COMTECH TELECOMMUNICATIONS CORP /DE/

(1)Summary of Significant Accounting and Reporting Policies

(a)Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Comtech Telecommunications Corp. and its subsidiaries ("Comtech," "we," "us," or "our"), all of which are wholly-owned. All significant intercompany balances and transactions have been eliminated in consolidation.

(b)Nature of Business

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 $157,500,000 in cash, subject to customary adjustments as defined in the Purchase Agreement. The Strategic Transaction is expected to close in calendar 2026, subject to certain closing conditions and regulatory approvals. 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.

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 in our fiscal 2026 consolidated financial statements and notes 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 haveone reportable segment, which is also ourone operating segment, that constitutes consolidated results consisting of our public safety business, referred to as Allerium. Unless otherwise noted, all activities and amounts reported in our fiscal 2026 consolidated financial statements and notes relate to our continuing operations, Allerium, and exclude activities and amounts related to the Disposal Group. For additional information related to the Strategic Transaction and Disposal Group, see Note (2) Business Divestiture.

Allerium is a leading public safety technology business focused on helping governments, emergency communications agencies and mobile network operators build, operate and modernize the critical infrastructure needed to transmit and receive emergency and similar types of communications. Our technologies help ensure communications are precisely located, securely routed and delivered to the appropriate emergency communications center. Our solutions enable customers to receive, manage and coordinate voice, text, location and other critical information that supports emergency response.

Allerium is organized into four service areas: Emergency Routing Solutions ("ERS"), which includes our next-generation 9-1-1 and carrier emergency routing offerings; Agency Solutions ("AS"), which includes our 9-1-1 call handling solutions; Mobile Network Solutions ("MNS"), which includes our trusted location, messaging and alerting solutions sold primarily into wireless carriers; and Cybersecurity Training Solutions ("CTS"), which includes our advanced cybersecurity training in support of certain government and commercial customers.

Allerium offers customers: Wireless/VolP 9-1-1 location and routing services to connect emergency calls to Public Safety Answering Points ("PSAPs"); SMS text to 9-1-1 services; next generation 9-1-1 solutions, providing emergency call routing, location validation, and policy-based routing rules, logging and security functionality; Emergency Services IP Network transport infrastructure for emergency services communications and support of next generation 9-1-1 services; call handling applications for PSAPs; wireless emergency alert solutions for network operators; and software and equipment for location-based and text messaging services for various applications, including for public safety, commercial and government services.

F - 13

Our business is highly competitive and characterized by rapid technological change. Our growth and financial position depends on our ability to keep pace with such changes and developments and to respond to the sophisticated requirements of an increasing variety of methods and devices used to transmit and receive secure wireless communications, among other things. Many of our competitors are substantially larger, and have significantly greater financial, marketing and operating resources and broader product lines than our own. A significant technological or sales breakthrough by others, including smaller competitors or new companies, could have a material adverse effect on our business. In addition, certain of our customers have technological capabilities in our product areas and could choose to replace our solutions with their own.

International sales expose us to certain risks, including barriers to trade, fluctuations in foreign currency exchange rates (which may make our solutions less price competitive), political and economic instability, tariff regulations, as well as the generally greater difficulties of doing business abroad. We attempt to reduce the risk of doing business in foreign countries by seeking contracts denominated in U.S. dollars, advance or milestone payments, credit insurance and irrevocable letters of credit in our favor.

(c)Liquidity

At July 31, 2026 and October 13, 2026 (the date closest to the issuance date):

•total outstanding borrowings under our Credit Facility were $108,519,000 at each such date, with no amounts drawn on the Revolving Loan;

•total outstanding borrowings under our Subordinated Credit Facility were $102,049,000 and $103,133,000, respectively, including interest paid-in-kind or accrued on the subordinated priority term loan outstanding at each date; such amounts do not include the 50%, or $32,500,000, Make-Whole Amount associated with the $65,000,000 portion of the Subordinated Credit Facility;

•the liquidation preference of our outstanding convertible preferred stock was $223,156,000 and $227,136,000, 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

•our available sources of consolidated liquidity totaled $61,258,000 and $51,281,000, respectively, which includes qualified cash and cash equivalents of $34,008,000 and $24,031,000, respectively (including cash and cash equivalents related to discontinued operations), and the available portion of the Revolving Loan of $27,250,000 as of each such date.

During the fourth quarter of fiscal 2026, we entered into various amendments to our Credit Facility, Subordinated Credit Facility and convertible preferred stock agreements which enhance our overall financial flexibility as we seek to further address our capital structure. 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 make whole adjustments on portions of the Subordinated Credit Facility until April 1, 2027; and (iv) upon closing of the Strategic Transaction, holders of convertible preferred stock agreeing to waive their right to any optional redemption until October 31, 2029 and deferring their ability 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 to recapitalize the business. See Note (2) Business Divestiture, Note (8) - Credit Facility, Note (9) - Subordinated Credit Facility and Note (17) - Convertible Preferred Stock for further information.

F - 14

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, we believe that we will be able to generate sufficient positive cash inflows and maximize the remaining available portion of the Revolving Loan under our Credit Facility to continue as a going concern and comply with the covenants contained in our existing 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 and transformation plan, generate positive cash inflows from operations, maximize the remaining available portion of the Revolving 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.

(d)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. Under ASC 606, we follow a five-step model to: (1) identify the contract with our customer; (2) identify our performance obligations in our contract; (3) determine the transaction price for our contract; (4) allocate the transaction price to our performance obligations; and (5) recognize revenue using one of the following two methods:

•Over time - We recognize revenue using the over time method when control transfers to the customer over the contractual period of performance. This generally occurs when we enter into a long-term contract relating to the design, development or deployment of complex technology platforms or software features to a buyer’s specification, for which we have determined that the customer controls the asset as it is created or there is no alternative use, as defined in ASC 606. Transfer of control is typically supported by contract clauses which allow our customers to unilaterally terminate a contract for convenience, pay for costs incurred plus a reasonable profit and take control of work-in-process. Work-in-process includes project costs for which we have commenced the design, development or deployment process and obtained the right to payment for work performed. Revenue recognized over time is generally based on the extent of progress toward completion of the related performance obligations. The selection of the method to measure progress requires judgment and is based on the nature of the solutions provided. In certain instances, typically for firm fixed-price contracts, we use the cost-to-cost measure because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. A cost-to-cost measure of progress is used to account for certain location-based and messaging infrastructure contracts. Under the cost-to-cost measure, the extent of progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Costs to fulfill generally include direct labor, materials, subcontractor costs, other direct costs and an allocation of indirect costs. When these contracts are modified, the additional goods or services are generally not distinct from those already provided. As a result, these modifications form part of an existing contract and we must update the transaction price and our measure of progress for the single performance obligation and recognize a cumulative catch-up to revenue and gross profits.

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.

For service-based contracts, we also recognize revenue over time. These services are typically recognized as a series of services performed over the contract term using the straight-line method, or based on our customers’ actual usage of the networks and platforms which we provide.

F - 15

•Point in time - When a performance obligation is not satisfied over time, we must record revenue using the point in time accounting method which generally results in revenue being recognized upon shipment or delivery of a promised good or service to a customer. This generally occurs when we enter into short term contracts or purchase orders where items are provided to customers with relatively quick turn-around times. Modifications to such contracts and/or purchase orders, which typically provide for additional quantities or services, are accounted for as a new contract because the pricing for these additional quantities or services are based on standalone selling prices.

Point in time accounting is principally applied to contracts when our customers cannot utilize the solution for its intended purpose during any phase of our design, development or deployment process; customers do not simultaneously receive and/or consume the benefits provided by our performance; customers do not control the asset (i.e., prior to delivery, customers cannot direct the use of the asset, sell or exchange the solution, etc.); and, although many of our contracts have termination for convenience clauses and/or an enforceable right to payment for performance completed to date, our performance creates an asset with an alternative use through the point of delivery.

In determining that our solutions have alternative use, we considered the underlying design, development or deployment process for our solutions. In the early phases, raw materials and work-in-process consist of common parts that are highly fungible among many different types of solutions and customer applications. Finished products are either configured to our standard configuration or based on our customers’ specifications. Finished products, whether built to our standard specification or to a customers’ specification, can be sold to a variety of customers and across many different end use applications with minimal rework, if needed, and without incurring a significant economic loss.

When identifying a contract with our customer, at inception, we consider approvals and commitments from both parties, if the rights of the parties are identified, if the payment terms are identified, if it has commercial substance, the transaction price to which we are entitled and if collectability is probable.

When identifying performance obligations, we consider whether there are multiple promises and how to account for them. In our contracts, multiple promises are separated if they are distinct, both individually and in the context of the contract. If multiple promises in a contract are highly interrelated or comprise a series of distinct services performed over time, they are combined into a single performance obligation. Our contracts, from time-to-time, may also include options for additional goods and services. To date, these options have not represented material rights to the customer as the pricing for them reflects standalone selling prices. As a result, we do not consider options we offer to be performance obligations for which we must allocate a portion of the transaction price.

When identifying the transaction price, we typically utilize the contract's stated price as a starting point. The transaction price in certain arrangements may include estimated amounts of variable consideration, including award fees, incentive fees or other provisions that can either increase or decrease the transaction price. We estimate variable consideration as the amount to which we expect to be entitled, and we include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the estimation uncertainty is resolved. The estimation of this variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (e.g., historical, current and forecasted) that is reasonably available to us.

When allocating the contract’s transaction price, we consider each distinct performance obligation. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. We determine standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price taking into account available information such as market conditions, including geographic or regional specific factors, competitive positioning, internal costs, profit objectives and internally approved pricing guidelines related to the performance obligations.

F - 16

Most of our contracts with customers are denominated in U.S. dollars and are typically firm fixed-price; however, we may receive cost reimbursable type contracts from time to time (including fixed-fee, incentive-fee and time-and-material type contracts). In almost all of our contracts with customers, we are the principal in the arrangement and report revenue on a gross basis. Transaction prices for contracts with U.S. domestic and international customers are usually based on specific negotiations with each customer and in the case of the U.S. government, sometimes based on estimated or actual costs of providing the goods or services in accordance with applicable regulations. Sales by geography and customer type, as a percentage of consolidated net sales, are as follows:

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 $21,648,000 and $22,431,000, 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.

F - 17

The following tables summarize our disaggregation of revenue consistent with information reviewed by our Chief Operating Decision Maker ("CODM") for the fiscal years ended July 31, 2026 and 2025. We believe these categories best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors which impact our business.

During fiscal 2026, we modified a contract with a customer to convert a firm fixed-price contract type to a cost reimbursable contract type on a retroactive basis. As a result, prior period amounts in the table above have been reclassified to conform with the current period presentation.

The timing of revenue recognition, billings and collections results in receivables, unbilled receivables and contract liabilities on our Consolidated Balance Sheets. Under typical payment terms for our contracts accounted for over time, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly) or upon achievement of contractual milestones. For certain contracts with provisions that are intended to protect customers in the event we do not satisfy our performance obligations, billings occur subsequent to revenue recognition, resulting in unbilled receivables. Under ASC 606, unbilled receivables constitute contract assets. There were no material impairment losses recognized on contract assets during the fiscal years ended July 31, 2026 and 2025. On large long-term contracts, and for contracts with international customers that do not do business with us regularly, payment terms typically require advanced payments and deposits. Under ASC 606, payments received from customers in excess of revenue recognized to-date results in a contract liability. These contract liabilities are not considered to represent a significant financing component of the contract because we believe these cash advances and deposits are generally used to meet working capital demands which can be higher in the earlier stages of a contract. Also, advanced payments and deposits provide us with some measure of assurance that the customer will perform on its obligations under the contract. Under the typical payment terms for our contracts accounted for at a point in time, costs are accumulated in inventory until the time of billing, which generally coincides with revenue recognition. Of the current contract liability balance of $41,955,000 at July 31, 2025 and $40,158,000 at July 31, 2024, $35,737,000 and $31,567,000 was recognized as revenue during fiscal years 2026 and 2025, respectively.

We recognize the incremental costs to obtain a contract as an expense when incurred if the amortization period of the asset is one year or less; otherwise, such costs are capitalized and amortized over the estimated life of the contract. Costs to obtain a contract that were capitalized are presented in the table below:

F - 18

Commissions payable to our internal sales and marketing employees or contractors that are incremental to the acquisition of long-term customer contracts are capitalized and amortized consistent with the pattern of revenue recognition through cost of sales on our Consolidated Statements of Operations. Commissions payable that are not incremental to the acquisition of long-term contracts are expensed as incurred in selling, general and administrative expenses on our Consolidated Statements of Operations.

Remaining performance obligations represent the transaction price of firm orders for which work has not been performed as of the end of a fiscal period. Remaining performance obligations, which we refer to as backlog, exclude unexercised contract options and potential orders under indefinite delivery / indefinite quantity ("IDIQ") contracts. As of July 31, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations was $520,416,000 (which represents the amount of our consolidated funded backlog). We estimate that approximately 80% of our remaining performance obligations at 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. During fiscal 2026, revenue recognized from performance obligations satisfied, or partially satisfied, in previous periods (for example due to changes in the transaction price) was not material.

