NASDAQ: CMTL
COMTECH TELECOMMUNICATIONS CORP /DE/CIK 0000023197 · SIC 3663 · Radio & TV Broadcasting & Communications Equipment
Comtech Telecommunications Corp., a Delaware corporation ("Comtech" or the "Company"), through its Allerium segment, is a leading provider of mission-critical communications infrastructure and software for public safety and mobile networks worldwide, including technologies that locate, route,… About this business →
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Latest financial statements
From 10-K filed Oct 14, 2026 (period ending Jul 31, 2026). As printed on the EDGAR/iXBRL face — not generated by the model.
Consolidated Statements of Operations
| Description | Fiscal years ended July 31, 2026 | Fiscal years ended July 31, 2025 |
|---|---|---|
| Net sales | 249,613,000 | 300,871,000 |
| Cost of sales | 152,437,000 | 205,664,000 |
| Gross profit | 97,176,000 | 95,207,000 |
| Expenses: | ||
| Selling, general and administrative | 87,855,000 | 88,129,000 |
| Research and development | 11,577,000 | 11,725,000 |
| Amortization of intangibles | 14,763,000 | 15,154,000 |
| Impairment of long-lived assets, including goodwill | — | 5,304,000 |
| CEO transition costs | 1,162,000 | 2,117,000 |
| Proxy solicitation costs | — | 2,682,000 |
| 115,357,000 | 125,111,000 | |
| Operating loss from continuing operations | (18,181,000) | (29,904,000) |
| Other expenses (income): | ||
| Interest expense | 21,339,000 | 19,011,000 |
| Interest (income) and other | 3,000 | (118,000) |
| Write-off of deferred financing costs and debt discounts | — | 8,977,000 |
| Change in fair value of warrants and derivatives | (22,089,000) | (38,498,000) |
| Loss from continuing operations before income taxes | (17,434,000) | (19,276,000) |
| Provision for (benefit from) income taxes | 847,000 | (279,000) |
| Net loss from continuing operations | (18,281,000) | (18,997,000) |
| Discontinued operations (Note 2): | ||
| Loss from discontinued operations before income taxes | (16,807,000) | (136,106,000) |
| Provision for income taxes | 1,081,000 | 199,000 |
| Net loss from discontinued operations | (17,888,000) | (136,305,000) |
| Net loss | (36,169,000) | (155,302,000) |
| Gain on extinguishment of convertible preferred stock | — | 51,179,000 |
| Adjustments to reflect redemption value of convertible preferred stock: | ||
| Dividends on convertible preferred stock, net | (32,763,000) | (100,128,000) |
| Net loss attributable to common stockholders | (68,932,000) | (204,251,000) |
| Net loss per common share: | ||
| Basic and diluted continuing operations | (1.71) | (2.31) |
| Basic and diluted discontinued operations | (0.60) | (4.64) |
| Basic and diluted | (2.31) | (6.95) |
| Weighted average number of common and common equivalent shares outstanding basic and diluted | 29,845,000 | 29,405,000 |
Consolidated Balance Sheets
| Description | As of July 31, 2026 | As of July 31, 2025 |
|---|---|---|
| Current assets: | ||
| Cash and cash equivalents | 34,978,000 | 35,371,000 |
| Accounts receivable, net | 67,803,000 | 87,176,000 |
| Inventories, net | 10,510,000 | 6,936,000 |
| Prepaid expenses and other current assets | 12,627,000 | 13,775,000 |
| Current assets of discontinued operations held for sale (See Note 2) | 117,341,000 | 127,987,000 |
| Total current assets | 243,259,000 | 271,245,000 |
| Property, plant and equipment, net | 30,976,000 | 27,960,000 |
| Operating lease right-of-use assets, net | 9,914,000 | 9,527,000 |
| Goodwill | 176,126,000 | 176,126,000 |
| Intangibles with finite lives, net | 120,664,000 | 135,427,000 |
| Deferred financing costs, net | 1,454,000 | 1,908,000 |
| Other assets, net | 9,324,000 | 10,457,000 |
| Non-current assets of discontinued operations held for sale (See Note 2) | 104,045,000 | 109,246,000 |
| Total assets | 695,762,000 | 741,896,000 |
| Liabilities, Convertible Preferred Stock and Stockholders’ Equity | ||
| Current liabilities: | ||
| Accounts payable | 20,751,000 | 14,660,000 |
| Accrued expenses and other current liabilities | 47,362,000 | 41,076,000 |
| Current portion of credit facility, net | 76,609,000 | 4,050,000 |
| Current portion of subordinated credit facility, net | 44,408,000 | — |
| Operating lease liabilities, current | 3,210,000 | 3,426,000 |
| Contract liabilities | 43,758,000 | 41,955,000 |
| Interest payable | 283,000 | 15,000 |
| Current liabilities of discontinued operations held for sale (See Note 2) | 54,190,000 | 53,067,000 |
| Total current liabilities | 290,571,000 | 158,249,000 |
| Non-current portion of credit facility, net | 21,400,000 | 114,414,000 |
| Non-current portion of subordinated credit facility, net | 62,920,000 | 95,588,000 |
| Operating lease liabilities, non-current | 9,423,000 | 8,907,000 |
| Income taxes payable, non-current | 1,444,000 | 1,611,000 |
| Long-term contract liabilities | 16,429,000 | 21,005,000 |
| Warrant and derivative liabilities | 4,481,000 | 17,849,000 |
| Other liabilities | 3,509,000 | 3,450,000 |
| Non-current liabilities of discontinued operations held for sale (See Note 2) | 24,698,000 | 26,856,000 |
| Total liabilities | 434,875,000 | 447,929,000 |
| Commitments and contingencies (See Note 14) | ||
| Convertible preferred stock, par value $0.10 per share; authorized and issued 178,181 shares at July 31, 2026 (redemption value of $223,156,000, which includes accrued dividends of $1,661,000) and authorized and issued 178,181 shares at July 31, 2025 (redemption value of $204,153,000, which includes accrued dividends of $1,520,000) | 221,983,000 | 189,545,000 |
| Stockholders’ equity: | ||
| Preferred stock, par value $0.10 per share; authorized and unissued 1,821,819 shares at July 31, 2026 and 2025, respectively | — | — |
| Common stock, par value $0.10 per share; authorized 100,000,000 shares; issued 45,025,294 shares and 44,443,626 shares at July 31, 2026 and 2025, respectively | 4,502,000 | 4,444,000 |
| Additional paid-in capital | 519,315,000 | 548,722,000 |
| Accumulated deficit | (43,064,000) | (6,895,000) |
| 480,753,000 | 546,271,000 | |
| Less: | ||
| Treasury stock, at cost (15,033,317 shares at July 31, 2026 and 2025) | (441,849,000) | (441,849,000) |
| Total stockholders’ equity | 38,904,000 | 104,422,000 |
| Total liabilities, convertible preferred stock and stockholders’ equity | 695,762,000 | 741,896,000 |
Consolidated Statements of Cash Flows
| Description | Fiscal years ended July 31, 2026 | Fiscal years ended July 31, 2025 |
|---|---|---|
| Cash flows from operating activities: | ||
| Net loss | (36,169,000) | (155,302,000) |
| Less: Net loss from discontinued operations | (17,888,000) | (136,305,000) |
| Net loss from continuing operations | (18,281,000) | (18,997,000) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
| Depreciation and amortization of property, plant and equipment | 9,778,000 | 8,813,000 |
| Amortization of intangible assets | 14,763,000 | 15,154,000 |
| Amortization of stock-based compensation | 3,121,000 | 2,238,000 |
| Paid-in-kind interest under term loan | — | 1,850,000 |
| Amortization of deferred financing costs, debt discount and accreted interest related to subordinated credit facility | 14,352,000 | 3,098,000 |
| Amortization of deferred financing costs and debt discount related to credit facility | 1,760,000 | 2,176,000 |
| Write-off of deferred financing costs and debt discount | — | 8,977,000 |
| Change in fair value of warrants and derivatives | (22,089,000) | (38,498,000) |
| Loss on disposal of property, plant and equipment | — | 11,000 |
| (Benefit from) provision for allowance for doubtful accounts and contract assets | (302,000) | 375,000 |
| Provision for excess and obsolete inventory | 492,000 | 261,000 |
| Deferred income tax expense (benefit) | 1,032,000 | (1,187,000) |
| Impairment of long-lived assets, including goodwill | — | 5,304,000 |
| Changes in assets and liabilities: | ||
| Accounts receivable | 19,675,000 | (8,472,000) |
| Inventories | (4,066,000) | 1,134,000 |
| Prepaid expenses and other current assets | 99,000 | (2,731,000) |
| Other assets | 709,000 | 745,000 |
| Accounts payable | 6,043,000 | (6,752,000) |
| Accrued expenses and other current liabilities | 1,018,000 | (1,914,000) |
| Contract liabilities | (2,773,000) | 1,767,000 |
