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

The technological complexity of our business has increased significantly over the last several years. This increased complexity and our expected growth has placed, and will continue to place, a strain on our management and our administrative, operational and financial infrastructure. Artificial intelligence (“AI”) technologies have rapidly developed and our business may be adversely affected if we cannot successfully integrate the technology into our internal business processes and product and service offerings in a timely, cost-effective, compliant and responsible manner. We anticipate that a further growth of headcount and facilities will be required to address expansion in our product and service offerings and the geographic scope of our customer base. However, if we are unsuccessful in our efforts, our business could decline. Our success will depend in part upon the ability of our senior management to manage our increased complexity and expected growth effectively. To do so, we must continue to hire, train, manage and integrate a significant number of qualified managers and engineers. If our new employees perform poorly, or if we are unsuccessful in hiring, training, managing and integrating these new employees, or retaining these or our existing employees, then our business may experience declines. To support our expected growth, we must continue to improve our operational, financial and management information systems. If we are unable to manage our growth while maintaining our quality of service, or if new systems that we implement to assist in managing our growth do not produce the expected benefits, then our business, results of operations, prospects, and financial condition could be materially adversely affected.

Because our products are highly engineered, we depend on anidentifying, educatedattracting and retaining an educated, trained and highly skilled workforce. Historically, substantial competition for skilled personnel in our industry has existed, and we could be materially adversely affected by a shortage of skilled employees. We may not be able to fill new positions or vacancies created by expansion or turnover or attract and retain qualified personnel. We may not be able to continue to hire, train and retain qualified employees at current wage rates since we operate in a competitive labor market, and currently significant inflationary and other pressures on wages exist.

Our business may be adversely affected by changes in budgetary priorities of the U.S. government.government and disruptions in U.S. government operations.

Changes in federal government budgetary priorities could directly affect our financial performance and could have a material adverse effect on our business, results of operations, prospects and financial condition. A significant decline in government expenditures, a shift of expenditures away from programs that we support or a change in federal government contracting policies could cause federal government agencies to reduce their purchases under contracts, to exercise their right to terminate contracts at any time without penalty or not to exercise options to renew contracts, any of which could result in decreased sales of our products. In addition, any disruptions in federal government operations could have a material adverse effect on our revenues, earnings, and cash flows. A prolonged failure to maintain significant U.S. government operations, particularly those pertaining to our business, and continued uncertainty related to recent and future government shutdowns could have a material adverse effect on our revenues, earnings, and cash flows.

As of December 31, 2024,2025, our total funded backlog was $579,787,162.$801.1 Fundedmillion. backlogBacklog representsRepresents the invoiceabletotal value or current estimated value of existing purchase orderscontracts for products under contracts for which funding is appropriated or otherwise authorized, less amounts previously invoiced. Due to the U.S. government’s ability to not exercise contract options or to terminate, modify, or curtail our programs or contracts and the rights of our non-U.S. government customers to cancel contracts and purchase orders in certain circumstances, we may realize less than expected revenues or may never realize revenues from some of the contracts that are included in our backlog. Our unfunded backlog, in particular, contains management’s estimate of amounts expected to be realized on unfunded contract work that may never be realized as revenues. If we fail to realize as revenues amounts included in our backlog, our future revenues, profitability and growth prospects could be materially adversely affected. For further discussion of funded backlog and the other non-GAAP financial measures described in this report, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Financial and Non-GAAP Operating Measures.”

The industry we do business in is highly regulated in the United StatesU.S. and in other countries. If new and more stringent government regulations are adopted or if industry oversight increases, we might incur significant expenses to comply with any new regulations or heightened industry oversight. In addition, if any existing material authorizations or approvals were revoked or suspended, our business, results of operations, prospects and financial condition would be materially adversely affected.

