In December 2023, our stockholders approved the Comtech Telecommunications Corp. 2023 Equity and Incentive Plan (the “2023 Plan”), which replaced the Amended and Restated 2000 Stock Incentive Plan. Under the 2023 Plan, the initial number of shares of common stock available for all awards, other than substitute awards granted in connection with a corporate transaction, was 1,669,683 shares of common stock plus certain expired or cancelled awards recycled back into the 2023 Plan. On January 13, 2025 and March 9, 2026, our stockholders approved an amendment to the 2023 Plan to increase the number of available shares of common stock authorized for issuance under the 2023 Plan by 2,195,000 and 2,800,000 shares, respectively. Accordingly, under the terms of the 2023 Plan, as amended, the maximum number of shares of common stock authorized for issuance is equal to 6,664,683 shares, including 69,683 shares from the 2000 Stock Incentive Plan.

We issue stock-based awards to certain of our employees and our Board of Directors pursuant to the 2023 Plan, as amended and/or restated from time to time, and our 2001 Employee Stock Purchase Plan, as amended and/or restated from time to time (the "ESPP"), and recognize related stock-based compensation in our condensed consolidated financial statements. The 2023 Plan provides for the granting to employees and consultants of Comtech (including prospective employees and consultants): (i) incentive and non-qualified stock options, (ii) restricted stock units ("RSUs"), (iii) RSUs with performance measures (which we refer to as "performance shares"), (iv) restricted stock, (v) stock units (reserved for issuance to non-employee directors) and share units (reserved for issuance to employees) (collectively, "share units") and (vi) stock appreciation rights ("SARs"), among other types of awards. Our non-employee directors are eligible to receive non-discretionary grants of stock-based awards, subject to certain limitations.

As of April 30, 2026, the aggregate number of shares of common stock which may be issued may not exceed 15,757,500. Stock options granted may not have a term exceeding ten years or, in the case of an incentive stock award granted to a stockholder who owns stock representing more than 10.0% of the voting power, no more than five years. We expect to settle all outstanding awards under the Plan and employee purchases under the ESPP with the issuance of new shares of our common stock.

As of April 30, 2026, we had granted stock-based awards representing the right to purchase and/or acquire an aggregate of 14,505,669 shares (net of 8,056,704 expired and canceled awards), of which an aggregate of 10,916,026 have been exercised or settled.

Our ESPP provides for the issuance of up to 1,300,000 shares of our common stock. Our ESPP is intended to provide our eligible employees the opportunity to acquire our common stock at 85% of fair market value on the first or last day of each calendar quarter, whichever is lower. Through April 30, 2026, we have cumulatively issued 1,137,632 shares of our common stock to participating employees in connection with our ESPP.


	Three months ended April 30,			Nine months ended April 30,
	2026		2025	2026		2025
Cost of sales	$	51,000	99,000	$	165,000	299,000
Selling, general and administrative expenses	1,089,000		1,033,000	2,445,000		2,033,000
Research and development expenses	41,000		63,000	110,000		188,000


Stock-based compensation expense before income tax benefit	1,181,000		1,195,000	2,720,000		2,520,000
Estimated income tax benefit	—		(252,000)	—		(516,000)
Net stock-based compensation expense	$	1,181,000	943,000	$	2,720,000	2,004,000

Stock-based compensation for equity-classified awards is measured at the date of grant, based on an estimate of the fair value of the award and is generally expensed over the vesting period of the award. At April 30, 2026, unrecognized stock-based compensation of $8,446,000, net of estimated forfeitures of $361,000, is expected to be recognized over a weighted average period of 2.0 years. Total stock-based compensation capitalized and included in ending inventory at both April 30, 2026 and July 31, 2025 was $198,000. There are no liability-classified stock-based awards outstanding as of April 30, 2026 or July 31, 2025.


