93.3 % 76.6 % 76.6 % International 39.7 % 38.0 % 8.7 % 6.7 % 23.4 % 23.4 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Sales to U.S. government customers include sales to the U.S. Department of Defense ("DoD"), intelligence and civilian agencies, as well as sales directly to or through prime contractors. Domestic sales include sales to commercial customers, as well as to U.S. state and local governments. For the three months ended April 30, 2026 and 2025, except for the U.S. government, there were no customers that represented 10% or more of consolidated net sales. International sales for the three months ended April 30, 2026 and 2025 (which include sales to U.S. domestic companies for inclusion in products that are sold to international customers) were $24.8 million and $29.7 million, respectively. Except for the U.S., no individual country (including sales to U.S. domestic companies for inclusion in products that are sold to a foreign country) represented 10% or more of consolidated net sales for the three months ended April 30, 2026 and 2025. Gross Profit. Gross profit was $36.1 million and $38.9 million for the three months ended April 30, 2026 and 2025, respectively, a decrease of $2.8 million, or 7.2%. Gross profit, as a percentage of consolidated net sales, for the three months ended April 30, 2026 was 34.0% as compared to 30.7% for the three months ended April 30, 2025. Our gross profit for the three months ended April 30, 2026 (both in dollars and as a percentage of consolidated net sales) reflects overall product mix changes, as discussed above, and improved operational and financial performance as a result of our transformation initiatives to, among other things, enhance operational efficiency, streamline product lines with a focus on strategic, higher operating margin products and reduce cost structures. Consolidated gross profit (both in dollars and as a percentage of consolidated net sales) for the prior year period also reflects Allerium's retroactive billing event discussed above. The improvement in our gross margin percentage builds upon the quarterly trend achieved throughout fiscal 2025 and the first two quarters of fiscal 2026. Gross profit, as a percentage of related segment net sales, is further discussed below. Our Satellite and Space Communications segment's gross profit, in dollars, for the three months ended April 30, 2026 was comparable to three months ended April 30, 2025. As a percentage of segment net sales, gross profit increased significantly. Gross profit in the more recent period reflects changes in products and services mix, as discussed above. Gross profit also benefited from this segment's transition from low or no margin non-recurring engineering contracts to higher volume manufacturing orders. Our Allerium segment's gross profit, both in dollars and as a percentage of related segment net sales, for the three months ended April 30, 2026 decreased in comparison to the three months ended April 30, 2025. The gross profit percentage in the more recent period reflects changes in products and services mix, as discussed above. Net sales and gross profit for the third quarter of fiscal 2025 also included over $3.0 million of incremental NG9-1-1 services revenue due to reaching an agreement with a statewide customer to retroactively invoice for certain recurring services provided in the past. Such benefit did not repeat in fiscal 2026. 55 Index Included in consolidated cost of sales for the three months ended April 30, 2026 and 2025 are provisions for excess and obsolete inventory of $0.6 million and $1.0 million, respectively. As discussed in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates - Provisions for Excess and Obsolete Inventory," we regularly review our inventory and record a provision for excess and obsolete inventory based on historical and projected usage trends. Our consolidated gross profit, as a percentage of consolidated net sales, depends on the volume of sales, sales mix and related gross profit for each segment, and therefore is inherently difficult to forecast. Our consolidated gross profit, as a percentage of consolidated net sales, may also be impacted by the timing and outcome of actions we may take related to our transformation plan. Selling, General and Administrative Expenses. Selling, general and administrative expenses were $29.3 million and $30.2 million for the three months ended April 30, 2026 and 2025, respectively. As a percentage of consolidated net sales, selling, general and administrative expenses were 27.7% and 23.8% for the three months ended April 30, 2026 and 2025, respectively. During the three months ended April 30, 2026 and 2025, we incurred $2.4 million and $4.3 million, respectively, of restructuring costs primarily to streamline our operations and improve efficiency (including costs related to legal and professional fees associated with our pursuit of strategic alternatives). Excluding restructuring costs, selling, general and administrative expenses for the three months ended April 30, 2026 and 2025 would have been $26.9 million, or 25.4%, and $25.9 million, or 20.4%, respectively, of consolidated net sales. The increase in our selling, general and administrative expenses, in dollars, excluding such items, is primarily due to increased expenditures in our Allerium and, to a lesser extent, Satellite and Space Communications segments, offset in part by lower expenditures in our Unallocated segment. The increase in our selling, general and administrative expenses, as a percentage of consolidated net sales, excluding such items, is primarily due to lower consolidated net sales in the more recent period. Amortization of stock-based compensation expense recorded as selling, general and administrative expenses was $1.1 million in the three months ended April 30, 2026, as compared to $1.0 million in the three months ended April 30, 2025. Amortization of stock-based compensation is not allocated to our two reportable operating segments. Research and Development Expenses. For the three months ended April 30, 2026 and 2025, company-funded research and development expenses were $5.2 million and $4.4 million, respectively. As a percentage of consolidated net sales, company-funded research and development expenses were 4.9% and 3.5% for the three months ended April 30, 2026 and 2025, respectively. For the three months ended April 30, 2026 and 2025, company-funded research and development expenses of $1.9 million and $1.4 million, respectively, related to our Satellite and Space Communications segment, and $3.3 million and $2.9 million, respectively, related to our Allerium segment. The remaining company-funded research and development expenses in each period related to the amortization of stock-based compensation expense. When appropriate, we seek customer funding for research and development to adapt our products to specialized customer requirements. During the three months ended April 30, 2026 and 2025, customers reimbursed us $8.6 million and $7.5 million, respectively, which is not reflected in the reported company-funded research and development expenses, but is included in net sales with the related costs included in cost of sales. During the three months ended April 30, 2026 and 2025, we also separately incurred engineering efforts related to cost to fulfill contract assets and internal use software, for which we capitalized $1.9 million and $2.0 million, respectively. Amortization of Intangibles. Amortization relating to intangible assets with finite lives for the three months ended April 30, 2026 was $4.6 million (of which $1.1 million was for the Satellite and Space Communications segment and $3.5 million was for the Allerium segment) compared to $5.0 million (of which $1.4 million was for the Satellite and Space Communications segment and $3.6 million was for the Allerium segment) in the three months ended April 30, 2025. CEO Transition Costs. During the three months ended April 30, 2026, we recorded nominal expenses associated with our CEO transition-related activities, as compared to $0.8 million for the three months ended April 30, 2025. Such Unallocated activities in both periods consisted primarily of net legal expenses related to a former CEO and expense related to a sign-on bonus for our current CEO in the prior year period. See Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (19) – Legal Proceedings and Other Matters of this Form 10-Q for information regarding legal proceedings and other matters. 