| Other liabilities, non-current | 68,000 | (95,000) |
| Interest payable | (211,000) | (1,057,000) |
| Income taxes payable | (203,000) | (1,394,000) |
| Net cash provided by (used in) operating activities from continuing operations | 24,985,000 | (29,194,000) |
| Net cash provided by operating activities from discontinued operations | 12,425,000 | 20,902,000 |
| Net cash provided by (used in) operating activities | 37,410,000 | (8,292,000) |
| Cash flows from investing activities: | ||
| Purchases of property, plant and equipment | (15,223,000) | (8,228,000) |
| Proceeds from sale of indefinite lived intangible assets | 565,000 | — |
| Net cash used in investing activities from continuing operations | (14,658,000) | (8,228,000) |
| Net cash provided by (used in) investing activities from discontinued operations | 8,748,000 | (337,000) |
| Net cash used in investing activities | (5,910,000) | (8,565,000) |
| Cash flows from financing activities: | ||
| Net payments under revolving loans | (17,641,000) | (14,859,000) |
| Repayment of term loan | (10,550,000) | (56,746,000) |
| Repayment of subordinated credit facility | (3,021,000) | — |
| Proceeds from subordinated credit facility | — | 100,000,000 |
| Payment of deferred financing costs and debt discount | (450,000) | (4,545,000) |
| Contribution for constructing long-lived assets | — | 2,814,000 |
| Payment of convertible preferred stock consent fee | — | (650,000) |
| Payment of convertible preferred stock amendment fees | (80,000) | (76,000) |
| Cash dividends paid on common stock | (32,000) | (158,000) |
| Remittance of employees' statutory tax withholding for stock awards | (688,000) | (1,248,000) |
| Proceeds from issuance of employee stock purchase plan shares | 95,000 | 118,000 |
| Payment of shelf registration costs | (181,000) | (207,000) |
| Net cash (used in) provided by financing activities from continuing operations | (32,548,000) | 24,443,000 |
| (Continued) | ||
| Net (decrease) increase in cash and cash equivalents, including cash classified within current assets of discontinued operations held for sale | (1,048,000) | 7,586,000 |
| Less: Net (decrease) increase in cash classified within current assets of discontinued operations held for sale | (655,000) | 1,097,000 |
| Net (decrease) increase in cash and cash equivalents from continuing operations | (393,000) | 6,489,000 |
| Cash and cash equivalents at beginning of year | 35,371,000 | 28,882,000 |
| Cash and cash equivalents at end of year | 34,978,000 | 35,371,000 |
| Supplemental cash flow disclosure (including discontinued operations) | ||
| Cash paid (received) during the fiscal year for: | ||
| Interest | 18,271,000 | 27,724,000 |
| Income taxes, net | (163,000) | 1,876,000 |
| Non-cash investing and financing activities: | ||
| Adjustment to reflect redemption value of convertible preferred stock | 32,438,000 | 96,258,000 |
| Term loan amendment fees paid-in-kind | 2,809,000 | 5,815,000 |
| Accrued term loan amendment fee | — | 2,809,000 |
| Accrued additions to property, plant and equipment | 662,000 | 317,000 |
| Issuance of restricted stock | 11,000 | 6,000 |
| Accrued remittance of employees' statutory tax withholdings for fully-vested share units | 2,000 | 3,000 |
| Reversal of dividend equivalents | — | (42,000) |
| Accrued deferred financing costs | 320,000 | — |
| Accrued shelf registration costs | 54,000 | — |
| Accrued convertible preferred stock amendment fees | 245,000 | — |
Amounts as printed on the EDGAR/iXBRL face. Labels, columns, and figures are the filing face, not a GAAP stencil. Interactive statements & notes on EDGAR ↗
About COMTECH TELECOMMUNICATIONS CORP /DE/
Source: Item 1 (Business) from the 10-K filed October 14, 2026. Description as filed by the company with the SEC.
ITEM 1. BUSINESS
Overview
Comtech Telecommunications Corp., a Delaware corporation ("Comtech" or the "Company"), through its Allerium segment, is a leading provider of mission-critical communications infrastructure and software for public safety and mobile networks worldwide, including technologies that locate, route, deliver and answer 9-1-1 calls and emergency communications, as well as carrier-grade location, messaging and public alerting capabilities, when every connection counts.
We are pleased to report that the transformation plan we first announced in January 2025 has continued to contribute to our improved operational and financial performance, as evidenced by a number of meaningful developments in our business, including: (i) the removal of the substantial doubt regarding our ability to continue as a going concern in November 2025; (ii) achieving positive consolidated operating cash flows for each of the last six quarters, with fiscal 2026 totaling $37.4 million; (iii) increasing our consolidated liquidity as of July 31, 2026 to $61.3 million; (iv) reducing our debt; and (v) securing long-term customer commitments, including a large, multi-year contract extension with a top tier mobile network operator in the U.S., valued in excess of $130.0 million.
Furthermore, on June 14, 2026, we entered into a definitive Securities Purchase Agreement (the "Purchase Agreement," and the transaction contemplated by the Purchase Agreement and related ancillary documents, the "Strategic Transaction") to sell most of our Satellite and Space Communications ("S&S") segment (the "Disposal Group") to Wavestream Corporation ("Buyer"), an affiliate of Gilat Satellite Networks Ltd (together with Buyer, "Gilat"). The Purchase Agreement provides for a base purchase price of $157.5 million in cash, subject to customary adjustments as defined in the Purchase Agreement. Upon execution of the Purchase Agreement, we received $10.0 million of the purchase price (the "Advance Payment"). Comtech will have the right to retain the Advance Payment in the event that the Purchase Agreement is terminated, if at the time of such termination: (i) all closing conditions have been satisfied or waived, other than certain conditions relating to regulatory approval and clearance, and any conditions by their nature are to be satisfied at the closing, and (ii) Sellers, as defined, are not in material breach of the Purchase Agreement. The Strategic Transaction is expected to close in calendar 2026, subject to certain closing conditions and regulatory approvals. The consummation of the Strategic Transaction does not require the approval of our common stockholders.
Read full description ↓
Contemporaneously with signing the Strategic Transaction during the fourth quarter of fiscal 2026, at a time when we were in compliance with the terms and covenants of each of our credit facilities, we entered into various amendments to our Credit Facility, Subordinated Credit Facility and convertible preferred stock agreements which enhance our overall financial flexibility and reduce our anticipated cost of capital. Such enhanced financial flexibility includes: (i) an extension of the covenant holiday under our Credit Facility and Subordinated Credit Facility to July 31, 2027; (ii) waiver of the fiscal 2026 excess cash flow prepayment under our Credit Facility; (iii) deferral of previously scheduled make whole escalations on portions of the Subordinated Credit Facility until April 1, 2027 if the loans are not prepaid by that time; (iv) a reduction in the prepayment penalty associated with the application of the net proceeds from the sale of most of S&S' business of 1.0%; (v) upon closing of the Strategic Transaction, elimination of a provision that previously provided for the acceleration of the redemption rights of the holders of convertible preferred stock upon a refinancing; (vi) extension of the redemption rights of the holders of convertible preferred stock from October 31, 2028 to October 31, 2029, except upon consummation of certain qualified asset sales by the Company or its subsidiaries or upon a change in control; and (vii) deferring the rights of the holders of convertible preferred stock to require cash dividends until October 31, 2028. Upon closing the Strategic Transaction, we will use the net cash proceeds to substantially reduce debt and then seek a comprehensive recapitalization of the business with the intention to further enhance our financial flexibility and reduce the cost of capital.
