AVNW 10-K & 10-Q changes, risk factors and insider trading

•Due to the volume of our international sales, we may be susceptible to a number of political, economiceconomic, financial and geographic risks that could harm our business.

•Changes in tax laws, treaties, rulings, regulations or agreements, or their interpretation in any country in which we operate; theany loss of a majormaterial tax dispute; a successful challenge to our operating structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries; or other factors could cause volatility in our effective tax rate and could adversely affect our operating results.

•Increased attention to Environmental, Social, and Governance (“ESG”) matters, conservation measures and climate change issues has contributed to an evolving state of environmental regulation, which could impact our results of operations, financial or competitive position and may adversely impact our business.

•Anti-takeover provisions of Delaware law, our Tax Benefit Preservation Plan (the “Plan”),Plan, and provisions in our Amended and Restated Certificate of Incorporation, as amended, and Amended and Restated Bylaws could make a third-party acquisition of us difficult.

The opticalwireless transporttelecommunications networking equipment marketindustry is characterized by rapid technological change, changes in customer requirements andrequirements, evolving industry standards.standards and regulatory requirements. We continually invest in research and development to sustain or enhance our existing products, but the introduction of new communications technologies and the emergence of new industry standards or requirements could render our products obsolete. In particular, the continued expansion of fiber-optic networks, the deployment of advanced 5G and future-generation wireless technologies, and the development of alternative wireless transport solutions such as free-space optics and satellite-based connectivity may reduce demand for traditional microwave backhaul equipment, which represents a significant portion of our product portfolio. If the addressable market for microwave and millimeter-wave transport solutions contracts more rapidly than anticipated due to the accelerated deployment of these competing technologies, our revenue, margins, and growth prospects could be materially adversely affected. Further, in developing our products, we have made, and will continue to make, assumptions with respect to which standards or requirements will be adopted by our customers and competitors. If the standards or requirements adopted by our prospective customers are different from those on which we have focused our efforts, market acceptance of our products would be reduced or delayed, and our business would be harmed.

Our success and ability to invest and grow depend largely on our ability to attract and retain highly skilled technical, professional, managerial, sales and marketing personnel. Historically, competition for these key personnel has been intense. The loss of services of any of our key personnel,personnel and their services (including to competitors), the inability to retain and attract qualified personnel in the future, a failure of our succession planning, or delays in hiring required personnel, particularly engineering and sales personnel, or the loss of key personnel to competitors could make it difficult for us to meet key objectives, such as timely and effective product introductions and financial goals.goals, and adversely impact our business.

If we fail to accurately predictforecast our manufacturing requirements or forecastanticipate customer demand, including demand driven by evolving technologies such as AI, data center infrastructure, and other emerging applications, we may incur additional costs of manufacturing, and our gross margins and financial results could be adversely affected. If we overestimate our requirements, including by misjudging the pace of adoption or the actual infrastructure buildout required to support AI workloads, high-performance computing, or data center expansion, our contract manufacturers may experience an oversupply of components and assess us charges for excess or obsolete components that could adversely affect our gross margins. The rapid evolution of AI-related applications and data center architectures makes such demand particularly difficult to forecast with precision, and customer requirements may shift materially from initial projections. If we underestimate our requirements, our contract manufacturers may have inadequate inventory or components, which could interrupt manufacturing and result in higher manufacturing costs, shipment delays, damage to customer relationships and/or our payment of penalties to our customers. Our contract manufacturers also have other customers and may not have sufficient capacity to meet all of their customers’ needs, including ours, particularly during periods of excessheightened demand.demand such as those driven by large-scale AI infrastructure investments or data center build-outs.

Under Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”), we are required to evaluate and determine the effectiveness of our internal controlscontrol over financial reporting. IneffectiveEffective internal controlcontrols overare necessary for us to provide reliable financial reporting could result in errors in our financial statements, reduce investor confidence,reports and adverselyto affecthelp ourprevent stockfraud. price.Although As disclosed in Part II, Item 9A “Controls and Procedures” in this Form 10-K, wemanagement concluded that our internal control over financial reporting was not effective foras theof fiscalJuly year3, ended2026, Junewe 27,have 2025, due to certainhad material weaknesses identifiedin relatedprior tofiscal years. Maintaining an ineffectiveeffective control environment requires significant judgment, resources, and ongoing monitoring. Internal control activities.over Wefinancial implementedreporting certainhas correctiveinherent measureslimitations and may not prevent or detect all misstatements, errors, or instances of fraud. Changes in our business, including acquisitions, organizational changes, personnel turnover, implementation of new systems, or other growth initiatives, may place additional demands on our internal control framework. As a result, control deficiencies may occur in the fourthfuture. quarter of fiscal 2024, including hiring a new CFO and backfilling vacancies resulting from key finance and accounting personnel turnover. In fiscal 2025, we implemented several internal control enhancements and hired a new Global Controller and other key financial positions. However, due to the material weaknesses described above, there is a reasonable possibility that our existing controls would not have detected a material misstatement in a timely manner if it were to be material. These measures are part of a process of remediating the material weaknesses that is under way and that we believe will remediate the material weaknesses. However, ifIf we are unable to remediatemaintain theeffective materialinternal weaknessescontrol inover anfinancial appropriate and timely manner,reporting, or if we identify additional control deficiencies that individually or togetherin the aggregate constitute significant deficiencies ora material weaknesses,weakness, our ability to accurately record, process, and report financial information and, consequently, our ability toand prepare timely financial statements within required time periods, could be adversely affected. OurIn failureaddition, to maintain effectiveineffective internal control over financial reportingcontrols could result in restatements of our financial statements, violations of applicable securities laws andor stock exchange listing requirements;requirements, subjectregulatory usinvestigations, toloss litigationof investor confidence, increased compliance costs, and investigations; negatively affect investor confidencedeclines in our stock price, any of which could materially adversely affect our business, financial statements;condition, results of operations, and adversely impact our stock price and abilityaccess to access capital markets.

Changes in tax laws, treaties, rulings, regulations or agreements, or their interpretation in any country in which we operate; theany loss of a majormaterial tax dispute; a successful challenge to our operating structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries; or other factors could cause volatility in our effective tax rate and could adversely affect our operating results.