56 Index Operating Income (Loss). Operating loss for the three months ended April 30, 2026 and 2025 was $3.1 million and $1.5 million, respectively. Operating income (loss) by reportable segment is shown in the table below: Three months ended April 30, 2026 2025 2026 2025 2026 2025 2026 2025 ($ in millions) Satellite and Space Communications Allerium Unallocated Consolidated Operating income (loss) $ 1.6 2.7 4.4 8.4 (9.1) (12.6) $ (3.1) (1.5) Percentage of related net sales 3.1 % 4.0 % 7.8 % 14.1 % NA NA NA NA Our GAAP operating loss of $3.1 million for the three months ended April 30, 2026 reflects: (i) $4.6 million of amortization of intangibles; (ii) $2.4 million of restructuring costs (of which $0.8 million, $0.2 million and $1.4 million related to our Satellite and Space Communications, Allerium and Unallocated segments, respectively); (iii) $1.2 million of amortization of stock-based compensation; and (iv) nominal CEO transition costs, as discussed above. Excluding such items, our consolidated operating income for the three months ended April 30, 2026 would have been $5.1 million, or 4.8% of consolidated net sales. Our GAAP operating loss of $1.5 million for the three months ended April 30, 2025 reflects: (i) $5.0 million of amortization of intangibles; (ii) $4.3 million of restructuring costs (of which $0.9 million and $3.4 million related to our Satellite and Space Communications and Unallocated segments, respectively); (iii) $1.2 million of amortization of stock-based compensation; and (iv) $0.8 million of CEO transition costs, as discussed above. Excluding such items, our consolidated operating income for the three months ended April 30, 2025 would have been $9.9 million, or 7.8% of consolidated net sales. The decrease, excluding the above items, from $9.9 million of operating income to $5.1 million of operating income for the more recent period primarily reflects the $3.0 million of incremental NG9-1-1 services revenue in the prior year period due to reaching an agreement with a statewide customer to retroactively invoice for certain recurring services provided in the past. Such benefit did not repeat in fiscal 2026. Operating income by reportable segment is further discussed below. The decrease in our Satellite and Space Communications segment operating income, both in dollars and as a percentage of segment net sales, primarily reflects higher selling, general and administrative and research and development expenses, as discussed above. The decrease in our Allerium segment operating income, both in dollars and as a percentage of segment net sales, primarily reflects the $3.0 million of incremental NG9-1-1 services revenue and gross profit in the prior year period due to reaching an agreement with a statewide customer to retroactively invoice for certain recurring services provided in the past. Such benefit did not repeat in fiscal 2026. Allerium also had higher selling, general and administrative and research and development expenses during the more recent period. Excluding the impact of its respective portion of restructuring charges and CEO transition costs in each period, Unallocated expenses for the three months ended April 30, 2026 would have been $7.7 million, as compared to $8.4 million for the three months ended April 30, 2025. The decrease in Unallocated expenses, excluding such items, was primarily due to lower overall expenditures for selling, general and administrative expenses, as discussed above. Interest Expense and Other. Interest expense was $11.5 million and $12.9 million for the three months ended April 30, 2026 and 2025, respectively. Interest expense in the more recent period reflects a shift from cash interest associated with our Credit Facility to accretion of make-whole adjustments and paid in kind interest associated with our Subordinated Credit Facility. Our effective interest rate in the more recent period was approximately 19.2%, as compared to 22.3% in the prior year period. Our current cash borrowing rate under our Credit Facility is approximately 14.1%, as compared to 14.2% in the corresponding prior year period. Interest (Income) and Other. Interest (income) and other for both the three months ended April 30, 2026 and 2025 was nominal. All of our available cash and cash equivalents are currently invested in bank deposits and money market deposit accounts which, at this time, are currently yielding an immaterial interest rate. 57 Index Change in Fair Value of Warrants and Derivatives. During the three months ended April 30, 2026 and 2025, we recorded a non-cash benefit of $12.5 million and $49.5 million, respectively, due to the remeasurement of warrants and derivatives related to our Credit Facility, Subordinated Credit Facility and Convertible Preferred Stock. See Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (4) - Fair Value Measurements and Financial Instruments, Note (9) - Credit Facility, Note (10) - Subordinated Credit Facility and Note (17) - Convertible Preferred Stock for more information. Provision for (Benefit from) Income Taxes. For the three months ended April 30, 2026, we recorded a tax expense of $1.3 million, as compared to a $1.8 million tax benefit for the three months ended April 30, 2025. Our effective tax rate (excluding discrete tax items) for the three months ended April 30, 2026 and 2025 was (2.2)% and (0.05)%, respectively. The change in rate is primarily due to changes in expected product and geographic mix. For purposes of determining our estimated annual effective tax rate ("AETR") to be applied to earnings from continuing operations for fiscal 2026, the change in fair value of warrants and derivatives and CEO transition costs are considered significant, unusual or infrequently occurring discrete tax items and are excluded from the computation of our AETR. During the three months ended April 30, 2026, we recorded a net discrete tax expense of $1.1 million primarily due to the establishment of a valuation allowance on certain net deferred tax assets associated with our Canadian operations, offset in part by the reversal of tax contingencies no longer required due to the expiration of applicable statute of limitations. During the three months ended April 30, 2025, we recorded a net discrete tax benefit of $0.5 million which was primarily related to the reversal of tax contingencies no longer required due to the expiration of applicable statute of limitations and the deductible portion of CEO transition costs. Our U.S. federal income tax returns for fiscal 2022 through 2025 are subject to Internal Revenue Service ("IRS") audit, including our fiscal 2023 income tax return which was recently selected by the IRS for examination. None of our state income tax returns prior to fiscal 2021 are subject to audit. Future tax assessments or settlements could have a material adverse effect on our consolidated results of operations and financial condition. Net Loss Attributable to Common Stockholders. During the three months ended April 30, 2026 and 2025, consolidated net loss attributable to common stockholders was $14.3 million and $14.5 million, respectively. In addition to those items discussed above, during the three months ended April 30, 2026 and 2025, we recorded $10.8 million and $48.4 million of net dividends related to our Convertible Preferred Stock. Adjusted EBITDA. Adjusted EBITDA (both in dollars and as a percentage of related net sales) for both the three months ended April 30, 2026 and 2025 are shown in the table below (numbers in the table may not foot due to rounding): Three months ended April 30, 2026 2025 2026 2025 2026 2025 2026 2025 ($ in millions) Satellite and Space Communications Allerium Unallocated Consolidated Operating income (loss) $ 1.6 2.7 4.4 8.4 (9.1) (12.6) $ (3.1) (1.5) Amortization of stock-based compensation — — — — 1.2 1.2 1.2 1.2 Amortization of intangibles 1.1 1.4 3.5 3.6 — — 4.6 5.0 Depreciation 0.7 0.7 2.3 1.9 0.1 0.1 3.1 2.7 Restructuring costs 0.8 0.9 0.2 — 1.4 3.4 2.4 4.3 CEO transition costs — — — — — 0.8 — 0.8 Adjusted EBITDA $ 4.1 5.7 10.4 13.9 (6.3) (7.0) $ 8.2 12.6 Percentage of related net sales 8.1 % 8.4 % 18.7 % 23.5 % NA NA 7.8 % 9.9 % The decrease in consolidated Adjusted EBITDA, both in dollars and as a percentage of consolidated net sales, for the three months ended April 30, 2026 as compared to the three months ended April 30, 2025 reflects the $3.0 million of incremental NG9-1-1 services revenue and gross profit in the prior year period due to reaching an agreement with a statewide customer to retroactively invoice for certain recurring services provided in the past. Such benefit did not repeat in fiscal 2026. 