Collectively, the Strategic Transaction and fiscal 2026 amendments to our Credit Facility, Subordinated Credit Facility and convertible preferred stock agreements, represent a successful outcome of our previously announced strategic review process.
As we await regulatory approval of the Strategic Transaction, we will be executing a transition plan to align the organization to be purpose-built to support Allerium's anticipated growth from increasing demand for next-generation public safety technologies and services. With an improved capital structure, streamlined organization and a clear strategic focus, Allerium is poised to capitalize on its leadership in the public safety market.
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Our operating segments historically consisted of Allerium and S&S. As the Strategic Transaction represents a material strategic shift in our business, the results and net assets of the Disposal Group are presented herein as "discontinued operations" and comparable prior periods have been recast to reflect this change. Through the closing date of the Strategic Transaction, we will continue to operate the Disposal Group in accordance with the terms of the Purchase Agreement. Following the classification of the Disposal Group as discontinued operations, we have one reportable segment, which is also our one operating segment, that constitutes consolidated results consisting of our public safety business. Unless otherwise noted, all activities and amounts reported in this document relate to our continuing operations and exclude activities and amounts related to the Disposal Group. For additional information related to the Strategic Transaction and Disposal Group, see Notes to Consolidated Financial Statements - Note (2) Business Divestiture included in Part II - Item 8. Financial Statements and Supplementary Data.
While our transformation plan has contributed to improved operational and financial performance, our business, financial condition and/or operating results in the future are subject to a number of risks and uncertainties, as further discussed throughout this Form 10-K, including in Item 1A. - Risk Factors, and other filings with the SEC.
Allerium
We operate one core business, Allerium, which we believe serves markets undergoing long-term growth, reinvestment and rapid technological change. Allerium is a leading provider of Next Generation 9-1-1 (“NG9-1-1”) infrastructure and emergency communications technologies for state and local governments, public safety agencies and telecommunications carriers.
Financial information about our business segment is provided in Notes to Consolidated Financial Statements - Note (13) Segment Information included in Part II - Item 8. Financial Statements and Supplementary Data. The markets and key technologies for Allerium are further described below.
Rebranding to Allerium
During fiscal 2025, we launched the rebranding of our Terrestrial and Wireless Networks segment to "Allerium," a fusion of “all” and “continuum.” Allerium is a name we believe symbolizes the seamless connection, collaboration, reliability and empowerment that we are focused on delivering to public safety professionals and essential service providers. Allerium reflects a brand rooted in experience, driven by innovation and built for those who protect our communities. This rebrand serves to clarify our go-to-market strategy under a single identity, which we believe reaffirms our commitment to delivering successful outcomes when it matters most. The rebrand strengthens market recognition, enhances customer trust and positions the business for sustained growth. Allerium underscores our focus on long-term value creation by improving brand equity, expanding customer reach and enabling more efficient go-to-market execution. It also increases visibility within key public safety and network markets, sectors defined by trust, reliability and innovation. While our name has changed, our mission has not: to serve those who protect our communities, with technology that performs when every connection counts.
No later than six months from the consummation of the Strategic Transaction, we must change our name to one that does not contain "Comtech". Following consummation of the Strategic Transaction, we expect to complete our rebranding initiative by formally changing our name to Allerium. We anticipate fully adopting the Allerium name during fiscal 2027. Accordingly, we refer to our continuing operations as Allerium. In connection with such rebranding, we also anticipate trading under a new Nasdaq symbol to be announced in the future.
Overview
Allerium is a public safety technology business focused on helping governments, emergency communications agencies and mobile network operators build, operate and modernize the critical infrastructure that connects people to help.
Every emergency begins with a connection. From the moment a citizen places a 9-1-1 call or sends a text requesting assistance, technologies, such as Allerium's, help ensure communications are precisely located, securely routed and delivered to the appropriate emergency communications center. Beyond the initial connection, our solutions enable agencies to receive, manage and coordinate voice, text, location and other critical information that supports emergency response when every second counts.
3
Our solutions serve two complementary markets.
•Public Safety Solutions: Our Public Safety Solutions include Next Generation 9-1-1 ("NG9-1-1") infrastructure, Emergency Services IP Networks ("ESInets"), Next Generation Core Services ("NGCS"), cloud-native call handling, emergency communications applications, trusted location services and software designed to improve coordination across the emergency response ecosystem and cybersecurity training.
•Mobile Network Solutions: Our Mobile Network Solutions provide carrier-grade location, messaging and public alerting technologies that enable mobile network operators to support emergency services, regulatory compliance and trusted communications across evolving wireless networks.
Together, these solutions position Allerium at the intersection of two long-term technology transformations: the modernization of emergency communications infrastructure and the continued evolution of mobile networks.
According to a 2026 Next Generation 9-1-1 report published by Frost & Sullivan, a leading third-party research firm, Allerium was the second leading provider of next generation core services ("NGCS") based on both primary contracts held and U.S. population served, with an estimated market share of approximately 25%. Allerium was also the third leading provider for call handling in the U.S., with an estimated market share of approximately 8%. Allerium's solutions were also estimated to support over 250 million wireless subscribers. We believe these positions demonstrate the breadth of Allerium's role across the emergency communications ecosystem, spanning the mobile networks where emergency communications originate through the NG9-1-1 infrastructure and call handling technologies used by public safety agencies.
Allerium supports statewide and regional NG9-1-1 deployments across North America, while providing mission-critical technologies used by public safety agencies and many of the world's largest mobile network operators. Our portfolio spans the technologies that locate, route, answer and increasingly coordinate emergency communications across secure, standards-based networks.
Increasingly, our software incorporates artificial intelligence, automation and advanced data analytics to help agencies improve situational awareness, streamline workflows and support more informed emergency response.
Allerium operates critical infrastructure for governments and public safety agencies, creating long-term customer relationships that extend well beyond initial deployments. We believe these trusted relationships provide a foundation to expand the capabilities we deliver over time, including additional software, cloud-based applications, data-driven capabilities and network services as customers continue modernizing their emergency communications environments.
During fiscal 2026, Allerium continued to strengthen its market position through customer deployments, contract renewals and continued product innovation. Highlights included expanding statewide NG9-1-1 services in Kentucky, renewing Arizona's statewide NG9-1-1 partnership, completing over 60 NG9-1-1 upgrades across Canada, making Allerium Mira commercially available as our cloud-native call handling platform, and introducing Allerium Coral, a network-native capability designed to securely coordinate incident information across agencies and jurisdictions.
Upon consummation of the Strategic Transaction, we will continue to align our operations, strategy and corporate identity around the Allerium business, creating a focused public safety technology company dedicated to supporting the continued evolution of emergency communications.
Across these markets, our portfolio includes four primary areas: next generation 9-1-1 and call delivery, call handling, trusted location and messaging solutions and cybersecurity training.
Next Generation 9-1-1 and Call Delivery
Allerium provides the network infrastructure that enables emergency communications to move securely, reliably and intelligently between originating service providers, emergency communications centers and public safety agencies. Our NG9-1-1 solutions include ESInets, NGCS, geospatial routing, policy-based call routing, location validation, originating service provider connectivity and related network services that form the foundation of modern emergency communications.
