7. GOVERNMENT GRANTS

The Company has entered into multiple subcontract agreements with multiple contract administrators engaged by the United States Government, to perform prototype development, manufacturing process enhancements, and capital equipment build-outs in support of government programs. Under the terms of these agreements, the Company is reimbursed for qualifying costs incurred, including equipment, labor, materials, and manufacturing expenses, plus a nominal contractual profit margin. The Company accounts for these contracts as government grants.

The following table summarizes a roll forward of the deferred government grants for the three months ended April 3, 2026:

The deferred government grant liability as of April 3, 2026 will be recognized in future periods as an offset to property, plant and equipment, net or as other revenue, subject to the conditions of the grant agreement being met.