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 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 July 31, 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 July 31, 2026, we had granted stock-based awards representing the right to purchase and/or acquire an aggregate of 14,479,495 shares (net of 8,082,878 expired and canceled awards), of which an aggregate of 11,083,207 have been exercised or settled.

As disclosed in Note (2) Business Divestiture, on June 14, 2026, we entered into the Purchase Agreement to sell the Disposal Group to Gilat. Outstanding stock-based awards for employees of the S&S Disposal Group will vest, or otherwise be forfeited, in accordance with the original terms of their stock award agreements upon closing of the divestiture transaction.

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 July 31, 2026, we have cumulatively issued 1,148,209 shares of our common stock to participating employees in connection with our ESPP.


	Fiscal Years Ended July 31,
	2026		2025
Cost of sales	$	141,000	243,000
Selling, general and administrative expenses	2,965,000		1,918,000
Research and development expenses	15,000		77,000
Stock-based compensation expense before income tax benefit	3,121,000		2,238,000
Estimated income tax benefit	—		—
Net stock-based compensation expense	$	3,121,000	2,238,000

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 July 31, 2026, unrecognized stock-based compensation related to continuing operations of $5,143,000, net of estimated forfeitures of $249,000, is expected to be recognized over a weighted average period of 1.7 years. There are no liability-classified stock-based awards outstanding as of July 31, 2026 or 2025.


	Fiscal Years Ended July 31,
	2026		2025
Stock options	$	—	19,000
Performance shares	461,000		(44,000)
RSUs, restricted stock and share units	2,638,000		2,232,000
ESPP	22,000		31,000
Stock-based compensation expense before income tax benefit	3,121,000		2,238,000
Estimated income tax benefit	—		—
Net stock-based compensation expense	$	3,121,000	2,238,000

During fiscal 2026, we reversed a portion of our stock-based compensation expense related to performance shares due to revised estimates of projected achievement of fiscal 2024 and 2025 performance share goals. In fiscal 2025, we reversed a portion of our stock-based compensation expense related to performance shares due to lower-than-estimated achievement of fiscal 2022 and 2023 performance share goals. Stock-based compensation expense in fiscal 2025 also reflects the forfeiture of awards related to our former Chief Operating Officer and Chief Executive Officer, whose employment were both terminated during fiscal 2025.

The estimated income tax benefit as shown in the above tables was computed using income tax rates expected to apply when the awards are settled. 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 fiscal 2026 and fiscal 2025 in light of the valuation allowance established on all U.S. deferred tax assets.


	Awards (in Shares)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value

Outstanding at July 31, 2024	141,190	$	20.61
Expired/canceled	(16,720)	21.77

Outstanding at July 31, 2025	124,470	20.45
Expired/canceled	(33,220)	27.51

Outstanding at July 31, 2026	91,250	$	17.88	3.82	$	—

Exercisable at July 31, 2026	91,250	$	17.88	3.82	$	—

Vested and expected to vest at July 31, 2026	91,250	$	17.88	3.82	$	—

Stock options outstanding as of July 31, 2026 have an exercise price of $17.88, 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, 2024	1,800,288	$	10.61
Granted	1,677,677	4.57
Settled	(855,870)	9.37
Canceled/Forfeited	(946,990)	6.54
Outstanding at July 31, 2025	1,675,105	6.53
Granted	2,736,869	3.06
Settled	(700,352)	6.08
Canceled/Forfeited	(406,584)	6.04
Outstanding at July 31, 2026	3,305,038	$	3.82	$	5,552,000

Vested at July 31, 2026	134,550	$	10.53	$	226,000

Vested and expected to vest at July 31, 2026	3,220,272	$	3.82	$	5,410,000

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 July 31, 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 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 were 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 fiscal 2026, we paid out $32,000. During fiscal 2025, we reversed $42,000 of previously accrued dividend equivalents due to forfeitures and paid out $158,000. Accrued dividend equivalents were recorded as an adjustment to retained earnings. As of July 31, 2026 and 2025, accrued dividend equivalents were $85,000 and $117,000, respectively.

With respect to the actual settlement of stock-based awards for income tax reporting, for fiscal years ended July 31, 2026 and 2025, we have not recognized any tax benefit or expense in light of the valuation allowance established for all U.S. deferred tax assets.