Karman Holdings Inc.
For the period ended Dec 31, 2025. Filed Apr 3, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Apr 3, 2026
KRMN$45.61+42.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-04-10.
0000950170-25-052639
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-04-03.
0002040127-26-000014
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 175 previous paragraphs and 151 current paragraphs.
81 unchanged; 32 reworded; 36 added; 55 removed; 7 previous and 2 current paragraphs rearranged.
Tables are not compared: 13 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (36)
Current report
In addition, the One Big Beautiful Bill Act (“OBBBA”) enacted in July, 2025 provides approximately $150 billion in incremental defense funding through fiscal year 2029, supporting multiple defense programs such as Hypersonics, Missiles and Munitions. We expect these tailwinds to reinforce demand for capabilities aligned with our core offerings.
Current report
Recent Developments
Current report
On April 2, 2025 ,we completed the acquisition of Metal Technology Inc. (“MTI”), pursuant to the terms of a Securities Purchase Agreement (the “MTI Agreement”) under which a whole owned subsidiary of ours agreed to purchase MTI for $82.3 million in cash. The acquisition of MTI expands the Company’s capabilities in advanced materials and is expected to strengthen its position in the strategic missile defense market through enhanced product offerings and customer relationships.
Current report
On May 28, 2025, we completed the acquisition of Industrial Solid Propulsion (“ISP”) pursuant to a Securities Purchase Agreement (the “ISP Agreement”), under which we purchased all issued and outstanding equity interests in ISP and related real estate of ISP, for approximately $52.9 million in cash and 147,842 shares of our common stock, subject to satisfaction or waiver of certain customary closing adjustments. The ISP Agreement contains customary representations, warranties and covenants of the parties. The acquisition of ISP expands the Company’s capabilities in small-diameter solid propellant and energetic propulsion systems, strengthening its position in the UAS and missile defense markets through proprietary technologies and integrated manufacturing expertise.
Current report
On October 28, 2025, we completed the acquisition of Five Axis Industries Inc. (“Five Axis”) pursuant to a Securities Purchase Agreement (the “Five Axis Agreement”) under which a wholly-owned subsidiary of ours has agreed to purchase Five Axis, for $90.7 million in cash and 68,625 shares of common stock of the Company, subject to the satisfaction or waiver of certain customary closing adjustments. The Agreement contains customary representations, warranties and covenants of the parties. The acquisition of Five Axis expands our capabilities in the commercial space industry,
Current report
On December 31, 2025, we entered into a Securities Purchase Agreement (the “ Seemann Agreement”) under which a wholly-owned subsidiary of ours agreed to purchase Seemann Composites, LLC and Materials Sciences LLC (together, the “Company Group”), for (i) $210.0 million in cash and (ii) shares of common stock of the Company with an aggregate value equal to $10.0 million, subject to certain customary purchase price adjustments (the “ Seemann Acquisition”). This acquisition was completed on February 3, 2026, pursuant to the Agreement, and we indirectly acquired all of the outstanding capital stock of the Company Group in exchange for the consideration described above. The Agreement contains customary representations, warranties and covenants of the parties. The Seemann Acquisition expands and enhances our capabilities in the maritime defense end market, strengthening our portfolio of advanced composite and materials solutions for high-priority naval programs.
Current report
General and Administrative Expenses
Current report
Revenue for the year ended December 31, 2025 increased $126.2 million, or 36.6%, to $471.5 million as compared to $345.3 million for the year ended December 31, 2024.
Current report
Growth in Hypersonics and Strategic Missile Defense revenue for the year ended December 31, 2025 from the comparable periods in the prior year, was primarily driven by expanded strategic missile programs, continued progress on NGI through qualification phases, higher volumes on classified programs, and increased activities supporting hypersonic test beds, partially offset by reduction in certain programs due to award timing and program phase transitions.
Current report
Growth in Space and Launch revenue for the year ended December 31, 2025 from the comparable periods in the prior year, was primarily driven by the timing of orders for critical content supporting both legacy and emerging launch providers, including content for liquid fueled rocket engines, partially offset by a decline in the cadence of crewed missions, and lower revenue from the Space Launch System (“SLS”).
Current report
Growth in Tactical Missiles and Integrated Defense Systems for the year ended December 31, 2025 from the comparable periods in the prior year, was primarily driven by demand associated with the continued proliferation of advanced drone and loitering munitions technologies and an increase in production rates for GMLRS.
Current report
Gross margin increased 2.0% to 40.3% for the year ended December 31, 2025, compared to 38.3% for the year ended December 31, 2024. The increase was primarily driven by operating leverage and improved operating efficiency.
Current report
General and Administrative Expenses
Current report
The 92.8% increase in general and administrative expenses between the year ended December 31, 2025 and 2024 was primarily driven by higher share-based compensation from P units (which were Profit Interest Units (PIUs) in the form of Class P LLC Membership Units (“P Units”) in Karman LLC prior to the Corporate Conversion) and Phantom Units that fully vested in connection with the completion of the Company’s IPO in February 2025. The increase was also attributed to higher compensation and benefits costs as we strengthen our team and expand our operational capabilities to support ongoing business growth. Additionally, we incurred higher professional fees for tax, accounting, and consulting services, primarily related to operating as a public company and in connection with planned and completed acquisitions.
Current report
Other Income
Current report
Adjusted EPS represents GAAP net income (loss) per fully diluted share, excluding transaction related expenses, integration expenses and non-recurring costs, lender and administrative agent fees and share-based compensation as they are not representative of our operating performance.
Current report
The reconciliation of GAAP to non-GAAP financial measures is provided below.
Current report
Other non-recurring costs for the year ended December 31, 2025 include estimated legal settlements and related professional fees that are non-recurring and do not reflect ongoing business operations.
Current report
Other non-recurring costs for the year ended December 31, 2025 includes (i) estimated legal settlements and related professional fees, (ii) write-off of a tax refund that are non-recurring and do not reflect ongoing business operations, (iii) a one-time $1.5 million tax expenses due to change in entity tax status and (iv) a $2.5 million write-off of unamortized debt issuance costs associated with our previous TCW term loan, which was refinanced with the new Citi Term Loan.
Current report
We allocate the purchase price of acquired entities to the underlying tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values, with any excess recorded as goodwill. The valuations of the acquired assets and liabilities will impact the determination of future operating results. Determining the fair value of assets we acquire and liabilities we assume requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. We determine the fair values of intangible assets acquired generally in consultation with third-party valuation advisors. Fair value adjustments to the assets and liabilities are recognized and the results of operations of the acquired business are included in our consolidated financial statements from the effective date of the acquisition.