•changes in domestic or international tax laws, treaties, rulings, regulations or agreements or the interpretation of such tax laws, treaties, rulings, regulations or agreements, including the impact of the Tax Cuts and Jobs Act of 2017 and any new administrationsagreements;

•the resolution of issues arising from any future tax audits with various tax authorities, including theany loss of a majormaterial tax dispute;

•localthe taxpotential for an authority challengingto challenge our operating structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries;

•taxes that may be incurred upon a repatriation of cash from foreign operations.jurisdictions.

Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”) imposes an annual limitation on the amount of taxablenet incomeoperating loss (“NOL”) carryforwards and certain other tax attributes that may be used to offset taxable income if a corporation experiences an “ownership change” as defined in Section 382 of the Code. An ownership change occurs when a company’s “five-percent shareholders” (as defined in Section 382 of the Code) collectively increase their ownership in the company by more than 50 percentage points (by value) over a rolling three-year period. Additionally, various states have similar limitations on the use of state netNOL operating losses (“NOL”)carryforwards following an ownership change.

We believe that these Tax Benefits are a valuable asset for us. The Amended and Restated Tax Benefit Preservation Plan (the “Plan”),Plan, dated as of August 27, 2020, and amended as of February 28, 2023, and, if approved by the Company’s stockholders, as amended further as of February 27, 2026 (our “Tax Benefit Preservation Plan”), is intended to protect our Tax Benefits during the effective period of the Tax Benefit Preservation Plan. The amendedfirst amendment to the Tax Benefit Preservation Plan was approved at the Company’s November 2023 Annual Meeting of Stockholders, which extended the final expiration date of the Tax Benefit Preservation Plan until March 3, 2026. The second amendment to the Tax Benefit Preservation Plan is expected to be submitted to the Company’s stockholders for ratification at the Company’s 2026 Annual Meeting of Stockholders. If the second amendment to the Tax Benefit Preservation Plan is approved at the Company’s 2026 Annual Meeting of Stockholders, the final expiration date of the Tax Benefit Preservation Plan will be extended until March 3, 2029. If stockholder approval is not obtained at such meeting, the Company anticipates terminating the Tax Benefit Preservation Plan at the close of business on the date that the voting results are certified. Although the Tax Benefit Preservation Plan is intended to reduce the likelihood of an “ownership change” that could adversely affect us, there is no assurance that the restrictions on transferability in the Tax Benefit Preservation Plan will prevent all transfers that could result in such an “ownership change”.

The Tax Benefit Preservation Plan could make it more difficult for a third party to acquire, or could discourage a third party from acquiring, us or a large block of our common stock. A third party that acquires 4.9% or more of our common stock could suffer substantial dilution of its ownership interest under the terms of the Tax Benefit Preservation Plan through the issuance of common stock or common stock equivalents to all stockholders other than the acquiring person.

Our ability to compete will depend, in part, on our ability to obtain and enforce intellectual property protection for our technology in the U.S. and internationally. We rely upon a combination of trade secrets, trademarks, copyrights, patents, contractual rights and technological measures to protect our intellectual property rights from infringement, misappropriation or other violations to maintain our brand and competitive position. We also make business decisions about when to seek patent protection for a particular technology and when to rely upon trade secret protection, and the approach we select may ultimately prove to be inadequate. With respect to patents, we cannot be certain that patents will be issued as a result of any currently pending patent application or future patent applications, or that any of our patents, once issued, will provide us with adequate protection from competing products or intellectual property owned by others. For example, issued patents may be circumvented or challenged, declared invalid or unenforceable or narrowed in scope. With respect to trade secret protections, we run the risk that others could independently develop competing or similar technologies allowing others to develop products without taking a license from us if our other intellectual property rights are insufficient to prevent such unlicensed development and deployment of these products. Furthermore, we may not be able to prevent infringement, misappropriation and unauthorized, use of our owned and exclusively-licensed intellectual property. We also cannot provide assurances that the protection provided to our intellectual property by the laws and courts of particular nations will be substantially similar to the protection and remedies available under U.S. law. Furthermore, we cannot provide assurances that third parties will not assert infringement claims against us in the U.S. or based on intellectual property rights and laws in other nations that are different from those established in the U.S.

Our business is subject to changing regulation of corporate governance, public disclosure and anti-bribery measuresmeasures, which have resulted in increased costs and may continue to result in additional costs or potential liabilities in the future.

We are subject to rules and regulations of federal and state regulatory authorities, The NASDAQ Stock Market LLC (“NASDAQ”) and financial market entities charged with the protection of investors and the oversight of companies whose securities are publicly traded, and foreign and domestic legislative bodies. During the past few years, theseThese entities, including the Public Company Accounting Oversight Board, the SEC, NASDAQ and several foreign governments, have issuedissued, requirements, lawsmodified and regulationsproposed, and continue to developissue, additionalmodify and propose, requirements, laws and regulations, which continue to evolve in scope and complexity, most notably SOX, and recent laws and regulations regarding bribery and unfair competition, including the SEC’s recently-approved (though currently paused, pending litigation) rules relating to the disclosure of climate-related information.information (for which the SEC has proposed rescission). Our efforts to comply with these requirements and regulations and prepare for compliance with proposed requirements and regulations have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of substantial management time and attention from revenue-generating activities to compliance activities.

Because our products are used in critical communications networks, we may be subject to significant liability claims if our products do not work properly. We warrant to our current customers that our products will operate in accordance with our product specifications. If our products fail or are alleged to fail to conform to these specifications, our customers could require us to remedy the purported failure or could assert claims for damages. The provisions in our agreements with customers that are intended to limit our exposure to liability claims may not preclude all potential claims. In addition, any insurance policies we have may not adequately limit our exposure with respect to such claims. Liability claims could require us to spend significant time and money in litigation or to pay significant damages. Any such claims, whether or not successful, would be costly and time-consuming to defend, and could divert management’s attention and seriously damage our reputation and our business.