4
As governments replace legacy Enhanced 9-1-1 systems with IP-based NG9-1-1 networks, agencies are increasingly seeking resilient, interoperable platforms capable of supporting voice, text, multimedia, precise location and emerging forms of real-time data. Our statewide and regional deployments are designed to provide that foundation while enabling future expansion as new technologies and workflows emerge.
Increasingly, NG9-1-1 is becoming more than a call-routing network. Allerium continues to expand the capabilities delivered through its infrastructure, enabling agencies to securely exchange and coordinate critical information as incidents move across jurisdictions, organizations and systems.
Call Handling Solutions
Allerium provides call handling solutions that enable emergency communications centers to receive, manage and respond to emergency requests across voice, text and emerging communication channels.
Our portfolio includes both proven on-premise platforms and Allerium Mira, our cloud-native call handling platform designed to support the evolving operational and technology requirements of modern emergency communications centers. Mira extends our existing call handling capabilities through a flexible microservices architecture that supports cloud, hybrid, private and edge deployment models while integrating directly with our NG9-1-1 infrastructure.
As agencies continue modernizing emergency communications environments, we believe cloud-native applications, artificial intelligence and closer integration between networks and operational software will become increasingly important components of future public safety systems.
Trusted Location and Messaging Solutions
Allerium provides carrier-grade location, messaging and public alerting technologies that support mobile network operators, government agencies and other communications providers worldwide.
Our solutions enable operators to determine subscriber location, support emergency communications, comply with evolving regulatory requirements and deliver trusted messaging services across wireless networks. We also provide Wireless Emergency Alert solutions, location technologies and emergency communications services that help mobile network operators deliver reliable public safety capabilities while supporting the ongoing evolution of networks, such as 4G and 5G.
These long-standing carrier relationships complement our public safety business while providing opportunities to extend trusted communications technologies across an increasingly connected communications ecosystem.
Cybersecurity Training
We provide advanced cybersecurity training, primarily in support of mission-critical, high-security U.S. government and certain commercial and university customers, based on mature and proven training tools and programming. We provide cyber training both at customer sites and through our in-house development capabilities. Our competitive advantages include proprietary methods for administration and student management, a proven track record through multiple renewal cycles on a key U.S. government program and deep, trusted customer relationships.
We see expansion opportunities driven by a heightened focus on cybersecurity threats and workforce readiness, particularly in mission-critical emergency communications environments. We are also leveraging our extensive library of cybersecurity training programs to serve state and local governments, as well as private sector enterprises. To enhance scalability and accessibility, we are expanding our capabilities through hosted SaaS delivery models.
Key Markets and Growth Drivers
Allerium believes several long-term industry trends support continued demand for its technologies and services.
Modernization of Emergency Communications
Governments across North America continue replacing legacy emergency communications infrastructure with standards-based NG9-1-1 networks capable of supporting voice, text, multimedia, location and real-time data. We believe this multi-year transition will continue to create opportunities for network modernization, software adoption and managed services.
5
Expansion Within Existing Customer Relationships
Allerium's long-term relationships with statewide, regional and local public safety agencies create opportunities to expand the capabilities we deliver over time. As agencies modernize emergency communications, the opportunity is shifting beyond connecting calls and data to enabling more intelligent coordination across systems, agencies and jurisdictions.
Our strategy is to extend the value of the NG9-1-1 network through software and data-driven capabilities. Recent innovations, including Allerium Coral, leverage the intelligence, security and trusted routing capabilities of our network infrastructure to support secure coordination of incident information and improved situational awareness through AI-assisted workflows. We believe this approach strengthens existing customer relationships while creating opportunities to deliver additional software and services as agencies continue to modernize their emergency communications environments.
Cloud-Native Public Safety Applications
Emergency communications centers continue evaluating cloud-based deployment models that provide greater flexibility, scalability and operational resilience. Allerium believes cloud-native applications will become an increasingly important component of future emergency communications environments.
Mobile Network Evolution
Mobile network operators continue investing in network modernization, advanced location technologies, public alerting capabilities and messaging platforms to support emergency services, regulatory compliance and evolving subscriber expectations. As 5G networks mature, operators are increasingly seeking more intelligent location capabilities that improve positioning accuracy, resilience and operational awareness across increasingly complex wireless environments. Allerium continues to invest in next-generation location technologies, including AI-assisted approaches that leverage contextual network intelligence to enhance positioning performance and support emerging commercial and public safety applications. We believe our long-standing relationships with leading global mobile network operators position us to participate in these ongoing investments and technology transitions.
International Opportunities
Allerium continues to support customers across Canada, Australia and other international markets. We believe our experience delivering mission-critical communications infrastructure provides opportunities to expand our presence internationally as governments and communications providers continue modernizing emergency communications and mobile network technologies.
Allerium: Customer Base
Our Allerium segment serves customers primarily across the United States, Canada and Australia, where we have established long-term relationships with governments, public safety agencies and many of the world's leading telecommunications companies. These relationships span mission-critical public safety infrastructure, emergency communications, carrier location technologies and messaging services, providing a foundation for continued collaboration as customers modernize their communications networks. Representative customer categories include:
•U.S. state and local governments, including the Commonwealths of Kentucky, Massachusetts and Pennsylvania; the states of Arizona, Iowa, Maine, Ohio, South Carolina and Washington; and regional emergency communications authorities such as the North Central Texas Emergency Communications District, the Northern Illinois Next Generation Alliance and St. Louis County, Missouri.
•Leading telecommunications companies, including AT&T Inc., Bell Mobility, Inc., Comcast Corp., Nokia Corp., Rogers Communications Canada Inc., TELUS Communications Inc., Verizon Communications Inc. and Vodafone Public Limited Co.
•Telephone companies and federal, provincial, and local governments in Australia, Canada, Cayman Islands and New Zealand.
•High-security U.S. government and certain commercial and university customers.
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More Information and Where to Find It
Our Internet website is www.comtech.com, at which we make available free of charge our filings with the Securities and Exchange Commission ("SEC"), including investor letters, press releases, annual reports, quarterly reports, current reports, and any amendments to those filings as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We also use our website to disseminate other material information to our investors (on the Home Page and in the "Investor Relations" section). Among other things, we post on our website our press releases and information about our public conference calls (including the scheduled dates, times and the methods by which investors and others can listen to those calls), and we make available for replay webcasts of those calls and other presentations for a limited time.
We also use social media channels to communicate with customers and the public about our Company, our products, services, and other issues, and we use social media and the Internet to communicate with investors, including information about our stockholder meetings. Information and updates about our Annual Meetings will continue to be posted on our website at www.comtech.com in the "Investors" section.
None of the information on our website, blog or any other website identified herein is incorporated by reference in this Form 10-K and such information should not be considered a part of this Form 10-K.
Transformation Plan
On January 13, 2025, we announced an expanded plan to transform our business (herein after referred to as our "transformation plan"). Our expanded transformation plan includes, but is not limited to, the initiatives set forth below:
•improve corporate governance;
•strengthen executive leadership;
•upgrade talent in key positions;
•reinvigorate corporate culture that emphasizes transparency, empowerment and accountability;
•align accountability throughout the organization;
•optimize cash flow including disciplined working capital management;
•invest in next-generation solutions for our customers' expanding and emerging needs;
•enhance operational efficiency;
•streamline product lines with a focus on strategic, higher operating margin products;
•improve production efficiency;
•reduce cost structures;
•enhance customer satisfaction;
•improve contractual terms with customers and vendors;
•improve capital structure through amended and improved terms with creditors and reduction of principal and interest amounts due; and
•explore strategic alternatives for our various businesses and product lines, including the potential sale or divestiture of assets or business lines such as those described below.
Cumulatively, such expanded transformation plan initiatives have resulted in us taking the following actions, among others:
•On November 7, 2023, we completed the divestiture of our solid-state RF microwave high power amplifiers and control components product line, which was included in our S&S segment, pursuant to a stock sale agreement entered into on October 11, 2023 (the "PST Divestiture"). Net proceeds from the PST Divestiture in fiscal 2024 were $33.2 million and used in part to repay a portion of our outstanding debt at the time, as well as to fund working capital needs.