Current report
Deferred tax liability and assets are recognized for the deferred tax consequences of differences between the tax bases and the recognized values of assets acquired and liabilities assumed in a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 740-10.
Current report
The Citi Credit Agreement contains a springing financial covenant that is tested on the last day of any testing fiscal quarter if and when the outstanding principal amount of revolving credit loans exceeds an applicable threshold. If the financial covenant is then in effect, we are required to maintain a Consolidated First Lien Net Leverage Ratio of less than or equal to 6.50 to 1.00. The financial covenant is also conditioned upon our requirement to deliver quarterly financial statements to the lender under the Citi Credit Agreement, which obligation commences with the fiscal quarter ending September 30, 2025. As there was no amount of revolving credit outstanding as of December 31, 2025, the springing financial covenant was not required. The we were in compliance with other debt covenant as of December 31, 2025.
Current report
On May 27, 2025, we entered into the first amendment to the Citi Credit Agreement (the “First Amendment”). The First Amendment provides for an incremental borrowing of $75 million to fund the acquisition of ISP. All other terms and conditions of the Citi Credit Agreement remain unchanged.
Current report
On July 23, 2025, we priced the underwritten public offering (the “Secondary Offering”) of our common stock, par value $0.001 per share (the “Common Stock”), at a public offering price of $49.00 per share (the “Secondary Offering Price”), pursuant to our registration statement on Form S-1 (File No. 333-288809),as amended (the “Registration Statement”). On July 23, 2025, in connection with the pricing of the Secondary Offering, certain of our existing stockholders (the“Selling Stockholders”) agreed to sell 21,000,000 shares of their Common Stock, in each case at the Secondary Offering Price, less underwriting discounts and commissions. The Underwriters were granted a 30-day option to purchase up to an additional 3,150,000 shares of Common Stock from a certain Selling Stockholder, which was fully exercised on July 24, 2025. The Secondary Offering and the shares were delivered on July 25, 2025. The Secondary Offering was non-dilutive and increased the public float of our common stock. We did not sell any shares or receive proceeds, and the Secondary Offering had no impact on our capital structure or operations.
Current report
On October 24, 2025, we entered into a second amendment to the Citi Credit Agreement (the “Second Amendment”). The Second Amendment provides for an incremental term loan in the aggregate original principal amount of $130.0 million (the “Incremental Term Loan”). The proceeds of the Incremental Term Loan were used to repay outstanding revolving credit loans under the Citi Credit Agreement, the acquisition of Five Axis, and for the payment of any fees, commissions and expenses associated therewith.
Current report
On February 2, 2026, we entered into a Third Amendment to our Credit Agreement. Under the terms of the Third Amendment, we (i) refinanced our existing term loans in an aggregate principal amount of $502.8 million to reduce the interest rate applicable thereto by 75 basis points to SOFR plus 2.75% and (ii) reduced the interest rate applicable to our revolving credit facility by 75 basis points for each level of our leverage-based pricing grid, the highest of such levels being set at SOFR plus 2.50%. In addition, following the refinancing of the existing term loans, we increased the principal amount of our term loans by $265.0 million, for a total principal amount of $767.8 million. We used the proceeds from the increase in the term loans to fund the acquisition of the Company Group, as well as to provide additional working capital and liquidity to us and to pay related fees, commissions and expenses associated with the Third Amendment.
Current report
On March 9, 2026, we entered into a Fourth Amendment to our Credit Agreement. Under the terms of the Fourth Amendment, we (i) increased the revolving credit commitments by $100.0 million such that the total revolving credit commitments are now $150.0 million and (ii) removed the cap on incremental revolving credit commitments, which was previously $50.0 million.
Current report
We believe that our cash and cash equivalents as of December 31, 2025, together with available borrowings under the Citi Credit Agreement and expected net cash provided by operating activities will be sufficient to fund our cash requirements for at least the next twelve months. As we continue to grow our business, including by any acquisitions we may make, we may in the future require additional working capital.
Current report
Summary of Statement of Cash Flows
Current report
The following table summarizes the primary sources and uses of our cash flow:
Current report
Net cash used in operating activities for the year ended December 31, 2025 was $22.1 million, primarily consisting of net income of $17.4 million, non-cash items of $53.8 million and a net change in our operating assets and liabilities of $93.3 million. Changes in our operating assets and liabilities was primarily driven by an increase in contract assets of $49.1 million, a decrease in contract liabilities of $7.1 million, which was mainly due to initial and subsequent measurement of contracts with customers, changes in business volume, and progress of existing contracts. Change in our operating assets and liabilities was also driven by a decrease in accounts payable, accruals and income tax payable of $16.9 million, which was mainly driven by payment of $11.7 million acquisition-related expenses and timing of other payments.
Current report
Net cash provided by operating activities for the year ended December 31, 2024 was $26.6 million, primarily consisting of net income of $12.7 million, non-cash items of $23.9 million and a net change in our operating assets and liabilities of $10.0 million. Change in our operating assets and liabilities was primarily driven by an increase in contract assets of $18.0 million, a decrease in contract liabilities of $6.2 million, which was mainly due to initial and subsequent measurement of contracts with customers, changes in business volume, and progress of existing contracts. Change in our operating assets and liabilities was also driven by a increase in prepaids and other current assets of $14.8 million, which was due to favorable timing of cash payments to vendors.
Current report
Net cash used in investing activities for the year ended December 31, 2025 was $238.3 million, as a result of MTI, ISP and Five Axis acquisitions of $211.9 million in total, investment in a convertible note of $6.0 million and purchases of property and equipment.
Current report
Net cash used in investing activities for the year ended December 31, 2024 was $46.2 million, which was principally attributable to the RMS acquisition and purchase of property and equipment.
Current report
Net cash provided by financing activities for the year ended December 31, 2025 was $282.8 million, which was primarily driven by net proceeds from our IPO of $154.8 million, proceeds from our new Citi credit facilities of $496.6 million (net of payment of debt issuance costs), partially offset by repayment of our old TCW credit facilities of $351.7 million.
Current report
Net cash provided by financing activities for the year ended December 31, 2024 was $25.7 million, which was primarily driven by net proceeds from increasing our TCW Term Note by $34.0 million (net of payment of debt issuance costs), partially offset by repayment of TCW Term Note of $9.5 million.
Removed paragraphs (55)
Previous report
Results of Operations
Previous report
Revenue for the year ended December 31, 2024 increased $64,545,494, or 23.0%, to $345,251,064 as compared to $280,705,570 for the year ended December 31, 2023. Revenue represents sales from our existing businesses over comparable periods.