Environmental, health and safety regulations govern the manufacture, assembly and testing of our products, including without limitation regulations governing the emission of pollutants and the use, remediation, and disposal of hazardous materials (including electronic wastes). Such laws and regulations include the European Union’s Restriction of Hazardous Substances Directive (“RoHS”) and the Waste Electrical and Electronic Equipment Directive (“WEEE”), as implemented by European Union member states. Our failure or the failure of our suppliers or contract manufacturers to properly manage the use, transportation, emission, discharge, storage, recycling or disposal of waste generated from our operations could subject us to increased compliance costs or liabilities such as fines and penalties.penalties, Weas maywell alsoas beimpose subjectrestrictions upon our ability to costsmanufacture andour liabilities for environmental clean-up costs on sites owned by us, sites previously owned by us,products or treatmentlimit andour disposal of wastes attributableability to usexport fromour pastproducts operations, underbeyond the Comprehensivedomestic EnvironmentalUnited Response, Compensation and Liability Act or equivalent laws. Existing and future environmental regulations may additionally restrict our and our suppliers’ use of certain materials to manufacture, assemble and test products. New or more stringent environmental requirements applicable to our operations or the operations of our suppliers could adversely affect our costs of doing business and result in material costs to our operations.States.

Increased attention to ESG matters, conservation measures and climate change issues has contributed to an evolving state of environmental regulation, which could impact our results of operations, financial or competitive position and may adversely impact our business.

Increased attention to, and sometimes conflicting,conflicting societal expectations on companies to address, climate change and other environmental and social impacts, and investor and societal expectations regarding voluntary ESG disclosures may result in increased costs to us and our suppliers, contract manufacturers, and customers. Moreover, while we createhave in the past and may continue to publish voluntary disclosures regarding ESG mattersmatters, fromstatements timetherein tohave time,been manyand ofmay in the statementsfuture in those voluntary disclosures arebe based on expectations and assumptions or hypothetical scenarios that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith. Such expectations and assumptions or hypothetical scenarios are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established approach to identifying, measuring and reporting on many ESG matters.

Increased public awareness and worldwide focus on climate change issues has led to legislative and regulatory efforts to limit greenhouse gas emissions, and otherwise require climate-related disclosure, and may result in more international, federalfederal, regional or regionalstate requirements or industry standards to reduce or mitigate risks or otherwise make disclosures related to climate change. As a result, we may become subject to new or more stringent regulations, legislation or other governmental requirements or industry standards, and we anticipate that we will see increased demand to meet voluntary criteria related to reduction or elimination of certain constituents from products, reducing emissions of greenhouse gases, and increasing energy efficiency. For example, in March 2024, the SEC approved final rules that would have required the disclosure of climate-related information in registration statements and periodic reports; however, those rules were stayed in April 2024, and in May 2026, the SEC proposed rescission of the rules. While the rules remain suspended and without effect as of the date of filing of this Annual Report on Form 10-K, there is potential that the Company could be subject to climate-related disclosure requirements in the future should these or similar requirements be adopted at the international, federal, regional or state level. Increased regulation of climate change concerns could subject us to additional costs and restrictions and require us to make certain changes to our manufacturing practices and/or product designs, which could negatively impact our business, results of operations, financial condition and competitive position. Moreover, such requirements may not always be uniform across jurisdictions, which may result in increased complexity and cost for compliance.

Furthermore, certain employment practices and social initiatives are the subject of scrutiny by both those calling for the continued advancement of such policies, as well as those who believe they should be curbed, including government actors, and the complex regulatory and legal frameworks applicable to such initiatives continue to evolve. We cannot be certain of the impact of such regulatory, legal and other developments on our business. More recent political developments could mean that we face increasing criticism or litigation risks from certain “anti-ESG” parties, including various governmental agencies. Such sentiment may focus on our environmental commitments (such as reducing greenhouse gas emissions) or its pursuit of certain employment practices or social initiatives that are alleged to be political or polarizing in nature or are alleged to violate laws based, in part, on changing priorities of, or interpretations by, federal agencies or state governments. ConsiderationPotential consideration of ESG-related factors in our decision-making could be subject to increasing scrutiny and objection from such anti-ESG parties. As a result, we may face increased litigation risks from private parties and governmental authorities related to our ESG efforts.

Anti-takeover provisions of Delaware law, the Amended and Restatedour Tax Benefit Preservation Plan (the “Plan”),Plan, and provisions in our Amended and Restated Certificate of Incorporation, as amended, and Amended and Restated Bylaws could make a third-party acquisition of us difficult.

In addition, the Tax Benefit Preservation Plan and the amendments to our Amended and Restated Certificate of Incorporation, as amended (the “Charter Amendments”) could make an acquisition of us more difficult.

Natural disasters, such as hurricanes, earthquakes, fires, extreme weather conditions and floods, could adversely affect our operations and financial performance. In addition, climate change may contribute to the increased frequencyfrequency, unpredictability or intensity of extreme weather events, including storms, wildfires, and other natural disasters. Further, geopolitical conflict and acts of terrorism or war could significantly disrupt our supply chain and access to vital components. Such events have in the past and could in the future result in physical damage to one or more of our facilities, the temporary closure of one or more of our facilities or those of our suppliers, a temporary lack of an adequate work force in a market, a temporary or long-term disruption in the supply of products from local or overseas suppliers or contract manufacturers, a temporary disruption in the transport of goods from overseas, and delays in the delivery of goods. Accordingly, climateClimate change and natural disasters may impact the availability and cost of materials and natural resources, sources and supply of energy necessary for our operations, and could also increase insurance and other operating costs. Many of our facilities around the world (and the operations of our suppliers) are in locations that may be impacted by the physical risks of climate change, and we face the risk of losses incurred as a result of physical damage to our facilities or those of our suppliers, such as loss or spoilage of inventory and business interruption caused by such events. In addition, if there is a natural disaster in any of the locations in which our significant customers are located, our customers may incur losses or sustained business interruption, or both, which may materially impair their ability to continue their purchase of products from us. Public health issues, whether occurring in the United States or abroad, could disrupt our operations, disrupt the operations of suppliers or customers, or have an adverse impact on customer demand. As a result of any of these events, we may be required to suspend operations in some or all of our locations, which could have an adverse effect on our business, financial condition, results of operations, and cash flows. These events could also reduce demand for our products or make it difficult or impossible to receive components from suppliers. Although we maintain business interruption insurance and other insurance intended to cover some or all of these risks, such insurance may be inadequate, whether because of coverage amount, policy limitations, the financial viability of the insurance companies issuing such policies, or other reasons.