We have taken reasonable steps to protect our systems and the information that we process or control, but there can be no assurance that our cybersecurity risk management policies, procedures and controls will be fully effective in every instance. For example, we face risks of disruptions, failures, computer viruses or other malicious codes or bugs, malware or ransomware incidents, unauthorized access attempts, theft of intellectual property, trade secrets, or other corporate assets, denial of service attacks and phishing / social engineering, from a diverse set of threat actors, including hacking by individuals, criminal groups or nation-state organizations or social activist (“hacktivist”) organizations, insider threats, and other bad actors. Further, events such as natural disasters, fires, power outages, systems failures, telecommunications failures, employee error or malfeasance or other catastrophic events could similarly cause interruptions, disruptions or shutdowns, or exacerbate the risk of the failures described above. These risks may increase as more employees work from home orhome, as we integrate new technology systems that may be subject to cybersecurity vulnerabilities.vulnerabilities and as AI capabilities improve.

To date, we have not experienced any information- or cyber-security incident resulting in a material adverse impact to our business or operations. However, existing or emerging threats involving changing attack techniques and tools (including artificial intelligenceAI) may circumvent our existing security controls and evade detection. As a result, we may be unable to anticipate or implement sufficient control measures to successfully defend against these techniques, or to detect, investigate, remediate or recover from an identified incident in a timely manner. We cannot predict the degree of any impact that increased monitoring, assessing, or reporting of cybersecurity matters would have on our business, results of operations, prospects and financial condition. Moreover, the costs, potential monetary damages, and operational consequences of responding to cyber incidents may not be covered by any insurance that we may carry from time to time. Finally, we cannot guarantee that applicable insurance will be available to us in the future on economically reasonable terms or at all.

We will also be subject to the Department of DefenseWar (“DoDDoW”) Cybersecurity Maturity Model Certification (“CMMC”) requirements, which will require companies that do business with the DoDDoW to, depending on the level of security required, meet or exceed certain specified cybersecurity standards to be eligible for new contract awards. The DoDDoW expects that nearly all new contracts will be required to comply with the CMMC by 2026. To the extent we are unable to achieve certification in advance of contract awards, or we fail to achieve or maintain certification at the level required for a particular contract award, we will be unable to bid on such contract awards or follow-on awards for existing work with the DoD,DoW, which could materially adversely impact our revenue, profitability and cash flows. Additionally, our subcontractors, and certain of our vendors, may also need to comply with CMMC requirements. We may be negatively impacted if our subcontractors or vendors are not compliant with CMMC requirements. The obligations imposed on us under the CMMC may be different from, or in addition to those, otherwise required by the Data Protection Laws to which we are subject. The costs to comply with the new CMMC requirements are significant and may increase, which could materially adversely affect our business, results of operations, prospects and financial condition. Failure to comply with CMMC requirements may also make us subject to bid protest challenges or False Claims Act allegations claiming damages to the government based on such non-compliance.

A significant portion of our net sales is generated from the military defense market. The military and defense market is significantly dependent upon government budget trends, particularly the DoDDoW budget. In addition to normal business risks, our supply of products to the U.S. government is subject to unique risks largely beyond our control. DoDDoW budgets could be negatively impacted by several factors, including, but not limited to, a change in defense spending policy as a result of the presidential election or otherwise, the U.S. government’s budget deficits, spending priorities, the cost of sustaining the U.S. military presence internationally, possible political pressure to reduce U.S. government military spending and the ability of the U.S. government to enact appropriations bills and other relevant legislation, each of which could cause the DoDDoW budget to remain unchanged or to decline. In recent years, the U.S. government has been unable to complete its budget process before the end of its fiscal year, resulting in both governmental shutdowns and continuing resolutions providing only enough funds for U.S. government agencies to continue operating at prior-year levels. Further, if the U.S. government debt ceiling is not raised and the national debt reaches the statutory debt ceiling, the U.S. government could default on its debts. A significant decline in U.S. military expenditures could result in a reduction in the amount of our products sold to the various agencies and buying organizations of the U.S. government.

As a result of the Small Business Administration (“SBA”) set-aside program, the federal government may decide to restrict certain procurements only to bidders that qualify as small, small disadvantaged, service- disabledservice-disabled veteran-owned, woman-owned businesses or meeting some other socioeconomic designation. We do not qualify as a small, small disadvantaged, service-disabled veteran-owned, woman-owned business or having any other preferred socioeconomic designation. As a result, we would not be eligible to perform as a prime contractor on those programs and in general would be restricted to no more than 49% of the work as a subcontractor on those programs. An increase in the amount of procurements under the SBA set-aside program, or other similar governmental programs, may impact our ability to bid on new procurements as a prime contractor, limit our opportunity to work as a subcontractor or restrict our ability to compete on incumbent work that is placed in the set-aside program.