58 Index The decrease in our Satellite and Space Communications segment's Adjusted EBITDA, both in dollars and as a percentage of consolidated net sales, primarily reflects higher selling, general and administrative and research and development expenses, as discussed above. The decrease in our Allerium segment's Adjusted EBITDA, both in dollars and as a percentage of segment net sales, reflects the $3.0 million of incremental NG9-1-1 services revenue and gross profit in the prior year period due to reaching an agreement with a statewide customer to retroactively invoice for certain recurring services provided in the past. Such benefit did not repeat in fiscal 2026. A reconciliation of our fiscal 2025 GAAP operating loss to Adjusted EBITDA loss is shown in the table below (numbers in the table may not foot due to rounding): ($ in millions) Fiscal Year 2025 Reconciliation of GAAP Operating Loss to Adjusted EBITDA: Operating loss $ (139.1) Amortization of stock-based compensation 3.1 Amortization of intangibles 21.7 Impairment of long-lived assets, including goodwill 79.6 Depreciation 11.8 Amortization of cost to fulfill assets 0.3 Restructuring costs 15.6 Strategic emerging technology costs 0.3 Proxy solicitation costs 2.7 CEO transition costs 2.1 Adjusted EBITDA $ (2.0) Reconciliations of our GAAP consolidated results to the corresponding Non-GAAP measures are shown in the tables below (numbers and per share amounts in the tables may not foot due to rounding). Non-GAAP results reflect Non-GAAP provisions for (benefits from) income taxes based on year-to-date results, as adjusted for the Non-GAAP reconciling items included in the tables below. We evaluate our Non-GAAP effective income tax rate on an ongoing basis, and it can change from time to time. Our Non-GAAP effective income tax rate can differ materially from our GAAP effective income tax rate. Three months ended April 30, 2026 ($ in millions, except for per share amount) Operating (Loss) Income Net Loss Attributable to Common Stockholders Net Loss per Diluted Common Share Reconciliation of GAAP to Non-GAAP Earnings: GAAP measures, as reported $ (3.1) $ (14.3) $ (0.47) Adjustments to reflect redemption value of convertible preferred stock — 10.8 0.36 Change in fair value of warrants and derivatives — (12.5) (0.42) Amortization of intangibles 4.6 4.5 0.15 Restructuring costs 2.4 2.4 0.08 Amortization of stock-based compensation 1.2 1.2 0.04 Net discrete tax expense — 1.1 0.04 Non-GAAP measures $ 5.1 $ (6.7) $ (0.22) 59 Index Three months ended April 30, 2025 ($ in millions, except for per share amount) Operating (Loss) Income Net Loss Attributable to Common Stockholders Net Loss per Diluted Common Share Reconciliation of GAAP to Non-GAAP Earnings: GAAP measures, as reported $ (1.5) $ (14.5) $ (0.49) Adjustments to reflect redemption value of convertible preferred stock — 48.4 1.65 Change in fair value of warrants and derivatives — (49.5) (1.68) Amortization of intangibles 5.0 4.8 0.16 Restructuring costs 4.3 4.1 0.14 Amortization of stock-based compensation 1.2 1.2 0.04 CEO transition costs 0.8 0.7 0.02 Net discrete tax benefit — (0.4) (0.02) Non-GAAP measures $ 9.9 $ (5.2) $ (0.18) Our Adjusted EBITDA is a Non-GAAP measure that represents earnings (loss) before interest, income taxes, depreciation, amortization of intangibles, impairment of long-lived assets, including goodwill, amortization of cost to fulfill assets, amortization of stock-based compensation, CEO transition costs, change in fair value of warrants and derivatives, proxy solicitation costs, restructuring costs, strategic emerging technology costs (for next-generation satellite technology) and write-off of deferred financing costs and debt discounts, and in the recent past, acquisition plan expenses, change in fair value of the convertible preferred stock purchase option liability, COVID-19 related costs, facility exit costs, strategic alternatives expenses and other and loss on business divestiture. These items, while periodically affecting our results, may vary significantly from period to period and may have a disproportionate effect in a given period, thereby affecting the comparability of results. Although closely aligned, our definition of Adjusted EBITDA is different than EBITDA (as such term is defined in our Credit Facility and Subordinated Credit Facility) utilized for financial covenant calculations and also may differ from the definition of EBITDA or Adjusted EBITDA used by other companies and therefore may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA, as well as adjusted operating income (loss), net income (loss) attributable to common shareholders and net income (loss) per diluted common share, as presented in the above tables, are non-GAAP measures. These Non-GAAP measures are frequently requested by investors and analysts. We believe that investors and analysts may use these Non-GAAP measures along with other information contained in our SEC filings, including GAAP measures, in assessing our performance and comparability of our results with other companies. Our Non-GAAP measures reflect the GAAP measures as reported, adjusted for certain items as described herein and also excludes the effects of our outstanding convertible preferred stock. These Non-GAAP financial measures have limitations as an analytical tool as they exclude the financial impact of transactions necessary to conduct our business, such as the granting of equity compensation awards, and are not intended to be an alternative to financial measures prepared in accordance with GAAP. These measures are adjusted as described in the reconciliation of GAAP to Non-GAAP measures in the tables presented herein, but these adjustments should not be construed as an inference that all of these adjustments or costs are unusual, infrequent or non-recurring. Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures determined in accordance with GAAP. Investors are advised to carefully review the GAAP financial results that are disclosed in our SEC filings. As we have not provided future Non-GAAP financial guidance or targets, there is no need to reconcile our business outlook to the most directly comparable GAAP measures. Furthermore, even if guidance or targets had been provided, items such as stock-based compensation, adjustments to the provision for income taxes, amortization of intangibles and interest expense, which are specific items that impact these measures, have not yet occurred, are out of our control, or cannot be predicted at this time. For example, quantification of stock-based compensation expense requires inputs such as the number of shares granted and market price that are not currently ascertainable. Accordingly, reconciliations to the Non-GAAP forward looking metrics would not be available without unreasonable effort and such unavailable reconciling items could significantly impact our financial results. 60 Index COMPARISON OF RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED APRIL 30, 2026 AND 2025 Net Sales. Consolidated net sales were $323.8 million and $369.2 million for the nine months ended April 30, 2026 and 2025, respectively, representing a decrease of $45.4 million, or 12.3%. Such decrease primarily reflects lower net sales in our Satellite and Space Communications segment and, to a lesser extent, our Allerium segment. Satellite and Space Communications Net sales in our Satellite and Space Communications segment were $156.0 million for the nine months ended April 30, 2026 as compared to $200.2 million for the nine months ended April 30, 2025, a decrease of $44.2 million, or 22.1%. As anticipated, the decline in net sales in the S&S segment primarily reflects the decision to phase out and eliminate certain low margin and capital intensive revenues, as well as the lingering impact of the prolonged U.S. government shutdown which, despite the recent uptick in order flow in the fourth quarter, delayed anticipated follow-on funding for active programs during the first three quarters of fiscal 2026. Examples of contracts being phased out include the Very Small Aperture Terminal (“VSAT”) Satellite Systems and Services contract and the Global Field Service Representative (“GFSR”) contract, as well as legacy troposcatter related products and services contracts. As part of this repositioning, S&S is pursuing sales of innovative, higher-margin solutions such as digital common ground modems, network solutions and rapidly deployable troposcatter Modular Transportable Transmission Systems ("MTTS") and multi-path radios ("MPRs"). Our Satellite and Space Communications segment represented 48.2% of consolidated net sales for the nine months ended April 30, 2026, as compared to 54.2% for the nine months ended April 30, 2025. Our book-to-bill ratio (a measure defined as bookings divided by net sales) in this segment for the nine months ended April 30, 2026 and 2025 was 0.83x and 0.80x (excluding a $36.4 million debooking in the prior fiscal year associated with the U.S. Army GFSR contract), respectively. In the more recent quarter, S&S experienced a strengthening in its funded orders, achieving a book-to-bill ratio of 1.04x. The last time S&S achieved a book-to-bill ratio greater than 1.0x was in the first quarter of fiscal 2024. The significant improvement in S&S bookings during the third quarter of fiscal 2026 reflects the receipt of a large troposcatter order from an international customer, in addition to the release of pent up orders and funding which we believe were delayed as a result of the prolonged U.S. government shutdown earlier in the fiscal year. Such bookings momentum within our S&S segment is expected to continue in the fourth quarter of fiscal 2026. Allerium Net sales in our Allerium segment were $167.8 million for the nine months ended April 30, 2026, as compared to $168.9 million for the nine months ended April 30, 2025, a decrease of $1.1 million, or 0.7%. Segment net sales for the nine months ended April 30, 2026 primarily reflect lower net sales of 911 call routing and call handling solutions, offset in part by higher net sales of location based solutions including wireless emergency alert services. Our Allerium segment represented 51.8% of consolidated net sales for the nine months ended April 30, 2026, as compared to 45.8% for the nine months ended April 30, 2025. Our book-to-bill ratio in this segment for the nine months ended April 30, 2026 and 2025 was 1.30x and 0.92x, respectively, and includes funding toward a multi-year contract extension, valued in excess of $130.0 million, by Allerium’s largest customer, a leading telecommunications company in the U.S. Bookings, sales and profitability in both segments can fluctuate from period-to-period due to many factors, including unpredictable funding, deployment and technology decisions by our customers and changes in the general business environment. Period-to-period fluctuations in bookings are normal for our segments. As such, period-to-period comparisons of our results may not be indicative of a trend or future performance. Also, we announced that we are exploring strategic alternatives for our businesses. Accordingly, future results of operations can be impacted by the timing and outcome of such initiatives. There can be no assurance that the exploration of strategic alternatives will result in a transaction or other strategic changes or outcomes. 