System security risks, data protection breaches, and cyber-attackscyberattacks could compromise our proprietary information, disrupt our internal operations and harm public perception of our products, which could cause our business and reputation to suffer and adversely affect our stock price.

In the ordinary course of business, we store sensitive data, including intellectual property, our proprietary business information and proprietary information of our customers, suppliers and business partners, on our networks. The secure maintenance of this information is critical to our operations and business strategy. Increasingly, companies, including ours, are subject to a wide variety of attacks on their networks on an ongoing basis. Despite our security measures, our information technology and infrastructure may be vulnerable to interruption, disruption, destruction, penetration or attacks due to natural disasters, power loss, telecommunications failure, terrorist attacks, domestic vandalism, Internet failures, computer malware, ransomware, cyberattacks, social engineering attacks, phishing attacks, data breaches and other events unforeseen or generally beyond our control. Additionally, advances in technology, an increased level of sophistication and expertise of hackers, widespread access to generative AI, and new discoveries in the field of cryptography can result in a compromise or breach of our information technology systems or security measures implemented to protect our systems. Any such breach could compromise our systems and networks, which could cause system disruptions or slowdowns and exploitation of security vulnerabilities in our products, and lead to the information stored on our networks being accessed, publicly disclosed, lost or stolen, which could subject us to liability to our customers, suppliers, business partners and others, and cause us reputational and financial harm. In addition, sophisticated hardware and operating system software and applications that we produce or procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of our networks. An increased number of our employees and service providers are working from home and connecting to our networks remotely on less secure systems, which we believe may further increase the risk of, and our vulnerability to, a cyber-attackcyberattack or breach on our network. Any such actual or perceived security breach, incident or disruption could also divert the efforts of our technical and management personnel and could require us to incur significant costs and operational consequences in connection with investigating, remediating, eliminating and putting in place additional tools, devices, policies, and other measures designed to prevent such security breaches, incidents and system disruptions. Moreover, we could be required by applicable law in some jurisdictions, or otherwise find it appropriate to expend significant capital and other resources, to notify or respond to applicable third parties or regulatory authorities due to any actual or perceived security incidents or breaches to our systems and its root cause.

If an actual or perceived breach of network security occurs in our network or in the network of a customer of our security products, regardless of whether the breach is attributable to our products, the market perception of the effectiveness and safety of our products could be harmed. Because the techniques used by computer programmers and hackers, many of whom are highly sophisticated and well-funded, to access or sabotage networks or systems change frequently and generally are not recognized until after they are used, we may be unable to anticipate or immediately detect these cyber-attacks.cyberattacks. This could impede our sales, manufacturing, distribution or other critical functions. In addition, our ability to defend against and mitigate cyberattacks depends in part on prioritization decisions that we and third parties upon whom we rely make to address vulnerabilities and security defects. While we endeavor to address all identified vulnerabilities in our products, we must make determinations as to how we prioritize developing and deploying the respective fixes, and we may be unable to do so prior to an attack. The economic costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software systems and security vulnerabilities could be significant and may be difficult to anticipate or measure because the damage may differ based on the identity and motive of the programmer or hacker, which are often difficult to identify. Furthermore, even once a vulnerability has been addressed, for certain of our products, the fix will only be effective once a customer has updated the impacted product with the latest release, and customers that do not install and run the latest supported versions of our products may remain vulnerable to attack.

As cyber-attackscyberattacks become more sophisticated, the need to develop, modify, upgrade or enhance our information technology infrastructure and measures to secure our business can lead to increased cybersecurity protection costs. Such costs may include making organizational changes, deploying additional personnel and protection technologies, training employees, and engaging third party experts and consultants. These efforts come at the potential cost of revenues and human resources that could be utilized to continue to enhance our product offerings, and such increased costs may adversely affect our operating margins.

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand Aviat Networks, Inc.’s (“Aviat”, the “Company”, “we”, “us”, or “our”) results of operations and financial condition during the two-year period ended JuneJuly 27,3, 2025.2026. MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s consolidated financial statements and accompanying notes. In the discussion herein, the fiscal years ended July 3, 2026, June 27, 2025, and June 28, 2024, and June 30, 2023, are referred to as “fiscal 20252026”, “fiscal 20242025” and “fiscal 20232024”, respectively. Aviat’s fiscal year ends on the Friday nearest to June 30. For a comparison of the results of operations for fiscal 20242025 and 2023,2024, refer to Aviat’s Annual Report on Form 10-K for the fiscal year ended June 28,27, 2024,2025, filed with the SEC on OctoberSeptember 4,10, 2024.2025.

On July 2, 2024, the Company acquired 4RF Limited (“4RF”), a New Zealand company, Aviat purchased all of the issued and outstanding shares of 4RF in an all-cash transaction for $18.2 million, net of $1.2 million cash acquired. 4F4RF is a leading provider of industrial wireless access solutions, including narrowband point-to-point/multi-point radios and Private LTE and 5G routers. The acquisition of 4RF allows Aviat to expand its product offering for the global industrial wireless access markets including Private LTE/5G. See Note 12. Acquisitions of the Notes to the consolidated financial statements in this Annual Report on Form 10-K (the “Notes”) for further information.

On May 9, 2023, the Company entered into a Master Sale of Business Agreement (as amended on November 30, 2023, the “Purchase Agreement”) with NEC Corporation (“NEC”), to acquire NEC’s wireless transport business (the “NEC Transaction”). The Company completed the NEC Transaction on November 30, 2023.