(e)Cash and Cash Equivalents

Our cash equivalents are short-term, highly liquid investments that are both readily convertible to known amounts of cash and have insignificant risk of change in value as a result of changes in interest rates. Our cash and cash equivalents, as of July 31, 2026 and 2025, amounted to $34,978,000 and $35,371,000, respectively, and primarily consist of bank deposits and money market deposit accounts insured by the Federal Deposit Insurance Corporation. Cash equivalents are carried at cost, which approximates fair value.

(f)Inventories

Our inventories are stated at the lower of cost and net realizable value, the latter of which is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Our inventories are reduced to their estimated net realizable value by a charge to cost of sales in the period such excess costs are determined. Our inventories are recorded using average cost.

Work-in-process (including our contracts-in-progress) and finished goods inventory reflect all accumulated production costs, which are comprised of direct production costs and overhead, and is reduced by amounts recorded in cost of sales as the related revenue is recognized. Indirect costs relating to long-term contracts, which include expenses such as general and administrative, are charged to expense as incurred and are not included in our cost of sales or work-in-process (including our contracts-in-progress) and finished goods inventory.

(g)Long-Lived Assets

Our computer equipment, which is recorded at cost, is depreciated or amortized over its estimated useful life (three toseven years) under the straight-line method. Capitalized internal use software costs are amortized once the software is ready for its intended use under the straight-line method over the estimated useful life of the software, which is generally three years. Capitalized internal use software is considered ready for its intended use after all substantial testing is completed. Capitalized values of properties and leasehold improvements under leases are amortized over the life of the lease or the estimated life of the asset, whichever is less.

F - 19

Goodwill represents the excess cost of a business acquisition over the fair value of the net assets acquired. In accordance with FASB ASC 350"Intangibles - Goodwill and Other" goodwill is not amortized. We periodically, at least on an annual basis in the first quarter of each fiscal year, review goodwill, considering factors such as projected cash flows and revenue and earnings multiples, to determine whether the carrying value of the goodwill is impaired. If we fail the quantitative assessment of goodwill impairment, we would be required to recognize an impairment loss equal to the amount that a reporting unit's carrying value exceeded its fair value; however, any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. We define our reporting unit to be the same as our operating segment.

We performed our annual goodwill impairment assessment for fiscal 2027 on August 1, 2026 (the first day of our fiscal 2027). See Note (15) -"Long-lived Assets, including Goodwill" for additional information. Unless there are future indicators that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, such as a significant adverse change in our future financial performance, our next impairment assessment for goodwill will be performed and completed in the first quarter of fiscal 2028. Any impairment charges that we may record in the future could be material to our results of operations and financial condition.

We assess the recoverability of the carrying value of our other long-lived assets, including identifiable intangible assets with finite useful lives, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. We evaluate the recoverability of such assets based upon the expectations of undiscounted cash flows from such assets. If the sum of the expected future undiscounted cash flows were less than the carrying amount of the asset, a loss would be recognized for the difference between the fair value and the carrying amount.

(h)Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

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 measure and account for uncertain tax positions taken or expected to be taken in income tax returns in accordance with the provisions of FASB ASC 740-10-25 "Income Taxes," which prescribes a two-step evaluation process for tax positions. The first step is recognition based on a determination of whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step is to measure a tax position that meets the more-likely-than-not threshold. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. If a tax position does not meet the more-likely-than-not recognition threshold, the benefit of that position is not recognized in the financial statements. Our policy is to recognize potential interest and penalties related to uncertain tax positions in income tax expense.

F - 20

(i)Earnings Per Share

Our basic earnings per share ("EPS") is computed based on the weighted average number of common shares (including vested but unissued stock units, share units, performance shares and restricted stock units ("RSUs")) outstanding during each respective period. Our diluted EPS reflects the dilution from potential common stock issuable pursuant to the exercise of equity-classified stock-based awards, warrants issued to our lenders and the assumed conversion of Convertible Preferred Stock, if dilutive, outstanding during each respective period. The warrants contingently issuable to our preferred shareholders upon a repurchase of the respective series of Convertible Preferred Stock are not reflected in diluted EPS. Pursuant to FASB ASC 260 "Earnings Per Share" ("ASC 260"), shares whose issuance is contingent upon the satisfaction of certain conditions are included in diluted EPS based on the number of shares, if any, that would be issuable if the end of the reporting period were the end of the contingency period. When calculating our diluted earnings per share, we consider the amount an employee must pay upon assumed exercise of stock-based awards, the amount of stock-based compensation cost attributed to future services and not yet recognized and the amount a holder must pay upon assumed exercise of warrants.

There wereno repurchases of our common stock during the fiscal years ended July 31, 2026 and 2025. See Note (18) -"Stockholders’ Equity" for more information.

Weighted average stock options, RSUs and restricted stock outstanding of 2,153,000 and 1,161,000 shares for fiscal 2026 and 2025, respectively, were not included in our diluted EPS calculation because their effect would have been anti-dilutive.

Our EPS calculations exclude 727,000 and 583,000 weighted average performance shares outstanding for fiscal 2026 and 2025, respectively, as the performance conditions have not yet been satisfied. However, the numerator for EPS calculations for each respective period is reduced by the compensation expense related to these awards.

Weighted average common shares related to warrants issued in connection with entering the Credit Facility on June 17, 2024 and Amendment No. 3 to our Subordinated Credit Facility on June 14, 2026 of 1,468,000 and 1,389,000 for fiscal 2026 and 2025, respectively, were not included in our diluted EPS calculation because their effect would have been anti-dilutive.

Weighted average common shares of 26,817,000 and 24,340,000 underlying the assumed conversion of Convertible Preferred Stock, on an if-converted basis, were not included in our diluted EPS calculation for fiscal 2026 and 2025, respectively, because their effect would have been anti-dilutive. As a result, the numerator for our basic and diluted EPS calculation for fiscal 2026 and 2025 is the respective net loss attributable to common stockholders.

F - 21

The following table reconciles the numerators and denominators used in the basic and diluted EPS calculations:

Given the net loss from continuing operations in fiscal 2026 and 2025, the denominators for basic and diluted EPS calculations for each respective period are the same for both continuing and discontinued operations.

As discussed further in Note (17) - "Convertible Preferred Stock," such shares of preferred stock represent a "participating security" as defined in ASC 260. As a result, our EPS calculations for fiscal 2026 and 2025 were based on the two-class method. Given the net loss attributable to common stockholders for fiscal 2026 and 2025, there was no impact of applying the two-class method to our reported basic or diluted earnings per common share.

(j)Fair Value Measurements and Financial Instruments

Using the fair value hierarchy described in FASB ASC 820 "Fair Value Measurements and Disclosures" ("ASC 820"), we valued our cash and cash equivalents using Level 1 inputs that were based on quoted market prices. We believe that the carrying amounts of our other current financial assets (such as accounts receivable) and other current liabilities (including accounts payable, accrued expenses and the current portion of long-term debt) approximate their fair values due to their short-term maturities. Additionally, the carrying amount of the non-current portion of our Credit Facility approximated its fair value due to the variable interest rates and pricing grid related to such debt.

Level 3 inputs 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.

As further discussed in Note (8) -"Credit Facility," we used Level 3 inputs to value the warrants issued to lenders in connection with our Credit Facility. As of July 31, 2026, we determined the fair value of such warrants based on the Black-Scholes option pricing model using the following estimates: exercise price of $0.10, risk free rate of 4.4%, volatility of 70.0%, expected life of 4.9 years and dividend yield of 0%. We also used Level 3 inputs to value the combined embedded derivative liability associated with our Credit Facility. As of July 31, 2026, we determined the fair value of the combined embedded derivative liability using a with-and-without scenario-based discounted cash flow method, which reflected our estimates regarding the probability and timing of events that could result in additional payments of interest and/or fees to such lenders as stated in our Credit Facility.

As further discussed in Note (9) - "Subordinated Credit Facility," we used Level 3 inputs to value the warrants issued to lenders in connection with our Subordinated Credit Facility. As of July 31, 2026, we determined the fair value of such warrants based on the Black-Scholes option pricing model using the following estimates: exercise price of $0.10, risk free rate of 4.5% volatility of 70.0%, expected life of 5.7 years and dividend yield of 0%. We also used Level 3 inputs to value the make-whole amount and combined embedded derivative liability associated with our Subordinated Credit Facility. As of July 31, 2026, we determined the fair value of the combined embedded derivative liability using a with-and-without scenario-based discounted cash flow method, which reflected our estimates regarding the probability and timing of events that could result in additional payments of interest and/or accelerated payments of principal and make-whole amounts to such lenders as stated in our Subordinated Credit Facility. The calculated fair value of the debt outstanding under the Subordinated Credit Facility approximated its carry value as of July 31, 2026.

F - 22

As further discussed in Note (17) -"Convertible Preferred Stock," we used Level 3 inputs to value the warrants contingently issuable and combined embedded derivative liability associated with our Convertible Preferred Stock. As of July 31, 2026, we determined that the Convertible Preferred Stock warrants had no fair value because we do not anticipate a scenario, as of July 31, 2026, in which the warrants would be issued. As of July 31, 2026, we determined the fair value of the combined embedded derivative liability using a with-and-without scenario-based discounted cash flow method, which reflected our estimates regarding the probability and timing of events that could result in additional and/or accelerated payments to our preferred shareholders, or the conversion of the Convertible Preferred Stock into common stock, pursuant to the terms of our Convertible Preferred Stock.

As of July 31, 2026 and 2025, other than the financial instruments discussed above, we had no other significant assets or liabilities included in our Consolidated Balance Sheets recorded at fair value, as such term is defined by ASC 820.

(k)Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the consolidated financial statements and the reported amounts of net sales and expenses during the reported period. We make significant estimates in many areas of our accounting, including but not limited to the following: liquidity and going concern assessments, revenue recognition, long-lived assets (including goodwill), valuation of warrants and embedded derivatives, stock-based compensation, income taxes (including valuation allowances related to deferred tax assets), allowance for doubtful accounts and provision for excess and obsolete inventories. Actual results may differ from those estimates.

(l)Comprehensive Income

In accordance with FASB ASC 220 "Comprehensive Income," we report all changes in equity during a period, except those resulting from investment by owners and distribution to owners, for the period in which they are recognized. Comprehensive income is the total of net income and all other non-owner changes in equity (or other comprehensive income) such as unrealized gains/losses on securities classified as available-for-sale, foreign currency translation adjustments and minimum pension liability adjustments. Comprehensive income (loss) was the same as our net income (loss) in fiscal 2026 and 2025.

(m)Reclassifications

Certain reclassifications have been made to previously reported consolidated financial statements to conform to the fiscal 2026 presentation.

(n) Adoption of Accounting Standards and Updates

We are required to prepare our 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 are commonly referred to as "GAAP." The FASB ASC is subject to updates by the FASB, which are known as Accounting Standards Updates ("ASUs").

During fiscal 2026, we adopted:

•FASB ASU No. 2023-09, which among other things, enhances and establishes new income tax disclosure requirements, in addition to modifying and eliminating certain existing requirements. Most notably, this ASU requires greater disaggregation of information in the effective tax rate reconciliation, including the inclusion of both percentages and amounts, specific categories and additional information for reconciling items meeting a quantitative threshold defined by the guidance. Additionally, disclosures of income taxes paid and income tax expense must be disaggregated by federal, state and foreign taxes, with income taxes paid further disaggregated for individual jurisdictions that represent 5 percent or more of total income taxes paid. See Note (11) Income Taxes for further information.

F - 23

The following FASB ASUs have been issued and incorporated into the FASB ASC and have not yet been adopted by us as of July 31, 2026:

•FASB ASU No. 2024-03, which among other things, requires more detailed disclosures of certain categories of expenses (including purchases of inventory, employee compensation, depreciation, and amortization) that are components of existing expense captions presented on the face of the income statement. All entities are required to apply the guidance prospectively with an option for retrospective application. This ASU is effective for annual reporting periods beginning after December 15, 2026 (our fiscal 2028), and interim periods within annual reporting periods beginning after December 15, 2027 (our first interim period of fiscal 2029), with early adoption permitted, as clarified in ASU No. 2025-01. The adoption of this ASU will impact our disclosures only and we do not expect it to have a material impact on our consolidated financial statements.

•FASB ASU No. 2025-05, which among other things, provides all entities with a practical expedient that allows for the assumption that current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating credit losses for such assets. This ASU is effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual periods (our fiscal 2027), with early adoption permitted. We are evaluating the impact of this ASU on our consolidated financial statements and disclosures.

•FASB ASU 2025-06, which among other things, amends the criteria for recognizing and capitalizing costs related to internal-use software by replacing the previous project stage model with a principles-based framework. Under this ASU, costs are capitalized when management has authorized and committed to funding a software project, and it is probable that the project will be completed and the software used as intended. This ASU is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods (our fiscal 2029), on either a prospective, retrospective or modified prospective transition method. We are evaluating the impact of this ASU on our consolidated financial statements and disclosures.