Previous report
Our revenues for the year ended December 31, 2024 continued to benefit from increased U.S. Government spending in response to evolving global threats, including conflicts in the Middle East, such as the Hamas-Israel conflict and actions by Iran’s proxies against the United States and its allies, alongside ongoing challenges from the Russia-Ukraine war, North Korean provocations, and rising tensions with China. The Company believes it is positioned to address the growing spending needs of the United States and its allies.
Previous report
The increase in Hypersonics and Strategic Missile Defense revenue was driven by well-funded development and production programs, alongside increased government spending. Revenue growth for the year ended December 31, 2024 was more moderate compared to the year ended December 31, 2023 due to the number of programs within the Hypersonics and Strategic Missile Defense revenue end market being within qualification and testing, compared to other end markets where more programs are in full or initial production phases of the program life cycle.
Previous report
Space and Launch revenues were supported by new launch vehicle programs, including Blue Origin’s New Glenn and ULA’s Vulcan and the acquisition of Rapid Machine Solutions – Wolcott Design Services, LLC (RMS). From the acquisition date of February 16, 2024, to December 31, 2024, RMS generated revenue of $11,692,260. These programs are expected to continue expanding as the commercial space launch market exceeds Federal Aviation Administration (FAA) projections.
Previous report
Tactical Missile and Integrated Defense Systems revenues increased, primarily due to key programs entering or continuing production phases of our program lifecycles. This market’s growth continues to be supported by successful system deployments in the Ukraine and Middle East conflicts, which continue generating significant global demand.
Previous report
Cost of goods sold increased to $213,139,980 for the year ended December 31, 2024, from $175,156,456 for the year ended December 31, 2023. The $37,983,524, or 21.7%, increase in cost of goods sold was primarily a result of increased materials and labor costs. Since the acquisition of RMS on February 16, 2024, RMS has incurred $4,967,447 of cost of sales, which was not reflected in our prior period results.
Previous report
Our success in program expansions and the continued maturation of existing programs across our end markets contributed to the 0.7% increase in gross profit as a percentage of revenues to 38.3% for the year ended December 31, 2024, compared to 37.6% for the year ended December 31, 2023.
Previous report
The 21.3% increase in general and administrative expenses between the year ended December 31, 2024 and 2023 was primarily driven by an increase in professional fees for legal, tax, accounting, and consulting fees. Additionally, payroll increased due to increased benefit expenses and headcount growth. These additional costs reflect the continued expansion of our operational support capabilities and the integration of newly established regional campuses and acquisitions. Since the acquisition of RMS on February 16, 2024, RMS has incurred $2,562,107 to our total general and administrative expenses, which was not reflected in our prior period results. The increase in general and administrative expenses was partially offset by decreases in recruitment costs, bad debt expenses and travel and entertainment costs.
Previous report
Other Income (expense)
Previous report
Revenue
Previous report
Revenue for the year ended December 31, 2023 increased $54,359,271, or 24.0%, to $280,705,570 as compared to $226,310,299 for the year ended December 31, 2022. Revenue represents sales from our existing businesses for comparable periods.
Previous report
The increase in revenues for fiscal 2023 as compared to fiscal 2022 was primarily attributable to organic growth across all end-markets, Hypersonics and Strategic Missile Defense, followed by Space and Launch and Tactical Missile and Integrated Defense Systems.
Previous report
The Company’s 2023 revenues benefited from increased U.S. Government spending in response to evolving global threats, including conflicts in the Middle East, such as the Hamas-Israel conflict and actions by Iran’s proxies against the U.S. and its allies, alongside ongoing challenges from the Russia-Ukraine war, North Korean provocations, and rising tensions with China. The Company is positioned to address the growing spending needs of the U.S. and its allies.
Previous report
The Hypersonics and Strategic Missile Defense market saw significant growth driven by well-funded development and production programs, alongside increased government spending. Revenues from these programs increased year-over-year by 37.9%, 34.2%, and 42.0% across the Aerodynamic Interstage, Payload Protection and Deployment, and Propulsion Systems product families, respectively.
Previous report
Space and Launch revenues were supported by new launch vehicle programs, including Blue Origin’s New Glenn and ULA’s Vulcan. These programs are expected to continue expanding as the commercial space launch market exceeds Federal Aviation Administration (FAA) projections. Year-over-year, Space and Launch revenues increased by 79.3% in Payload Protection and Deployment and 16.3% in Propulsion Systems.
Previous report
Tactical Missile and Integrated Defense Systems revenues increased, primarily due to an increase of 74.3% in Payload Protection and Deployment and an increase of 13.3% in Propulsion Systems. This market’s growth was supported by successful system deployments during the Ukraine conflict, generating significant global demand.
Previous report
Our success in program expansions and the maturation of existing programs across our end markets contributed to the 1.8% increase in gross profit as a percentage of revenues to 37.6% for the year ended December 31, 2023, compared to 35.8% for the year ended December 31, 2022.
Previous report
Operating Expenses:
Previous report
The 21.9% increase in general and administrative expenses between the years ended December 31, 2023 and 2022, respectively, was primarily driven by an increase in payroll expenses for salaries, bonuses, and retirement benefits. Additionally, total personnel compensation increased as a result of headcount increases. These additional costs reflect the expansion of our operational support capabilities and the integration of newly established regional campuses. The increase in general and administrative expenses was partially offset by decreases in share-based compensation expense and professional fees for legal, tax, accounting, and consulting fees.
Previous report
Depreciation and Amortization
Previous report
Depreciation and amortization expense decreased to $20,432,034 for the year ended December 31, 2023 compared to $30,475,370 for the year ended December 31, 2022. The decrease in amortization expense for the year ended December 31, 2023, is primarily attributable to the full amortization of certain backlog assets in 2022, which did not extend into fiscal year 2023. Depreciation of fixed assets used in the production of goods sold is included in cost of goods sold. The $10,043,336 decrease in depreciation and amortization expense is also attributable to a decrease in purchases of property and equipment.
Previous report
Interest Expense, net
Previous report
Interest expense, net for the year ended December 31, 2023 increased by $10,366,247, or 27.6%, to $47,867,005 compared to $37,500,758 for the year ended December 31, 2022. This increase in interest is primarily attributable to the increase in additional borrowings under the Revolving Credit Facility to fund working capital needs and to manage cash flow requirements. Both the Revolving Credit Facility and note payable are variable interest rate loans with an applicable spread. For additional information related to debt, see Note 7, Debt, in the Notes to the Consolidated Financial Statements.
Previous report
Other Income (expense)
Previous report
Other income (expense) for the years ended December 31, 2023 and 2022 of $563,772 and $(205,604), respectively, was attributable to an increase in gains from the sale of assets.