Prior to the acquisition date, NEC was a leader in wireless backhaul networks with an extensive installed base of their Pasolink series products. The completion of the NEC Transaction increases the scale of Aviat, enhances the Company’s product portfolio with a greater capability to innovate, and creates a more diversified business. ReferThe toresults Noteof 12. Acquisitionsoperations of the NotesNEC toTransaction have been included in the consolidated financial statements insince thisthe Annualdate Reportof on Form 10-K for further information.acquisition.

The fair value of the consideration transferred at the closing of the NEC Transaction was comprised of (i) cash of $32.2 million, and (ii) the issuance of 736,750 shares or $22.3 million of Companycommon stock of the Company. The fair value of the shares issued was determined based on the closing market price of the Company’s common stock.stock on the acquisition date. Aggregate consideration transferred at closing was approximately $54.5 million, which iswas subject to certain post-closing adjustments. In fiscal 2025, the Company transferred consideration of $18.6 million to settle the post-closing working capital adjustment. The Company funded the cash portion of the NEC Transactionconsideration with Term Loan borrowings under its Credit Facility (as defined below).Facility. Refer to Note 7. Credit Facility and Debt of the Notes for further information.

The market for mobile backhaul continued to be the Company’s primary addressable market segment globally in fiscal 2025.2026. In North America, the Company supported 5G and long-term evolution (“LTE”) deployments of its mobile operator customers, public safety network deployments for state and local governments, and private network implementations for utilities and other customers. In international markets, the Company’s business continued to rely on a combination of customers increasing their capacity to handle subscriber growth and the ongoing build-out of some large LTE and 5G deployments. Aviat’s position continues to be to support its customers for 5G and LTE readiness and ensure that its technology roadmap is well aligned with evolving market requirements. Aviat’s strength in turnkey and after-sale support services is a differentiating factor that wins business for the Company and enables it to expand its business with existing customers. Additionally, Aviat operates an e-commerce on-line platform, Aviat Store, that provides low-cost services, a simple experience, and fast delivery to mobile operators and private network customers. In 2025, newRecently, U.S. tariffs on foreign imports were proposed, and in certain casesimported implemented.goods Inhave response,increased costs within parts of the supply chain. Aviat has implemented mitigation strategiesmeasures, by optimizing itsincluding sourcing and operationsoperational initiatives and pricing actions, to minimize the effects and took pricing actions to offsetreduce the impact of these tariffs.tariffs on its business and results of operations. However, as disclosed in the “Risk Factors” section in Item 1A of this Annual Report on Form 10-K, a number of factors could prevent the Company from achieving its objectives, including ongoing pricing pressures attributable to competition and macroeconomic conditions in the geographic markets that it serves.

Revenue in AfricaNorth and the Middle EastAmerica increased by $0.5$12.4 million in fiscal 20252026 primarily due to increasedincreases demandin ofsoftware managed& serviceslicenses and softwarefield offerings on a larger install base,services, which increased 36%25% and 42%,11%, respectively, partially offset by a 12% decrease in equipment sales.respectively.

Revenue in EuropeAfrica and the Middle East increased by $7.1$8.5 million in fiscal 20252026 primarily due to increased equipment sales to mobile operatorsincreases in thedemand region.for products and software offerings, which increased 22% and 29%, respectively.

Revenue fromin product sales and servicesEurope increased by 4.9%$10.3 and 9.8%, respectivelymillion in fiscal 20252026 primarily due to theincreased sameequipment overall factorssales of revenue growth discussed previously.48%.

Gross margin for fiscal 20252026 decreased by $(5.3)$1.1 million, while gross margin as a percentage of revenue reduced by 3.40.6 percentage points due to higherlower service revenue, offset by sales volumes onand lowerthe marginmix sales.of product and service offerings.

Research and development expenses decreased by $(0.7)$7.4 million in fiscal 20252026 primarily due to synergies achieved leading to cost optimizationmanagement from the NEC Transaction.initiatives.

Selling and administrative expenses increaseddecreased by $4.4$1.0 million in fiscal 20252026 primarily due to mergerlower administrative costs and acquisitioncost expensesmanagement and additional costs resulting from the NEC Transaction and 4RF acquisition.initiatives.

During fiscal 20252026, restructuring charges were $3.6$2.1 million, a decrease of $(0.3)$1.5 million compared to fiscal 2024.2025. FiscalDuring 2025fiscal 2026, the Company’s Board of Directors approved restructuring activities wereplans, primarily associated with reductions in workforce in certain of the Company’s operations to optimize skill sets and align cost structure. TheIn prior year comparison period includesaddition, restructuring charges primarilyalso associatedconsisted withof a $0.3 million early lease termination charge during the NEC Transaction.year.

Other expense, net increaseddecreased by $0.8$2.6 million in fiscal 20252026 primarily as a result of foreign exchange rate movement.

For a comparison of the results of operations for fiscal 20242025 and 2023,2024, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Aviat’s Annual Report on Form 10-K for the fiscal year ended June 28,27, 2024,2025, filed with the SEC on OctoberSeptember 4,10, 2024.2025.

As of JuneJuly 27,3, 2025,2026, the Company’s total cash and cash equivalents were $59.7$72.8 million. Approximately $22.2$22.6 million, or 37%31% was held in the United States. The remaining balance of $37.5$50.3 million, or 63%69% was held outside the United States. Of the amount of cash and cash equivalents held by the Company’s foreign subsidiaries on JuneJuly 27,3, 2025,2026, $37.1$50.2 million was held in jurisdictions where its undistributed earnings are indefinitely reinvested, and if repatriated, would be subject to foreign withholding taxes.

Operating cash flows is presented as net income adjusted for certain non-cash items and changes in operating assets and liabilities. Net cash provided by operating activities was $5.7$13.6 million for fiscal 2025,2026, compared with $30.5$5.7 million in the prior year. The $(24.8)$7.8 million decreaseincrease is primarily attributable to decreasedimproved networking incomecapital prior to non-cash adjustments and overall decreases in the net changes in operating assets and liabilities compared to the prior year.performance. Net changes in operating assets and liabilities resulted in $(16.8)$11.9 million of cash used in operating activities for fiscal 2025,2026, compared to $(2.5)$16.8 million in fiscal 2024.2025. The $(14.3)$4.9 million increasedecrease compared to the prior year is primarily attributable to increasesa in inventory as well as ansmaller increase in accounts receivablereceivable, whichlower isinventory primarilypurchases drivenand bya increased salesdecrease in theunbilled year and timing of receiving payments.receivables. These impacts were partially offset by ana increaselarger decrease in accounts payable due to purchasing of increased inventory as well as the timing of inventory purchases and vendor payments as compared to the prior year.