61 Index Geography and Customer Type Sales by geography and customer type, as a percentage of related sales, for the nine months ended April 30, 2026 and 2025 are as follows: Nine months ended April 30, 2026 2025 2026 2025 2026 2025 Satellite and Space Communications Allerium Consolidated U.S. government 35.7 % 58.1 % 1.2 % 1.1 % 17.8 % 32.0 % Domestic 17.0 % 12.0 % 89.9 % 91.4 % 54.8 % 48.3 % Total U.S. 52.7 % 70.1 % 91.1 % 92.5 % 72.6 % 80.3 % International 47.3 % 29.9 % 8.9 % 7.5 % 27.4 % 19.7 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Sales to U.S. government customers include sales to the U.S. DoD, intelligence and civilian agencies, as well as sales directly to or through prime contractors. Domestic sales include sales to commercial customers, as well as to U.S. state and local governments. For the nine months ended April 30, 2026 and 2025, except for the U.S. government, there were no customers that represented 10.0% or more of consolidated net sales. International sales for the nine months ended April 30, 2026 and 2025 (which include sales to U.S. domestic companies for inclusion in products that are sold to international customers) were $88.7 million and $72.6 million, respectively. Except for the U.S., no individual country (including sales to U.S. domestic companies for inclusion in products that are sold to a foreign country) represented 10% or more of consolidated net sales for the nine months ended April 30, 2026 and 2025. Gross Profit. Gross profit was $109.1 million and $87.2 million for the nine months ended April 30, 2026 and 2025, respectively, an increase of $21.9 million, or 25.1%. Gross profit, as a percentage of consolidated net sales, for the nine months ended April 30, 2026 was 33.7% as compared to 23.6% for the nine months ended April 30, 2025. Our gross profit for the nine months ended April 30, 2026 (both in dollars and as a percentage of consolidated net sales) reflects overall product mix changes, as discussed above, and improved operational and financial performance, as a result of our transformation initiatives to, among other things, enhance operational efficiency, streamline product lines with a focus on strategic, higher operating margin products and reduce cost structures. Gross profit in the prior year period included, among other charges, an $11.4 million non-cash charge related to the write down of certain inventories as a result of restructuring activities within our Satellite and Space Communications segment. Excluding the non-cash inventory-related charge in the prior year period, our gross profit, as a percentage of consolidated net sales, for the nine months ended April 30, 2025 would have been 26.7%. Gross profit, as a percentage of related segment net sales, is further discussed below. Our Satellite and Space Communications segment's gross profit, both in dollars and as a percentage of segment net sales, for the nine months ended April 30, 2026 increased significantly in comparison to the nine months ended April 30, 2025. Gross profit in the more recent period reflects changes in products and services mix, as well as other segment related items, as discussed above. Gross profit also benefited from this segment's transition from low or no margin non-recurring engineering contracts to higher volume manufacturing orders. Our Allerium segment's gross profit, both in dollars and as a percentage of segment net sales, for the nine months ended April 30, 2026 increased in comparison to the nine months ended April 30, 2025. The gross profit percentage in the more recent period reflects changes in products and services mix, as discussed above. In addition to the benefit of cost reduction initiatives, such gross margin also reflects the continued adoption of our solutions by new customers, as well as the migration of more PSAPs onto our NG9-1-1 core services and platforms, as we progress through initial deployments of our solutions to monthly recurring revenue streams. Included in consolidated cost of sales for the nine months ended April 30, 2026 and 2025 are provisions for excess and obsolete inventory of $1.6 million and $14.5 million, respectively. As discussed in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates - Provisions for Excess and Obsolete Inventory, we regularly review our inventory and record a provision for excess and obsolete inventory based on historical and projected usage trends. As discussed above, in the prior year period, we recorded a non-cash charge of $11.4 million within Cost of Sales on our Condensed Consolidated Statement of Operations related to the write down of inventory associated with approximately 70 products within our satellite ground infrastructure product line that were discontinued. Such prior year period non-cash charge also included the write down of inventory associated with the CGC Divestiture that was no longer considered salable during the period. 62 Index Our consolidated gross profit, as a percentage of consolidated net sales, depends on the volume of sales, sales mix and related gross profit for each segment, and therefore is inherently difficult to forecast. Our consolidated gross profit, as a percentage of consolidated net sales, may also be impacted by the timing and outcome of actions we may take related to our transformation plan. Selling, General and Administrative Expenses. Selling, general and administrative expenses were $87.0 million and $115.7 million for the nine months ended April 30, 2026 and 2025, respectively. As a percentage of consolidated net sales, selling, general and administrative expenses were 26.9% and 31.3% for the nine months ended April 30, 2026 and 2025, respectively. During the prior year period in fiscal 2025, we determined that an unbilled receivable contract asset related to an international customer and reseller of our troposcatter technologies was at risk of not being invoiced or collected. As a result and considering that we offered a price concession (i.e., variable consideration) to our customer, in the first quarter of fiscal 2025, our Satellite and Space Communications segment reversed $1.6 million of cumulative revenue and associated unbilled receivable contract assets related to this transaction and recorded a non-cash charge to fully reserve for the remaining $17.0 million unbilled receivable contract asset within our allowance for doubtful accounts. Also, during the nine months ended April 30, 2026 and 2025, we incurred $6.5 million and $14.2 million, respectively, of restructuring costs primarily to streamline our operations and improve efficiency (including costs related to legal and professional fees associated with our pursuit of strategic alternatives, the wind down of our steerable antenna product line in the U.K. initiated in our fourth quarter of fiscal 2024 and severance costs). Excluding such provision for doubtful accounts and restructuring costs, selling, general and administrative expenses for the nine months ended April 30, 2026 and 2025 would have been $80.5 million, or 24.9% and $84.5 million or 22.9%, respectively, of consolidated net sales. The decrease in our selling, general and administrative expenses, in dollars, excluding such items, is primarily due to cost reduction actions within our Unallocated and Satellite and Space Communications segments. The increase in our selling, general and administrative expenses, as a percentage of consolidated net sales, excluding such items, is primarily due to lower consolidated net sales. Amortization of stock-based compensation expense recorded as selling, general and administrative expenses was $2.4 million and $2.0 million, respectively, for the nine months ended April 30, 2026 and 2025. During both respective periods, we reversed