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•We have undertaken a detailed evaluation of our S&S segment's product portfolio to identify further opportunities to divest, separate and/or rationalize businesses or facilities that are not core to our go-forward focus. Consistent with this effort, in our fourth quarter of fiscal 2024, we made the decision to exit our underperforming operations in Basingstoke, United Kingdom. Such operations were established in connection with the fiscal 2020 acquisition of CGC Technology Limited. Taking into consideration the significant ongoing investment, as well as unfavorable contract terms on prospective antenna sales, we concluded such operations would not generate an attractive return on invested capital and made the decision to exit these operations. Furthermore, we conducted an intensive review of our product portfolio to focus future investment on our most strategic, high-margin revenue opportunities within the S&S segment. Upon completion of such review, we recorded a non-cash charge of $11.4 million primarily related to the write down of inventory during the first quarter of fiscal 2025 associated with approximately 70 products within our satellite ground infrastructure product line that were discontinued.
•In September 2025, we initiated a process to further optimize our operations within our S&S segment. Such actions include reducing our facility footprint and migrating the manufacturing of certain products to our Chandler, Arizona facility, resulting in approximately $3.0 million of anticipated annualized cost savings.
•We implemented multiple reductions in force throughout our entire organization. Inclusive of actions taken since August 2025 (i.e., the start of our fiscal 2026), such reductions approximated 7% of our total workforce as of July 31, 2025, or approximately $15.0 million in annualized labor costs.
•On June 14, 2026, we entered into the Purchase Agreement to sell the Disposal Group to Gilat. The Purchase Agreement provides for a base purchase price of $157.5 million in cash, subject to customary adjustments as defined in the Purchase Agreement. Upon execution of the Purchase Agreement, we received a $10.0 million Advance Payment. The Strategic Transaction is expected to close in calendar 2026, subject to certain closing conditions and regulatory approvals. The consummation of the Strategic Transaction does not require the approval of our common stockholders.
•As discussed above in Part 1 - Item 1. Business - Overview, in June and July 2026, we also amended our existing credit facilities and agreed to exchange the existing series of convertible preferred stock with a new series of convertible preferred stock upon consummation of the Strategic Transaction. These actions not only provide the necessary consents to the Strategic Transaction, but also deliver immediate enhancements to our financial flexibility.
Our improved operational and financial performance resulting from our transformation plan afforded us the opportunity to enter into the Strategic Transaction, as well as to obtain the various amendments to our Credit Facility, Subordinated Credit Facility and convertible preferred stock agreements. Collectively, the Strategic Transaction and fiscal 2026 amendments to our Credit Facility, Subordinated Credit Facility and convertible preferred stock agreements, at a time when we were in compliance with our covenants, represent a successful outcome of our previously announced strategic review processes, and position us to prepay significant portions of our Credit Facility and Subordinated Credit Facility and enhance our overall financial flexibility as we seek to further address our capital structure. Upon closing the Strategic Transaction, we will use the net cash proceeds to substantially reduce debt and then seek to recapitalize the business and reduce the cost of capital, in order to provide a stronger and healthier financial position for the remaining Allerium operations.
As we await regulatory approval of the Strategic Transaction, we will be executing a transformation plan to further align the organization to be purpose-built to support Allerium's anticipated growth from increasing demand for next-generation public safety technologies and services. With an improved capital structure, streamlined organization and a clear strategic focus, Allerium is poised to capitalize on its leadership in the public safety market by directing investment, innovation, and execution around a single mission-critical market with significant long-term demand drivers as public safety solutions continue to evolve from voice-based connections to data-centric communication, coordination and real-time AI-enhanced decision-making. With a simpler operating model, a strengthened balance sheet and a single strategic focus, Allerium hopes to accelerate its growth of recurring software and services revenue and expand margins and operating leverage while investing more decisively in the innovation its public safety customers depend upon.
There can be no assurance that our plans will result in acquisitions, divestitures or other strategic changes or outcomes. Also, while anticipated to improve our profitability in future periods, such actions will likely result in near-term restructuring charges.
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Sales, Marketing and Customer Support
Sales and marketing strategies include direct sales through sales, marketing and engineering personnel, indirect sales through independent representatives, value-added resellers, and sales through a combination of the foregoing. We devote resources to evaluating and responding to requests for proposals by customers around the world and, as needed, we employ the use of specialized consultants to develop our proposals and bids.
We intend to continue to expand international marketing efforts, as needed, by engaging additional independent sales representatives, distributors and value-added resellers and by establishing foreign sales offices. In addition, we expect to leverage our relationships with larger companies (such as large mobile wireless operators) to market our technology solutions. In fiscal 2027, we expect to continue expanding our social media and Internet presence and further developing an updated marketing and branding strategy, such as fully transitioning to the new Allerium brand.
We are pre-qualified as an approved vendor for certain government contracts. We collaborate in sales efforts under various arrangements with integrators. Our marketing efforts also include advertising, public relations, speaking engagements and attending and sponsoring industry conferences.
Our management, technical and marketing personnel establish and maintain relationships with customers. Our sales strategies include a commitment to providing ongoing customer support for our solutions. This support involves providing direct access to engineering staff or trained technical representatives to resolve technical or operational issues.
Our solutions in many of our product areas have long sales cycles. Once a solution is designed into a system, application or platform, customers may be reluctant to change the incumbent supplier due to the extensive qualification process and potential redesign required in using alternative sources. In addition, in recent years, we have found that overall sales cycles for each of our product areas have significantly increased, as we continue to support our customer's overall migration and upgrade to newer designs and technologies.
Sales by geography and customer type, as a percentage of related net sales, are as follows:
Fiscal Years Ended July 31,
2026 2025
Allerium
Domestic 82.3 % 69.2 %
U.S. government 9.0 % 23.3 %
Total U.S. 91.3 % 92.5 %
International 8.7 % 7.5 %
Total 100.0 % 100.0 %
Domestic sales include sales to commercial customers, as well as to U.S. state and local governments. Sales to U.S. government customers include sales to the U.S. Department of War ("DoW"), intelligence and civilian agencies, as well as sales directly to or through prime contractors. International sales for fiscal 2026 and 2025 (which include sales to U.S. domestic companies for inclusion in products that are sold to international customers) were $21.6 million and $22.4 million, respectively.
For fiscal 2026, a domestic top tier mobile network operator and a Northeastern state contributed 17.0% and 12.6%, respectively, of net sales. For fiscal 2025, the U.S. Government and a domestic top tier mobile network operator contributed 23.3% and 15.3%, respectively, of net sales. 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 more than 10% of consolidated net sales for fiscal 2026 and 2025.
When we sell internationally, we denominate most of our contracts in U.S. dollars. Some of our sales to international customers are paid for by letters of credit or on an open account. From time to time, some of our customers may require us to provide performance guarantees.
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Backlog
Our backlog is defined as orders (sometimes also referred to herein as bookings) that we believe to be firm. Our backlog as of July 31, 2026 was $520.4 million. We estimate that approximately 80% of the backlog as of July 31, 2026 will be recognized as sales during the next thirty-six month period, of which approximately 40% is estimated to be recognized during fiscal 2027. Such estimate could be impacted by our transformation plan discussed throughout this Form 10-K.
At July 31, 2026, 88.9% of our backlog consisted of orders for use by U.S. commercial customers, 2.1% consisted of U.S. government contracts, subcontracts and government funded programs, and 9.0% consisted of orders for use by international customers (including sales to U.S. domestic companies for inclusion in solutions that will be sold to international customers).