Net cash used in investing activities was $28.5$7.3 million for fiscal 2025,2026 compared to $35.2$28.5 million in the prior year. The $6.7$21.2 million decrease is driven by priorthe yearabsence cashof paidacquisition forpayments associated with the NEC Transaction ofin $32.2the current year, whereas the previous year had $18.2 million compared to current year net cash paid for the 4RF acquisition of $18.2such million. This is partially offset by an increase in purchases of property, plant, and equipment of $10.3 million compared to the prior year.payments.

Financing cash flows consist primarily of borrowings and repayments under the Company’s Credit Facility and proceeds from the exercise of employee stock options. Net cash provided by financing activities was $18.7$6.3 million for fiscal 2025,2026, compared with $48.7$18.7 million in the prior year. The $(30.0)$12.3 million decrease is primarily due to paymentlower net borrowings under both the Revolver and Term Loan facilities, partially offset by the absence of $18.6 million of deferred consideration of $18.6 millionpayments related to theacquisitions NECthat acquisition and repayment of $50.6 million in the current year on Term Loan borrowings compared to $1.3 millionoccurred in the prior year. The decrease is partially offset by increased net borrowings of $15.0 million on the Revolver (as defined below) in the current year.

As of JuneJuly 27,3, 2025,2026, the Company’s sources of liquidity consisted of $59.7$72.8 million in cash and cash equivalents, $51.3$84.2 million of available credit under its Credit Facility, and future collections of receivables from customers. The Company regularly requires letters of credit from certain customers, and, from time to time, these letters of credit are discounted without recourse shortly after shipment occurs in order to meet immediate liquidity requirements and to reduce its credit and sovereign risk. Historically, the Company’s primary sources of liquidity have been cash flows from operations and credit facilities.

The Company entered into a Secured Credit Facility Agreement (the “Credit Facility”), dated May 9, 2023, amended as of November 22, 2023 and October 18, 2024, with Wells Fargo Bank, National Association, as administrative agent, swingline lender and issuing lender and Wells Fargo Securities LLC, Citigroup Global Markets Inc., and Regions Capital Markets as lenders. The Credit Facility provides for a $75.0 million revolving credit facility (the “Revolver”) and a $75.0 million Term Loan Facility (the “Term Loan”) with a maturity date of October 18, 2029. The $75.0 million Revolver can be borrowed with a $10.0 million sub-limit for letters of credit, and a $10.0 million swingline loan sub-limit. On August 28, 2025, the Company entered into an amendment under the Credit Facility to increase the Term Loan and Revolver commitments by $20$20.0 million for each instrument. The Credit Facility provides for a $95.0 million revolving credit facility (the “Revolver”) and a $95.0 million Term Loan Facility (the “Term Loan”) with a maturity date of October 18, 2029. The $95.0 million Revolver can be borrowed with a $20.0 million sub-limit for letters of credit, and a $10.0 million swingline loan sub-limit. The full Revolver balance will be paid on maturity. Refer to Note 7. Credit Facility and Debt and Note 16. Subsequent Events of the Notes for further information.

As of JuneJuly 27,3, 2025,2026, the available credit under the Revolver was $51.3$76.8 million, reflecting the available limit of $60.0$95.0 million less outstanding borrowings of $10.0 million and outstanding letters of credit of $8.7$8.2 million. The Company borrowed $95.0$100.0 million and repaid $80.0$105.0 million against the Revolver in fiscal 2025.2026. The Company borrowed $75.0$20.0 million and repaid $50.6$5.5 million against the Term Loan in fiscal 2025.2026. As of JuneJuly 27,3, 2025,2026, the Company had $73.1$87.6 million outstanding under its Term Loan and $15.0$10.0 million borrowings under its Revolver.

Outstanding borrowings under the Credit Facility bear interest at either: (a) Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus the applicable margin; or (b) the Base Rate plus the applicable margin. The pricing levels for interest rate margins are determined based on the Consolidated Total Leverage Ratio as determined and adjusted quarterly. As of JuneJuly 27,3, 2025,2026, the applicable margin on Adjusted Term SOFR and Base Rate borrowings was 2.8%2.75% and 1.8%,1.75%, respectively. The effective rate of interest on the outstanding Term Loan borrowings as of July 3, 2026 and June 27, 2025, was 6.9%.6.5% and 6.9%, respectively.

The Credit Facility requires the Company and its subsidiaries to maintain a fixed charge coverage ratio to be greater than 1.25 to 1.00 as of the last day of any fiscal quarter of the Company. The Credit Facility also requires that the Company maintain a maximum leverage ratio of 3.00 times Earningsearnings Beforebefore Interest,interest, Taxes,taxes, Depreciationdepreciation, and Amortizationamortization ("“EBITDA"”), with a step-down to 2.75 times EBITDA after four full quarters, and 2.50 times EBITDA after eight full quarters. The current maximum leverage ratio requirement is 2.75 times EBITDA. The Credit Facility contains customary affirmative and negative covenants, including, among others, covenants limiting the ability of the Company and its subsidiaries to dispose of assets, permit a change in control, merge or consolidate, make acquisitions, incur indebtedness, grant liens, make investments, make certain restricted payments, and enter into transactions with affiliates, in each case subject to customary exceptions. As of JuneJuly 27,3, 2025,2026, the Company was in compliance with all financial covenants contained in the Credit Facility.

The Company had liabilities for restructuring activities totaling $1.8$1.2 million as of JuneJuly 27,3, 2025,2026, which was classified as current and are expected to be paid in cash within the next 12 months. The Company expects to fund the future payments with available cash and cash provided by operations. Refer to Note 8. Restructuring Activities of the Notes for further information.