•FASB ASU No. 2025-10, which among other things, establishes guidance for the recognition, measurement and presentation of government grants received by business entities. The ASU requires that government grants be recognized when it is probable that we will comply with the conditions of the grant and that the grant will be received, and provides models for presenting grants related to assets or income. The ASU also requires enhanced disclosures about the nature and terms of government grants and the financial statement line items affected. This ASU is effective for annual reporting periods beginning after December 15, 2028, and interim periods within those annual reporting periods (our fiscal 2030), with early adoption permitted. We are evaluating the impact of this ASU on our consolidated financial statements and disclosures.

•FASB ASU No. 2025-11, which among other things, clarifies the guidance in Topic 270 -Interim Reporting to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This ASU is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods (our fiscal 2029), with early adoption permitted. We are evaluating the impact of this ASU on our consolidated financial statements and disclosures.

•FASB ASU 2026-01, which among other things, provides authoritative guidance regarding the initial measurement of paid-in-kind (“PIK”) dividends on preferred stock classified as permanent or temporary equity. The amendments require that PIK dividends be initially measured based on the PIK dividend rate stated in the preferred stock agreement, such as multiplying a stated rate by the liquidation value of the preferred stock, rather than at fair value. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods (our fiscal 2028), with early adoption permitted. We are evaluating the impact of this ASU on our consolidated financial statements and disclosures.

F - 24

(2)Business Divestiture

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 $157,500,000 in cash, subject to customary adjustments as defined in the Purchase Agreement. Upon execution of the Purchase Agreement, we received $10,000,000 of the purchase price (the "Advance Payment"). We 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. At closing, $3,000,000 of the base purchase price will be held in escrow to fund potential working capital related adjustments. 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 of July 31, 2026, we determined that the Disposal Group met the criteria to be classified as held for sale. Assets classified as held for sale are recorded at the lower of carrying value or fair value, less costs to sell and are no longer depreciated.

We classify the results of operations and assets and liabilities related to a disposal group in discontinued operations if all of the following criteria are met: (1) the operations and cash flows of the disposal group can be clearly distinguished from the rest of the company; (2) the disposal group meets the criteria to be classified as held for sale; and (3) the disposal represents a strategic shift that has or will have a major effect on our operations and financial results. For businesses classified as discontinued operations, the associated balances included in the consolidated balance sheets and consolidated statements of operations are reclassified from their historical presentation to assets and liabilities of discontinued operations on the consolidated balance sheets and to discontinued operations on the consolidated statements of operations, respectively, for all periods presented. The gains or losses associated with the discontinued operation are also recorded in discontinued operations on the consolidated statements of operations.

As the Strategic Transaction represents a material strategic shift in our business, the results and net assets of the Disposal Group are presented in our consolidated financials as "discontinued operations" and comparable prior periods have been recast to reflect this change.

The tables below present the carrying amounts of the major classes of assets and liabilities of discontinued operations as of July 31, 2026 and 2025 and the major classes of line items comprising net loss from discontinued operations for the fiscal years ended July 31, 2026 and 2025.

F - 25

(1) Other current assets includes $3,993,000 and $4,648,000 of cash and cash equivalents at July 31, 2026 and 2025, respectively.

(2) Following the classification of the Disposal Group as "held for sale," we ceased depreciation and amortization of long-lived assets included in the Disposal Group.

(3) Deferred tax liabilities of $5,166,000 and $5,680,000 were reclassified to discontinued operations at July 31, 2026 and 2025, respectively.

(4) Other expenses include interest expense of $26,956,000 and $26,640,000 during fiscal years 2026 and 2025, respectively. Interest expense for each the Credit Facility and Subordinated Credit Facility was allocated to discontinued operations based on the estimated portion of debt that is contractually required to be prepaid with net proceeds from the sale of the Disposal Group relative to the total average debt outstanding during each period. Interest expense for fiscal 2026 includes a write-off of deferred financing costs and debt discounts of $658,000. See Note 8 - "Credit Facility" and Note 9 - "Subordinated Credit Facility" for additional information.

(3)Operating Expenses

During fiscal 2026 and 2025, we recorded a net expense of $1,162,000 and $2,117,000, respectively, related to CEO transition costs. Such activities in both fiscal years 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 fiscal 2025.

During fiscal 2025, we incurred $2,682,000 of proxy solicitation costs, consisting principally of legal and advisory fees. In November 2024, we entered into a cooperation agreement (the “Cooperation Agreement”) with Fred Kornberg, Michael Porcelain and Oleg Timoshenko (collectively the “Investor Group”). Pursuant to the Cooperation Agreement, our Board appointed Michael J. Hildebrandt to serve on the Board and agreed to nominate, support and recommend Mr. Hildebrandt for election at our Fiscal 2024 Annual Meeting of Stockholders (the "2024 Annual Meeting"). Also, we agreed not to renominate two incumbent directors for election at the 2024 Annual Meeting and the Investor Group agreed to withdraw its nomination of candidates for election to the Board at the 2024 Annual Meeting to, instead, support our slate of directors for election. Pursuant to the Cooperation Agreement, we and the Investor Group will cooperate to identify an additional candidate to be appointed to the Board at a later date as an independent director. In September 2025, we provided notice to the Investor Group regarding our renomination of Mr. Hildebrandt at the Fiscal 2025 Annual Meeting of Stockholders. Accordingly, the Cooperation Agreement was extended until 30 days prior to the nomination deadline of our Fiscal 2026 Annual Meeting of Stockholders.

During fiscal 2026 and 2025, we incurred $9,984,000 and $10,016,000, respectively, of restructuring costs primarily focused on legal and other expenses related to strategic alternatives and divestiture activities, as well as other initiatives to streamline our operations, align our cost structure with our future anticipated business and improve our liquidity.

F - 26

(4)Accounts Receivable

Accounts receivable consists of the following at July 31, 2026 and 2025:

Unbilled receivables as of July 31, 2026 relate to contracts-in-progress for which revenue has been recognized, but for which we have not yet earned the right to bill the customer for work performed to-date. Under ASC 606, unbilled receivables constitute contract assets. Management estimates that a substantial portion of the remaining net contract assets not yet billed at July 31, 2026 will be billed and collected within one year.

As of July 31, 2026, a large multinational telecommunications company and two domestic top tier mobile network operators represented 19.9%,19.3% and 14.8% of net accounts receivable, respectively. As of July 31, 2025, two domestic top tier mobile network operators and a large multinational telecommunications company represented 23.9%,17.5% and 13.8% of net accounts receivable, respectively. There were no other customers which accounted for greater than 10.0% of net accounts receivable.

(5)Inventories

Inventories consist of the following at July 31, 2026 and 2025:

As of July 31, 2026 and 2025, the amount of inventory directly related to long-term contracts (including contracts-in-progress) was $3,229,000 and $2,100,000, respectively.

F - 27

(6)Property, Plant and Equipment

Property, plant and equipment consist of the following at July 31, 2026 and 2025:

Depreciation and amortization expense was $9,778,000 and $8,813,000 for the fiscal years ended July 31, 2026 and 2025, respectively.

(7)Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following at July 31, 2026 and 2025:

Accrued contract costs represent direct and indirect costs on contracts as well as estimates of amounts owed for invoices not yet received from vendors or reflected in accounts payable.

(8)Credit Facility

On June 17, 2024, we entered into a senior secured loan facility with a syndicate of lenders, which replaced our prior credit facility. As further discussed below, we subsequently amended the credit facility on October 17, 2024, March 3, 2025, July 21, 2025, June 14, 2026, and July 30, 2026 (the "Credit Facility"). At July 31, 2026, the Credit Facility consists of a remaining $108,519,000 term loan (the "Term Loan" facility) and (ii) an asset-based revolving credit facility with revolving commitments in an aggregate principal amount of $54,750,000, subject to borrowing base limitations as described below (the "Revolving Loan" facility). The obligations under the Credit Facility are guaranteed by certain of our domestic and foreign subsidiaries (the "Guarantors"), who have granted for the benefit of the lenders, a lien on, and first priority security interest in, substantially all of our tangible and intangible assets.

F - 28

The Credit Facility was amended on October 17, 2024 (the "First Amendment") which, among other things: (i) waived all defaults under the Credit Facility, specifically in connection with our Net Leverage Ratio and Fixed Charge Coverage Ratio covenants as of July 31, 2024; (ii) increased the interest rate margins applicable to the Term Loan to 12.00% per annum for Base Rate Loans and 13.00% per annum for SOFR Loans and increased interest rate margins applicable to the Revolving Loan by 1.00% at each level; (iii) permitted the incurrence of $25,000,000 of total unsecured subordinated debt (as described below); (iv) suspended testing of the Net Leverage Ratio and the Fixed Charge Coverage Ratio covenants until January 31, 2025; (v) provided the lenders a consent right with respect to Revolving Loan borrowings above $32,500,000; and (vi) amended the maturity date to the earlier of: (x) July 31, 2028; or (y)90 days prior to the earliest date that the debt under the Subordinated Credit Facility (as defined below) becomes due and payable.

The Credit Facility was amended again on March 3, 2025 (the "Second Amendment") which, among other things: (i) waived all defaults under the Credit Facility, specifically in connection with our Net Leverage Ratio and Fixed Charge Coverage Ratio covenants as of January 31, 2025; (ii) decreased the interest rate margins applicable to the Term Loan from 12.00% per annum to 9.50% per annum for Base Rate Loans and from 13.00% per annum to 10.50% per annum for SOFR Loans; (iii) permitted the incurrence of an additional $40,000,000 of total unsecured subordinated debt (as described below); (iv) suspended testing of the Net Leverage Ratio and the Fixed Charge Coverage Ratio covenants until October 31, 2025; (v) suspended our ability to pay interest in-kind until after the interest rate margins are tested based on net leverage ratios; (vi) permitted partial principal repayments of $27,252,000 and $9,084,000 on the Term Loan and Revolving Loan, respectively, and waived the prepayment fees that would have been payable under the Credit Facility with regard to such repayments; (vii) permanently reduced commitments under the Revolving Loan facility by $3,179,000 and provided the lenders a consent right with respect to Revolving Loan borrowings above $29,321,000; (viii) reduced the minimum quarterly average liquidity requirement from $20,000,000 to $17,500,000; and (ix) provided the lenders the right to appoint an independent director to our Board of Directors after May 31, 2025 (which has been satisfied as of the issuance date).

The Credit Facility was further amended on July 21, 2025 (the "Third Amendment") which, among other things: (i) suspended, until the four-quarter period ending January 31, 2027, testing of the Net Leverage Ratio, the Fixed Charge Coverage Ratio and the Minimum EBITDA covenants; (ii) altered the interest rate margins applicable to Term Loans (as described in further detail below); (iii) delayed the scheduled repayment of a portion of the principal of the Term Loans (as described in further detail below); (iv) delayed the scheduled repayment of fees due pursuant to the Second Amendment; (v) reduced the minimum EBITDA requirement (as described in further detail below); (vi) reduced the minimum quarterly average liquidity requirement from $17,500,000 to $15,000,000; (vii) permitted us to engage in the sale or disposition of certain properties and assets approved by the Administrative Agent (the “Specified Permitted Individual Disposition”), on the terms, and subject to documentation, reasonably acceptable to the Administrative Agent, so long as 65% of the net cash proceeds are applied against the outstanding principal amount of the obligations under the Credit Facility and 35% of the net cash proceeds are applied against the outstanding principal amount of the subordinated term loans under the Subordinated Credit Facility (as defined below); and (viii) required us to adopt management incentive and retention arrangements for our key personnel in connection with the contemplation of our strategic alternatives.

The Third Amendment provided that the interest rate margins on the Term Loans would be 9.50% and 10.50% for Base Rate Loans and SOFR Loans, respectively, until the first business day of the month following January 31, 2027, when we were to have delivered financial statements demonstrating compliance with the financial covenants under the Credit Facility. If demonstrated, the interest rate margins would have reverted to: (i) for Base Rate Loans, a margin ranging from 7.50% to 9.00% and (ii) for SOFR Loans, a margin ranging from 8.50% to 10.00%, in each case, based on whether our Net Leverage Ratio during the applicable determination period ranges from less than 1.75 x to greater than or equal to 3.25 x, respectively.

F - 29

The Third Amendment deferred $3,037,500 of scheduled term loan repayments otherwise due on July 31, 2025 until: (x) the maturity of the Credit Facility, or (y) January 31, 2026, in the case that we had not filed by December 31, 2025, either (i) a Form 10-K annual report accompanied by an opinion of our independent registered public accounting firm free from any “going concern” or like qualification or exception with respect to our consolidated financial statements for the relevant fiscal year ended, or (ii) a Form 10-Q quarterly report that included footnote disclosure (with which our independent registered public accounting firm would not disagree) in the financial statements accompanied thereby that affirmatively included management's assessment that there is no longer a substantial doubt about our ability to continue as a going concern. With the filing of our prior year Form 10-K for the fiscal year ended July 31, 2025, the $3,037,500 became due upon the maturity of the Credit Facility.