Our reputation and relationship with the U.S. government, and in particular with the agencies of the DoDDoW and the U.S. intelligence community, are key factors in maintaining and developing new business opportunities. In addition, we often act as a subcontractor or in “teaming” arrangements in which we and other contractors bid together on particular contracts or programs for the U.S. government or government agencies. We expect to continue to depend on relationships with other prime contractors for a portion of our revenue for the foreseeable future. Negative press reports regarding conflicts of interest, poor contract performance, employee misconduct, information security breaches or other aspects of our business, regardless of accuracy, could harm our reputation. Additionally, as a subcontractor or team member, we often lack control over fulfillment of a contract, and poor performance on the contract could tarnish our reputation, even when we perform as required. As a result, we may be unable to successfully maintain our relationships with government agencies or prime contractors, and any failure to do so could materially adversely affect our ability to maintain our existing business and compete successfully for new business.

Efforts by the U.S. government to reform its procurement practices have focused on, among other areas, the separation of certain types of work to facilitate objectivity and avoid or mitigate organizational conflicts of interest and the strengthening of regulations governing organizational conflicts of interest. Organizational conflicts of interest may arise from circumstances in which a contractor has impaired objectivity during performance; unfair access to non-public information; or the ability to set the “ground rules” for another procurement for which the contractor competes. A focus on organizational conflicts of interest issues has resulted in legislation and a proposed regulation aimed at increasing organizational conflicts of interest requirements, including, among other things, separating sellers of products and providers of advisory services in major defense acquisition programs. The passage of a new federal law in December 20222023 requires the Federal Acquisition Regulation (“FAR”) council to provide and update definitions of each of the above types of conflicts of interest and provide illustrative examples of various relationships that contractors could have that would give rise to potential conflicts of interest. The passage of this legislation comes as this topic continues to garner increased scrutiny of such alleged conflicts among federal contractors. The resulting rule-making process, as well as continuing reform initiatives in procurement practices, may, however, result in future amendments to the FAR, increasing the restrictions in current organizational conflicts of interest regulations and rules. Similarly, organizational conflicts of interest remain an active area of bid protest litigation, increasing the likelihood that competitors may leverage such arguments in an attempt to overturn agency award decisions. To the extent that proposed and future organizational conflicts of interest laws, regulations, and rules or interpretations thereof limit our ability to successfully compete for new contracts or task orders with the U.S. government, either because of organizational conflicts of interest issues arising from our business, or because companies with which we are affiliated, or with which we otherwise conduct business, create organizational conflicts of interest issues for us, our business, results of operations, prospects and financial condition could be materially adversely affected.

The technologies related to our products have undergone, and in the future may undergo, significant changes. To succeed in the future, we must continue to design, develop, manufacture, assemble, test, market and support new products and enhancements, and we may not be able to do so successfully, if at all, or on a timely, cost effective, or repeatable basis. AI technologies have rapidly developed and our business may be adversely affected if we cannot successfully integrate the technology into our internal business processes and product and service offerings in a timely, cost-effective, compliant and responsible manner. Our competitors may develop technologies and products that are more effective than those we develop or that render our technology and products obsolete or noncompetitive. Furthermore, our products could become unmarketable if new industry standards emerge. We may need to modify our products significantly in the future to remain competitive, and new products we introduce may not be accepted by our customers.

We are subject to numerous state, federal and international laws and directives and regulations in the U.S. and abroad that involve matters central to our business, including data privacy and security, employment and labor relations, immigration, taxation, anti-corruption, anti-bribery, import-export controls, trade restrictions, internal and disclosure control obligations, securities regulation and anti-competition. Compliance with legal requirements is costly, time-consuming and requires significant resources. We also conduct business in certain identified growth areas, such as health information technology, energy and environmental services, which are highly regulated and may expose us to increased compliance risk. Violations of one or more of these legal requirements in the conduct of our business could result in significant fines and other damages, criminal sanctions against us or our officers, prohibitions on doing business and damage to our reputation. Violations of these regulations or contractual obligations related to regulatory compliance in connection with the performance of customer contracts could also result in liability for significant monetary damages, fines and criminal prosecution, unfavorable publicity, and other reputational damage, restrictions on our ability to compete for certain work and allegations by our customers that we have not performed our contractual obligations. Moreover, changes in these laws, the imposition of new or additional regulations or the enactment of any new or more stringent legislation that impacts our business could require us to change the way we operate and could have a material adverse effect on our sales, profitability, cash flows and financial condition.