The Company enters into foreign exchange forward contracts to mitigate the change in fair value of specific non-functional currency assets and liabilities on the balance sheet. All balance sheet hedges are marked to market through earnings every period. Changes in the fair value of these derivatives are largely offset by re-measurement of the underlying assets and liabilities. The Company did not have any foreign exchange forward contracts outstanding as of JuneJuly 27,3, 2025,2026, or June 28,27, 2024.2025.

Net foreign exchange losses (gains) losses recorded in the consolidated statements of operations during fiscal 2025,2026, 2025 and 2024 andwere 2023$0.9 weremillion, $(0.8) million,million and $(0.3) million and $1.0 million, respectively.

Certain of the Company’s international business are transacted in non-U.S. dollar (“USD”) currencies. From time to time, the Company utilizes foreign currency hedging instruments to minimize the currency risk of non-USD transactions. The impact of translating the assets and liabilities of foreign operations to USD is included as a component of stockholders’ equity. As of July 3, 2026, and June 27, 2025, and June 28, 2024, the cumulative translation adjustment decreased stockholders’ equity by $18.8$20.4 million and $19.3$18.8 million, respectively.

The Company had $59.7$72.8 million in total cash and cash equivalents as of JuneJuly 27,3, 2025.2026. Cash equivalents totaled $6.4$2.9 million as of JuneJuly 27,3, 2025,2026, and were comprised of money market funds and bank certificates of deposit. Cash equivalents have been recorded at fair value. Fair value is measured using inputs that fall into a three-level hierarchy that prioritizes the inputs used to measure fair value based on observability of such inputs. Refer to Note 6. Fair Value Measurements of Assets and Liabilities of the Notes for further information.

The Company’s cash equivalents earn interest at fixed rates; therefore, changes in interest rates will not generate a gain or loss on these investments unless they are sold prior to maturity. The weighted-average days to maturity for cash equivalents held as of JuneJuly 27,3, 2025,2026, was approximately 27110 days, and these investments had an average yield of approximately 5.0%2.9% per annum. A 10% change in interest rates on the Company’s cash equivalents is not expected to have a material impact on its financial position, results of operations, or cash flows.

As of JuneJuly 27,3, 2025,2026, the Company had $73.1$87.6 million outstanding under its Term Loan and $15.0$10.0 million outstandingborrowings under its Revolver. Refer to Note 7 Credit Facility and Debt of the Notes for further information.

The Company’s borrowings under the current Credit Facility bear interest at either: (a) Adjusted Term SOFR plus the applicable margin; or (b) the Base Rate plus the applicable margin. The pricing levels for interest rate margins are determined based on the Consolidated Total Leverage Ratio as determined and adjusted quarterly. As of JuneJuly 27,3, 2025,2026, the applicable margin on Adjusted Term SOFR and Base Rate borrowings was 2.8%2.75% and 1.8%,1.75%, respectively. The effective rate of interest on the Company’s outstanding Term Loan borrowings as of July 3, 2026 and June 27, 2025, was 6.9%.6.5% and 6.9%, respectively.

A 10% change in interest rates is estimated to have a $0.5$0.6 million impact on annual interest expense on the Company’s outstanding long-term debt as of JuneJuly 27,3, 2025.2026.

Revenue from services includes certain network planning and design, engineering, installation and commissioning, extended warranty, customer support, consulting, training, and education. Maintenance and support services are generally offered to our customers and recognized over a specified period of time and from sales and subsequent renewals of maintenance and support contracts. The network planning and design, engineering and installation related services noted are recognized based on an over-time recognition model using the cost-input method. Certain judgment is required when estimating total contract costs and progress to completion on the over-time arrangements, as well as whether a loss is expected to be incurred on the contract. The cost estimation process for these contracts is based on the knowledge and experience of the Company’s project managers, engineers, and financial professionals. Changes in job performance and job conditions are factors that influence estimates of the total costs to complete those contracts and the Company’s revenue recognition. If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made in a timely manner. These revisions may result in increases or decreases in estimated revenues or costs, and such revisions are reflected in income in the period in which the circumstances that gave rise to the revision become known to us. As of JuneJuly 27,3, 2025,2026, favorable and unfavorable changes in contract estimates are not considered material for each period presented. We perform ongoing profitability analysis of our service contracts accounted for under this method to determine whether the latest estimates of revenues, costs, and profits require updating. In rare circumstances if these estimates indicate that the contract will be unprofitable, the entire estimated loss for the remainder of the contract is recorded immediately. As of JuneJuly 27,3, 2025,2026, contract losses recognized are not considered material during each period presented and there are no material loss contracts for each period presented.

ThereOther than as described below, there have been no material changes from the risk factors described in our Annual Report, although we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.

The market for mobile backhaul continued to be the Company’s primary addressable market segment globally in the first sixnine months of fiscal 2026. In North America, the Company supported 5G and long-term evolution (“LTE”) deployments of its mobile operator customers, public safety network deployments for state and local governments, and private network implementations for utilities and other customers. In international markets, the Company’s business continued to rely on a combination of customers increasing their capacity to handle subscriber growth and the ongoing build-out of some large LTE and 5G deployments. Aviat’s position continues to be to support its customers for 5G and LTE readiness and ensure that its technology roadmap is well aligned with evolving market requirements. Aviat’s strength in turnkey and after-sale support services is a differentiating factor that wins business for the Company and enables it to expand its business with existing customers. Additionally, Aviat operates an e-commerce platform that provides low-cost services, simple experience, and fast delivery to mobile operators and private network customers. In early 2025, U.S. tariffs on foreign imports were introduced. Aviat will attempt to mitigate these tariffs; however, as disclosed abovebelow and in the “Risk Factors” section in Item 1A of its Annual Report on Form 10-K filed with the SEC on September 10, 2025, a number of factors could prevent the Company from achieving its objectives, including ongoing pricing pressures attributable to competition and macroeconomic conditions in the geographic markets that it serves.