On June 14, 2026, in connection with entering into the Strategic Transaction, we amended the Credit Facility (the "Fourth Amendment") which, among other things: (a) provides consent to the consummation of the Strategic Transaction; (b) acknowledges and agrees that the Strategic Transaction shall not result in a Change of Control as defined in the Credit Facility, as amended; (c) suspends, through the four quarter period ending July 31, 2027, testing of the Net Leverage Ratio, Fixed Charge Coverage Ratio and Minimum EBITDA covenants; (d) clarifies that the Advance Payment will not be required to be applied to prepay the applicable obligations in accordance with the terms of the Credit Facility until the Strategic Transaction closes; and (e) provides that the Maximum Revolver Amount under the Credit Facility shall not be reduced to an amount less than $27,250,000 as a result of the prepayment of the Term Loan in accordance with the terms of Credit Facility. The Fourth Amendment also: (i) sets the applicable margin for Base Rate Loans and SOFR Loans at 9.50% and 10.50%, respectively, through the maturity of the Credit Facility; (ii) provides for a fee to be applied to the Term Loan balance outstanding at various intervals after the closing of the sale of most of S&S' business; and (iii) reduces the prepayment penalty associated with the application of the net proceeds from the sale of most of S&S' business by 1.00%. On July 30, 2026, we further amended the Credit Facility (the "Fifth Amendment") to, among other things, waive any excess cash flow prepayment that would have been payable for the fiscal year ended July 31, 2026.

Once financial covenant testing resumes on July 31, 2027, in addition to complying with the minimum quarterly average liquidity requirement, we will be required to comply with: (i) a maximum Net Leverage Ratio of 2.65 x commencing with the four fiscal quarter period ending July 31, 2027 and thereafter; (ii) a minimum Fixed Charge Coverage Ratio of 1.35 x commencing with the four fiscal quarter period ending July 31, 2027 and thereafter; and (iii) a minimum EBITDA of $37,500,000 for the four-quarter period ending July 31, 2027 and $40,000,000 for the four-quarter period ending October 31, 2027 and thereafter.

We accounted for the October 17, 2024, March 3, 2025, July 21, 2025, June 14, 2026 and July 30, 2026 amendments to our Credit Facility as debt modifications.

At the time of entering into the Third Amendment in fiscal 2025, and through and including the issuance date, there were no events of default. Over the next twelve months beyond the issuance date, we believe that it is probable we will be able to comply with the covenants required by the Credit Facility.

In accordance with our existing credit facilities, we must use 65% of the net proceeds from the Strategic Transaction to prepay the majority of our Credit Facility, with the remaining 35% used to prepay debt outstanding under our Subordinated Credit Facility, starting with repaying the subordinated priority term loan. As a result of these contractual repayment obligations, and given that the Disposal Group met the criteria to be reported as "held for sale" as of year end, $85,347,000 of the Term Loan outstanding under the Credit Facility (including principal, and excluding deferred financing costs and debt discounts) was classified as current liabilities in our Consolidated Balance Sheet as of July 31, 2026.

F - 30

Additional Credit Facility Details

In connection with entering the Credit Facility, the Term Loan lenders received 1,435,884 detachable warrants (as amended, the "Lender warrants") granted at an exercise price of $0.10 per common share which entitles the Term Loan lenders to purchase 1,435,884 shares of our common stock from us at any time and from time to time after the Closing Date and on or prior to June 17, 2031, subject to certain adjustments. Upon the earlier of the consummation of the Strategic Transaction or refinancing of the Term Loan, the Term Loan lenders have the right to sell up to 50.0% of the warrants back to us for cash, at a 10.0% discount to the 30-day volume weighted average price of our common stock, subject to certain adjustments. We determined that the Lender warrants met the definition of a freestanding financial instrument that should be accounted for as a liability. We established an initial Lender warrant liability of $3,011,000 which was allocated as a discount against the Term Loan proceeds. The Lender warrant liability is classified in"Warrant and derivative liabilities" on the Consolidated Balance Sheets and is remeasured to its estimated fair value each reporting period, using Level 3 fair value inputs, until the Lender warrants are exercised or expire. Changes in the estimated fair value of the Lender warrant liability are recognized in our Consolidated Statement of Operations as a non-cash expense or benefit. As of July 31, 2026 and 2025, the Lender warrant liability was remeasured to $2,303,000 and $3,007,000, respectively, resulting in a non-cash benefit of $704,000 and $1,537,000 for the years ended July 31, 2026 and 2025, respectively, recorded in"Other expenses (income) - Change in fair value of warrants and derivatives" on the Consolidated Statements of Operations.

Additionally, we identified several embedded derivatives that require bifurcation from the Credit Facility under ASC 815-15 -"Embedded Derivatives,"("ASC 815"). Certain of these embedded features include contingent event of default, going concern interest rate increases and/or fees, which qualify for accounting as one combined embedded derivative liability. We established an initial embedded derivative liability of $3,116,000, which was allocated as a discount against the Term Loan proceeds. The combined embedded derivative liability is presented with the host instrument as part of the amount outstanding under the Credit Facility on the Consolidated Balance Sheets and is remeasured to its estimated fair value each reporting period, using Level 3 fair value inputs, until the embedded derivative features have zero probability of occurring or expire. Changes in the estimated fair value of the combined embedded derivative liability are recognized in our Consolidated Statement of Operations as a non-cash expense or benefit. As of July 31, 2026 and 2025, the combined embedded derivative liability was remeasured to $601,000 and $1,890,000, respectively, resulting in non-cash benefits of $1,289,000 and $1,151,000 for the years ended July 31, 2026 and 2025, respectively, recorded in"Other expenses (income) - Change in fair value of warrants and derivatives" on the Consolidated Statements of Operations.

The following table summarizes the activity relating to deferred financing costs and discounts under the Credit Facility:

F - 31

Deferred financing fees and discounts attributable to the Term Loan are amortized as interest expense over the life of the debt through the maturity date using the effective interest method and are presented as a deduction to the borrowings outstanding under the Term Loan. Deferred financing fees attributable to the Revolving Loan are capitalized on the Consolidated Balance Sheets and amortized as interest expense over the life of the debt using the straight-line method.

The amount outstanding under our Credit Facility was as follows:

During the fiscal year ended July 31, 2026, we had outstanding balances under our Credit Facility ranging from $108,519,000 to $135,305,000.

Availability under the Revolving Loan is subject to eligibility criteria set forth in the Credit Facility, and equal to a borrowing base in an amount equal to, from time to time: (a)85% of the consolidated net book value of billed and invoiced accounts receivable; plus (b)85% of the consolidated net book value of accounts receivable we have the right to bill but have not yet billed up to the lesser of (i)12.5% of the amount calculated pursuant to the sum of clauses (a) and (b) and (ii) $15,000,000 of such accounts; plus (c)60% of the consolidated net book value of all inventory, less (d) customary reserves. As of July 31, 2026 and July 31, 2025, our eligible Borrowing Base collateral, as defined under the Revolving Loan, was $92,727,000 and $101,222,000, respectively.

Interest expense for fiscal 2026 and 2025 related to our Credit Facility, including amortization of deferred financing costs and debt discount and minimum interest and unused line fees related to the Revolving Loan, as applicable, allocated to: (i) continuing operations was $6,809,000 and $14,877,000, respectively, and (ii) discontinued operations was $18,526,000 and $19,836,000, respectively. Our blended interest rate approximated 19.76%, and 18.51% for fiscal 2026 and 2025, respectively.

The Term Loan is subject to 2.50% amortization per annum. Scheduled Term Loan repayments of $1,012,500 are payable on the last business day of each fiscal quarter, with the remaining Term Loan balance due on the maturity date. On July 31, 2026, in addition to the scheduled quarterly Term Loan repayment of $1,012,500, we made a voluntary prepayment of $6,500,000, which was applied to future scheduled quarterly Term Loan repayments. As such, the next scheduled quarterly Term Loan repayment of $587,500 is due on April 30, 2028.

F - 32

The Credit Facility contains: (a) customary representations, warranties and affirmative covenants; (b) customary conditions to drawing the Revolving Loan; (c) customary negative covenants, subject to negotiated exceptions, including but not limited to: (i) liens, (ii) investments, (iii) indebtedness, (iv) significant corporate changes, including mergers and acquisitions, (v) dispositions, including the disposition of assets by any Loan Party to any Subsidiary that is not a Loan Party, (vi) restricted payments, including stockholder dividends, (vii) distributions, including the repayment of subordinated intercompany and third party indebtedness, and (viii) certain other restrictive agreements; (d) certain financial covenants (see above); (e) customary optional and mandatory prepayment events; and (f) customary events of default (subject to grace periods, as appropriate), such as payment defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency, the occurrence of a defined change in control and the failure to observe the negative covenants and other covenants related to the operation of our business. In addition, under certain circumstances, we may be required to enter into amendments to the Credit Facility in connection with any further syndication of the Credit Facility.

Capitalized terms used but not defined herein have the meanings set forth for such terms in the Credit Facility, which has been documented and filed with the SEC.

(9)Subordinated Credit Facility

On October 17, 2024, we entered into a subordinated credit facility with the existing holders of our convertible preferred stock and U.S. Bank Trust Company, National Association, as agent, which provided an initial subordinated unsecured term loan facility in the aggregate principal amount of $25,000,000 (the “Subordinated Credit Agreement”). As further discussed below, on March 3, 2025, July 21, 2025, June 14, 2026 and July 30, 2026, we entered into amendments to the Subordinated Credit Agreement (the "Subordinated Credit Facility”).

On March 3, 2025, we entered into an amendment ("Amendment No. 1") which, in addition to providing incremental aggregate principal of $40,000,000, waived all defaults under the Subordinated Credit Facility, specifically in connection with our Net Leverage Ratio and Fixed Charge Coverage Ratio covenants as of January 31, 2025 and suspended testing of the Net Leverage Ratio and the Fixed Charge Coverage Ratio covenants under the Subordinated Credit Facility until October 31, 2025. The net proceeds were principally used to repay a portion of the Term Loan and Revolving Loan on March 3, 2025, fund our general working capital needs and enabled us to negotiate the Second Amendment to the Credit Facility, including the waiver of existing defaults.

On July 21, 2025, we entered into a second amendment (“Amendment No. 2”) which, among other things: (i) provided for the incurrence of a $35,000,000 incremental facility (as described in further detail below); (ii) suspended, until the four-quarter period ending January 31, 2027, testing of the Net Leverage Ratio, the Fixed Charge Coverage Ratio and the Minimum EBITDA covenants in the Subordinated Credit Facility; (iii) modified the interest rate applicable to the subordinated term loans (as described in further detail below); (iv) reduced the minimum EBITDA requirement (as described in further detail below); (v) reduced the minimum quarterly average liquidity requirement from $17,500,000 to $15,000,000; (vi) permitted us to engage in the Specified Permitted Individual Disposition, on the terms, and subject to documentation, reasonably acceptable to the Subordinated Agent (subject to the same requirement with respect to the application of any net cash proceeds as discussed in Note (8) - Credit Facility); and (vii) required us to adopt management incentive and retention arrangements for its key personnel in connection with the contemplation of our strategic alternatives (also as discussed Note (8) - Credit Facility).

Amendment No. 2 provides for an incremental priority subordinated unsecured term loan facility in the aggregate principal amount of $35,000,000. We used the net proceeds to pay certain transaction costs, fees and expenses incurred in connection with amendments to our credit facilities and to prepay, without premium: (i) $28,481,000 of the outstanding Term Loans under the Credit Facility, and (ii) $5,775,000 of the outstanding Revolving Loan under the Credit Facility. As part of this prepayment, we permanently reduced Revolving Loan commitments under the Credit Facility by $2,071,000. The interest on the priority subordinated credit facility term loan shall be paid-in-kind quarterly, in arrears, by capitalizing and adding the unpaid and accrued amount of such interest to the aggregate outstanding principal amount of the priority subordinated credit facility term loan on the last business day of each quarter. This tranche of subordinated debt ranks senior in right of payment to the existing subordinated term loans under the Subordinated Credit Facility. Unlike the existing subordinated term loans, the incremental priority subordinated credit facility is not subject to any make-whole premium.

F - 33

Under Amendment No. 2, the interest rate applicable to the incremental priority subordinated credit facility shall be the greater of: (x) the highest per annum interest rate then-applicable to the Term Loans under the Credit Facility, and (y) Term SOFR (as defined in the Credit Facility) plus 10.5%.