We are subject to tariffs on certain imports into the United States.U.S.. As the implementation of tariffs is ongoing, more tariffs may be added in the future. These tariffs could have an adverse impact on our business, results of operations, prospects and financial condition, and if we are unable to pass such price increases through to our customers, it would likely increase our cost of sales and, as a result, decrease our gross margins, operating income and net income. AsIn February 2026, the United States Supreme Court invalidated a significant portion of tariffs that had been in effect since April 2025 based on International Emergency Economic Powers Act (IEEPA). The ruling has created substantial uncertainty regarding the datetariff landscape, including the method and timing of thisany Annualrefunds Reportto onpreviously Formcollected 10-K,tariffs discussionsand remainany ongoing in respectimposition of certainnew tradeor restrictions andsimilar tariffs onunder importsalternative fromstatutory Canada, China, and Mexico, as well as retaliatory tariffs enacted in response to such actions.mechanisms. In light of these events, there continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties, and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States.U.S.. Any of these factors could depress economic activity and restrict our access to suppliers or customers and, in turn, have a material adverse effect on the business and financial condition of such suppliers and customers or other counterparties we do business with, which in turn would negatively impact us.

Deteriorating macroeconomic conditions, including slower growth or a recession, inflation, changes in the U.S. presidential administration, bank failures, supply chain disruption, increases in interest rates, increases to fuel and other energy costs or vehicle costs, a potential U.S. federal government shutdown, geopolitical events, including escalating tariff and non-tariff trade measures imposed by the U.S., Mexico, China, Canada and other countries, the potential for new or unforeseen conflicts such as the impact of the Russia and Ukraine conflict and Hamas and Israel conflict,conflicts, changes in the labor market, downturns that could result in store closures, or decreases in government spending power, could in the future result in a decline in customer spending, which could materially adversely affect our business, results of operations, prospects and financial condition.

The Company’s future results of operations could be materially adversely affected by changes in the Company’s effective tax rate as a result of the Corporate Conversion, changes in the valuation of deferred tax assets, challenges by tax authorities or changes in tax laws or regulations. In addition, the amount of income taxes paid by the Company may be subject to ongoing audits by U.S. federal, state and local tax authorities. If these audits result in assessments different from amounts reserved, future financial results may include unfavorable adjustments to the Company’s tax liabilities, which could have a material adverse effect on the Company’s results of operations.

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 are 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. InAs addition,permitted onceunder 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 for the year ended December 31, 2025. In 2026, we expect to no longer qualify as an “Emerging Growth Company” weand, as a result, will be required, pursuantsubject to the requirements of Section 404,404 of the Sarbanes-Oxley Act, including the obligation to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting.

As of December 31, 2024,2025, our total indebtedness, excluding approximately $3.1$7.6 million of unamortized debt issuance costs, was approximately $362.1$499.1 million, consisting of borrowings under our Financing Agreement with TCWCitibank Asset Management Company LLC, as amended N.A.(the “TCWCiti Credit Agreement”). See Note 166 in the Notes to the Consolidated Financial Statements for further details on our refinancing agreement with Citibank N.A., which became effective in April, 2025 (the “Citi Credit Agreement”), which refinanced and replaced the TCW Credit Agreement. We may incur additional indebtedness in the future. For additional information related to our debt, see Note 7 in the Notes to the Consolidated Financial Statements.details.

not be required to comply with the requirement in the Public Company Accounting Oversight BoardPCAOB Auditing Standard 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, to communicate critical audit matters in the auditor’s report;

be permitted to present only two years of audited financial statements and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our periodic reports and registration statements, including in our Prospectusstatements; not be required to disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation; or not be required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency,” and “say-on-golden parachutes.”

