FEIM · CIK 0000039020
What Frequency Electronics, Inc. told the SEC could break it.
Frequency Electronics is overwhelmingly tied to the U.S. Government: about 94% of fiscal 2025 sales came from government contracts or subcontracts for government end-use (with one FEI-NY customer alone at $26.9 million), so program funding cuts, delays or terminations would materially hit revenue. Compounding that, 96% of sales came from fixed-price contracts, under which it bears cost overruns — a risk amplified by inflation and rising labor rates. Its supply chain took a geopolitical hit too: it historically relied on Morion in St. Petersburg, Russia for cost-effective high-precision quartz resonators and crystal oscillators, but Russia-Ukraine sanctions ended purchases and it fully impaired that investment to $0, forcing it to find alternative sources. As a defense contractor it also operates under FAR/DFARS, audits, clearance and export-control requirements.
4 self-disclosed vulnerabilities, pulled from its own filings, each in the company’s words, with the source. This is the risk register almost nobody reads.
In its own words
What could break it.
Regulatory & policy
- loss of Morion (St. Petersburg, Russia) as a cost-effective source for high-precision quartz resonators and crystal oscillators due to Russia-Ukraine sanctions; investment written off to $0medium
Frequency Electronics historically relied on Morion, a Russian crystal-oscillator manufacturer (in which it held a 4.6% stake and to which it licensed technology), as a cost-effective source for high-precision quartz resonators and crystal oscillators; due to the Russia-Ukraine conflict and resulting sanctions, the future status of that investment and supply relationship is uncertain, FEI made no purchases from Morion in fiscal 2025 or 2024, and it fully impaired the investment (carrying value $0) — so it must secure alternative sources for these critical timing components, a supply-chain disruption risk for its products.
“Due to the current Russia-Ukraine conflict and resulting sanctions, the future status of FEI's equity investment in Morion is uncertain.”
- government-contractor regulation — FAR/DFARS, contract audits, security-clearance maintenance, export controls, anti-boycott rules and OFAC sanctions; violations risk fines, suspension or debarmentlow
As a defense contractor, Frequency Electronics' contracts are mostly subject to the Federal Acquisition Regulations (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS), and it is subject to government audits, security-clearance requirements, export-control rules, anti-boycott regulations and OFAC sanctions (notably implicating its investment in Morion, a subsidiary of state-owned Russian bank Gazprombank); audit findings or violations could result in fines, forfeiture of profits, loss of security clearance, suspension or debarment from government contracting, any of which would materially harm its business.
Customer concentration
- ~94% of sales to the U.S. Government or U.S.-Government-end-use subcontracts; one FEI-NY customer was $26.9M (>10% of segment); programs subject to funding cuts/terminationhigh
Frequency Electronics is overwhelmingly dependent on U.S. Government demand: approximately 94% (98% in fiscal 2024) of sales were made under contracts to the U.S. Government or subcontracts for U.S. Government end-use, and within the FEI-NY segment one customer accounted for $26.9 million (more than 10% of that segment's revenue); these programs may be only partially or incrementally funded and are subject to termination, funding reductions or delays from shifting government priorities — so budget changes or program cancellation would materially affect its revenue.
“April 30, 2025 and 2024, approximately 94 % and 98 %, respectively, of the Company's sales were made under contracts to the U.S. Government or subcontracts for U.S. Government end-use.”
SEC filing →As of 2025
Other disclosures
- fixed-price contract concentration — 96% of fiscal 2025 sales from fixed-price contracts, which bear cost-overrun risk amplified by inflation, labor shortages and rising labor rateshigh
Frequency Electronics derived 96% of fiscal 2025 sales from fixed-price contracts, which inherently carry more financial risk than cost-type contracts because the company bears cost overruns; inflationary pressures, labor shortages and increased labor rates can raise costs above the fixed price, and although management uses its best judgment to estimate contract costs, future events may require adjustments (including loss provisions) that adversely affect operating income.
“In fiscal 2025, 96% of our sales were derived from fixed-price contracts.”
SEC filing →As of 2025
The hidden graph
Who it depends on, and who depends on it.
Relationships surfaced from filings, including ones disclosed by the other side, which is how the non-obvious ones come to light.
Its customers
Morion, Inc. (St. Petersburg, Russia)
“the Company made a strategic investment in and licensed certain technology to Morion, Inc. (“Morion”), a Russian crystal oscillator manufacturer located in St. Petersburg, Russia.”
Cited →U.S. Government
“April 30, 2025 and 2024, approximately 94 % and 98 %, respectively, of the Company's sales were made under contracts to the U.S. Government or subcontracts for U.S. Government end-use.”
Cited →“During fiscal year 2025, only Northrop Grumman accounted for more than 10% of the Company's consolidated revenues; however, the Company has other large customers that it relies on for significant portions of its consolidated revenues.”
Cited →
Its suppliers
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