On June 14, 2026, we entered into a third amendment (“Amendment No. 3”) which, among other things: (a) provides consent to the consummation of the Strategic Transaction; (b) acknowledges and agrees that the Strategic Transaction shall not result in a Change of Control as defined in the Subordinated Credit Facility; (c) suspends, through the four quarter period ending July 31, 2027, testing of the Net Leverage Ratio, Fixed Charge Coverage Ratio and Minimum EBITDA covenants; (d) clarifies that the Advance Payment will not be required to be applied to prepay the applicable obligations in accordance with the terms of the Subordinated Credit Facility until the Strategic Transaction closes; and (e) modifies the calculation of the Make-Whole Amount applicable to certain tranches of subordinated term loans by deferring the respective trigger dates for such Make-Whole Amount adjustments to April 1, 2027. In connection with Amendment No. 3, we also issued warrants to certain subordinated lenders to purchase up to 625,000 shares of our common stock at an exercise price of $0.10 per share. The warrants, and the shares of our common stock underlying the warrants, will vest and become exercisable on October 17, 2026, and are automatically and irrevocably forfeitable if the related subordinated term loans (including, without limitation, payment of (x) all accrued and unpaid interest thereon and (y) the applicable Make-Whole Amount payable in connection therewith) are repaid in full prior to vesting.

Under Amendment No. 3, once financial covenant testing resumes on July 31, 2027, in addition to complying with the minimum quarterly average liquidity requirement, we will be required to comply with: (i) a maximum Net Leverage Ratio of 3.18 x as of July 31, 2027 and thereafter; (ii) a minimum Fixed Charge Coverage Ratio of 1.08 x commencing with the four fiscal quarter period ending July 31, 2027 and thereafter; and (iii) a minimum EBITDA of $30,000,000 for the four-quarter period ending July 31, 2027 and $32,000,000 for the four-quarter period ending October 31, 2027 and thereafter.

On July 30, 2026, we entered into a fourth amendment (“Amendment No. 4”) to, among other things make certain technical amendments with respect to the application of a prepayment of outstanding amounts under the Subordinated Credit Facility.

At the time of entering into Amendment No. 2 in fiscal 2025, and through and including the issuance date, there were no events of default. Over the next twelve months beyond the issuance date, we believe that it is probable we will be able to comply with the covenants required by the Subordinated Credit Facility.

On July 31, 2026, we made a $3,500,000 voluntary prepayment under the Subordinated Credit Facility, which was applied to the priority subordinated credit facility term loan, including interest paid-in-kind.

In accordance with our existing credit facilities, we must use 65% of the net proceeds from the sale of most of our S&S business to prepay the majority of our Credit Facility, with the remaining 35% used to prepay debt outstanding under our Subordinated Credit Facility, starting with repaying the remaining portion of the subordinated priority term loan. As a result of these contractual repayment obligations, and given that the Disposal Group met the criteria to be reported as "held for sale" as of year end, $45,956,000 of the term loans outstanding under the Subordinated Credit Facility including principal, interest paid-in-kind and Make Whole Amounts, as applicable, and excluding deferred financing costs and debt discounts) were classified as current liabilities in our Consolidated Balance Sheet as of July 31, 2026.

Debt related to the Subordinated Credit Facility will not be considered debt for purposes of our financial covenant testing under the Credit Facility. However, the Subordinated Credit Facility includes a cross-default provision, whereby a default under the Credit Facility constitutes a default under the Subordinated Credit Facility.

F - 34

Additional Subordinated Credit Facility Details

The obligations under the Subordinated Credit Facility mature 90 days after the Credit Facility. Unlike the $35,000,000 tranche discussed above, the othertwo tranches of the Subordinated Credit Facility, which aggregate $65,000,000 of principal, are subject to Make-Whole Amounts with respect to certain repayments or prepayments equal to: (i) from the respective closing date of each tranche through (but not including) the date that is nine months thereafter, the principal repayment amount multiplied by 33.0%; (ii) from the date that is nine months after the applicable closing date through (but not including) April 1, 2027, the principal repayment amount multiplied by 50.0% plus, starting on March 3, 2027, interest accrued on the principal amount outstanding at the Make-Whole Interest Rate (as defined below) and calculated as of any such date of determination; (iii) from April 1, 2027 and thereafter, the principal repayment amount multiplied by 75.0% plus, starting on April 1, 2027, interest accrued on the principal amount outstanding at the Make-Whole Interest Rate (as defined below) and calculated as of any such date of determination. The Make-Whole Interest Rate is a rate equal to 16.0% per annum, which is increased by 2.0% per annum upon the occurrence and during the continuation of an event of default under the Subordinated Credit Facility.

We identified an embedded derivative related to redemption features that requires bifurcation from the Subordinated Credit Facility under ASC 815. We established a total embedded derivative liability of $16,864,000, which was allocated as a discount against the Subordinated Credit Facility proceeds. The embedded derivative liability is presented with the"Non-current portion of subordinated credit facility, net" on the Consolidated Balance Sheet and is remeasured to its estimated fair value each reporting period, using Level 3 fair value inputs, until the embedded derivative redemption features have zero probability of occurring or expire. Changes in the estimated fair value of the embedded derivative liability are recognized in our Consolidated Statements of Operations as a non-cash expense or benefit. For the fiscal years ended July 31, 2026 and 2025, the embedded derivative liability was remeasured tozero and $5,753,000, respectively. For the fiscal years ended July 31, 2026 and 2025, we recorded a non-cash benefit of $5,753,000 and $11,111,000 in"Other expenses (income) - Change in fair value of warrants and derivatives" on the Consolidated Statements of Operations.

In connection with Amendment No. 3, we issued warrants to the subordinated lenders to purchase up to 625,000 shares of our common stock at an exercise price of $0.10 per share. The warrants vest on October 17, 2026, expire on April 17, 2032 and are forfeitable if the related subordinated term loans are repaid in full prior to vesting. We determined that the warrants met the definition of a freestanding financial instrument that should be accounted for as a liability. We established an initial warrant liability of $1,678,000, which was allocated as a discount against the Subordinated Credit Facility term loans. The warrant liability is classified in"Warrant and derivative liabilities" on the Consolidated Balance Sheets and is remeasured to its estimated fair value each reporting period, using Level 3 fair value inputs, until the warrants are forfeited, exercised or expire. Changes in the estimated fair value of the warrant liability are recognized in our Consolidated Statement of Operations as a non-cash expense or benefit. As of July 31, 2026, the warrant liability was remeasured to $1,005,000, resulting in a non-cash benefit of $673,000 for the year ended July 31, 2026, recorded in"Other expenses (income) - Change in fair value of warrants and derivatives" on the Consolidated Statements of Operations.

Deferred financing costs, discounts and the Make-Whole Amount are amortized as interest expense through the Subordinated Credit Facility maturity date using the effective interest method, and are presented as adjustments to the borrowings outstanding under such debt.

Interest expense for fiscal 2026 and 2025 related to our Subordinated Credit Facility, including amortization of deferred financing costs, debt discount and the Make-Whole Amount, allocated to: (i) continuing operations was $14,507,000 and $4,084,000; and (ii) discontinued operations was $8,410,000 and $6,793,000 respectively. We accounted for all of the amendments to date as debt modifications.

F - 35

The following table reconciles the amount outstanding under the Subordinated Credit Facility to its net carrying value:

The obligations under the Subordinated Credit Facility are guaranteed by the same guarantors under the Credit Facility and contain customary representations, warranties and affirmative covenants, in each case substantially consistent with the representations and warranties and affirmative covenants under the Credit Facility. The Subordinated Credit Facility contains customary negative covenants, subject to negotiated exceptions, including but not limited to: (i) liens, (ii) investments, (iii) indebtedness, (iv) significant corporate changes, including mergers and acquisitions, (v) dispositions, (vi) restricted payments, including stockholder dividends, (vii) customary optional and mandatory prepayment events, and (viii) certain other restrictive agreements.

Capitalized terms used but not defined herein have the meanings set forth for such terms in the Subordinated Credit Facility, which has been documented and filed with the SEC.

(10)Leases

Our leases historically relate to the leasing of facilities and equipment. In accordance with FASB ASC 842 - "Leases" ("ASC 842"), we determine at inception whether an arrangement is, or contains, a lease and whether the lease should be classified as an operating or a financing lease. At lease commencement, we recognize a right-of-use ("ROU") asset and lease liability based on the present value of the future lease payments over the estimated lease term. We elected to not recognize a ROU asset or lease liability for any leases with terms of twelve months or less. Instead, for such short-term leases, we recognize lease expense on a straight-line basis over the lease term. Certain of our leases include options to extend the term of the lease or to terminate the lease early. When it is reasonably certain that we will exercise a renewal option or will not exercise a termination option, we include the impact of exercising or not exercising such option, respectively, in the estimate of the lease term. As our lease agreements do not explicitly state the discount rate implicit in the lease, we use our incremental borrowing rate ("IBR") on the commencement date to calculate the present value of future lease payments. Such IBR represents our estimated rate of interest to borrow on a collateralized basis over a term commensurate with the expected lease term.

Some of our leases include payments that are based on the Consumer Price Index ("CPI") or other similar indices. These variable lease payments are included in the calculation of the ROU asset and lease liability using the index as of the lease commencement date. Other variable lease payments, such as common area maintenance, property taxes, and usage-based amounts, are required by ASC 842 to be excluded from the ROU asset and lease liability and expensed as incurred. In addition to the present value of the future lease payments, the calculation of the ROU asset would also consider, to the extent applicable, any deferred rent upon adoption, lease pre-payments or initial direct costs of obtaining the lease (e.g., such as commissions).

F - 36

For all classes of leased assets, we elected the practical expedient to not separate lease components (i.e., the actual item being leased, such as the facility or piece of equipment) from non-lease components (i.e., the distinct elements of a contract not related to securing the use of the leased asset, such as common area maintenance and consumable supplies).

Certain of our facility lease agreements (which are classified as operating leases) contain rent holidays or rent escalation clauses. For rent holidays and rent escalation clauses during the lease term, we record rental expense on a straight-line basis over the term of the lease. As of July 31, 2026, none of our leases contained a residual value guarantee and covenants included in our lease agreements are customary for the types of facilities and equipment being leased.

The components of lease expense are as follows:

Additional information related to leases is as follows:

The following table is a reconciliation of future cash flows relating to operating lease liabilities presented on our Consolidated Balance Sheet as of July 31, 2026:

As of July 31, 2026, we do not have any material rental commitments that have not commenced.

F - 37

(11)Income Taxes

Loss from continuing operations before income taxes consists of the following:

The provision for (benefit from) income taxes included in the accompanying Consolidated Statements of Operations consists of the following:

F - 38

In fiscal 2026, we adopted the enhanced disclosure requirements of FASB ASU No. 2023-09 and presented the fiscal 2026 effective income tax rate reconciliation below pursuant to the requirements of the revised standard. As permitted by FASB ASU No. 2023-09, we presented the fiscal 2025 effective income tax rate reconciliation consistent with our historical format.

Income taxes differed from the amounts computed by applying the U.S. Federal income tax rate as a result of the following:

(1) The jurisdictions that comprise the majority of the domestic state and local income taxes is Texas and Pennsylvania.

F - 39

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at July 31, 2026 and 2025 are presented below:

At July 31, 2026 and 2025, our net deferred tax assets of $218,000 and $1,249,000, respectively, were recorded as"Other assets, net" in our Consolidated Balance Sheets.

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. Based on our evaluation as of July 31, 2026, we determined, for most of our net deferred tax assets, that it was not more-likely-than-not that such net deferred tax assets will be realized. Accordingly, we recorded a full valuation allowance against such net deferred tax assets.

At July 31, 2026, we had: (i) $8,909,000 of Federal net operating loss carryforwards, which do not expire; (ii) state net operating loss carryforwards of $59,925,000, which begin to expire in fiscal 2027; and (iii) Canadian net operating loss carryforwards of $2,172,000, which expire in fiscal 2045.

At July 31, 2026, we had: (i) Federal research and experimentation credit carryforwards of $5,134,000, which begin to expire in 2032; (ii) state research and experimentation credit carryforwards of $2,826,000, which expire in fiscal 2027; and (iii) foreign research and experimentation credit carryforwards of $809,000, which begin to expire in fiscal 2043.

Our foreign earnings and profits are not material; therefore, we have not recorded any deferred tax liability related to unremitted foreign earnings.

F - 40

Unrecognized Tax Positions

At July 31, 2026 and 2025, total unrecognized tax benefits were $3,991,000 and $4,078,000, respectively, including interest of $224,000 and $203,000, respectively. At July 31, 2026 and 2025, $1,444,000 and $1,611,000, respectively, of our unrecognized tax benefits were recorded as non-current income taxes payable on our Consolidated Balance Sheets. The remaining unrecognized tax benefits of $2,547,000 and $2,467,000 at July 31, 2026 and 2025, respectively, were presented as an offset to the associated deferred tax assets on our Consolidated Balance Sheets. Of the total unrecognized tax benefits, $1,444,000 and $1,611,000 at July 31, 2026 and 2025, respectively, would favorably impact our effective tax rate, if recognized.

The following table summarizes the activity related to our unrecognized tax benefits for fiscal years 2026 and 2025 (excluding interest):

Our U.S. Federal income tax returns for fiscal 2023 through 2026 are subject to Internal Revenue Service ("IRS") audit. Our fiscal 2023 income tax return is currently under examination by the IRS. None of our state and foreign income tax returns prior to fiscal 2022 are subject to audit.