A significant portion of the backlog from our U.S. commercial customers relates to large, multi-year contracts to provide state and local governments (and their agencies) with 9-1-1 public safety and location technology solutions. Although the contracts themselves represent legal, binding obligations of these governments, funding is often subject to the approval of budgets (for example, on an annual or bi-annual basis). Although funding for these multi-year contracts is dependent on future budgets being approved, we include the full estimated value of these large, multi-year contracts in our backlog given the legal obligations of the customer, the critical nature of the services being provided and the positive historical experience of our state and local government customers passing their respective budgets.
In some cases, such as contracts received from large U.S. based telecommunication companies, our backlog may include the value of customer authorizations to proceed or may be computed by multiplying the most recent month’s contract or revenue by the months remaining under the existing long-term agreements, which we consider to be the best available information for anticipating revenue under those agreements.
Backlog that is derived from U.S. government orders relates to U.S. government contracts that have been awarded, signed and funded. Backlog for our U.S. government customers also includes amounts appropriated by Congress and allotted to the contract by the procuring government agency. Such backlog does not include the value of options that may be exercised in the future on multi-year contracts, nor does it include the value of additional purchase orders that we may receive under indefinite delivery/indefinite quantity ("IDIQ") contracts or basic ordering agreements.
When we acquire a company with existing contracts, we only record bookings in the period of acquisition for those contracts that meet our definition.
Almost all of the contracts in our backlog are subject to modification, cancellation at the convenience of the customer, or for default in the event that we are unable to perform under the contract.
There can be no assurance that our backlog will result in actual revenue in any particular period, or at all, or that any contract included in backlog will be profitable. There is a higher degree of risk in this regard with respect to unfunded backlog. The actual amount and timing of any revenue is subject to various contingencies, many of which are beyond our control. The actual recognition of revenue on contracts included in backlog may never occur or may change because a program schedule could change, a customer may not follow up with order details (e.g., delivery instructions), fluctuations in currency exchange rates after an order is placed could cause our products to become too expensive for a foreign customer, a customer’s program could be canceled, a contract could be reduced, modified or terminated early due to changes in a customer’s priorities, funding may not be included in future budgets, actual indirect rates being reimbursed on U.S. government contracts may ultimately be less than those indirect rates included in our initial proposals, or an option that we had assumed would be exercised is not exercised. As a result of these contingencies, we may adjust our backlog if we determine that such orders are no longer firm and/or funded. In addition to adjustments from these types of contingencies, variations in backlog from time to time are attributable, in part, to changes in sales mix, the timing of contract proposals, the timing of contract awards, delivery schedules on specific contracts, new bookings obtained through acquisitions or reductions due to divestitures or other restructuring type activities. Backlog in our Allerium segment has been, and could be, highly influenced by the nature and timing of orders received from federal, state and local governments and defense-related agencies, causing such orders to be subject to unpredictable funding, deployment and technology decisions by such customers. As a result, we believe our backlog and orders, at any point in time, are not necessarily indicative of the total sales anticipated for any future period.
For more information about risks pertaining to our backlog, see the discussion of those risks outlined in Item 1A – Risk Factors under Part I of this Form 10-K.
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Research and Development
We have established leading technology positions in our fields principally through internal research and development activities. Internal research and development expenses are reported as research and development expenses for financial reporting purposes and were $11.6 million and $11.7 million in fiscal 2026 and 2025, respectively, representing 4.6% and 3.9% of total consolidated net sales, respectively, for these periods.
In fiscal 2026 and 2025, we undertook engineering efforts related to internal use software and capitalized $6.3 million and $3.9 million, respectively.
Intellectual Property
We rely upon trade secrets, technical know-how, continuing technological innovation and, with respect to certain key technologies, patents to develop and maintain our competitive position. The solutions we sell require significant engineering design and integration expertise. For technological capabilities that are not protected by patents or licenses, we generally rely on the expertise of our employees and our learned experiences in both the design and integration of our solutions and the delivery of our services.
Some of our key technology is protected by patents that are significant to protecting our proprietary technology. We do not expect that upon expiration of these patents, our future results will be negatively impacted.
We have dozens of patents worldwide relating to wireless location services, text messaging, GPS ephemeris data, emergency public safety data routing, electronic commerce and other areas. To-date, our strategy has been to avoid offensive and defensive patent litigation and focus on building meaningful partnerships with other companies through direct licensing, cross licensing, and other forms of agreements. We do not believe that any single patent or group of patents, patent application or patent license agreement is material to our operations.
We have filed additional patent applications for certain apparatus and processes we believe we have invented covering key features of location services, wireless text alerts, SMS Center, mobile-originated data and E-9-1-1 network software. There is no assurance that any patent application will result in a patent being issued by the U.S. Patent and Trademark Office or other patent offices, nor is there any guarantee that any issued patent will be valid and enforceable. Additionally, foreign patent rights may or may not be available or pursued in any technology area for which U.S. patent applications have been filed.
Almost all the solutions we sell include technology and other technical know-how that we have internally developed. In past instances where we have provided government-purpose rights, to our knowledge, the U.S. government has not exercised any of these rights. To the extent that we have provided or will provide government-purpose rights in the future, we believe that given the rapidly changing nature of our technology, our future success will depend primarily on the technical competence and creative skill of our personnel, rather than any contractual protection.
Competition
Our business is highly competitive and characterized by rapid technological change. Some of our competitors are substantially larger, have significantly greater financial, marketing, research and development, technological and operating resources and broader product lines than we have. Other companies are developing new technologies and the shift towards open standards will likely result in increased competition. A significant technological breakthrough by others, including new companies, our existing competitors and our customers, could have a material adverse effect on our business. Our future success depends on, among other things, our ability to keep pace with such changes and developments and to respond to the increasing variety of electronic equipment users and transmission technologies.
Some of our customers have subsidiaries or divisions that compete against us. In addition, new and potential competitors are always emerging. Certain of our customers, who currently outsource their engineering and integration requirements to us, have technological capabilities in our product areas and could choose to replace our solutions with solutions they develop. In some cases, we partner or team with companies (both large and mid-tier) to compete against other teams for large programs. In some cases, these same companies may be among our competitors.
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Allerium competes across multiple public safety and mobile network technology markets, including Next Generation 9-1-1 infrastructure, emergency communications software, cloud-native call handling, location technologies, messaging platforms and related cybersecurity solutions. Competition varies by product and geographic market and includes the following companies, among others:
AT&T Inc., Atos, Axon Enterprise, Inc., Bandwidth.com, Carbyne (acquired by Axon), Central Square Technologies, DataMark (Digital Data Technologies/DDTI), 8x8, Inc., Everbridge, Inc. (acquired by Thoma Bravo), Frequentis GeoComm, Immersive Labs, INdigital (acquired by Novacap), Intersec, Intrado Life & Safety, Inc., Invictus Apps, Inc. d/b/a PREPARED (acquired by Axon), LM Ericsson, Lumen Technologies, Inc. (formerly, CenturyLink, Inc.), Mavenir, Mobilaris AB, Mobile Arts AB, Motorola Solutions, Inc., NGA911, NextNav, Inc., Nokia Networks (a subsidiary of Nokia Corporation), Octave Intelligence Limited (formerly, Hexagon AB), Polaris Wireless, RapidDeploy Inc. (acquired by Motorola Solutions), RapidSOS, Sinch AB (Inteliquent), Synergem Technologies, SS8, TomTom N.V., Versaterm Public Safety Inc., WestTel and Zetron.
We believe that competition is based primarily on technology innovation, product performance, reputation, delivery times, customer support and price. Due to our proprietary know-how, we believe we can develop, produce and deliver solutions on a cost-effective basis faster than many of our competitors.
Corporate Responsibility and Sustainability
We recognize the need for driving corporate responsibility within our organization, throughout our supplier network and in our communities. To drive this responsibility, we will continue to target effective corporate governance, ethical behavior in the workplace and social responsibility, while also updating and enhancing this focus with initiatives, such as: refreshing the roles and responsibilities of the committees of our Board of Directors to ensure oversight of compliance, risks, and best practices; and enhancing our company-wide People Strategy to continue to foster and promote workplace talent and employee engagement.
