Comtech Telecommunications (CMTL) risk factors, FY2026 10-K

Global Risks

1. 01New and ongoing challenges relating to current supply chain constraints, including for satellite ground station and troposcatter components, and impacts from inflation and any new or increased tariffs on imports and other trade restrictions, could adversely impact our revenue, gross margins and financial results23% rewritten
2. 02If global economic business and political conditions deteriorate as compared to the current environment, it could have a material adverse impact on our business outlook and our business, operating results and financial condition
3. 03We have significant operations in Arizona, Florida, California, Washington State, Maryland and other locations which could be materially and adversely impacted in the event of a terrorist attack and government responses thereto or significant disruptions (including natural disasters) to our business

Transformation Plan Risks

1. 04We may fail to realize all of the anticipated benefits of our strategic and operational initiatives, or those benefits may take longer to realize than expected
2. 05Our transformation plan may require a substantial portion of the time and attention of our management team, which may have an adverse effect on our business and results of operations, and we may face increased levels of employee attrition

Business Risks

1. 06Our cash and liquidity projections may not materialize as anticipated92% rewritten
2. 07Our business outlook is difficult to forecast and operating results are subject to significant fluctuations and are likely to be volatile
3. 08Our backlog is subject to customer cancellation or modification and such cancellations or modifications could result in a decline in sales and increased provisions for excess and obsolete inventory
4. 09Our efforts to invoice and collect unbilled accounts receivable may be unsuccessful67% rewritten
5. 10A change in our relationship with our large wireless carrier customers could have a material adverse effect on our business, results of operations and financial condition
6. 11Disputes with our subcontractors or key suppliers or their inability to deliver on a timely basis, could cause delays in our performance
7. 12Our estimates regarding future warranty obligations may change based on a variety of factors, impacting future cost of revenue

Risks Related to Satellite and Space Communications Segment and Strategic Transaction

1. 13The U.S. Government's budget deficit, as well as a breach of the debt ceiling, could have an adverse impact on our operations93% rewritten
2. 14Our contracts with the U.S. government are subject to unique business, commercial and government audit risks
3. 15Our dependence on sales to international customers exposes us to unique business, commercial and export compliance risks
4. 16The announcement and pendency of the proposed Strategic Transaction with an affiliate of Gilat Satellite Networks Ltd could adversely affect our business, financial results and operationsNew
5. 17Failure to complete the proposed Strategic Transaction with an affiliate of Gilat Satellite Networks Ltd could adversely affect our business and the market price of shares of our common stockNew
6. 18If the pending sale of most of our Satellite and Space Communications business is completed, we may not achieve the anticipated benefits of the Strategic Transaction, and the Strategic Transaction may expose us to new risksNew

Strategic Growth Risks

1. 19We face a number of risks relating to the expected long-term growth of our business
2. 20Loss of our executive officers or other key personnel or other changes to our management team could disrupt our operations and growth plans or harm our business29% rewritten
3. 21We have indebtedness outstanding under a Credit Facility and Subordinated Credit Facility, and may incur substantial additional indebtedness in the future. We may not be able to service our debt obligations in the future and we must maintain compliance with various covenants that impose restrictions on our business
4. 22As part of our transformation plan, we explored strategic alternatives for our various businesses and product lines, including the potential sale or divestiture of assets or businesses. Such process led to our entering of the Strategic Transaction on June 14, 2026
5. 23Our investments in recorded goodwill and other intangible assets could be impaired as a result of future business conditions, a deterioration of the global economy or if we change our reporting unit structure for any reason43% rewritten
6. 24Net Intangibles with Finite Lives

Legal, Regulatory and Litigation Risks

1. 25Changes in U.S. federal, state and local and foreign tax law could adversely affect our business and financial condition
2. 26The final determination of tax examinations and any related litigation could be materially different than what is reflected in historical income tax provisions and accruals52% rewritten
3. 27We may be subject to environmental liabilities
4. 28The success of our business is dependent on compliance with FCC rules and regulations and similar foreign, state and local laws and regulations
5. 29Regulation of the mobile communications industry and VoIP is evolving, and unfavorable changes or our failure to comply with existing and potential new legislation or regulations could harm our business and operating results
6. 30Ongoing compliance with the provisions of securities laws, related regulations and financial reporting standards could unexpectedly materially increase our costs and compliance related expenses30% rewritten
7. 31A material weakness is 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 annual or interim financial statements will not be prevented or detected on a timely basis
8. 32Indemnification provisions in our contracts could have a material adverse effect on our consolidated results of operations, financial position or cash flows
9. 33We are, from time to time, involved in commercial disputes and civil litigation relating to our businesses
10. 34Protection of our intellectual property is limited and pursuing infringers of our patents and other intellectual property rights can be costly
11. 35Third parties may claim we are infringing their intellectual property rights and we could be prevented from selling our products, or suffer significant litigation expense, even if these claims have no merit

Competitive Risks

1. 36Our business is highly competitive, we are reliant upon the success of our partners, and some of our competitors have significantly greater resources than we do, which could result in a loss of customers, market share and/or market acceptance
2. 37We rely upon various third-party companies and their technology to provide services to our customers and if we are unable to obtain such services at reasonable prices, or at all, our gross margins and our ability to provide the services of our wireless applications business could be materially adversely affected
3. 38Because our software may contain defects or errors, and our hardware products may incorporate defective components, our sales could decrease if these defects or errors adversely affect our reputation or delay shipments of our products

Risks Related to our Common Stock

1. 39Our stock price is volatile
2. 40Future issuances of our shares of common stock could dilute a stockholder's ownership interest in Comtech and reduce the market price of our shares of common stock
3. 41Actions of activist stockholders could impact the pursuit of our business strategies and adversely affect our results of operations, financial condition and/or share price
4. 42We have taken a number of actions that could have the effect of discouraging, delaying or preventing a merger, acquisition or divestiture involving Comtech that our stockholders may consider favorable