In July 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted, resulting in significant changes to U.S. tax law. U.S. GAAP, specifically ASC 740, requires that the effects of an applicable change in tax law be recognized in the period of enactment. Accordingly, our financial statements and footnote disclosures reflect the impact of those provisions of the OBBBA that were applicable to us, such as bonus depreciation, changes in the tax treatment of U.S. research and experimental expenditures (and related deductions) and limitations imposed on business interest expense deductions. We continue to assess the potential impact of the OBBBA on U.S. research and experimental expenditures incurred in prior years, as the OBBBA provides optionality as to when these costs may be deducted.

During fiscal 2026, net cash paid (received) related to income taxes, by taxing jurisdiction, for continuing operations was as follows:

F - 41

(12)Stock-Based Compensation

In December 2023, our stockholders approved the Comtech Telecommunications Corp. 2023 Equity and Incentive Plan (the “2023 Plan”), which replaced the Amended and Restated 2000 Stock Incentive Plan. Under the 2023 Plan, the initial number of shares of common stock available for all awards, other than substitute awards granted in connection with a corporate transaction, was 1,669,683 shares of common stock plus certain expired or cancelled awards recycled back into the 2023 Plan. On January 13, 2025 and March 9, 2026, our stockholders approved an amendment to the 2023 Plan to increase the number of available shares of common stock authorized for issuance under the 2023 Plan by 2,195,000 and 2,800,000 shares, respectively. Accordingly, under the terms of the 2023 Plan, as amended, the maximum number of shares of common stock authorized for issuance is equal to 6,664,683 shares, including 69,683 shares from the 2000 Stock Incentive Plan.

We issue stock-based awards to certain of our employees and our Board of Directors pursuant to the 2023 Plan, as amended and/or restated from time to time and our 2001 Employee Stock Purchase Plan, as amended and/or restated from time to time (the "ESPP"), and recognize related stock-based compensation in our consolidated financial statements. The 2023 Plan provides for the granting to employees and consultants of Comtech (including prospective employees and consultants): (i) incentive and non-qualified stock options, (ii) restricted stock units ("RSUs"), (iii) RSUs with performance measures (which we refer to as "performance shares"), (iv) restricted stock, (v) stock units (reserved for issuance to non-employee directors) and share units (reserved for issuance to employees) (collectively, "share units") and (vi) stock appreciation rights ("SARs"), among other types of awards. Our non-employee directors are eligible to receive non-discretionary grants of stock-based awards, subject to certain limitations.

As of July 31, 2026, the aggregate number of shares of common stock which may be issued may not exceed 15,757,500. Stock options granted may not have a term exceedingten years or, in the case of an incentive stock award granted to a stockholder who owns stock representing more than 10.0% of the voting power, no more than five years. We expect to settle all outstanding awards under the Plan and employee purchases under the ESPP with the issuance of new shares of our common stock.

As of July 31, 2026, we had granted stock-based awards representing the right to purchase and/or acquire an aggregate of 14,479,495 shares (net of 8,082,878 expired and canceled awards), of which an aggregate of 11,083,207 have been exercised or settled.

As of July 31, 2026, the following stock-based awards, by award type, were outstanding:

As disclosed in Note (2) Business Divestiture, on June 14, 2026, we entered into the Purchase Agreement to sell the Disposal Group to Gilat. Outstanding stock-based awards for employees of the S&S Disposal Group will vest, or otherwise be forfeited, in accordance with the original terms of their stock award agreements upon closing of the divestiture transaction.

Our ESPP provides for the issuance of up to 1,300,000 shares of our common stock. Our ESPP is intended to provide our eligible employees the opportunity to acquire our common stock at 85% of fair market value on the first or last day of each calendar quarter, whichever is lower. Through July 31, 2026, we have cumulatively issued 1,148,209 shares of our common stock to participating employees in connection with our ESPP.

F - 42

Stock-based compensation related to continuing operations is reflected in the following line items in our Consolidated Statements of Operations:

Stock-based compensation for equity-classified awards is measured at the date of grant, based on an estimate of the fair value of the award and is generally expensed over the vesting period of the award. At July 31, 2026, unrecognized stock-based compensation related to continuing operations of $5,143,000, net of estimated forfeitures of $249,000, is expected to be recognized over a weighted average period of 1.7 years. There areno liability-classified stock-based awards outstanding as of July 31, 2026 or 2025.

Stock-based compensation expense related to continuing operations, by award type, is summarized as follows:

During fiscal 2026, we reversed a portion of our stock-based compensation expense related to performance shares due to revised estimates of projected achievement of fiscal 2024 and 2025 performance share goals. In fiscal 2025, we reversed a portion of our stock-based compensation expense related to performance shares due to lower-than-estimated achievement of fiscal 2022 and 2023 performance share goals. Stock-based compensation expense in fiscal 2025 also reflects the forfeiture of awards related to our former Chief Operating Officer and Chief Executive Officer, whose employment were both terminated during fiscal 2025.

ESPP stock-based compensation expense primarily relates to the 15% discount offered to participants in the ESPP.

The estimated income tax benefit as shown in the above tables was computed using income tax rates expected to apply when the awards are settled. The actual income tax benefit recognized for tax reporting is based on the fair market value of our common stock at the time of settlement and can significantly differ from the estimated income tax benefit recorded for financial reporting. There is no estimated income tax benefit recognized for fiscal 2026 and fiscal 2025 in light of the valuation allowance established on all U.S. deferred tax assets.

F - 43

Stock Options

The following table summarizes the Plan's total activity relating to stock options:

Stock options outstanding as of July 31, 2026 have an exercise price of $17.88, representing the fair market value of our common stock on the date of grant, a contractual term often years and a vesting period offive years.

Performance Shares, RSUs, Restricted Stock, Share Unit Awards and Other Stock-based Awards

The following table summarizes the Plan's total activity relating to performance shares, RSUs, restricted stock, share units and other stock-based awards:

The total intrinsic value relating to fully-vested awards settled during the fiscal years ended July 31, 2026 and 2025 was $2,424,000 and $2,420,000, respectively.

The performance shares granted to employees principally vest over athree-year performance period, if pre-established performance goals are attained, or as specified pursuant to the Plan and related agreements. As of July 31, 2026, the number of outstanding performance shares included in the above table, and the related compensation expense prior to consideration of estimated pre-vesting forfeitures, assume achievement of the pre-established goals at a target level, except for performance shares granted in fiscal 2024 and fiscal 2025, which reflect lower-than-estimated achievement.

F - 44

RSUs and restricted stock granted to non-employee directors prior to August 2022 had a vesting period offive years and were convertible into shares of our common stock generally at the time of termination, on aone-for-one basis for no cash consideration, or earlier under certain circumstances. Commencing in August 2022, such awards have a vesting period ofone year.

RSUs granted to employees prior to August 2022 have a vesting period offive years and are convertible into shares of our common stock generally at the time of vesting, on aone-for-one basis for no cash consideration. Commencing in August 2022, such RSUs have a vesting period ofthree years.

The fair value of performance shares, RSUs, restricted stock, share units and other stock-based awards is determined using the closing market price of our common stock on the date of grant, less the present value of any estimated future dividend equivalents such awards are not entitled to receive and an applicable estimated discount for any post-vesting transfer restrictions.

Dividend equivalents are subject to forfeiture, similar to the terms of the underlying stock-based awards, and are payable in cash generally at the time of settlement of the underlying award. During fiscal 2026, we paid out $32,000. During fiscal 2025, we reversed $42,000 of previously accrued dividend equivalents due to forfeitures and paid out $158,000. Accrued dividend equivalents were recorded as an adjustment to retained earnings. As of July 31, 2026 and 2025, accrued dividend equivalents were $85,000 and $117,000, respectively.

With respect to the actual settlement of stock-based awards for income tax reporting, for fiscal years ended July 31, 2026 and 2025, we havenot recognized any tax benefit or expense in light of the valuation allowance established for all U.S. deferred tax assets.

(13)Segment Information

Reportable operating segments are determined based on Comtech’s management approach. The management approach, as defined by FASB ASC 280"Segment Reporting" ("ASC 280") is based on the way that the CODM organizes the segments within an enterprise for making decisions about resources to be allocated and assessing their performance. On January 13, 2025, the Board of Directors appointed Kenneth Traub as President and Chief Executive Officer in addition to his role as Chairman. Mr. Traub is our CODM for purposes of ASC 280.

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 in our consolidated financial statements as "discontinued operations" and comparable prior periods have been recast to reflect this change. Following the classification of the Disposal Group as discontinued operations, we haveone reportable segment, which is also ourone operating segment, that constitutes consolidated results consisting of our public safety business, Allerium. The determination that we operate as a single segment is consistent with the nature of our operations and the financial information regularly reviewed by the CODM.

In light of the Strategic Transaction and the change in our segment reporting structure in the fourth quarter of fiscal 2026, our CODM determined to use GAAP net income to measure Allerium's performance. The CODM also uses this metric to make decisions about allocating capital and personnel resources, evaluating which project(s) to undertake and or to prioritize and determining the compensation of employees. All required segment information can be found within these consolidated financial statements and notes.

The large majority of our total long-lived assets are located in the U.S.

(14)Commitments and Contingencies

F - 45

(a)Legal Proceedings and Other Matters

Ongoing Former CEO Related Matters

On March 12, 2024, we terminated Ken Peterman, our President and CEO at the time, for Cause pursuant to the terms of his employment agreement dated September 12, 2022 (the “Employment Agreement”). On November 21, 2024 (as amended on December 31, 2024), Mr. Peterman filed a claim with the American Arbitration Association, alleging that Comtech materially breached the Employment Agreement in the termination for Cause and that the termination was a retaliation for whistleblowing by Mr. Peterman in connection with certain of our prior financial and accounting practices. Mr. Peterman claimed he was owed direct contractual damages in an amount in excess of $6,000,000 and consequential damages for injury to his professional reputation in excess of $35,000,000. We believed Mr. Peterman's claims to be entirely without merit and defended ourselves vigorously in the matter. We filed an initial counterclaim against Mr. Peterman alleging that his misconduct and attempts to conceal the same constituted a breach of his fiduciary duties. Subsequently, on November 24, 2025, we filed an amended counterclaim seeking damages for malicious prosecution, abuse of process, breach of contract and defamation, as well as further claims for Mr. Peterman's breach of his fiduciary duties in addition to the initial counterclaim. On January 9, 2026, Mr. Peterman's counsel wrote to the Arbitrator with two motions, (i) voluntarily withdrawing Mr. Peterman's claims against Comtech, and (ii) seeking dismissal of Comtech's counterclaims against Mr. Peterman. On or about January 23, 2026, the Arbitrator granted Mr. Peterman’s motion to withdraw all of his claims against Comtech in the arbitration, but rejected Mr. Peterman's motion for dismissal of Comtech's counterclaims. Comtech’s counterclaims are still pending against Mr. Peterman. On or about February 6, 2026, Mr. Peterman's counsel notified the Arbitrator that he was resigning from his representation of Mr. Peterman. Mr. Peterman has retained new counsel in connection with his defense of Comtech's counterclaims. Discovery continues as the parties prepare for a hearing on Comtech’s counterclaims. In parallel, in August 2026, Mr. Peterman filed a complaint in Delaware Chancery Court asserting his right to advancement of legal expenses in connection with his defense of Comtech’s counterclaims in the arbitration and his entitlement to reimbursement for fees and expenses associated with the Delaware action. We filed our answer in September 2026.

Mr. Peterman also filed a separate administrative complaint with the Department of Labor (Occupational Safety and Health Administration) making similar allegations and claiming that we retaliated against him in violation of the Sarbanes-Oxley Act of 2002. We independently investigated, with the assistance of an outside advisor, Mr. Peterman's allegations that he was a whistleblower and determined that such allegations were not substantiated. The U.S. Department of Labor dismissed Mr. Peterman’s administrative complaint on or about April 22, 2025. The appeal period has expired. Nevertheless, on July 18, 2025, Mr. Peterman filed a complaint in the U.S. District Court for the Southern District of New York (the "Court"), largely reciting the same claims he made in the prior Sarbanes-Oxley complaint with the Department of Labor. We promptly informed Mr. Peterman’s attorney that the suit was frivolous and sought leave of the Court to seek dismissal. Mr. Peterman’s attorney responded by withdrawing the lawsuit on September 5, 2025.

Mr. Peterman also filed a separate administrative complaint with the Department of Labor (Occupational Safety and Health Administration) making similar allegations and claiming that we retaliated against him in violation of the Sarbanes-Oxley Act of 2002. We independently investigated, with the assistance of an outside advisor, Mr. Peterman's allegations that he was a whistleblower and determined that such allegations were not substantiated. The U.S. Department of Labor dismissed Mr. Peterman’s administrative complaint on or about April 22, 2025. The appeal period has expired. Nevertheless, on July 18, 2025, Mr. Peterman filed a complaint in the U.S. District Court for the Southern District of New York (the "Court"), largely reciting the same claims he made in the prior Sarbanes-Oxley complaint with the Department of Labor. We promptly informed Mr. Peterman’s attorney that the suit was frivolous and sought leave of the Court to seek dismissal. Mr. Peterman’s attorney responded by withdrawing the lawsuit on September 5, 2025.