Human Capital
Our employees and our culture are regarded as keys to our success to retain top talent, boost productivity and align with our company’s mission. Our comprehensive people strategy continues to focus on developing a meaningful plan to enhance our employees’ experience and promote people-centric policies. We are passionate about building impactful employee engagement through diverse programs, initiatives, and opportunities. As part of this strategy, we aim to foster a workplace where employees feel a strong sense of belonging and connection, where their perspectives are valued, and where they are empowered to pursue opportunities that fuel their professional passions. Our People Strategy also emphasizes strategic recruitment, talent development and retention, competitive benefits and wellness programs, and a deep commitment to employee health, safety, and overall well‑being.
Employee Experience
We believe that a positive and welcoming environment leads to greater involvement and connection to the organization that fosters a sense of proactive belonging, a key component for achieving a sustainable impact. At the heart of our approach is the intentional act of bringing people together across social, cultural and experiential gaps. By creating opportunities for provocative thinking and meaningful experiences, we are able to challenge assumptions that disrupt our innate habits of thinking and behaving. We strive for an environment where all employees feel that they belong, are accepted, included, respected and supported as individuals.
We expect our employees and contractors to foster authentic connections and cultivate hospitable spaces. Our policy promotes equal employment opportunities without discrimination or harassment on the basis of race, color, national origin, religion, sex, age, disability, or any other status protected by law. Our senior leadership team drives these efforts across the enterprise to cultivate a strong culture of inclusivity and purpose.
We frequently organize events or engagements where employees are encouraged to participate to celebrate our workforce and our communities. Events include Men’s Health Awareness, Breast Cancer Awareness Month, Autism Awareness Month, and Pride Month, among others. In fiscal 2026, we continued our commemoration of "Honor Week” by spotlighting our veteran employees and recognizing their accomplishments. We are continuously working to build stronger employee connections through several new initiatives. This year we added the “Rise and Shine” award which represents the pinnacle of employee and manager recognition. In addition, we created “Appreciation Stations” at each location to provide employees an opportunity to send appreciation postcards to colleagues.
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Our leadership team continues to inspire a positive corporate culture that emphasizes transparency, empowerment and accountability, in which employees are increasingly taking pride in contributing to our collective success, which has enhanced morale, employee retention and performance, as evidenced by our employee satisfaction pulse surveys and fiscal year attrition rates. Strong communication is the key to providing the foundation for an engaged workforce. Company news, employee opportunities, company initiatives and events are communicated through our company-wide intranet, monthly segment town hall meetings, company-wide town hall meetings, at least quarterly, which are led by our Chief Executive Officer and senior leadership team. We continued our "Meet the Team" series, profiling one employee each month in a monthly article released on our intranet and continued the “MORE” program (which stands for "Moments of Recognition Every Day") to showcase our appreciation for our employees' contributions and successes. To further enhance our communication strategy, we developed a “Change Champion Network” to support employees through the transition of the divestiture of most of our legacy Satellite and Space Communications segment, serving as a structured, two-way communication and readiness bridge, comprised of trusted leaders and influencers who can help reinforce consistent messages, clarify leadership intent and help surface employee sentiment, feedback and risks quickly.
Talent Acquisition and Management
To meet and execute our strategic business goals, we are committed to ensuring that our employees find their careers at Allerium filled with purpose, growth and fulfillment. We are focused on sourcing, attracting and retaining top talent, including those with engineering, science and technical backgrounds. We continuously review the skillsets required to meet our customers’ needs and reflect this review in our recruitment efforts. To promote this initiative, we use a variety of recruiting platforms aimed at attracting talent of various backgrounds and cultures and professional connections. We aim to create personalized development plans during our talent, promotion and succession planning.
We value employee development at all career stages and performance levels. We continuously invest in programs, benefits and resources to foster the personal and professional growth of our colleagues. We provide ongoing training and career development opportunities by offering courses through Comtech University, our online learning management system, and offer job-specific training to promote and develop advancement within the organization and to enhance skills.
Comtech successfully relaunched its Internship Program in fiscal 2026, restoring a structured summer development experience. The program provides project‑based assignments aligned to business objectives, paired with mentorship, professional development, and a renewed university engagement strategy to strengthen long‑term talent pipelines. Following the relaunch, the program has re‑energized internal teams and reinforced a continuous pathway from internship to co‑op and full‑time employment.
At July 31, 2026, we had a total of 1,292 employees (including temporary employees and contractors), of which 475 were employed by our discontinued operations. Allerium had 817 employees, 463 of whom were engaged in production and production support, 193 in research and development and other engineering support and 161 in marketing and administrative functions, including sales, accounting and finance, tax and information technology. None of our U.S. employees are represented by a labor union. Of our total employees, 224 are based outside of the U.S., including 124 in Canada and 84 in India. We believe our employee relations are good.
Safety and Wellness
We strive to maintain a robust health, safety and wellness program to ensure a healthy work environment, promote workforce resiliency and enhance business value. We encourage employee participation to identify opportunities for improvement and review and monitor our performance with safety committees at our local sites. Local safety committees identify safety programs and ensure completion of all training and target learning objectives.
All employees and their households have access to an employee assistance program, as well as a health advocate program to help with all aspects of benefits, family life, financial concerns, legal issues and transition to retirement. Assistance is available 365 days per year, 24 hours per day. This year, employees had an opportunity to participate in several wellness events as a company-wide challenge.
We rigorously review our benefit and compensation plans to maintain competitive packages that reflect the wellness needs of our workforce and the marketplace as part of our financial wellness initiatives. These programs include a 401(k) plan, comprehensive health packages and welfare benefits, among many others. In fiscal 2026, we introduced a commuter benefits program that provides employees with tax‑advantaged savings on eligible commuting expenses.
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We support pay equity for all employees within the same geographic area, experience level and performance standards. Our job architecture program provides simplicity and clarity on roles (levels, titles, scope), mobility (visibility into potential career paths), alignment (of roles with organizational goals and objectives) and equity (a framework designed to support fair compensation practices).
Environment
We are committed to reducing our environmental impact across our value chain, including in the design of our solutions, operation of our facilities and procurement of materials. We are also committed to maintaining compliance with the various global environmental regulations that are applicable to our business, including with respect to the waste and emissions generated at our facilities. Our Board of Directors is responsible for the oversight of our environmental efforts, and the management of climate-related issues is overseen by our Chief Legal Officer.
We seek to increase efficient usage of building space and we offer our employees incentives to promote greener commuting options through rideshare programs.
We are committed to providing a workplace which values the health, safety, and well-being of our employees, contractors and visitors to our facilities, complying with Environment, Health and Safety ("EHS") legal requirements, and minimizing EHS risk. In fiscal 2026, we continued to support our EHS goals of engaging employees at all levels of the organization in the prevention of work-related injuries and illnesses, reducing environmental impacts and fostering a culture of continuous improvement.
U.S. Government Contracts and Security Clearances
The U.S. government operates on an October-to-September fiscal year. Generally, in February of each year, the President of the United States presents to the U.S. Congress ("Congress") the proposed budget for the upcoming fiscal year and from February through September of each year, the appropriations and authorization committees of Congress review the President’s budget proposals and establish the funding levels for the upcoming fiscal year. Once these levels are enacted into law, the Executive Office of the President administers the funds to the agencies. Thereafter, we can receive orders pursuant to sole-source or competitively awarded contracts, which we describe below.
The U.S. government may be unable to complete its budget process before the end of any given government fiscal year and when the fiscal budget is not approved in a timely manner, the U.S. government is required either to shut down or be funded pursuant to a "continuing resolution" that authorizes agencies of the U.S. government to continue operations but does not authorize new spending initiatives, either of which could result in reduced or delayed orders or payments for products and services we provide.