a portion of our stock-based compensation expense related to performance shares due to lower actual or projected achievement of goals related to certain performance shares granted in prior fiscal years. Stock-based compensation expense for the prior year period also reflects the forfeiture of awards related to our former Chief Operating Officer and former Chief Executive Officer, whose employment were both terminated during the prior year period. Amortization of stock-based compensation is not allocated to our two reportable operating segments. Research and Development Expenses. Company-funded research and development expenses were $13.4 million and $12.5 million for the nine months ended April 30, 2026 and 2025, respectively, representing an increase of $0.9 million, or 7.6%. As a percentage of consolidated net sales, company-funded research and development expenses were 4.2% and 3.4% for the nine months ended April 30, 2026 and 2025, respectively. For the nine months ended April 30, 2026 and 2025, company-funded research and development expenses of $4.7 million and $3.8 million, respectively, related to our Satellite and Space Communications segment and $8.7 million and $8.5 million, respectively, related to our Allerium segment. The remaining company-funded research and development expenses in the nine months ended April 30, 2026 and 2025 related to the amortization of stock-based compensation expense. When appropriate, we seek customer funding for research and development to adapt our products to specialized customer requirements. During the nine months ended April 30, 2026 and 2025, customers reimbursed us $20.3 million and $13.7 million, respectively, which is not reflected in the reported company-funded research and development expenses, but is included in net sales with the related costs included in cost of sales. During the nine months ended April 30, 2026 and 2025, we also separately incurred engineering efforts related to cost to fulfill contract assets and internal use software, for which we capitalized $5.1 million and $5.4 million, respectively. 63 Index During the prior year period in fiscal 2025, we incurred $0.3 million of strategic emerging technology costs in our Satellite and Space Communications segment for next-generation satellite technology to advance our solutions offerings to be used with new broadband satellite constellations. Commencing in the second quarter of fiscal 2025, as a result of our decision to cease operations related to our steerable antenna product line in the U.K., we no longer have such costs. Amortization of Intangibles. Amortization relating to intangible assets with finite lives for the nine months ended April 30, 2026 and 2025 was $14.7 million (of which $3.9 million was for the Satellite and Space Communications segment and $10.8 million was for the Allerium segment) compared to $16.7 million (of which $5.8 million was for the Satellite and Space Communications segment and $10.9 million was for the Allerium segment), respectively. The decrease in our Satellite and Space Communications segment's amortization reflects the impact of our fourth quarter fiscal 2024 decision to wind down our steerable antenna product line in the U.K. CEO Transition Costs. During both the nine months ended April 30, 2026 and 2025, we recorded a net expense of $1.1 million. Such Unallocated activities in both periods consisted primarily of net legal expenses related to a former CEO and expense related to a sign-on bonus for our current CEO, and severance costs and third party CEO search firm expenses related to a former CEO in the prior year period. See Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (19) – Legal Proceedings and Other Matters of this Form 10-Q for information regarding legal proceedings and other matters. Proxy Solicitation Costs. During the prior year period, we incurred $2.7 million of proxy solicitation costs in our Unallocated segment as a result of a now-settled proxy contest. Impairment of Long-Lived Assets, including Goodwill. Based on lower-than-expected financial performance within our Satellite and Space Communications segment during the prior year period, and other factors, we performed a quantitative goodwill impairment test as of October 31, 2024 and determined that our Satellite and Space Communications reporting unit had an estimated fair value below its carrying value and concluded that our goodwill in this reporting unit was impaired. As a result, in the prior year period, we recognized a $79.6 million non-cash goodwill impairment charge in our Satellite and Space Communications reporting unit. See Part I. - Financial Information - Item 1. - Note (15) - Long-Lived Assets, including Goodwill for further information. Operating Income (Loss). Our operating loss for the nine months ended April 30, 2026 and 2025 was $7.1 million and $141.0 million, respectively. Operating income (loss) by reportable segment is shown in the table below: Nine months ended April 30, 2026 2025 2026 2025 2026 2025 2026 2025 ($ in millions) Satellite and Space Communications Allerium Unallocated Consolidated Operating income (loss) $ 7.3 (114.9) 15.3 17.0 (29.7) (43.1) $ (7.1) (141.0) Percentage of related net sales 4.7 % NA 9.1 % 10.1 % NA NA NA NA Our GAAP operating loss of $7.1 million for the nine months ended April 30, 2026 reflects: (i) $14.7 million of amortization of intangibles; (ii) $6.5 million of restructuring costs (of which $2.3 million, $0.2 million and $4.0 million related to our Satellite and Space Communications, Allerium and Unallocated segments, respectively); (iii) $2.7 million of amortization of stock-based compensation; and (iv) $1.1 million of CEO transition costs, as discussed above. Excluding such items, our consolidated operating income for the nine months ended April 30, 2026 would have been $17.9 million, or 5.5% of net sales. Our GAAP operating loss of $141.0 million for the nine months ended April 30, 2025 reflects: (i) a non-cash goodwill impairment charge of $79.6 million; (ii) $16.7 million of amortization of intangibles; (iii) $14.2 million of restructuring costs (of which $4.7 million, $0.1 million and $9.4 million related to our Satellite and Space Communications, Allerium and Unallocated segments, respectively); (iv) $2.7 million of proxy solicitation costs; (v) $2.5 million of amortization of stock-based compensation; (vi) $1.1 million of CEO transition costs; (vii) $0.3 million of strategic emerging technology costs; and (viii) $0.3 million of amortization of cost to fulfill assets, as discussed above. Excluding such items, our consolidated operating loss for the nine months ended April 30, 2025 would have been $23.7 million. The significant improvement, excluding the above items, from the $23.7 million operating loss in the prior year period to $17.9 million of operating income for the more recent period primarily reflects higher gross profit (both in dollars and as percentage of consolidated net sales) and lower selling, general and administrative expenses, offset in part by higher research and development expenses, as discussed above. Operating income (loss) by reportable segment is further discussed below. 64 Index The significant improvement in our Satellite and Space Communications segment operating income for the nine months ended April 30, 2026 primarily reflects lower selling, general and administrative expenses, higher gross profit (both in dollars and as a percentage of segment net sales) and lower amortization of intangibles, offset in part by higher research and development expenses, as discussed above. The prior year period also included a $79.6 million non-cash charge related to the impairment of goodwill within our Satellite and Space Communications segment. The decrease in our Allerium segment operating income in the more recent period primarily reflects higher selling, general and administrative and research and development expenses, offset in part by higher gross profit (both in dollars and as a percentage of segment net sales) and lower amortization of intangibles, as discussed above. Excluding the impact of its respective portion of restructuring charges, CEO transition costs and proxy solicitation costs in each period, Unallocated expenses for the more recent period would have been $24.6 million, as compared to $29.9 million in the prior year period. The decrease in Unallocated expenses, excluding such items, was primarily due to lower overall expenditures for selling, general and administrative expenses due to cost reduction actions, as discussed above. Interest Expense and Other. Interest expense was $34.3 million and $33.4 million for the nine months ended April 30, 2026 and 2025, respectively. The more recent period reflects a shift from cash interest associated with our Credit Facility to accretion of make-whole adjustments and paid in kind interest associated with our Subordinated Credit Facility. Our effective interest rate in the more recent period was approximately 18.6%, as compared to 20.0% in the prior year period. Our current cash borrowing