Previous report
Benefit From Income Taxes
Previous report
The benefit from income taxes was $3,168,821 for the year ended December 31, 2023 compared to benefit from income taxes of $3,172,913 for the year ended December 31, 2022. The decrease in provision for income taxes was attributable to an increase in deferred taxable income. The timing differences between provisions for income taxes recognizable under US GAAP compared to statutory taxes may create different amounts of current and deferred tax amounts. For additional information regarding provisions for taxes, see Note 14, Provision for Income Taxes, in the Notes to the Consolidated Financial Statements.
Previous report
Other non-recurring costs consisted primarily of non-cash impairment losses during the year ended December 31, 2023 and net gains on disposals of property held for sale and acquisition costs during the twelve months ended December 31, 2022.
Previous report
Material Weaknesses
Previous report
As a privately-held company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes- Oxley Act (“Section 404”). As a public company, we will be subject to significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. In addition, we will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting.
Previous report
The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing, and possible remediation. Testing and maintaining internal controls may divert our management’s attention from other matters that are important to our business.
Previous report
During the preparation of our financial statements, we identified material weaknesses in our internal control over financial reporting. The SEC defines a material weakness as “a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.”
Previous report
we did not fully maintain components of the COSO framework, including elements of the control environment, risk assessment, control activities, information and communication and monitoring activities components, relating to (i) sufficiency of processes related to identifying and analyzing risks to the achievement of objectives, including technology, across the entity, (ii) developing general control activities over technology to support the achievement of objectives across the entity, (iii) sufficiency of selecting and developing control activities that contribute to the mitigation of risks to the achievement of objectives to acceptable levels, and (iv) sufficiency of monitoring activities to ascertain whether the components of internal control are present and functioning.
Previous report
we did not design and maintain effective information technology general controls for certain information systems supporting its key financial reporting processes. Specifically, we did not design and maintain sufficient change management, security, operations, and system development controls for management-identified in-scope on-premise applications and vendor-supported applications; and
Previous report
we did not design and maintain effective process-level controls for all significant business process cycles;
Previous report
We have begun the process of evaluating the material weaknesses and developing our full remediation plan. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. Until the remediation plan is implemented, tested and deemed effective, we cannot assure that our actions will adequately remediate the material weaknesses or that additional material weaknesses in our internal controls will not be identified in the future. If we are unable to remediate the material weaknesses, our ability to record, process and report financial information accurately, and to prepare financial statements within the time periods specified by the rules and forms of the Securities and Exchange Commission could be adversely affected and could reduce the market’s confidence in our financial statements and harm our stock price. While we will work to remediate the material weaknesses as quickly and efficiently as possible, we cannot at this time provide an expected timeline in connection with any remediation plan. These remediation measures may be time consuming and costly and might place significant demands on our financial and operational resources.
Previous report
As permitted under the U.S. securities laws, neither we nor our independent registered public accounting firm have performed or are required to perform an evaluation of the effectiveness of our internal control over financial reporting. In the future, we may identify additional material weaknesses or significant deficiencies in our internal control over financial reporting.
Previous report
Our ability to comply with the annual internal control reporting requirements will depend on the effectiveness of our financial reporting and data systems and controls across our company. Any weaknesses or deficiencies or any failure to implement new or improved controls, or difficulties encountered in the implementation or operation of these controls, could harm our operating results and cause us to fail to meet our financial reporting obligations, or result in material misstatements in our consolidated financial statements, which could adversely affect our business and reduce the price of our common stock.
Previous report
If we are unable to conclude that we have effective internal control over financial reporting, investors could lose confidence in our reported financial information, which could have a material adverse effect on the trading price of our common stock. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital market.
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Reworded paragraphs (32)
Previous wording
You should read the following discussion in conjunction with our audited consolidated financial statements, including the related notes thereto, contained within this Item 8 of this Annual Report. In addition to historical information, this discussion contains forward-looking statements that involve risks and uncertainties. You should read the sections of this prospectus titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. For purposes of this section, references to the “Company,” “Karman,” “we,” “us,” and “our” refer to TCFIII Spaceco Holdings and its other subsidiaries prior to the Corporate Conversion and to Karman Holdings Inc. or Karman Holdco and its consolidated subsidiaries for all periods following the Corporate Conversion.
Current wording
You should read the following discussion in conjunction with our audited consolidated financial statements, including the related notes thereto, contained within this Item 8 of this Annual Report. In addition to historical information, this discussion contains forward-looking statements that involve risks and uncertainties. You should read the sections of this Annual Report titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. For purposes of this section, references to the “Company,” “Karman,” “we,” “us,” and “our” refer to TCFIII Spaceco Holdings and its other subsidiaries prior to the Corporate Conversion and to Karman Holdings Inc. or Karman Holdco and its consolidated subsidiaries for all periods following the Corporate Conversion.
Previous wording
We specialize in the upfront design, testing, manufacturing, and sale of mission-critical systems for existing and emerging missile, missile and defense, and space programs. Our integrated payload protection, propulsion, and interstage system solutions are deployed across a wide variety of existing and emerging programs supporting important Department of Defense and space sector initiatives. We estimate that no single program accounted for more than 12% of sales in the twelve months ended December 31, 2024 or the twelve months ended December 31, 2023, with revenue from over 100 active programs supporting current production and next-generation space, missile, hypersonics, and defense applications.
Current wording
We specialize in the upfront design, testing, manufacturing, and sale of mission-critical systems for existing and emerging missile, missile and defense, and space programs. Our integrated payload protection, propulsion, and interstage system solutions are deployed across a wide variety of existing and emerging programs supporting important Department of War (“DOW”) and space sector initiatives. We estimate that no single program accounted for more than 12% of sales in the twelve months ended December 31, 2025 or the twelve months ended December 31, 2024, with revenue from over 130 active programs supporting current production and next-generation space, missile, hypersonics, and defense applications.
Previous wording
Aerodynamic and Interstage Systems: involves supporting metallic and composite subsystems designed for aerodynamics and interstage separation.
Current wording
Aerodynamic and Interstage Systems: involves supporting metallic and composite subsystems designed to enhance aerodynamics and enable different modes of interstage separation.
Previous wording
Propulsion Systems: involves the integrated offering of solid rocket motor subsystems, launch systems, and ablative composites.
Current wording
Propulsion Systems: involves the integrated offering of solid rocket motors and supporting subsystems, critical subsystems for liquid fueled rocket motors, launch systems, and ablative composites.
Previous wording
We are focused on delivering innovative and customized solutions for our customers, with more than 204 multi-discipline engineers supporting our comprehensive in-house design and manufacturing capabilities. Our unique set of capabilities is supported by decades of experience across advanced material design, proprietary digital models, material science and testing, and manufacturing expertise. We believe that this collection of vertically integrated capabilities provides a strong value proposition for our customers who seek to simplify their supply chains, increase their speed to market, and reduce costs – all while benefitting from quality integrated system solutions. Our differentiated market offering is supported by significant sole- and single-source contract positions.