Sole-source contracts are generally awarded to a single contractor without a formal competition when a single contractor is deemed to have an expertise or technology superior to that of competing contractors or when there is an urgent need by the U.S. government that cannot wait for a full competitive process. Potential suppliers compete informally through research and development and marketing efforts. Competitively-bid contracts are awarded based on a formal proposal evaluation established by the procuring agency and interested contractors prepare bids. Competitively-bid contracts are awarded after a formal bid and proposal competition among suppliers.
The U.S. government has a stated policy direction to reduce the number of sole-source contract awards across all procuring agencies. In addition, the U.S. government is increasing the use of multiple-award IDIQ contracts to increase its procurement options. IDIQ contracts allow the U.S. government to select a group of eligible contractors for the same program. When the government awards IDIQ contracts to multiple bidders under the same program, a company that has already competed to be selected as a participant in the program must subsequently compete for individual delivery orders. As a result of this U.S. government shift toward multiple award IDIQ contracts, we expect to face greater competition for future U.S. government contracts and, at the same time, greater opportunities for us to participate in program areas that we do not currently participate in.
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As a U.S. government contractor and or subcontractor, from time to time, we are subject to a variety of rules and regulations, such as the Federal Acquisition Regulation ("FAR"). Individual agencies can also have acquisition regulations. For example, the DoW implements the FAR through the U.S. Defense Federal Acquisition Regulation Supplement (commonly known as "DFARS"). For certain Federal government entities, the FAR regulates the phases of any product or service acquisition, including: acquisition planning, competition requirements, contractor qualifications, protection of source selection and vendor information, and acquisition procedures. In addition, the FAR addresses the allowability of supplier costs, while Cost Accounting Standards address how those costs can be allocated to contracts. The FAR also subjects suppliers to audits and other government reviews. These reviews cover issues such as cost, performance and accounting practices relating to our contracts. The government may challenge a supplier's costs and fees or require corrective actions which can delay programs and increase our costs. Suppliers are also required to comply with the National Industrial Security Program Operating Manual for the handling of classified materials and programs and is administered by the Defense Counterintelligence and Security Agency (“DCSA”). Suppliers who do not comply with these various regulations may lose and/or become ineligible for facility security clearances and/or participation in classified and non-classified programs.
Under firm fixed-price contracts, we perform for an agreed-upon price and we can derive benefits from cost savings, but bear the risk of cost overruns. Our cost-reimbursable type contracts typically provide for reimbursement of allowable costs incurred plus a negotiated fee. Cost-plus-incentive-fee orders typically provide for sharing with the U.S. government savings accrued from orders performed for less than the target costs and costs incurred in excess of targets up to a negotiated ceiling price (which is higher than the target cost), and for the supplier to carry the entire burden of costs exceeding the negotiated ceiling price.
In fiscal 2026, $22.4 million or 9.0% of our consolidated net sales were to the U.S. government (including sales to prime contractors to the U.S. government). Of this amount, firm fixed-price and cost-reimbursable type contracts (including fixed-fee, incentive-fee and time and material type contracts) accounted for $17.7 million and $4.7 million, respectively.
Regulatory Matters
In addition to the rules and regulations that pertain to us as a U.S. government contractor and or subcontractor, we are also subject to a variety of local, state and federal governmental regulations.
Our solutions that are incorporated into wireless communications systems must comply with various government regulations, including those of the FCC. Our facilities, which may store, handle, emit, generate and dispose of hazardous substances that are incorporated into our solutions, are subject to a variety of local, state and federal regulations, including those issued by the Environmental Protection Agency. Our solutions are also subject to European Union directives related to the recycling of electrical and electronic equipment.
Laws and regulations have been enacted that affect companies conducting business on the Internet, including the European General Data Protection Regulation ("GDPR"). The GDPR imposes certain privacy related requirements on companies that receive or process personal data of residents of the European Union that are currently different than those in the U.S. and include significant penalties for non-compliance. Similarly, there are several legislative proposals in the U.S., at both the federal and state level, that could impose new obligations in areas affecting our business, such as liability for personal data protection. In addition, some countries are considering or have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements that could increase the cost and complexity of delivering our services. Our costs to comply with the GDPR as well any other similar laws and regulations that emerge may negatively impact our business.
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More so in the past, certain of our international sales are subject to U.S. and foreign regulations such as the Arms Export Control Act, the International Emergency Economic Powers Act ("IEEPA"), the International Traffic in Arms Regulations ("ITAR"), the Export Administration Regulations ("EAR") and the trade sanctions laws and regulations administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control ("OFAC"), the Department of Commerce ("DoC"), the Department of State and their foreign counterparts as well as other applicable laws relating to trade, export controls and foreign corrupt practices, the violation of which could adversely affect our operations. We must comply with all applicable export control laws and regulations of the U.S. and other countries. Certain of our solutions may require licenses from U.S. government agencies for export from the U.S. or other countries, and some of our solutions are not permitted to be exported. We cannot be certain that we will be able to obtain necessary export licenses, and such failure would materially adversely affect our operations. If we are unable to receive appropriate export authorizations in the future, we may be prohibited from selling our solutions internationally, which may limit our sales and have a material adverse effect on our business, results of operations and financial condition. In certain cases, U.S. and foreign export controls also severely limit unlicensed technical discussions, such as discussions with any persons who are not U.S. citizens or permanent residents. As a result, in cases where we may need an export license, our ability to compete against a non-U.S. domiciled foreign company that may not be subject to the same U.S. laws may be materially adversely affected. In addition, we are subject to the FCPA and other local laws that generally bar bribes or unreasonable gifts to foreign governments or officials. Violations of these laws or regulations could result in significant sanctions, including disgorgement of profits, fines and criminal sanctions against us, our officers, our directors or our employees, more onerous compliance requirements, more extensive debarments from export privileges or loss of authorizations needed to conduct aspects of our international business. A violation of any of the regulations enumerated above could materially adversely affect our business, financial condition and results of operations. Additionally, changes in regulatory requirements could further restrict our ability to deliver solutions to our international customers or negatively impact our business, including the addition of a country to the list of sanctioned countries under the IEEPA or similar legislation.
In the past, we have self-reported violations of export control laws or regulations to the U.S. Department of State, Directorate of Defense Trade Controls ("DDTC"), DoC, OFAC and their foreign counterparts. In addition, we have made various commitments to U.S. government agencies that oversee trade and export matters that we will maintain certain policies and procedures including maintaining a company-wide Office of Trade Compliance and conducting ongoing internal assessments and reporting any future violations to those agencies.
Our financial reporting, corporate governance, public disclosure and compliance practices are governed by laws such as the Sarbanes-Oxley Act of 2002, Dodd-Frank Act of 2010, and rules and regulations issued by the SEC. The SEC has adopted rules which require, among other things, public companies to conduct certain inquiries to determine whether or not Conflict Minerals (as that term is defined in the SEC rules) that are necessary to the functionality of their manufactured products or their product's production processes originated in a Covered Country (as that term is defined in the SEC rules) and ultimately file a report with the SEC. Conflict Minerals are widely used in many industries, including the telecommunications industry and almost all of our solutions include component parts purchased from third-party suppliers and we must rely heavily on information received from suppliers to determine the origin of those materials. We have implemented a due diligence program consistent with the Organization for Economic Co-operation and Development guidelines to collect information concerning the country of origin of Conflict Minerals and in that regard, have adopted a policy that requires our suppliers (both public and private) to commit to a code of conduct relating to the responsible sourcing of minerals and to establish a policy to reasonably assure that the products they manufacture do not contain Conflict Minerals that originated in a Covered Country. Efforts to comply with this SEC rule have resulted in additional costs to us and, we believe, to our suppliers. As such, the availability of raw materials used in our operations could be negatively impacted and/or raw material prices could increase. Further, if we are unable to certify that our products are conflict free, we may face challenges with our customers, which could place us at a competitive disadvantage and could harm our reputation.