Separately, on December 11, 2024, Mr. Peterman was indicted by the United States Attorney for the Eastern District of New York and arrested on charges of insider trading and securities fraud. He was also charged with similar allegations by the SEC in a civil lawsuit filed in the Eastern District of New York the same day. We are not named as a defendant in either proceeding.

F - 46

Resolved U.S. Export Matter

In 2023, we initiated an export compliance review pertaining to certain variants of our modems and determined that we potentially violated U.S. export compliance laws. Based on such review, in fiscal 2024, we voluntarily disclosed to the Directorate of Defense Trade Controls (“DDTC”) a potential misclassification of certain exports under an EAR classification and sought export licenses under the more restrictive ITAR classification for future exports. In September 2026, the DDTC closed the matter without taking further action or imposing a civil penalty.

Other Matters

In the ordinary course of business, we include indemnification provisions in certain of our customer contracts to indemnify, hold harmless and reimburse such customers for certain losses, including but not limited to losses related to third-party claims of intellectual property infringement arising from the customer’s use of our solutions. We may also, from time to time, receive indemnification requests from customers related to third-party claims that 9-1-1 calls were improperly routed during an emergency. We evaluate such claims as and when they arise. We do not always agree with customers that they are entitled to indemnification and in such cases reject their claims. Despite maintaining that we have properly carried out our duties, we may seek coverage under our various insurance policies; however, we cannot be sure that we will be able to maintain or obtain insurance coverage at acceptable costs or in sufficient amounts or that our insurer will not disclaim coverage as to such claims. Accordingly, pending or future claims asserted against us by a party that we are obligated 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.

There are also certain other pending and threatened legal actions which arise in the normal course of business. Although the ultimate outcome of these matters is difficult to accurately predict, we believe that the outcome of these other matters will not have a material adverse effect on our consolidated financial condition or results of operations.

(b)Employment Change of Control and Indemnification Agreements

We have entered into employment and/or change of control agreements, as well as indemnification agreements with certain of our executive officers 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.

(15)Long-lived Assets, including Goodwill

Allerium's goodwill as of July 31, 2026 and July 31, 2025 was $176,126,000. In accordance with FASB ASC 350, we perform a goodwill impairment analysis at least annually (on the first day of the first quarter of each fiscal year, or August 1st), unless indicators of impairment exist in interim periods. If we fail the quantitative assessment of goodwill impairment ("quantitative assessment"), we would be required to recognize an impairment loss equal to the amount that a reporting unit's carrying value exceeded its fair value; however, any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. At July 31, 2026 and July 31, 2025, accumulated goodwill impairment losses related to our Allerium reporting unit were $8,565,000.

Fiscal 2026

On June 14, 2026, we determined that the Disposal Group met the criteria to be classified as "held for sale." Because the Disposal Group represented the disposal of a portion of the Satellite and Space Communications reporting unit, we allocated $28,499,000 of such reporting unit's historical goodwill to the Disposal Group based on the relative fair value of the Disposal Group to the fair value of the Satellite and Space Communications reporting unit. We then tested goodwill allocated to the Disposal Group and retained businesses of the Satellite and Space Communications reporting unit and concluded that no impairment existed as of June 14, 2026. In addition to the quantitative goodwill impairment test, we assessed the recoverability of the Disposal Group's carrying value and determined that the fair value of the Disposal Group, less costs to sell, exceeded its carrying value as of July 31, 2026. See Note (2) - Business Divestiture for additional information related to the Strategic Transaction.

F - 47

In connection with the Strategic Transaction and change during the fourth quarter of fiscal 2026 in our reporting structure toone operating segment, Allerium, we aggregated Allerium's components, based on their similar economic characteristics, to formone reporting unit. As a result, the $2,036,000 of goodwill allocated to the retained businesses of the Satellite and Space Communications reporting unit was combined with the goodwill of the Allerium reporting unit, which was $174,090,000 just prior to the change.

Fiscal 2027

On August 1, 2026 (the first day of fiscal 2027), we performed our annual quantitative assessment using market participant assumptions to determine if the fair value of Allerium exceeded its carrying value. In making this assessment, we considered, among other things, expectations of projected net sales and cash flows, assumptions impacting the weighted average cost of capital, trends in trading multiples of comparable companies, changes in our stock price and changes in the carrying value of Allerium. We also considered overall business conditions.

In performing the quantitative assessment, we estimated the fair value of Allerium using a combination of the income and market approaches. The income approach, also known as the discounted cash flow ("DCF") method, utilizes the present value of cash flows to estimate fair value. Allerium's future cash flows were projected based on our estimates, at that time, of future revenues, operating income and other factors (such as working capital and capital expenditures). For purposes of conducting our impairment analysis, we assumed revenue growth rates and cash flow projections that are below our actual long-term expectations. The discount rate used in our DCF method were based on a weighted-average cost of capital ("WACC") determined from relevant market comparisons, adjusted upward for specific reporting unit risks (primarily the uncertainty of achieving projected operating cash flows). A terminal value growth rate was applied to the final year of the projected period, which reflects our estimate of stable, perpetual growth. We then calculated a present value of the respective cash flows to arrive at an estimate of fair value under the income approach. Under the market approach, we estimated a fair value based on comparable companies' market multiples of revenues and earnings before interest, taxes, depreciation and amortization and factored in a control premium. Finally, we compared our estimate of fair value to our total public market capitalization and assessed implied control premiums based on our common stock price of $1.68 as of the date of testing.

Ultimately, based on our quantitative assessment, we determined that our Allerium reporting unit had an estimated fair value in excess of its carrying value of at least 7.9%, and concluded that our goodwill was not impaired and that Allerium was not at risk of failing the quantitative assessment.

It is possible that, during the remainder of fiscal 2027 or beyond, business conditions (both in the U.S. and internationally) could deteriorate from the current state, our current or prospective customers could materially postpone, reduce or even forgo purchases of our products and services to a greater extent than we currently anticipate, or our common stock price could further fluctuate. A significant decline in our customers' spending that is greater than we anticipate or a shift in funding priorities may also have a negative effect on future orders, sales, income and cash flows and we might be required to perform a quantitative assessment during fiscal 2027 or beyond. If assumed net sales and cash flow projections are not achieved in future periods, our common stock price significantly declines from current levels, and or we complete certain actions related to our transformation plan, Allerium could be at risk of failing the quantitative assessment and goodwill and intangibles assigned to the reporting unit could be impaired.

In any event, we are required to perform our next annual goodwill impairment analysis on August 1, 2027 (the start of our fiscal 2028). If our assumptions and related estimates change in the future, or if we change our reporting unit structure or other events and circumstances change (e.g., a sustained decrease in the price of our common stock (considered on both absolute terms and relative to peers)), we may be required to record impairment charges when we perform these tests, or in other future periods. Any impairment charges that we may record in the future could be material to our results of operations and financial condition.

F - 48

(16)Intangible Assets

Intangible assets with finite lives as of July 31, 2026 and 2025 are as follows:

The weighted average amortization period in the above table excludes fully amortized intangible assets.

Amortization expense for the fiscal years ended July 31, 2026 and 2025 was $14,763,000 and $15,154,000.

The estimated amortization expense consists of the following for the fiscal years ending July 31:

We review net intangible assets with finite lives for impairment when an event occurs indicating the potential for impairment. Based on our fiscal 2026 assessment, we believe that the carrying values of our net intangible assets were recoverable as of July 31, 2026. If business conditions deteriorate, we may be required to record impairment losses, and/or increase the amortization of intangibles in the future. Any impairment charges that we may record in the future could be material to our results of operations and financial condition.

(17)Convertible Preferred Stock

Fiscal 2025 and Prior

On October 18, 2021, we entered into a Subscription Agreement (the “Subscription Agreement”) with certain affiliates and related funds of White Hat Capital Partners LP and Magnetar Capital LLC (collectively, the “Investors”). On October 19, 2021, pursuant to the terms of the Subscription Agreement, the Investors purchased an aggregate of 100,000 shares of Series A Convertible Preferred Stock, with a par value of $0.10 per share, for an aggregate purchase price of $100,000,000. White Hat Capital Partners LP is affiliated with Mark Quinlan, who serves as a member of our Board of Directors and was chairman of our Board of Directors through November 26, 2024.

F - 49

On December 13, 2023, we and the Investors agreed to change certain terms of the Series A Convertible Preferred Stock, effected through an Exchange Agreement, pursuant to which the Investors exchanged (the “Series A Exchange”) all 100,000 shares of Series A Convertible Preferred Stock outstanding for 100,000 shares of our Series A-1 Convertible Preferred Stock, par value $0.10 per share (the “Series A-1 Convertible Preferred Stock”), with an initial liquidation preference of $1,134.20 per share. As a result of the Series A Exchange, no shares of Series A Convertible Preferred Stock remain outstanding.

On January 22, 2024, we entered into a Subscription and Exchange Agreement with the Investors, relating to: (i) the issuance and sale of 45,000 shares of Series B Convertible Preferred Stock, par value $0.10 per share (the “Series B Convertible Preferred Stock”), for an aggregate purchase price of $45,000,000, or $1,000 per share (the “Primary Issuance”), (ii) the exchange of 100,000 shares of our Series A-1 Convertible Preferred Stock for 115,721.22 shares of Series B Convertible Preferred Stock (the “Series B Exchange”) and (iii) the issuance to the Investors of 5,400 shares of Series B Convertible Preferred Stock in lieu of cash for certain expense reimbursements (the “Series B Reimbursement” and, together with the Primary Issuance and the Series B Exchange, the “Series B Issuance”). As a result of the Series B Exchange, no shares of Series A-1 Convertible Preferred Stock remain outstanding. We received $43,200,000 of cash proceeds from the Primary Issuance, net of $1,800,000 for certain expense reimbursements.

On June 17, 2024, in connection with entering into the Credit Facility discussed in Note (8) - Credit Facility, we and the Investors agreed to change certain terms of the Series B Convertible Preferred Stock. The changes altered the preferred holders’ existing consent rights and existing put rights alongside payments upon a change of control following specified asset sales, in each case consistent with the Credit Facility. To effect these changes, we and the Investors entered into a Subscription and Exchange Agreement, pursuant to which the Investors: (i) exchanged, in a transaction exempt from registration under the Securities Act of 1933, all of the 166,121.22 shares of Series B Convertible Preferred Stock outstanding for 166,121.22 shares of our Series B-1 Convertible Preferred Stock, par value $0.10 per share (the "Series B-1 Exchange"), with an initial liquidation preference of $1,036.58 per share, and (ii) received 5,705.83 additional shares of Series B-1 Convertible Preferred Stock as a consent fee (the "Series B-1 Fee"). As a result of the Series B-1 Exchange, no shares of Series B Convertible Preferred Stock remain outstanding. We did not receive any cash proceeds from the Series B-1 Exchange.

On October 17, 2024, in connection with amending the Credit Facility, we and the Investors agreed to change certain terms of the Series B-1 Convertible Preferred Stock. The changes: altered the date on which preferred holders can opt to have us repurchase their Series B-2 Convertible Preferred Shares (as discussed below) in certain circumstances; provided for increases to the dividend rate in certain circumstances; and provided for an option for the preferred holders to elect to receive dividends in cash (to the extent permitted by law). To effect the changes described above, we and the Investors entered into a Subscription and Exchange Agreement, pursuant to which the Investors: (i) exchanged all of the 171,827.05 shares of Series B-1 Convertible Preferred Stock outstanding for 171,827.05 shares of our Series B-2 Convertible Preferred Stock, par value $0.10 per share (the “Series B-2 Exchange”), with an initial liquidation preference of $1,067.87 per share; and (ii) received 3,436.53 additional shares of Series B-2 Convertible Preferred Stock as a consent fee (the "Series B-2 Fee"). As a result of the Series B-2 Exchange, no shares of Series B-1 Convertible Preferred Stock remain outstanding. We did not receive any cash proceeds from the Series B-2 Exchange.

On March 3, 2025, in connection with amending the Credit Facility and Subordinated Credit Facility (as discussed in Note (9) - Subordinated Credit Facility), we and the Investors agreed to change certain terms of the Series B-2 Convertible Preferred Stock. The changes provided the Investors with a board observer right and certain information access rights. These changes were effected through a Subscription and Exchange Agreement (the "Series B-3 Subscription and Exchange Agreement"), pursuant to which the Investors: (i) exchanged (the “Series B-3 Exchange”) all of the 175,263.58 shares of Series B-2 Convertible Preferred Stock outstanding for 175,263.58 shares of our Series B-3 Convertible Preferred Stock, par value $0.10 per share, with an initial liquidation preference of $1,104.48 per share (the per share liquidation preference of the Series B-2 Convertible Preferred Stock as of the date of issuance); and (ii) received 2,916.76 additional shares of Series B-3 Convertible Preferred Stock (the “Series B-3 Fee” and, together with the Series B Reimbursement, the Series B-1 Fee and the Series B-2 Fee, the “Additional Issuances”) and $650,000 in cash as a consent fee. As a result of the Series B-3 Exchange, no shares of Series B-2 Convertible Preferred Stock remain outstanding. We did not receive any cash proceeds from the Series B-3 Exchange.