The Company manages its sales activities primarily on a geographic basis in North America and three international geographic regions: (1) Africa and the Middle East, (2) Europe, and (3) Latin America and Asia Pacific. Revenue by region for the three and sixnine months ended DecemberMarch 26,27, 20252026 and DecemberMarch 27,28, 20242025 and the related changes were as follows:

Revenue in LatinNorth America and Asia Pacific decreased by $6.7$3.2 million during the secondthird quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower demand for servicesproducts of 61%, partially offset by an increase of 36% on software offerings.17%. Revenue in LatinNorth America and Asia Pacific decreasedincreased by $2.5$2.1 million during the first sixnine months of fiscal 2026 compared with the same period of fiscal 2025 primarily due to dueincreases to lowerin demand for services and productssoftware offerings of 31%10% and 14%5% respectively, partially offset by ana increasedecrease in demand for products of 139% on software offerings.4%.

Revenue fromin productAfrica salesand decreasedthe Middle East increased by 1.3%$1.4 andmillion revenue from services decreased by 15.7% forduring the secondthird quarter of fiscal 2026 compared with the same quarterperiod of fiscal 2025.2025 primarily due to increases in demand for software offerings and products of 133% and 13%, respectively, partially offset by a decrease in demand of 35% for services. Revenue fromin productAfrica salesand the Middle East increased by 9.0%$5.7 andmillion revenue from services decreased by 1.1% forduring the first sixnine months of fiscal 2026 compared with the same period of fiscal 2025. The changes were2025, primarily due to theincreases factorsin discusseddemand above.for software offerings and products of 36% and 15%, respectively.

Gross margin for the secondthird quarter of fiscal 2026 decreased by $4.8$10.0 million compared with the same quarter of fiscal 2025 primarily due to highersales volumes onand lowerthe marginmix products.of product and service offerings. Gross margin for the first sixnine months of fiscal 2026 increased by $11.1$1.1 million due to higher sales volumes onand higherthe marginmix products,of specificallyproduct softwareand service offerings.

Research and development expenses decreased by $3.8$48 millionthousand and $7.1$7.2 million for the three and sixnine months ended DecemberMarch 26,27, 2025,2026, respectively, compared with the same periods in fiscal 2025, primarily due to cost management initiatives and synergies related to acquisitions.initiatives.

Selling and administrative expenses increaseddecreased by $1.1$1.8 million for the secondthird quarter of fiscal 2026 compared with the same quarter of fiscal 2025 primarily due to higherlower administrative costs.costs and cost management initiatives. Selling and administrative expenses decreased by $0.5$2.2 million for the first sixnine months of fiscal 2026 compared with the same quarterperiod of fiscal 2025 primarily due to lower administrative costs and cost management initiatives.

Interest expense, net increased by $0.3 million and $0.9$1.2 million for the three and sixnine months ended DecemberMarch 26,27, 2025,2026, respectively, primarily due to interest expense incurred on incremental Term Loan borrowings compared to the prior year period.

Other expense (income) expense,, net decreased by $3.0$1.7 million and $2.8$4.4 million for the three and sixnine months ended DecemberMarch 26,27, 2025,2026, respectively, compared with the same quarter of fiscal 2025 primarily as a result of fluctuation in foreign exchange rate movement.currencies.

The tax expense for the first sixnine months of fiscal 2026 was primarily attributable to tax expense related to U.S. and profitable foreign subsidiaries. The tax benefit for the first sixnine months of fiscal 2025 was primarily resulting from year-to-date losses.

As of DecemberMarch 26,27, 2025,2026, the Company’s total cash and cash equivalents were $86.5$78.1 million. Approximately $33.3$16.2 million was held in the United States. The remaining balance of $53.2$61.9 million, or 62%,79%, was held outside the United States.

Operating cash flows isare presented as net income (loss) adjusted for certain non-cash items and changes in operating assets and liabilities. Net cash provided by (used in) operating activities was $12.2$10.5 million for the first sixnine months of fiscal 2026, compared with $(6.44.8) million in the prior year. The $18.6$15.3 million increase is primarily attributable to netincreased incomeearnings alongand with decreasesincreases in inventory,working unbilled,capital andcompared deferredto taxesthe whichprior was partially offset by an increase in accounts receivable and a decrease in accounts payable.year.

Net cash used in investing activities was $3.2$7.8 million for the first sixnine months of fiscal 2026, compared to $23.5$26.3 million in the prior year. The $20.3$18.4 million decrease is primarily due to the absence of prior year acquisition payments associated with the NEC Transaction in the current year.

Financing cash flows consist primarily of borrowings and repayments under the Company’s Credit Facility and proceeds from the exercise of employee stock options. Net cash provided by financing activities was $17.1$15.8 million for the first sixnine months of fiscal 2026, compared with $18.6$17.6 million in the prior year. The $1.5$1.8 million decrease is primarily due to reduced net Term Loan borrowings of $17.9$16.8 million compared to $26.3$25.3 million in the prior year and the absence of prior year payments of deferred consideration for acquisitions of $5.8 million.

As of DecemberMarch 26,27, 2025,2026, the Company’s principal sources of liquidity consisted of $86.5$78.1 million in cash and cash equivalents, $74.4$76.4 million of available credit under its Credit Facility, and future collections of receivables from customers. On August 28, 2025, the Company entered into an amendment under the Credit Facility to increase the Term Loan and Revolver commitments by $20 million for each instrument. The Company regularly requires letters of credit from certain customers, and, from time to time, these letters of credit are discounted without recourse shortly after shipment occurs in order to meet immediate liquidity requirements and to reduce its credit and sovereign risk. Historically, the Company’s primary sources of liquidity have been cash flows from operations and credit facilities.

The Company borrowed and repaid $50.0$75.0 million against the Revolver during the first sixnine months of fiscal 2026 and had $15.0 million borrowings outstanding under the Revolver. As of DecemberMarch 26,27, 2025,2026, the Company had $91.0$89.9 million outstanding under its Term Loan and during the first sixnine months of fiscal 2026 borrowed $20.0 million and repaid $2.1$3.2 million against the Term Loan. As of DecemberMarch 26,27, 2025,2026, the Company was in compliance with all financial covenants contained in the Credit Facility.