	Three months ended April 30,			Nine months ended April 30,
	2026		2025	2026		2025
Stock options	$	—	6,000	$	—	26,000
Performance shares	277,000		384,000	121,000		289,000
RSUs, restricted stock and share units	893,000		794,000	2,574,000		2,165,000
ESPP	11,000		11,000	25,000		40,000



Stock-based compensation expense before income tax benefit	1,181,000		1,195,000	2,720,000		2,520,000
Estimated income tax benefit	—		(252,000)	—		(516,000)
Net stock-based compensation expense	$	1,181,000	943,000	$	2,720,000	2,004,000

The estimated income tax benefit as shown in the above table was computed using income tax rates expected to apply when the awards are settled. Such deferred tax asset was recorded net as part of our non-current deferred tax liability on our Condensed Consolidated Balance Sheets as of April 30, 2026 and July 31, 2025. The actual income tax benefit recognized for tax reporting is based on the fair market value of our common stock at the time of settlement and can significantly differ from the estimated income tax benefit recorded for financial reporting. There is no estimated income tax benefit recognized for three and nine months ended April 30, 2026 in light of the valuation allowance established on all U.S. deferred tax assets.

The following table summarizes the Plan's activity:


	Awards (in Shares)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at July 31, 2025	124,470	$	20.45

Expired	(28,220)	28.35

Outstanding at October 31, 2025	96,250	18.13



Outstanding at January 31, 2026	96,250	$	18.13



Outstanding at April 30, 2026	96,250	$	18.13	3.87	$	—

Exercisable at April 30, 2026	96,250	$	18.13	3.87	$	—

Vested and expected to vest at April 30, 2026	96,250	$	18.13	3.87	$	—

Stock options outstanding as of April 30, 2026 have exercise prices ranging from $17.88 - $22.75, representing the fair market value of our common stock on the date of grant, a contractual term of ten years and a vesting period of five years.


	Awards (in Shares)	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding at July 31, 2025	1,675,105	$	6.53
Granted	439,624	2.26
Settled	(337,984)	6.67
Canceled/Forfeited	(16,231)	5.86
Outstanding at October 31, 2025	1,760,514	$	5.45
Granted	2,009,343	3.16
Settled	(124,752)	5.00
Canceled/Forfeited	(289,516)	6.98
Outstanding at January 31, 2026	3,355,589	$	3.96
Granted	287,902	3.59
Settled	(95,982)	8.66
Canceled/Forfeited	(54,116)	3.11
Outstanding at April 30, 2026	3,493,393	$	3.81	$	12,297,000

Vested at April 30, 2026	177,814	$	9.55	$	626,000

Vested and expected to vest at April 30, 2026	3,397,506	$	3.82	$	11,959,000

The total intrinsic value relating to fully-vested awards settled during the three and nine months ended April 30, 2026 was $437,000 and $1,864,000, respectively. The total intrinsic value relating to fully-vested awards settled during the three and nine months ended April 30, 2025 was $13,000 and $2,281,000, respectively.

The performance shares granted to employees principally vest over a three-year performance period, if pre-established performance goals are attained, or as specified pursuant to the Plan and related agreements. As of April 30, 2026, the number of outstanding performance shares included in the above table, and the related compensation expense prior to consideration of estimated pre-vesting forfeitures, assume achievement of the pre-established goals at a target level, except for performance shares granted in fiscal 2024 and fiscal 2025, which reflect net lower-than-estimated achievement.

RSUs and restricted stock granted to non-employee directors prior to August 2022 had a vesting period of five years and are convertible into shares of our common stock generally at the time of termination, on a one-for-one basis for no cash consideration, or earlier under certain circumstances. Commencing in August 2022, such awards have a vesting period of one year.

RSUs granted to employees prior to August 2022 have a vesting period of five years and are convertible into shares of our common stock generally at the time of vesting, on a one-for-one basis for no cash consideration. Commencing in August 2022, such RSUs have a vesting period of three years.

The fair value of performance shares, RSUs, restricted stock, share units and other stock-based awards is determined using the closing market price of our common stock on the date of grant, less the present value of any estimated future dividend equivalents such awards are not entitled to receive and an applicable estimated discount for any post-vesting transfer restrictions.

Dividend equivalents are subject to forfeiture, similar to the terms of the underlying stock-based awards, and are payable in cash generally at the time of settlement of the underlying award. During the three and nine months ended April 30, 2026, we paid out $5,000 and $33,000, respectively. During the three and nine months ended April 30, 2025, we reversed $1,000 and $33,000, respectively, of previously accrued dividend equivalents due to forfeitures and paid out $157,000 during the nine months ended April 30, 2025. Accrued dividend equivalents were recorded as a reduction to retained earnings. As of April 30, 2026 and July 31, 2025, accrued dividend equivalents were $84,000 and $117,000, respectively.