F - 50

The Series B-3 Convertible Preferred Stock ranks senior to the shares of our common stock, with respect to the payment of dividends and the distribution of assets upon a liquidation, dissolution or winding up of the Company. Each share of Series B-3 Convertible Preferred Stock is entitled to a cumulative dividend (the “Dividend”) at the rate of 9.00% per annum, compounding quarterly, paid-in-kind, or 7.75% per annum, compounding quarterly, paid in cash, at our election (except as described below), or 6.50% per annum, in respect of any shares of Series B-3 Convertible Preferred Stock that remain outstanding following the redemption of at least fifty percent (50%) of the Series B-3 Convertible Preferred Stock pursuant to the exercise of an asset sale or change in control put right or an asset sale call right, as described below. The Dividend rate may also increase following certain events, including certain asset sales that constitute a change in control, as set forth in the certificate of designations governing the Series B-3 Convertible Preferred Stock (the "Series B-3 Certificate of Designations"). For any quarter in which the Dividend is not paid in cash, such Dividend becomes part of the liquidation preference of the Series B-3 Convertible Preferred Stock. In addition, no dividend or other distribution on our common stock will be declared or paid on our common stock unless, at the time of such declaration and payment, an equivalent dividend or distribution is declared and paid on the Series B-3 Convertible Preferred Stock (the “Participating Dividend”), provided that in the case of any such dividend in the form of cash, in lieu of a cash payment, such Participating Dividend will become part of the liquidation preference of the Series B-3 Convertible Preferred Stock. Such Participating Dividend results in the Series B-3 Convertible Preferred Stock meeting the definition of a "participating security" for purposes of our earnings per share calculations. Following the satisfaction of all obligations under the Credit Facility in full and the termination of all of commitments under the Credit Facility (a “CA Satisfaction”), and (i) our failure to fully satisfy an exercised put right (other than a put right exercised in connection with an Asset Sale that constitutes a change in control) or (ii) beginning on or after April 30, 2027 (or later in certain circumstances), holders of the Series B-3 Convertible Preferred Stock will be entitled to elect to have us pay the Dividend in cash (to the extent permitted by law).

The shares of Series B-3 Convertible Preferred Stock are convertible into shares of common stock at the option of the holder thereof at any time. At any time after July 22, 2027, we have the right to mandate conversion of the Series B-3 Convertible Preferred Stock, subject to certain restrictions based on the price of our common stock in the preceding thirty (30) trading days. The conversion price for the Series B-3 Convertible Preferred Stock is $7.99, subject to certain adjustments set forth in the Series B-3 Certificate of Designations.

Holders of the Series B-3 Convertible Preferred Stock are entitled to vote with the holders of our common stock on an as-converted basis, and are entitled to a separate class vote with respect to, among other things, amendments to our organizational documents that have an adverse effect on the Series B-3 Convertible Preferred Stock, authorizations or issuances of securities of the Company (other than certain qualified or private offerings of up to $50,000,000 of shares of common stock), the payment of dividends, related party transactions, repurchases or redemptions of securities of the Company, dispositions of businesses or assets involving consideration having a fair value in excess of $75,000,000 (or $20,000,000 following a CA Satisfaction), the incurrence of certain indebtedness and certain amendments or extensions of our Credit Facility on terms and conditions that, taken as a whole, (A) are materially different from the existing Credit Facility or (B) adversely affect our ability to perform our obligations in connection with an optional repurchase of the Series B-3 Convertible Preferred Stock, in each case, subject to the exceptions and qualifications set forth in the Series B-3 Certificate of Designations.

Holders have the right to require us to repurchase their Series B-3 Convertible Preferred Stock (at 1.0 x the liquidation preference, plus accrued and unpaid dividends) on a date occurring either: (a) on or after October 31, 2028, (b) upon the consummation of an asset sale meeting certain criteria, or (c) on or after April 30, 2027 following a CA Satisfaction. We have the right to repurchase all, or less than all, of the Series B-3 Convertible Preferred Stock upon the consummation of an asset sale meeting the same criteria, other than an asset sale that would result in a change-of-control. In addition, each holder will have the right to cause us to repurchase its Series B-3 Convertible Preferred Stock in connection with a Change of Control (as defined in the Series B-3 Certificate of Designations) at 1.5 x (or 1.0x in the case of Series B-3 Convertible Preferred Stock issued in the Additional Issuances) the liquidation preference, plus accrued and unpaid dividends. Any repurchase described above would be subject to the terms set forth in the Series B-3 Certificate of Designations.

F - 51

Fiscal 2026

On June 14, 2026, in connection with entering into the Strategic Transaction and amending our credit facilities, we also entered into an exchange agreement with the holders of Series B-3 Convertible Preferred Stock, pursuant to which the holders, among other things: (a) provided consent to the consummation of the Strategic Transaction; (b) waived any rights to repayment or repurchase of shares of Series B-3 Convertible Preferred Stock in connection therewith; (c) agreed that holders of Convertible Preferred Stock may not: (i) exercise their optional repurchase rights until October 31, 2029, except upon consummation of certain qualified asset sales by us or upon a Change of Control as defined in the Series B-4 Certificate of Designations, or (ii) elect to receive dividends in cash earlier than October 31, 2028. To effect these changes, upon consummation of the Strategic Transaction, all 178,180.34 shares of Series B‑3 Convertible Preferred Stock will be exchanged for 178,180.34 shares of our Series B‑4 Convertible Preferred Stock (the “Series B-4 Exchange”), which will have substantially similar terms as those of the Series B-3 Convertible Preferred Stock except for the changes described above. In connection with the exchange, new Voting Agreements and a new Registration Rights Agreement with the holders of our Series B-4 Convertible Preferred Stock will automatically take effect, each having substantially similar terms to the existing agreements. The Series B-4 Convertible Preferred Stock maintains the $7.99 conversion price of the Series B-3 Convertible Preferred Stock. Consummation of the Series B-4 Exchange and issuance of shares of Series B-4 Convertible Preferred Stock are conditioned upon the consummation of the Strategic Transaction and are expected to occur on the closing date of the Strategic Transaction. We will not receive any cash proceeds from the Series B-4 Exchange, nor incur any fees to the holders of Series B-3 Convertible Preferred Stock. As of the issuance date, no share of Series B-4 Convertible Preferred Stock is issued and outstanding.

Additional Convertible Preferred Stock Details

Upon a repurchase of the Series B-3 Convertible Preferred Stock at 1.0 x the liquidation preference, we will issue each respective holder a warrant (a “Warrant”). A Warrant will represent the right to acquire our common stock, as further described in the Series B-3 Subscription and Exchange Agreement, for a term of five years and six months from the issuance of such Warrant, at an initial exercise price equal to the conversion price on the date of issuance of such Warrant, subject to certain adjustments. We determined that our obligation to issue a Warrant met the definition of a freestanding financial instrument that should be accounted for as a liability. The Warrant liability is classified in Warrant and Derivative Liabilities on the Consolidated Balance Sheets and is remeasured to its estimated fair value each reporting period, using Level 3 fair value inputs, until the Warrant is exercised or expires. Changes in the estimated fair value of the Warrant are recognized in our Consolidated Statements of Operations as a non-cash expense or benefit. As of July 31, 2026 and July 31, 2025, the Warrant liability was remeasured tozero and $234,000, resulting in non-cash benefits of $234,000 and $476,000, respectively, recorded in "Other expenses (income) - Change in fair value of warrants and derivatives" on the Consolidated Statements of Operations.

We accounted for the Series B-2 Exchange as an extinguishment of the Series B-1 Convertible Preferred Stock based on a qualitative and quantitative assessment of the terms of the preferred shares exchanged. We recognized a $51,179,000 gain on extinguishment in fiscal 2025, representing the difference between the carrying value of the Series B-1 Convertible Preferred Stock and the issuance date fair value of the Series B-2 Convertible Preferred Stock. As the Series B-1 Convertible Preferred Stock was classified as temporary equity, the gain on extinguishment was included as an offset in determining net loss attributable to common stockholders and credited to retained earnings as a return from the holders.

We accounted for the Series B-3 Exchange as a modification of the Series B-2 Convertible Preferred Stock and accounted for our commitment to the Series B-4 Exchange as a modification of the Series B-3 Convertible Preferred Stock.

F - 52

We identified several embedded derivatives that require bifurcation from the Series B-2 Convertible Preferred Stock (and subsequent issuances of the Convertible Preferred Stock) under ASC 815, including the holders' right to: (i) require us to repurchase the Convertible Preferred Stock upon the consummation of an asset sale meeting certain criteria, or in connection with a change in control; (ii) convert the Convertible Preferred Stock into shares of our common stock; (iii) increase the dividend rate in certain circumstances; and (iv) elect to receive cash dividends in certain circumstances. When evaluating such embedded derivatives, we determined that the Series B-2 Convertible Preferred Stock (and subsequent issuances of the Convertible Preferred Stock) was more akin to a debt-like host than an equity-like host. We also determined that such features qualify for accounting as one combined embedded derivative liability. Given the extinguishment of the prior instruments for accounting purposes, as discussed above, we established an initial embedded derivative liability of $38,832,000 upon the issuance of the Series B-2 Convertible Preferred Stock. We presented such embedded derivative liabilities within"Warrant and Derivative Liabilities" on the Consolidated Balance Sheets. The combined embedded derivative liability is remeasured to its estimated fair value each reporting period, using Level 3 fair value inputs. Changes in the estimated fair value of the combined embedded derivative liability are recognized in our Consolidated Statements of Operations as a non-cash expense or benefit. As of July 31, 2026 and July 31, 2025, the embedded derivative liability was remeasured to $1,173,000 and $14,608,000, resulting in a non-cash benefit of $13,435,000 and $24,224,000, respectively, recorded in "Other expenses (income) - Change in fair value of warrants and derivatives" on the Consolidated Statements of Operations.

Upon the Series B-2 Exchange, the initial estimated fair value of the Series B-2 Convertible Preferred Stock was $132,310,000. We reduced the initial estimated fair value of the Series B-2 Convertible Preferred Stock to establish the initial combined embedded derivative liabilities, as discussed above.

We also adjusted the carrying value of the Series B-4 Convertible Preferred Stock deemed issued for accounting purposes at July 31, 2026 based on its redemption value of $223,156,000, which includes $1,661,000 of accumulated and unpaid dividends. Through July 31, 2026, as presented in the table below, the adjustments charged against retained earnings (at the time) and additional paid in capital to increase the carrying value of each respective series of Convertible Preferred Stock, while outstanding, to their respective redemption values totaled $128,696,000.

The following table presents the allocation of the initial estimated fair value of the Series B-2 Convertible Preferred Stock to its host instrument and combined embedded derivatives on October 17, 2024:

The following table presents a reconciliation of the adjustments to increase the carrying values of each respective series of Convertible Preferred Stock to their redemption values while outstanding or deemed outstanding:

F - 53

In accordance with ASC 480, Distinguishing Liabilities from Equity, specifically ASC 480-10-S99-3A(2), SECStaff Announcement: Classification and Measurement of Redeemable Securities, we classified each respective series of Convertible Preferred Stock outside of permanent equity, as temporary equity, since the redemption of such shares is at the option of the holder on a fixed date or upon the occurrence of certain events that are not solely within our control.

(18)Stockholders’ Equity

Shelf Registration

On March 23, 2026, we filed a $125,000,000 shelf registration statement with the SEC for the sale of various types of securities, including debt securities. This shelf registration was declared effective by the SEC as of April 6, 2026 and expires on April 6, 2029. To-date, we have not issued any securities pursuant to this shelf registration statement. As of the date of this Annual Report on Form 10-K, we are subject to rules which limit the amount of securities we can sell under our registration statements on Form S-3.

Common Stock Repurchase Program

On September 29, 2020, our Board of Directors authorized a $100,000,000 stock repurchase program, which replaced our prior program. The $100,000,000 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. There wereno repurchases made during the fiscal years ended July 31, 2026 or 2025.

Additional Paid in Capital

Cumulatively, through July 31, 2026, $122,317,000 of the adjustments to the carrying values of outstanding Convertible Preferred Stock to their respective redemption values, while outstanding, were charged to additional paid in capital so as not to exceed the available amount of retained earnings at the time of such adjustments.

(19)Cost Reduction and Related Restructuring Activities

In connection with our transformation strategy, we implemented multiple reductions in force throughout our organization. During fiscal 2026 and fiscal 2025, we reduced headcount within our continuing operations by approximately 135 total employees and contractors, resulting in $18,500,000 in annualized labor cost savings. At July 31, 2026, we had approximately 817 employees (including temporary employees and contractors).

Our severance liability was $35,000 and $645,000, respectively, as of July 31, 2026 and July 31, 2025. Severance costs, recorded within selling, general and administrative expenses in our Consolidated Statements of Operations were $251,000 and $1,901,000, respectively, for fiscal 2026 and 2025. Severance payments were $861,000 and $1,644,000, respectively, for fiscal 2026 and 2025.

F - 54