rate under our Credit Facility is approximately 14.1%, as compared to 14.2% in the corresponding prior year period. Interest (Income) and Other. Interest (income) and other for both the nine months ended April 30, 2026 and 2025 was nominal. All of our available cash and cash equivalents are currently invested in bank deposits and money market deposit accounts which, at this time, are currently yielding an immaterial interest rate. Change in Fair Value of Warrants and Derivatives. During the nine months ended April 30, 2026 and 2025, we recorded a non-cash benefit of $9.8 million and $15.5 million, respectively, due to the remeasurement of warrants and derivatives related to our Credit Facility, Subordinated Credit Facility and Convertible Preferred Stock. See Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (4) - Fair Value Measurements and Financial Instruments, Note (9) - Credit Facility, Note (10) - Subordinated Credit Facility and Note (17) - Convertible Preferred Stock for more information. Write-off of Deferred Financing Costs and Debt Discounts. In connection with the October 17, 2024 and March 3, 2025 amendments to the Credit Facility and Amended Subordinated Credit Facility, and in particular, the prepayment of Term Loan principal and reduced commitments under the Credit Facility, $4.9 million of deferred financing fees and debt discounts were immediately expensed during the prior year period. Provision for (Benefit from) Income Taxes. For the nine months ended April 30, 2026, we recorded a tax expense of $1.7 million as compared to a tax benefit of $0.6 million for the nine months ended April 30, 2025. Our effective tax rate (excluding discrete tax items) for the nine months ended April 30, 2026 and 2025 was (2.2)% and (0.05)%, respectively. The change in rate is primarily due to changes in expected product and geographical mix. For purposes of determining our estimated AETR to be applied to earnings from continuing operations for fiscal 2026, the change in fair value of warrants and derivatives and CEO transition costs are considered significant, unusual or infrequently occurring discrete tax items and are excluded from the computation of our AETR. During the nine months ended April 30, 2026, we recorded a net discrete tax expense of $0.8 million primarily due to the establishment of a valuation allowance on certain net deferred tax assets associated with our Canadian operations, offset in part by the reversal of tax contingencies no longer required due to the expiration of applicable statute of limitations. During the nine months ended April 30, 2025, we recorded a net discrete tax benefit of $0.7 million primarily related to the reversal of tax contingencies no longer required due to the expiration of applicable statute of limitations and proxy solicitation costs. Our U.S. federal income tax returns for fiscal 2022 through 2025 are subject to IRS audit, including our fiscal 2023 income tax return which was recently selected by the IRS for examination. None of our state and foreign income tax returns prior to fiscal 2021 are subject to audit. Future tax assessments or settlements could have a material adverse effect on our consolidated results of operations and financial condition. 65 Index Net Loss Attributable to Common Stockholders. During the nine months ended April 30, 2026 and 2025, consolidated net loss attributable to common stockholders was $54.2 million and $192.7 million, respectively. In addition to those items discussed above: (i) the more recent period includes $21.2 million of net dividends related to our Convertible Preferred Stock; and (ii) the prior year period includes $80.7 million of net dividends related to our Convertible Preferred Stock, offset in part by a $51.2 million gain related to the exchange of our Series B-1 Convertible Preferred Stock for Series B-2 Convertible Preferred Stock on October 17, 2024. Adjusted EBITDA. Adjusted EBITDA (both in dollars and as a percentage of related net sales) for both the nine months ended April 30, 2026 and 2025 are shown in the table below (numbers in the table may not foot due to rounding): Nine months ended April 30, 2026 2025 2026 2025 2026 2025 2026 2025 ($ in millions) Satellite and Space Communications Allerium Unallocated Consolidated Operating income (loss) $ 7.3 (114.9) 15.3 17.0 (29.7) (43.1) $ (7.1) (141.0) Amortization of stock-based compensation — — — — 2.7 2.5 2.7 2.5 Amortization of intangibles 3.9 5.8 10.8 10.9 — — 14.7 16.7 Impairment of long-lived assets, including goodwill — 79.6 — — — — — 79.6 Depreciation 2.0 2.2 6.8 5.8 0.3 0.4 9.1 8.4 Amortization of cost to fulfill assets — 0.3 — — — — — 0.3 Restructuring costs 2.3 4.7 0.2 0.1 4.0 9.4 6.5 14.2 Strategic emerging technology costs — 0.3 — — — — — 0.3 Proxy solicitation costs — — — — — 2.7 — 2.7 CEO transition costs — — — — 1.1 1.1 1.1 1.1 Adjusted EBITDA $ 15.5 (22.1) 33.1 33.8 (21.6) (27.0) $ 27.0 (15.3) Percentage of related net sales 9.9 % NA 19.7 % 20.0 % NA NA 8.3 % NA The significant increase in consolidated Adjusted EBITDA for the nine months ended April 30, 2026 as compared to the nine months ended April 30, 2025 primarily reflects higher gross profit (both in dollars and as percentage of consolidated net sales) and lower selling, general and administrative expenses, offset in part by higher research and development expenses, as discussed above. The significant increase in our Satellite and Space Communications segment's Adjusted EBITDA, both in dollars and as a percentage of segment net sales, primarily reflects lower selling, general and administrative expenses and higher gross profit (both in dollars and as a percentage of related segment net sales), offset in part by higher research and development expenses, as discussed above. The decrease in our Allerium segment's Adjusted EBITDA, both in dollars and as a percentage of segment net sales, primarily reflects higher selling, general and administrative and research and development expenses, offset in part by higher gross profit (both in dollars and as a percentage of segment net sales), as discussed above. A reconciliation of our fiscal 2025 GAAP operating loss to Adjusted EBITDA loss is included in section “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Comparison of the Results of Operations for the Three Months Ended April 30, 2026 and 2025.” 66 Index Reconciliations of our GAAP consolidated results to the corresponding Non-GAAP measures are shown in the tables below (numbers and per share amounts in the tables may not foot due to rounding). Non-GAAP results reflect Non-GAAP provisions for (benefits from) income taxes based on year-to-date results, as adjusted for the Non-GAAP reconciling items included in the tables below. We evaluate our Non-GAAP effective income tax rate on an ongoing basis, and it can change from time to time. Our Non-GAAP effective income tax rate can differ materially from our GAAP effective income tax rate. Nine months ended April 30, 2026 ($ in millions, except for per share amount) Operating (Loss) Income Net Loss Attributable to Common Stockholders Net Loss per Diluted Common Share Reconciliation of GAAP to Non-GAAP Earnings: GAAP measures, as reported $ (7.1) $ (54.2) $ (1.82) Adjustments to reflect redemption value of convertible preferred stock — 21.2 0.71 Change in fair value of warrants and derivatives — (9.8) (0.33) Amortization of intangibles 14.7 14.3 0.48 Amortization of stock-based compensation 2.7 2.7 0.09 Restructuring costs 6.5 6.5 0.22 CEO transition costs 1.1 1.1 0.04 Net discrete tax expense — 0.8 0.03 Non-GAAP measures $ 17.9 $ (17.3) $ (0.58) Nine months ended April 30, 2025 ($ in millions, except for per share amount) Operating Loss Net Loss Attributable to Common Stockholders Net Loss per Diluted Common Share Reconciliation of GAAP to Non-GAAP Earnings: GAAP measures, as reported $ (141.0) $ (192.7) $ (6.56) Change in fair value of warrants and derivatives — (15.5) (0.53) Adjustments to reflect redemption value of convertible preferred stock — 80.7 2.74 Gain on extinguishment of convertible preferred stock — (51.2) (1.74) Impairment of long-lived assets, including goodwill 79.6 79.6 2.71 Amortization of intangibles 16.7 16.0 0.54 Restructuring costs 14.2 13.6 0.46 Proxy solicitation costs 2.7 2.5 0.09 Amortization of stock-based compensation 2.5 2.4 0.08 CEO transition costs 1.1 1.0 0.04 Strategic emerging technology costs 0.3 0.3 0.01 Amortization of cost to fulfill assets 0.3 0.3 0.01 Net discrete tax benefit — (0.4) (0.01) Non-GAAP measures $ (23.7) $ (63.4) $ (2.16) A definition and explanation of Adjusted EBITDA, a Non-GAAP financial measure, is included in section “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Comparison of the Results of Operations for the Three Months Ended April 30, 2026 and 2025.” 