As a result of our recent IPO, as a public company, we will incur significant legal, regulatory, finance, accounting, investor relations, insurance and other expenses that we havehad not incurred as a private company, including costs associated with public company reporting requirements and costs of recruiting and retaining non-executive directors. We also have incurred and will continue to incur costs associated with the Sarbanes-Oxley Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act, and related rules implemented by the SEC and the NYSE. The expenses incurred by public companies for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. Our management will need to devote a substantial amount of time to ensure that we comply with all of these requirements, diverting the attention of management away from revenue-producing activities. These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our Board, our Board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions, and other regulatory action and potentially civil litigation.

In addition, we, our executive officers, directors, and holders of substantially all of our capital stock and securities convertible into our capital stock outstanding prior to the IPO, including the selling stockholders, have signed lock-up agreements with the underwriters that, subject to certain customary exceptions, restrict the sale of the shares of our common stock and certain other securities held by them for 180 days following the IPO. See “Certain Relationships and Related Party Transactions—Lock-up Agreements” for a description of these lock-up agreements.

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 prospectusAnnual 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.

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 DefenseWar (“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, 20242025 or the twelve months ended December 31, 2023,2024, with revenue from over 100130 active programs supporting current production and next-generation space, missile, hypersonics, and defense applications.

Aerodynamic and Interstage Systems: involves supporting metallic and composite subsystems designed forto enhance aerodynamics and enable different modes of interstage separation.

We are focused on delivering innovative and customized solutions for our customers, with more than 204300 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 benefittingbenefiting from quality integrated system solutions. Our differentiated market offering is supported by significant sole- and single-source contract positions.

We currently operate as a corporation under the name Karman Holdings Inc. Prior to our initial public offering,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 is offeringoffered our common stock to the public in thisour offeringIPO iswas a corporation rather than a limited liability company and so that our existing investors and new investors in thisthe offeringIPO will ownowned our common stock rather than equity interests in a limited liability company.

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 DoDDoW and the United StatesU.S. intelligence community, including those related to cybersecurity, could impact our ability to perform in the markets we serve.

Our defense operations are affected by U.S. Department of Defense (“DoD”)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.

We believe that our business is well positioned in areas that the DoDDoW 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’sDoW’s strategy and operations.

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, MissileTactical Missiles and Integrated Defense Systems, and Space and Launch). We do not believe our revenues are subject to significant seasonal variations.

Revenue for the year ended December 31, 20242025 increased $64,545,494,$126.2 million, or 23.0%,36.6%, to $345,251,064$471.5 million as compared to $280,705,570$345.3 million for the year ended December 31, 2023. Revenue represents sales from our existing businesses over comparable periods.2024.

The increase in revenues for the year ended December 31, 20242025 as compared to the year ended December 31, 20232024 was primarily attributable to organic growth across all end-markets, Tactical MissileMissiles and Integrated Defense Systems, followed by Hypersonics and Strategic Missile Defense and Space and Launch and Missile and Hypersonics and Strategic Missile Defense.Missile.

Cost of goods sold increased to $213,139,980$281.5 million for the year ended December 31, 2024,2025, from $175,156,456$213.1 million for the year ended December 31, 2023.2024. The $37,983,524,$68.3 million, or 21.7%,32.1%, increase in cost of goods sold was primarily a result of increased spending on materials and labor costs.to Sincesupport theproduction 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.growth.

General and administrative expenses increased to $44,420,816$85.7 million for the year ended December 31, 20242025 from $36,623,263$44.4 million for the year ended December 31, 2023.2024. General and administrative expenses and the related percentage changes for the year ended December 31, 20242025 and 20232024 were as follows:

Depreciation and amortization expense increased to $24,130,519$31.4 million for the year ended December 31, 20242025 compared to $20,432,034$24.1 million for the year ended December 31, 2023.2024. The increase in amortization expense for the year ended December 31, 2024, iswas primarily attributable to the current period amortization of $18,300,000$100.1 million of newly acquired intangible assets from the RMSacquisition of Metal Technology Inc. (“MTI”) on April 2, 2025, the acquisition of Industrial Solid Propulsion (“ISP”) on FebruaryMay 14,28, 2024.2025 and the acquisition of Five Axis Industries, Inc. (“Five Axis”) on October 28, 2025. The acquired RMSMTI, ISP and Five Axis intangible assets will be amortized over a weighted average period of 12.111.0, years.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.