Current wording
We are focused on delivering innovative and customized solutions for our customers, with more than 300 multi-discipline engineers supporting our comprehensive in-house design and manufacturing capabilities. Our unique set of capabilities is supported by decades of experience across advanced material design, proprietary digital models, material science and testing, and manufacturing expertise. We believe that this collection of vertically integrated capabilities provides a strong value proposition for our customers who seek to simplify their supply chains, increase their speed to market, and reduce costs – all while benefiting from quality integrated system solutions. Our differentiated market offering is supported by significant sole- and single-source contract positions.
Previous wording
We currently operate as a corporation under the name Karman Holdings Inc. Prior to our initial public offering, we converted from a Delaware limited liability company named TCFIII Spaceco Holdings LLC. In the conversion, all of our outstanding equity interests were converted into shares of common stock of Karman Holdings Inc. The purpose of the Corporate Conversion was to reorganize our structure so that the entity that is offering our common stock to the public in this offering is a corporation rather than a limited liability company and so that our existing investors and new investors in this offering will own our common stock rather than equity interests in a limited liability company.
Current wording
We currently operate as a corporation under the name Karman Holdings Inc. Prior to our IPO, we converted from a Delaware limited liability company named TCFIII Spaceco Holdings LLC. In the conversion, all of our outstanding equity interests were converted into shares of common stock of Karman Holdings Inc. The purpose of the Corporate Conversion was to reorganize our structure so that the entity that offered our common stock to the public in our IPO was a corporation rather than a limited liability company and so that investors in the IPO owned our common stock rather than equity interests in a limited liability company.
Previous wording
Increased audit, review, investigation and general scrutiny by U.S. government agencies of performance under government contracts and compliance with the terms of those contracts and applicable laws could affect our operating results. Negative publicity and increased scrutiny of government contractors in general, including us, relating to government expenditures for contractor services and incidents involving the mishandling of sensitive or classified information as well as the increasingly complex requirements of the DoD and the United States intelligence community, including those related to cybersecurity, could impact our ability to perform in the markets we serve.
Current wording
Increased audit, review, investigation and general scrutiny by U.S. government agencies of performance under government contracts and compliance with the terms of those contracts and applicable laws could affect our operating results. Negative publicity and increased scrutiny of government contractors in general, including us, relating to government expenditures for contractor services and incidents involving the mishandling of sensitive or classified information as well as the increasingly complex requirements of the DoW and the U.S. intelligence community, including those related to cybersecurity, could impact our ability to perform in the markets we serve.
Previous wording
Our defense operations are affected by U.S. Department of Defense (“DoD”) budget and spending levels, changes in demand, changes in policy positions or priorities, the domestic and global political and economic environment, and the evolving nature of the global and national security threat environment. Changes in these budget and spending levels, policies, or priorities, which are subject to U.S. domestic and foreign geopolitical risks and threats, may impact our defense businesses, including the timing of and delays in U.S. government licenses and approvals for sales, the risk of sanctions, or other restrictions.
Current wording
Our defense operations are affected by DoW budget and spending levels, changes in demand, changes in policy positions or priorities, the domestic and global political and economic environment, and the evolving nature of the global and national security threat environment. Changes in these budget and spending levels, policies, or priorities, which are subject to U.S. domestic and foreign geopolitical risks and threats, may impact our defense businesses, including the timing of and delays in U.S. government licenses and approvals for sales, the risk of sanctions, or other restrictions.
Previous wording
We believe that our business is well positioned in areas that the DoD and other customers indicate are priorities for future defense spending, including those based on the 2023 National Security Strategy document, the 2024 U.S. National Security related budget and the National Defense Authorization Act (“NDAA”), and also the related Future Years Defense Program or five- year projection of the forces, resources and programs needed to support the DoD’s strategy and operations.
Current wording
We believe that our business is well positioned in areas that the DoW and other customers indicate are priorities for future defense spending, including those based on the 2023 National Security Strategy document, the 2024 U.S. National Security related budget and the National Defense Authorization Act (“NDAA”), and also the related Future Years Defense Program or five- year projection of the forces, resources and programs needed to support the DoW’s strategy and operations.
Previous wording
We generate our revenue primarily from the design, development and deployment of systems and subsystems (Propulsion Systems, Aerodynamic Interstage Systems, and Payload Protection and Deployment Systems) across three end markets (Hypersonics and Strategic Missile Defense, Missile and Integrated Defense Systems, and Space and Launch). We do not believe our revenues are subject to significant seasonal variations.
Current wording
We generate our revenue primarily from the design, development and deployment of systems and subsystems (Propulsion Systems, Aerodynamic Interstage Systems, and Payload Protection and Deployment Systems) across three end markets (Hypersonics and Strategic Missile Defense, Tactical Missiles and Integrated Defense Systems, and Space and Launch). We do not believe our revenues are subject to significant seasonal variations.
Previous wording
The increase in revenues for the year ended December 31, 2024 as compared to the year ended December 31, 2023 was primarily attributable to organic growth across all end-markets, Tactical Missile and Integrated Defense Systems, followed by Space and Launch and Missile and Hypersonics and Strategic Missile Defense.
Current wording
The increase in revenues for the year ended December 31, 2025 as compared to the year ended December 31, 2024 was primarily attributable to growth across all end-markets, Tactical Missiles and Integrated Defense Systems, followed by Hypersonics and Strategic Missile Defense and Space and Launch and Missile.
Previous wording
Cost of goods sold increased to $175,156,456 for the year ended December 31, 2023, from $145,364,015 for the year ended December 31, 2022. The $29,792,441, or 20.5%, increase in cost of goods sold was primarily a result of increased materials and labor costs.
Current wording
Cost of goods sold increased to $281.5 million for the year ended December 31, 2025, from $213.1 million for the year ended December 31, 2024. The $68.3 million, or 32.1%, increase in cost of goods sold was primarily a result of increased spending on materials and labor to support production growth.
Previous wording
General and administrative expenses increased to $44,420,816 for the year ended December 31, 2024 from $36,623,263 for the year ended December 31, 2023. General and administrative expenses and the related percentage changes for the year ended December 31, 2024 and 2023 were as follows:
Current wording
General and administrative expenses increased to $85.7 million for the year ended December 31, 2025 from $44.4 million for the year ended December 31, 2024. General and administrative expenses and the related percentage changes for the year ended December 31, 2025 and 2024 were as follows:
Previous wording
Depreciation and amortization expense increased to $24,130,519 for the year ended December 31, 2024 compared to $20,432,034 for the year ended December 31, 2023. The increase in amortization expense for the year ended December 31, 2024, is primarily attributable to the amortization of $18,300,000 of newly acquired intangible assets from the RMS acquisition on February 14, 2024. The acquired RMS intangible assets will be amortized over a weighted average period of 12.1 years. Depreciation of fixed assets used in the production of goods sold is included in cost of goods sold.