67 Index LIQUIDITY AND CAPITAL RESOURCES Our cash and cash equivalents were $28.5 million and $40.0 million at April 30, 2026 and July 31, 2025, respectively. For the nine months ended April 30, 2026, our cash flows reflect the following: •Net cash provided by operating activities was $19.1 million for the nine months ended April 30, 2026, as compared to net cash used in operating activities during the prior year period of $19.7 million. The significant period-over-period improvement reflects favorable changes in net working capital requirements, due primarily to improved accountability and process disciplines, as well as the timing of and progress toward completion on contracts accounted for over time, including related shipments, billings and collections. These activities allowed us to reduce receivables and inventory levels since July 31, 2025. Also, as a result of our enhanced liquidity, driven by our improved operational and financial performance and recent amendments to our credit facilities, operating cash flows in the more recent period reflect our concerted efforts to maintain lower levels of accounts payable in order to improve vendor relations and position ourselves to negotiate more favorable payment terms. Operating cash flows in the more recent period include lower aggregate net cash payments for interest and taxes of $13.9 million, as compared to $22.4 million in the prior year period. Operating cash flows for the nine months ended April 30, 2026 and 2025 also include $9.6 million and $19.4 million, respectively, in aggregate payments for restructuring costs, including severance, proxy solicitation costs, CEO transition costs, debt modification costs and strategic emerging technology costs for next-generation satellite technology, during each respective period. •Net cash used in investing activities was $13.1 million and $6.5 million for the nine months ended April 30, 2026 and 2025, respectively, and primarily reflects capital expenditures in our Allerium segment to build-out cloud-based computer networks and internal use software applications, as well as capital investments and building improvements in connection with our leased facilities. •Net cash used in financing activities during the more recent period was $17.5 million and primarily reflects $14.0 million of payments under the Revolving Loan and scheduled principal repayments of $3.0 million toward the Term Loan outstanding under our Credit Facility. Net cash provided by financing activities in the prior year period was $22.3 million and primarily reflects net proceeds received under our Subordinated Credit Facility. The Credit Facility, Subordinated Credit Facility and Convertible Preferred Stock are discussed below and in Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (4) - Fair Value Measurements and Financial Instruments, Note (9) - Credit Facility, Note (10) - Subordinated Credit Facility and Note (17) - Convertible Preferred Stock. Liquidity At April 30, 2026 and June 12, 2026 (the date closest to the issuance date): •total outstanding borrowings under our Credit Facility was $119.7 million and $116.0 million, respectively; of such amount, $3.6 million was drawn on the Revolver Loan at April 30, 2026; in May 2026, we repaid the remaining $3.6 million outstanding Revolver Loan balance; •total outstanding borrowings under our Subordinated Credit Facility were $104.1 million and $104.8 million, respectively, including interest paid-in-kind or accrued on the $35.0 million subordinated priority term loan; such amount does not include the $32.5 million Make-Whole Amount associated with the $65.0 million portion of the Subordinated Credit Facility (pursuant to the terms discussed in Note (10) - Subordinated Credit Facility, as of April 30, 2026 and the issuance date, the Make-Whole Amount percentage for each tranche within the $65.0 million of principal is 50.0%); •the liquidation preference of our outstanding convertible preferred stock was $218.2 million and $220.5 million, respectively (excluding potential increases in the liquidation preference and other obligations that could be triggered by, among other things, breaches of covenants and/or asset sales resulting in a change in control of the Company); and 68 Index •our available sources of liquidity totaled $49.4 million and $50.0 million, respectively, which includes qualified cash and cash equivalents of $25.8 million and $22.8 million, respectively, and the available portion of the Revolver Loan of $23.6 million and $27.3 million, respectively. On June 14, 2026, subsequent to quarter end, we entered into a transaction to sell most of Comtech's Satellite and Space Communications ("S&S") business to an affiliate of Gilat Satellite Networks Ltd. As the criteria for reporting the portion of the S&S business being sold as "held for sale" was not met as of April 30, 2026, the Condensed Consolidated Financial Statements as of and for the three and nine months ended April 30, 2026 and 2025 reflect the portion of the S&S business being sold as "held and used." The portion of the S&S business being retained by Comtech principally includes advanced cybersecurity training in support of U.S. government and certain commercial and university customers. In connection with the above transaction, on June 14, 2026, we also entered into additional amendments and or exchange agreements related to our Credit Facility, Subordinated Credit Facility and Convertible Preferred Stock agreements. See Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (1) General - Subsequent Events, and Current Report on Form 8-K filed by us with the SEC on June 15, 2026, for more detailed information about these transactions. As of the issuance date, we expect cash and cash equivalents and cash flows from both operating and financing activities to be our principal sources of liquidity. We believe these sources of liquidity will be sufficient to fund our operating and cash commitments for investing and financing activities over the next year beyond the issuance date. Over the next year beyond the issuance date, in addition to the net proceeds from the sale of most of S&S' business, we believe that we will be able to generate sufficient positive cash inflows and maximize the remaining available portion of the Revolver Loan under our Credit Facility to continue as a going concern and comply with the covenants contained in our credit facilities. Our ability to meet future anticipated liquidity needs over the next year beyond the issuance date will largely depend on our ability to execute on our operational strategy, generate positive cash inflows from operations, maximize the remaining available portion of the Revolver Loan under our Credit Facility and or secure outside capital. Our ability to do so may also be affected by general economic, financial and other factors which are beyond our control. Our material cash requirements are for working capital, debt service (including interest), capital expenditures, tax payments, facilities lease payments and dividends related to our Convertible Preferred Stock, which are payable in kind or in cash under certain circumstances. Also, as discussed above, in accordance with our existing credit facilities, we will use 65% of the net proceeds from the sale of most of S&S' business to prepay the majority of our Credit Facility, with the remaining 35% to prepay subordinated debt outstanding under our Subordinated Credit Facility, starting with repaying the subordinated priority term loan. Our material cash requirements could increase beyond our current expectations due to factors such, as but not limited to: (i) an inability to meet our current obligations under our credit facilities as they become due, or to obtain future waivers or amendments from the lenders in the event compliance is not maintained; (ii) general economic conditions; (iii) a change in customer or government spending priorities and/or contracting decisions; (iv) larger than usual customer orders; (v) a future redemption by the holders of our Convertible Preferred Stock; (vi) transaction costs related the sale of most of S&S' business; or (vii) actions we may take related to our transformation plan. Also, in light of our transformation plan initiatives, we continue to review and evaluate our capital allocation plans. Furthermore, we may choose to raise additional funds through equity and debt financing transactions to provide additional flexibility or to pursue acquisitions. Although it is difficult in the current economic and credit environment to predict the terms and conditions of financing that may be available in the future, we believe that we would have sufficient access to credit from financial institutions and/or financing from public and private debt and equity markets. In addition to making capital investments for our high-volume manufacturing center in our Satellite and Space Communications segment, we have also been making significant capital expenditures and building out cloud-based computer networks and internal use software applications to support customers in our Allerium segment. We expect capital investments for these and other initiatives to continue in fiscal 2026 and beyond, but could be impacted by the sale of most of our S&S business. 69 Index Our investment policy relating to our cash and cash equivalents is intended to minimize principal loss while at the same time maximize the income we receive without significantly increasing risk. To minimize risk, we generally invest excess cash and cash equivalents in money market mutual funds (both government and commercial), certificates of deposit, bank deposits, and U.S. Treasury securities. Money market mutual funds we invest in are direct obligations of the U.S. government, bank securities guaranteed by the Federal Deposit Insurance Corporation, certificates of deposit and commercial paper and other securities issued by other companies. While we cannot predict future market conditions or market liquidity, we believe our investment policies are appropriate in the current environment. Ultimately, the availability of our cash and cash equivalents is dependent on a well-functioning liquid market. On September 29, 2020, our Board of Directors authorized a $100.0 million stock repurchase program, which replaced our prior program. The $100.0 million stock repurchase program has no time restrictions and repurchases may be made from time to time in open-market or privately negotiated transactions, or by other means in accordance with federal securities laws and the terms of our Credit Facility. There were no repurchases of our common stock during the nine months ended April 30, 2026 and 2025. In fiscal 2023, we adjusted our capital allocation plans and determined to forgo a common stock dividend. Future common stock dividends, if any, remain subject to compliance with financial covenants under our Credit Facility and Subordinated Credit Facility, as well as Board approval and certain voting rights of holders of our Convertible Preferred Stock. At April 30, 2026, we had a nominal amount of cash deposited as collateral in connection with outstanding standby letters of credit to guarantee future performance on certain customer contracts and no commercial letters of credit outstanding. Commitments In the normal course of business, other than as discussed below, we routinely enter into binding and non-binding purchase obligations primarily covering anticipated purchases of inventory and equipment. We do not expect that these commitments, as of April 30, 2026, will materially adversely affect our liquidity. At April 30, 2026, cash payments due under contractual obligations (including estimated interest expense on our Credit Facility), excluding purchase orders that we entered into in the normal course of our business, are as follows: ($ in thousands) Total Due Within 1 Year Credit Facility - principal payments $ 119,672 4,050 Credit Facility - interest payments 34,362 16,248 Operating lease obligations 42,468 7,018 Subordinated Credit Facility 104,135 — Subordinated Credit Facility Make-Whole Amount 32,500 — Contractual cash obligations $ 333,137 27,316 On June 14, 2026, subsequent to quarter end, we entered into a transaction to sell most of Comtech's Satellite and Space Communications ("S&S") business to an affiliate of Gilat Satellite Networks Ltd. In accordance with our existing credit facilities, we will use 65% of the net proceeds from the sale of most of S&S' business to prepay the majority of our Credit Facility, with the remaining 35% to prepay subordinated debt outstanding under our Subordinated Credit Facility, starting with repaying the subordinated priority term loan. See Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (1) General - Subsequent Events, and Current Report on Form 8-K filed by us with the SEC on June 15, 2026, for more detailed information about these transactions. As the transaction has not yet been consummated, the table above as of April 30, 2026 does not reflect the use of the net proceeds to repay outstanding debt under our Credit Facility and Subordinated Credit Facility. 70 Index As stated above, the amounts in the above table represent cash payments due under contractual obligations. Interest payments related to our Credit Facility were calculated based on the outstanding borrowings at April 30, 2026 (and do not, for example, account for the subsequent repayment, in full, of the remaining $3.6 million of Revolver Loan in May 2026). Interest related to the Credit Facility was calculated based on the SOFR forward curve, plus the applicable margin, and does not assume any interest paid-in-kind. The Subordinated Credit Facility amount includes paid-in-kind interest through April 30, 2026 on the $35.0 million Subordinated Credit Facility Amendment No. 2 Priority Term Loan. The Subordinated Credit Facility Make-Whole Amount represents $65.0 million of the outstanding Subordinated Credit Facility principal amount, multiplied by the applicable make-whole rate for each applicable tranche as of April 30, 2026. The Subordinated Credit Facility and Make-Whole Amount are not included in the total due within one year column given the timing of such payment is subject to the timing of certain repayments, prepayments and maturity date associated with the Credit Facility. The table above includes future cash outflows related to our Basingstoke, UK facility which ceased operations in fiscal 2025. Such outflows were based on the contractual lease terms in place as of April 30, 2026. Subsequent to quarter end, we paid $1.9 million to the landlord to terminate the lease earlier than its November 2030 expiration date. See Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (4) - Fair Value Measurements and Financial Instruments, Note (9) - Credit Facility, Note (10) - Subordinated Credit Facility, and Note (11) - Leases for further information. As discussed in Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (17) – Convertible Preferred Stock, prior to entering the Exchange Agreement on June 14, 2026, the holders of the Convertible Preferred Stock: (i) had the option to redeem such shares for cash in the event of the occurrence of an asset sale meeting certain criteria; (ii) on or after April 30, 2027 in the event of a satisfaction of the existing Credit Facility; and (iii) in all other cases, October 31, 2028. As the Convertible Preferred Stock are not mandatorily redeemable for cash, the redemption value of such shares are not presented in the table above. See Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (1) General - Subsequent Events, and Current Report on Form 8-K filed by us with the SEC on June 15, 2026, for more detailed information regarding the terms of the Exchange Agreement entered on June 14, 2026. In the ordinary course of business, we include indemnification provisions in certain of our customer contracts. Pursuant to these agreements, we have agreed to indemnify, hold harmless and reimburse the indemnified party for certain losses suffered or incurred by the indemnified party, including but not limited to losses related to third-party intellectual property claims. It is not possible to determine the maximum potential amount under these agreements due to a history of nominal claims and the unique facts and circumstances involved in each particular agreement. As discussed further in Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (19) - Legal Proceedings and Other Matters, we are subject to a number of indemnification demands and we are incurring ongoing legal expenses in connection with these matters. Our insurance policies may not cover the cost of defending indemnification claims or providing indemnification. As a result, pending or future claims asserted against us by a party that we have agreed to indemnify could result in legal costs and damages that could have a material adverse effect on our consolidated results of operations and financial condition. We entered into employment and/or change of control agreements, as well as indemnification agreements with certain of our executive officers, directors and certain key employees. All of these agreements may require payments by us, in certain circumstances, including, but not limited to, a change in control of the Company or termination of the employee. Our Condensed Consolidated Balance Sheet at April 30, 2026 includes liabilities for uncertain tax positions, including interest, any or all of which may result in a cash payment. The future payments related to uncertain tax positions have not been presented in the table above due to the uncertainty of the amounts and timing of any potential cash settlement with the taxing authorities. See Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (12) – Income Taxes, for further information. RECENT ACCOUNTING PRONOUNCEMENTS We are required to prepare our Condensed Consolidated Financial Statements in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") which is the source for all authoritative U.S. generally accepted accounting principles, which is commonly referred to as "GAAP." The FASB ASC is subject to updates by the FASB, which are known as Accounting Standards Updates ("ASUs"). See Part I. - Financial Information - Item 1. - Notes to Condensed Consolidated Financial Statements - Note (2) – Adoption of Accounting Standards and Updates for further information. 71 Index