Interest expense, net for the year ended December 31, 20242025 increaseddecreased by $2,865,898,$6.2 million, or 6.0%,12.2%, to $50,732,903$44.6 million compared to $47,867,005$50.7 million 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. 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 7,6, Debt, in the Notes to the Consolidated Financial Statements.

Other Income (expense)

Other income (expense) for the year ended December 31, 20242025 and 20232024 was $1,502,156$4.1 million and $563,772,$1.5 million, respectively. The difference between periods was attributable to athe settlementwrite-off of a shareholdercontingent noteconsideration inliability during the year ended December 31, 2024.2025.

The provision for income taxes was ($1,627,963)$15.2 million and $1.6 million for the year ended December 31, 20242025 comparedand to2024, a tax benefit of $3,168,821 for the year ended December 31, 2023.respectively. The increase in provision for income taxes was attributable to substantially larger pre-tax book income during the year ended December 31, 2024.2025 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 14,13, Provision for Income Taxes, in the Notes to the Consolidated Financial Statements.

our ability to remediate the identified material weaknesses in our internal control over financial reporting; and the other risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, as amended, supplemented or supercededsuperseded in our other reports filed with the Security and Exchange Commission (“SEC”), including under “Risk Factors” in Item 1A of our subsequent Quarterly Reports on Form 10-Q.

We specialize in the rapid design, development and production of mission-critical, next-generation systems solutions that align with the U.S. Department of War’s core mission priorities and the nation’s accelerating demand for access to space. We deliver payload protection, propulsion and launch, and hydro/aerodynamic interstage systems to more than 80150 prime contractors supporting more than 130 space and defense programs. We estimate that no single program accounted for more than 11% of sales in the three and six months ended MarchJune 31,30, 2026 or in the three and six months ended MarchJune 31,30, 2025.

Recent DevelopmentDevelopments

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 four end markets (Hypersonic and Strategic Missile Defense, Missile and Integrated Defense Systems, Space and Launch and Maritime Defense Systems). We do not believe our revenue areis subject to significant seasonal variations.

Our general and administrative expenses (“G&A”) expenses include salaries, fringe benefits (such as health insurance, retirement plans, vacation and sick days), and other expenses related to selling, marketing and proposal activities, certain administrative costs, operational overhead expenses, share-based compensation expenses and amortization of acquired intangible assets. Some G&A expenses relate to marketing and business development activities that support both ongoing business areas as well as new and emerging market areas. These activities can be directly associated with developing requirements for applications of capabilities created in our business development activities as well as managing human capital. G&A expenses isare an important financial metric that we analyze to help us evaluate the contribution of our selling, marketing and proposal activities to revenue generation.

Comparison of the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

Revenue for the three months ended MarchJune 31,30, 2026 increased $51.1$67.0 million, or 51.0%,58.2%, to $151.2$182.1 million, as compared to $100.1$115.1 million for the three months ended MarchJune 31,30, 2025. Revenue for the six months ended June 30, 2026 increased $118.1 million, or 54.9%, to $333.3 million, as compared to$215.2 million for the six months ended June 30, 2025.

The increase in revenue for the three and six months ended MarchJune 31,30, 2026 as compared to the same period in the prior year, was primarily attributable to growth across all end-markets as additional detail below. The results of operations include the following disaggregation of revenue by end market:

1. Revenue in Maritime Defense Systems for the three and six months ended MarchJune 31,30, 2025 was previously included within other end markets.

Growth in Hypersonics and Strategic Missile Defense revenue for the three and six months ended MarchJune 31,30, 2026 from the comparable period in the prior year, was primarily driven by increasesgrowth in strategickey programs.interceptor program production and increased production associated with a new surface-to-surface missile system.

Growth in Space and Launch revenue for the three and six months ended MarchJune 31,30, 2026 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 providersproviders, andpartially spacecraft.offset by customer order timing associated with shifting launch schedules.