Current wording
Depreciation and amortization expense increased to $31.4 million for the year ended December 31, 2025 compared to $24.1 million for the year ended December 31, 2024. The increase was primarily attributable to the current period amortization of $100.1 million of newly acquired intangible assets from the acquisition of Metal Technology Inc. (“MTI”) on April 2, 2025, the acquisition of Industrial Solid Propulsion (“ISP”) on May 28, 2025 and the acquisition of Five Axis Industries, Inc. (“Five Axis”) on October 28, 2025. The acquired MTI, ISP and Five Axis intangible assets will be amortized over a weighted average period of 11.0, 10.7 and 13.0 years respectively. Depreciation of fixed assets used in the production of goods sold is included in cost of goods sold.
Previous wording
Interest expense, net for the year ended December 31, 2024 increased by $2,865,898, or 6.0%, to $50,732,903 compared to $47,867,005 during the year ended December 31, 2023. This increase in interest expense is primarily attributable to the $35,000,000 increase in borrowings under the TCW Term Note incurred to finance the acquisition of RMS on February 16, 2024. Both the Revolving Credit Facility and TCW Term Note payable are variable interest rate loans with an applicable spread. For additional information related to debt, see Note 7, Debt, in the Notes to the Consolidated Financial Statements.
Current wording
Interest expense, net for the year ended December 31, 2025 decreased by $6.2 million, or 12.2%, to $44.6 million compared to $50.7 million during the year ended December 31, 2024. Both the Revolving Credit Facility and Term Note payable are variable interest rate loans with an applicable spread. The decrease was primarily driven by a lower year-over-year interest rate, partially offset by the $2.5 million write-off of unamortized issuance costs related to the extinguishment of the TCW Term Note in the second quarter of 2025. For additional information related to debt, see Note 6, Debt, in the Notes to the Consolidated Financial Statements.
Previous wording
Other income (expense) for the year ended December 31, 2024 and 2023 was $1,502,156 and $563,772, respectively. The difference between periods was attributable to a settlement of a shareholder note in the year ended December 31, 2024.
Current wording
Other income for the year ended December 31, 2025 and 2024 was $4.1 million and $1.5 million, respectively. The difference between periods was attributable to the write-off of a contingent consideration liability during the year ended December 31, 2025.
Previous wording
The provision for income taxes was ($1,627,963) for the year ended December 31, 2024 compared to a tax benefit of $3,168,821 for the year ended December 31, 2023. The increase in provision for income taxes was attributable to substantially larger pre-tax book income during the year ended December 31, 2024. For additional information regarding provisions for taxes, see Note 14, Provision for Income Taxes, in the Notes to the Consolidated Financial Statements.
Current wording
The provision for income taxes was $15.2 million and $1.6 million for the year ended December 31, 2025 and 2024, respectively. The increase in provision for income taxes was attributable to substantially larger pre-tax book income during the year ended December 31, 2025 and other discrete items, including the change in entity classification, non-deductible officers’ compensation, and interest and penalties related to prior year tax returns and uncertain tax positions. For additional information regarding provisions for taxes, see Note 13, Provision for Income Taxes, in the Notes to the Consolidated Financial Statements.
Previous wording
We measure our business using both key financial and operating data including key performance indicators (“KPIs”) and non-GAAP financial measures and use the following metrics to manage our business, monitor results of operations and ensure proper allocation of capital: (i) Revenue, (ii) Funded Backlog, (iii) EBITDA, (iv) Adjusted EBITDA and (v) Adjusted EBITDA Margin. We believe that these financial performance metrics represent the primary drivers of value enhancement, balancing both short and long-term indicators of increased shareholder value. These are the metrics we use to measure our results and evaluate our business and related contract performance.
Current wording
We measure our business using both key financial and operating data including key performance indicators (“KPIs”) and non-GAAP financial measures and use the following metrics to manage our business, monitor results of operations and ensure proper allocation of capital: (i) Revenue, (ii) Backlog, (iii) EBITDA, (iv) Adjusted EBITDA and (v) Adjusted EBITDA Margin. We believe that these financial performance metrics represent the primary drivers of value enhancement, balancing both short and long-term indicators of increased stockholder value. These are the metrics we use to measure our results and evaluate our business and related contract performance.
Previous wording
Funded Backlog - Represents the total value of existing contracts, less amounts previously invoiced. Contract types include but are not limited to purchase orders, long term agreements and contractual authorization to proceed.
Current wording
Backlog - Represents the total value or current estimated value of existing contracts, less amounts previously invoiced. Contract types include but are not limited to purchase orders, long term agreements and contractual authorization to proceed. (Backlog was previously referred to as funded backlog. No change to the historical dollar amount presented to the table above.)
Previous wording
EBITDA/Adjusted EBITDA - We define EBITDA as our net income before income taxes, depreciation and amortization and interest expense. References to Adjusted EBITDA refer to EBITDA plus, as applicable for each period any non-cash share-based compensation expenses, including non-cash gains and losses on equity, non-cash gains and losses on derivative instruments associated with equity, termination expenses, and personnel expenses from discontinued operations. Additionally, Adjusted EBITDA excludes certain nonrecurring costs that management excludes in contemplation of budget decisions and are not costs of operating the business such as entity wide re-branding initiatives or acquisition integration costs. Adjusted EBITDA excludes the costs associated with lender and administrative agent fees associated with one-off amendments, as these are not directly related to the operations of the business and are non-recurring. Lastly, Management excludes other non-recurring costs including net gains from disposition of assets, non-cash gains and losses from any hedging arrangements, non-cash impairment losses, business interruption insurance proceeds, and any non-recurring transaction expenses.
Current wording
Adjusted EBITDA refers to EBITDA plus, as applicable for each period, adjustments for certain items management believes are not indicative of ongoing operations. Adjusted EBITDA excludes non-cash share-based compensation expenses. Additionally, Adjusted EBITDA excludes certain nonrecurring costs that management excludes in contemplation of budget decisions and are not costs of operating the business, such as entity wide re-branding initiatives or acquisition integration costs, and lender and administrative agent fees associated with discrete amendments. Lastly, Adjusted EBITDA excludes other non-recurring costs including gains or losses from disposition of assets, non-cash impairment losses, non-recurring transaction expenses and other charges or gains that the Company believes are not part of the ongoing operations of its business. The resulting expense or benefit from these other non-recurring costs is inconsistent in amount and frequency.
Previous wording
Adjusted EBITDA and Adjusted EBITDA Margin are used to facilitate a comparison of the ordinary, ongoing and customary course of our operations on a consistent basis from period to period and provide an additional understanding of factors and trends affecting our business. Adjusted EBITDA and Adjusted EBITDA Margin are driven by changes in volume, performance, contract mix and general and administrative expenses and investment levels. Performance, as used in this definition, refers to changes in profitability and is primarily based on adjustments to estimates at completion on individual contracts. These adjustments result from increases or decreases to the estimated value of the contract, the estimated costs to complete the contract, or both. These measures therefore assist management and our board and may be useful to investors in comparing our operating performance consistently over time as they remove the impact of our capital structure, asset base and items outside the control of the management team and expenses that do not relate to our core operations. Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similarly titled non-GAAP measures used by other companies as other companies may have calculated the measures differently. The reconciliation of EBITDA and Adjusted EBITDA to net income (loss) is provided below:
Current wording
Adjusted EBITDA and Adjusted EBITDA Margin are used to facilitate a comparison of the ordinary, ongoing and customary course of our operations on a consistent basis from period to period and provide an additional understanding of factors and trends affecting our business. Adjusted EBITDA and Adjusted EBITDA Margin are driven by changes in volume, performance, contract mix and general and administrative expenses and investment levels. Performance, as used in this definition, refers to changes in profitability and is primarily based on adjustments to estimates at completion on individual contracts. These adjustments result from increases or decreases to the estimated value of the contract, the estimated costs to complete the contract, or both. These measures therefore assist management and our board and may be useful to investors in comparing our operating performance consistently over time as they remove the impact of our capital structure, asset base and items outside the control of the management team and expenses that do not relate to our core operations. Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similarly titled non-GAAP measures used by other companies as other companies may have calculated the measures differently.
Previous wording
Depreciation and amortization expense includes $8,828,596, $6,747,180 and $4,506,464 of allocated depreciation and amortization from cost of goods sold for the years ended December 31, 2024, 2023 and 2022, respectively.
Current wording
Depreciation and amortization expense includes $11.3 million, $8.8 million and $6.7 million of allocated depreciation and amortization from cost of goods sold for the years ended December 31, 2025, 2024 and 2023, respectively.
Previous wording
Represents legal and due diligence fees incurred in connection with planned and completed acquisitions, which are required to be expensed as incurred. During the periods presented, these costs were incurred for due diligence and legal fees related to an acquisition of equipment and intangible assets. Additionally, the Company incurred certain professional service fees related to its IPO that did not meet the requirements to be deferred issuance costs, these costs are considered non-recurring and outside the ordinary course of business, and therefore are not indicative of ongoing operating performance.
Current wording
Represents legal and due diligence fees incurred in connection with planned and completed acquisitions, which are required to be expensed as incurred. For the year ended December 31, 2025, these expenses related to the MTI, ISP, Five Axis, Seemann Composites and MSC acquisitions. Additionally, the Company incurred certain professional service fees related to its IPO and secondary offering that did not meet the requirements to be deferred issuance costs. These costs are considered non-recurring and outside the ordinary course of business, and therefore are not indicative of ongoing operating performance.
Previous wording
These costs include company-wide system implementation expenses and Company re-branding costs. This category also includes post-acquisition integration costs, and employee expenses related to acquisitions or restructuring activities.
Current wording
Includes company-wide system implementation expenses company re-branding costs and compliance efforts. This category also includes post-acquisition integration costs, and employee expenses related to acquisitions or restructuring activities.
Previous wording
Reflects non-recurring lender fees associated with one-off amendments to the Company’s credit agreement, separate from ongoing administrative fees.
Current wording
Reflects non-recurring lender fees associated with discrete amendments to the Company’s credit agreement, separate from ongoing administrative fees and are not indicative of ongoing business operations.
Previous wording
Reflects non-cash share-based compensation expenses associated with the Company's P Units.
Current wording
Reflects share-based compensation expenses associated with the Company’s P Units and Phantom Units. These Units were fully vested in connection with the completion of the Company’s IPO in February 2025.
Previous wording
The majority of our revenue is generated pursuant to written contractual arrangements to design, develop, manufacture and/or modify complex products, and to provide related engineering, technical and other services according to customer specifications. In most cases, goods or services provided under the Company’s contracts are accounted for as a single performance obligation due to the complex and integrated nature of its products and services. These contracts generally require significant integration of a group of goods and services to deliver a combined output. These contracts may be cost-plus fixed price or time and materials. Revenue is recognized over time using the input method, by tracking costs incurred, which measures progress toward completion and control is transferred as the Company performs its contractual obligations due to the performance having no alternative use and the Company’s enforceable right to payment. The Company estimates profit on these contracts as the difference between total estimated revenues and total estimated costs at completion (EAC) and recognizes profit as costs are incurred. Significant judgment is used to estimate total costs at completion. EAC’s are estimated using historical actual margins as a percentage of revenue, applied to open jobs. Unforeseen events and circumstances can alter the estimate of the costs and potential benefits associated with a particular contract. Changes in job performance, job conditions, estimated profitability, and final contract settlements may result in revisions to costs and income. The Company recognizes changes in contract estimates on a cumulative “catch-up” basis in the period in which the changes are identified. Such changes in contract estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in a prior period. Changes in contract estimates may also result in the reversal of previously recognized revenue if the current estimate differs from the previous estimate.
Current wording
The Company estimates profit on these contracts as the difference between total estimated revenues and total estimated costs at completion (EAC) and recognizes profit as costs are incurred. Significant judgment is used to estimate total costs at completion. EAC’s are estimated using historical actual margins as a percentage of revenue, applied to open jobs. Unforeseen events and circumstances can alter the estimate of the costs and potential benefits associated with a particular contract.Changes in job performance, job conditions, estimated profitability, and final contract settlements may result in revisions to costs and income. The Company recognizes changes in contract estimates on a cumulative “catch-up” basis in the period in which the changes are identified. Such changes in contract estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in a prior period. Changes in contract estimates may also result in the reversal of previously recognized revenue if the current estimate differs from the previous estimate.
Previous wording
For the impairment test, we first assess qualitative factors, macroeconomic conditions, industry and market considerations, triggering events, cost factors, and overall financial performance, to determine whether it is necessary to perform a quantitative goodwill impairment test. Alternatively, we may bypass the qualitative assessment for some or all of its reporting units and apply the quantitative impairment test. If determined to be necessary, the quantitative impairment test shall be used to identify goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any). For the quantitative impairment test we estimate the fair value by weighting the results from the income approach and the market approach. These valuation approaches consider a number of factors that include, but are not limited to, prospective financial information, growth rates, terminal value, discount rates, and comparable multiples from publicly traded companies in our industry and require us to make certain assumptions and estimates regarding industry economic factors and future profitability of its business. For purposes of testing goodwill for impairment, we operate as a single reporting unit. Based upon the annual goodwill impairment testing performed in the fourth quarter of each year, we determined that there was no impairment of our goodwill during the years ended December 31, 2024, 2023, or 2022.
Current wording
Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets. We test goodwill for impairment annually as of October 1 of our fiscal year, or when events or circumstances indicates goodwill might be impaired. For purpose of testing goodwill for impairment, we operate as a single reporting unit, which is consistent with our single operating segment. In performing the impairment test, we first assess qualitative factors, including macroeconomic conditions, industry and market considerations, triggering events,cost factors, and overall financial performance, to determine whether it is necessary to perform a quantitative goodwill impairment test. Alternatively, we may bypass the qualitative assessment for some or all of our reporting unit and apply the quantitative impairment test. If determined to be necessary, the quantitative impairment test shall be used to identify goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any). For the quantitative impairment test, we estimate the fair value by weighting the results of the income approach and the market approach. These valuation approaches consider a number of factors that include, but are not limited to, prospective financial information, growth rates, terminal value, discount rates, and comparable multiples from publicly traded companies in our industry and require us to make certain assumptions and estimates regarding industry economic factors and future profitability of our business. Based upon the annual goodwill impairment testing performed in the fourth quarter of each fiscal year, we determined that there was no impairment of our goodwill during the years ended December 31, 2025, 2024, or 2023.
Previous wording
In April, 2025, the Company entered into a new Credit Agreement (the “Citi Credit Agreement”) by and among Karman, the lenders from time to time party thereto and Citibank, N.A. (“Citi”), as the administrative agent for the lenders, and, substantially contemporaneously therewith, certain direct and indirect subsidiaries of Karman terminated all outstanding commitments and repaid all outstanding obligations under the TCW Credit Agreement and the Citi Credit Agreement provided for the issuance of a new $300.0 million term loan and $50.0 million revolving line of credit. The new term loan will mature on April 1, 2032 and the new revolving line of credit will mature on April 30, 2030.
Current wording
On April 1, 2025, the Company entered into a new Credit Agreement (as amended from time to time, the “Citi Credit Agreement”) by and among Karman, the lenders from time to time party thereto and Citibank, N.A. (“Citi”), as the administrative agent for the lenders, and, substantially contemporaneously therewith, certain direct and indirect subsidiaries of Karman terminated all outstanding commitments and repaid all outstanding obligations under the TCW Credit Agreement and the Citi Credit Agreement provided for the issuance of a new $300.0 million term loan and $50.0 million revolving line of credit. The new term loan will mature on April 1, 2032 and the new revolving line of credit will mature on April 30, 2030.
Previous wording
We lease certain facilities and equipment under financing and operating leases that expire at various dates through 2041. Future aggregate rental payments under financing and operating leases as of December 31, 2024 were as follows: $12,748,968 in 2025, $12,466,055 in 2026, $12,634,446 in 2027, $12,289,212 in 2028, $9,690,865 in 2029 and $91,386,623 thereafter. See Note 8, Leases, of the Notes to the Consolidated Financial Statements for information pertaining to future minimum lease payments relating to our operating and finance lease obligations.
Current wording
See Note 8, Leases, of the Notes to the Consolidated Financial Statements for information regarding our operating and finance lease obligations.
Previous wording
We are currently an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Current wording
In 2026, we expect to no longer qualify as an ‘emerging growth company’ as defined in the JOBS Act. Until that time, we have elected to use the extended transition period for adopting new or revised accounting standards, which permits us to delay adoption until the dates applicable to private companies. Once we cease to qualify as an emerging growth company, we will be required to adopt all new or revised accounting standards as of their applicable public‑company effective dates. As a result, our financial statements may not be comparable to those of companies that have already adopted such standards in accordance with public‑company reporting requirements.
Previous wording
We are not currently required to comply with the SEC’s rules implementing Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a public company, we will be required to comply with the SEC’s rules implementing Section 302 of the Sarbanes-Oxley Act, which will require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. Though we will be required to disclose material changes made to our internal controls and procedures on a quarterly basis, we will not be required to make our first assessment of the effectiveness of our internal control over financial reporting under Section 404 until our second annual report on Form 10-K after we become a public company.
Current wording
We are not currently required to comply with the SEC’s rules implementing Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Since becoming a public company, we are required to comply with the SEC’s rules implementing Section 302 of the Sarbanes-Oxley Act, which require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. Though we are required to disclose material changes made to our internal controls and procedures on a quarterly basis, we are not required to make our first assessment of the effectiveness of our internal control over financial reporting under Section 404 until our second annual report on Form 10-K after becoming a public company.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
EBITDA refers to net income before income taxes, depreciation and amortization and interest expense.
Current report — wording carried from elsewhere
The majority of our revenue is generated pursuant to written contractual arrangements to design, develop, manufacture and/or modify complex products, and to provide related engineering, technical and other services according to customer specifications. In most cases, goods or services provided under the Company’s contracts are accounted for as a single performance obligation due to the complex and integrated nature of its products and services. These contracts generally require significant integration of a group of goods and services to deliver a combined output. These contracts may be cost-plus, fixed price or time and materials. Revenue is recognized over time using the input method, by tracking costs incurred, which measures progress toward completion and control is transferred as the Company performs its contractual obligations due to the performance having no alternative use and the Company’s enforceable right to payment.
Rearranged previous paragraphs (7)
Previous report — wording carried elsewhere
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Previous report — wording carried elsewhere
Comparison of the Years Ended December 31, 2023 and 2022
Previous report — wording carried elsewhere
The following table sets forth, for the years ended December 31, 2023 and 2022, certain operating data of the Company, including presentation of the changes in amounts between reporting periods:
Previous report — wording carried elsewhere
As described in additional detail below, the results of operations include the following disaggregation of product mix:
Previous report — wording carried elsewhere
Cost of Goods Sold and Gross Profit
Previous report — wording carried elsewhere
General and administrative expenses increased to $36,623,263 for the year ended December 31, 2023 from $30,036,084 for the year ended December 31, 2022. General and administrative expenses and the related percentage changes for the years ended December 31, 2023 and 2022 were as follows:
Previous report — wording carried elsewhere
Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets. We test goodwill for impairment annually during the fourth quarter of our fiscal year or when events or circumstances change in a manner that indicates goodwill might be impaired.