Growth in Tactical Missiles and Integrated Defense Systems for the three and six months ended MarchJune 31,30, 2026 from the comparable period in the prior year, was primarily driven by demandstrength associatedin withcore theproduction continuedprograms, adoptionincluding ofunmanned advancedaircraft dronesystems and loitering munitions technologiescounter-UAS, and anemerging increaseprograms intransitioning productionto output for GMLRS.production.

Growth in Maritime Defense Systems for the three and six months ended MarchJune 31,30, 2026 from the comparable period in the prior year was primarily driven by the Seemann Acquisitionlegacy and associatednext generation submarine and LCAC programs.programs..

Cost of goods sold increased by $26.7$35.8 million or 52.5%, and $62.4 million, or 44.0%,48.5%, for the three and six months ended MarchJune 31,30, 2026,2026 and 2025, from the comparable period in the prior year,year. whichThe increase was primarily driven by increased spending on materials and labor to support production growth.

Gross margin increased 2.8%by 2.1% and 2.4% for the three and six months ended MarchJune 31,30, 2026 and 2025 from the comparative period of the prior year. The increase was primarily driven by operating leverage and improved operating efficiency.

General and administrative expenses increased by $5.3$11.9 million, or 23.0% ,61.3% for the three months ended MarchJune 31,30, 2026 from the comparativecomparable period of the prior year. The increaseyear, was primarily driven by anhigher increaseemployee incompensation payrollof approximately $7.5 million due to acquisitions and professionalworkforce feesexpansion, foras tax,well accounting,as andhigher consultingoperating feescosts primarily relatedincurred to transactionsupport expensescontinued and integration cost, partially offset by the decrease in share-based compensation expenses from P units and Phantom Units that fully vested in connection with the completiongrowth of theour Company’s IPO in February 2025.business.

Depreciation and amortization expense increased by $7.6$4.6 million, or 122.2%,61.2%, and $12.2 million, or 88.8%, for the three and six months ended MarchJune 31,30, 20262026, fromrespectively, as compared to the comparativecorresponding periodperiods of the prior year. The increase was primarily attributabledue to the amortization expense on a total of $125.5 million intangible assets acquired in the Seemann AcquisitionAcquisition, completed in the first quarter of 2026, asand wellincremental asdepreciation aand fullamortization quarter of expense fromon intangible assets and fixed assets acquired subsequent toin the firstsecond quarter of 2025.2025, which resulted in a full quarter and two full quarters of additional expenses in the three months and six months ended June 30, 2026, respectively.

Interest expense, net increased by $1.3$3.4 million, or 11.2%,28.5%, and $4.7 million, or 20.0%, for the three and six months ended MarchJune 31,30, 2026 from the comparative period of the prior year, which was primarily driven by higher principal balance, partially offset by lower interest rate. For additional information related to debt, see Note 7, Debt, in the Notes to the condensedconndensed consolidated financial statements.

Other (Income) Expense

Other (income) expense for each of the three and six months ended MarchJune 31,30, 2026 and 2025 was $0.2 million and $0.1 million, respectively. The difference between periods is immaterial.

The provision for income taxes was $0.8$6.1 million and $3.3$5.1 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The increaseeffective tax rate was 21.8% and 71.7% for the six months ended June 30, 2026 and 2025, respectively. The higher effective tax rate in the provision for income taxes for the three months ended March 31, 2026 from the comparativeprior-year period of the prior year, was attributable to higher income tax expenses due to discrete items, including the change in entity classificationclassification, non-deductible executive compensation, and non-deductibleinterest officers’and compensation.penalties For additional information regarding provisions for taxes, see Note 14, Provision for Income Taxes, in the Notesrelated to theprior condensedyear consolidatedtax financialreturns statements.and uncertain tax positions.

We believe the non-GAAP financial measures will help investors understand our financial condition and operating results and assess our future prospects. We believe these non-GAAP financial measures, each of which is discussed in greater detail below, are important supplemental measures because they exclude unusual or non-recurring items as well as non-cash items that are unrelated to or may not be indicative of our ongoing operating results. Further, when read in conjunction with our U.S. GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as a tool to help make financial, operational and planning decisions. We may use non-GAAP financial metrics in certain Management compensation plans, debt covenants, internal budgetary decision making, and other resource allocation decisions. Finally, theseThese measures are often used by analysts and other interested parties to evaluate companies in our industry by providing more comparable measures that are less affected by factors such as capital structure.

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.

Includes depreciation of property, plant and equipment, amortization of intangible assets and right-of-use assets. Depreciation expense includes allocated depreciation from cost of goods sold of $2.9$3.1 million and $2.7$2.8 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $6.0 million and $5.5 million for the six months ended June 30, 2026 and 2025, respectively.

Represents legal and due diligence fees incurred in connection with planned and completed acquisitions, which are required to be expensed as incurred. For the three and six months ended MarchJune 31,30, 2026, these expenses isare primarily related to the Seemann acquisition. For the three and six months ended June 30, 2025, these expenses are primarily related to the MTI and ISP acquisitions. 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.performance, Duringwhich was reflected in the threesix months ended MarchJune 31,30, 2025, the $1.9 million was mostly related to such IPO related expenses.2025.

Reflects share-based compensation expenses. For the three and six months ended June 30, 2026, these expenses associatedrelated withto the Company’s RSUs and PSUs. For the six months ended June 30, 2025, these expenses related to 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.

Represents itemitems management believes are not indicative of ongoing operating performance.performance, Other non-recurring costs for the three months ended March 31, 2026 includes anincluding estimated $1.6 million legal settlements and related professional fees, as well as and professional fees associateassociated with other non-recurring events. Other non-recurring costs for the three and six months ended June 30, 2025 represent the write-off of unamortized debt issuance costs associated with our previous refinanced term loan.

We believe that our cash and cash equivalents as of MarchJune 31,30, 2026, together with available borrowings under the Citibank 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.

Net cash providedused byin operating activities for the threesix months ended MarchJune 31,30, 2026 was $0.2$3.0 million , primarily consisting of net income of $7.8$21.8 million, non-cash item of $15.2$32.7 million and a net change in our operating assets and liabilities of 22.8$57.5 million. Change in our operating assets and liabilities was primarily driven by an increase in contract assets of $7.1$24.9 million, a decrease in contract liabilities of $0.3 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 an increase in accounts receivable of $9.1$25.5 million , partially offset by a decrease in accounts payable, accruals and income tax payable of $2.0$0.8 million, which was mainly driven by timing of other payments.

Net cash used in operating activities for the threesix months ended MarchJune 31,30, 2025 was $13.6$31.0 million, primarily consisting of net lossincome of $4.8$2.0 million, non-cash items of $13.0$23.3 million and a net change in our operating assets and liabilities of $21.8$56.3 million. Change in our operating assets and liabilities was primarily driven by an increase in contract assets of $14.9$26.4 million, a decrease in contract liabilities of $3.9$10.1 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 $20.0$18.9 million, which was mainly due to timing of payment and a decrease in accounts receivable of $7.5 million,which was due to timing of invoicing and improved collection.payments.

Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 was $217.5$231.5 million, which was primarily driven by the Seemann Acquisition of $210.2$210.0 million and purchase of property and equipment.

Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2025 was $11.0$140.9 million, which was primarily driven byas a $6.0result of MTI and ISP acquisitions of $126.3 million in total and investment in a convertible note and purchase of property$6.0 and equipment.million.

Net cash provided by financing activities for the threesix months ended MarchJune 31,30, 2026 was $257.2$252.2 million, which was primarily driven by proceeds from our term note of $260.1 million (net of payment of debt issuance costs), partially offset by repayment of our Citibank credit facilities of $1.9$3.9 million.

Net cash provided by financing activities for the threesix months ended MarchJune 31,30, 2025 was $126.8$187.8 million, which was primarily driven by net proceeds from our IPO of $153.8 million, proceeds from our new Citibank credit facilities of $398.5 million (net of debt issuance costs), partially offset by repayment of revolvingour lineold TCW credit facilities of credit of $25.0 million and repayment of notes payable of $2.3$337.1 million.

As of MarchJune 31,30, 2026 and 2025, we did not have any off-balance sheet arrangements, as defined in Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows.