10q10k10q10k.net

What changed in CPI AEROSTRUCTURES INC's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of CPI AEROSTRUCTURES INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+294 added−265 removedSource: 10-K (2026-03-31) vs 10-K (2025-03-31)

Top changes in CPI AEROSTRUCTURES INC's 2025 10-K

294 paragraphs added · 265 removed · 186 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

81 edited+22 added−27 removed32 unchanged
Biggest changeProducts and Services We offer design, engineering, manufacture, build, MRO services, and supply chain and kitting services capabilities to the A&D industry as follows: ● Aerostructures: New Production and Repair/Overhaul of Fielded Wing Structures and other Control Surfaces, Rudder Island, Engine Inlets/Nacelles, Engine Exhaust Manifolds, Aircraft Doors and Windows, Aircraft Steps and Racks, and other Aircraft Secondary Structures ● Aerosystems: Airborne Pod Structures and Integration of Internal Systems, Radar Housing Structures, Panel Assemblies, Mechanical Door Locking Systems, and Canopy Lifting Systems ● Large Diameter Tube Bending: Complex Ducts and Tubes in Steel, Aluminum, Titanium, and Nickel Alloys ● Complex Specialty Welding: Fusion Welded Fluid Tanks and Resistance Welding (Spot and Seam) of complex metallic assemblies ● Electrical Cables, Harness, and Enclosures: Wire Harnesses, Power Control Systems, Fuel Management Systems, Power Distribution Systems, Fully Integrated Electrical Control Systems, and RF enclosures Engineering Services and Capabilities As a build-to-print structural assemblies manufacturer, CPI Aero’s engineering focus is on executing customer contracts through product realization, and to support collaborative design development using design for manufacturing and assembly (“DFMA”), geometric dimensioning & tolerancing (“GD&T”), and tooling concept support.
Biggest changeOur products are described in the following categories: ● Aerostructures: New Production and Repair/Overhaul of Fielded Wing Structures and other Control Surfaces, Rudder Island/Drag Chute Canisters, Engine Inlets/Nacelles, Engine Exhaust Manifolds, Aircraft Doors and Windows, Aircraft Steps and Racks, and other Aircraft Secondary Structures ● Aerosystems: Airborne Pod Structures and Integration of Internal Systems, Radar Housing Structures and Integrated Radar Housing Rack Systems ● Small-to-Large Diameter Tube Bending: Complex Ducts and Tubes in Steel, Aluminum, Titanium, and Nickel Alloys, from ¼” to 5” diameter via fully automated NC Tube bending equipment ● Complex Specialty Welding: Fusion Welded Fluid Tanks, Aerial Refueling Probes, Plenums, Tubes and Ducts and Resistance Welding (Spot and Seam) of fairings and complex metallic assemblies ● Electrical Cables, Harness, and Enclosures: Wire Harnesses, Power Control Systems, Fuel Management Systems, Power Distribution Systems, Fully Integrated Electrical Control Systems, and RF enclosures Engineering Services and Capabilities As a build-to-print structural assemblies manufacturer, CPI Aero’s engineering focus is on executing customer contracts through product realization, and to support collaborative design development using design for manufacturing and assembly (“DFMA”), geometric dimensioning & tolerancing (“GD&T”), and tooling concept support.
Occupational Safety and Health Administration, various state, county, and local agencies acting in cooperation with federal and state authorities.
Occupational Safety and Health Administration, and various state, county, and local agencies acting in cooperation with federal and state authorities.
For example, costs such as those related to charitable contributions, advertising, interest expense, and public relations are unallowable, and therefore not recoverable through sales. During and after the fulfillment of a government contract, we may be audited in respect of the direct and allocated indirect costs attributed thereto. These audits may result in adjustments to our contract costs.
For example, costs such as those related to charitable contributions, advertising, interest expense, and public relations are unallowable, and therefore not recoverable through sales. During and after the fulfillment of a government contract, we may be audited in respect of the direct and allocated indirect costs attributed to such contract. These audits may result in adjustments to our contract costs.
Among other things, these regulatory bodies impose restrictions to control air, soil, and water pollution, to protect against occupational exposure to chemicals, including health and safety risks, and to require notification or reporting of the storage, use, and release of certain hazardous chemicals and substances. The extensive regulatory framework imposes compliance burdens and risks on us.
Among other things, these regulatory bodies impose restrictions to control air, soil, and water pollution, to protect against occupational exposure to chemicals, including health and safety risks, and to require notification or reporting of the storage, use, and release of certain hazardous chemicals and substances. The regulatory framework imposes compliance burdens and risks on us.
We continue to pursue opportunities that enable us to build our talent pipeline, particularly for skilled labor, including running an apprentice training program several times over the course of the year and forging relationships with local high school and trade schools.
We continue to pursue opportunities that enable us to build our talent pipeline, particularly for skilled manufacturing labor, including running an apprentice training program several times over the course of the year and forging relationships with local high school and trade schools.
Our failure to comply with applicable regulations could result in the termination of or our disqualification from some of our contracts, which could have a material adverse effect on our operations. 9 Government Contract Compliance Our government contracts and sub-contracts are subject to the procurement rules and regulations of the U.S. Government.
Our failure to comply with applicable regulations could result in the termination of or our disqualification from some of our contracts, which could have a material adverse effect on our operations. Government Contract Compliance Our government contracts and sub-contracts are subject to the procurement rules and regulations of the U.S. Government.
We believe that we are in compliance with all federal, state, and local laws and regulations governing our operations and have obtained all material licenses and permits required for the operation of our business. The U.S.
We believe that we are in material compliance with applicable federal, state, and local laws and regulations governing our operations and that we have obtained all material licenses and permits required for the operation of our business. The U.S.
This includes, hosting educational experiences and shop tours with high school and trade school classes. Members of our leadership team participate on the boards of trade associations that support and advance the interests of the local community.
This includes hosting educational experiences and shop tours with high school and trade school classes. Members of our leadership team participate on the boards of trade associations that support and advance the interests of the local community. 10
The FAA prescribes standards and licensing requirements for aircraft and aircraft components. We are subject to inspections by the FAA and may be subjected to fines and other penalties (including orders to cease production) for noncompliance with FAA regulations.
The FAA prescribes standards and licensing requirements for aircraft and aircraft . We are subject to inspections by the FAA and may be subjected to fines and other penalties (including orders to cease production) for noncompliance with FAA regulations.
Navy in April 2016, and CPI Aero has a contract with Raytheon to assemble the pod structural housing and air management system (“AMS”) and integrate customer furnished equipment. In 2019, Raytheon authorized CPI Aero to begin production of pod structures and AMS components for the System Demonstration and Test Article (“SDTA”) phase of the NGJ-MB program.
Navy in April 2016, and CPI Aero has a contract with Raytheon to assemble the pod structural housing and air management system (“AMS”) and integrate customer furnished equipment. In 2019, Raytheon authorized CPI Aero to begin production of pod structures and AMS assemblies for the System Demonstration and Test Article (“SDTA”) phase of the NGJ-MB program.
Many of the contract terms are dictated by these rules and regulations. Specifically, cost-based pricing is determined under the Federal Acquisition Regulation (“FAR”), which provide guidance on the types of costs that are allowable in establishing prices for goods and services under U.S. Government contracts.
Many of the contract terms are dictated by these rules and regulations. Specifically, cost-based pricing is determined under the Federal Acquisition Regulation (“FAR”), which provides guidance on the types of costs that are allowable in establishing prices for goods and services under U.S. Government contracts.
In 2017, CPI Aero received an approximately $21 million long-term agreement through 2022 for the production of fuel panel assemblies, work it has performed for Sikorsky since 2010. Also in 2017, the Company received an $8 million long-term agreement through 2022 to manufacture machine gunner window assemblies for the BLACK HAWK, continuing work it has performed since 2010.
In 2017, CPI Aero received an approximate $21 million long-term agreement through 2022 for the production of fuel panel assemblies, work it has performed for Sikorsky since 2010. Also in 2017, the Company received an $8 million long-term agreement through 2022 to manufacture machine gunner window assemblies for the BLACK HAWK, continuing work it has performed since 2010.
In certain instances, the large prime contractors often subcontract much of the work they win to their Tier 1 suppliers so we also may act as a subcontractor to them in these situations. Furthermore, in some cases these prime contractors are not permitted to bid, for example when the U.S. Government designates a contract as a Small Business Set-Aside.
In certain instances, the large prime contractors often subcontract much of the work they win to their Tier 1 suppliers, and we may act as a subcontractor to them in these situations. Furthermore, in some cases these prime contractors are not permitted to bid, for example when the U.S. Government designates a contract as a Small Business Set-Aside.
All SDTA pods and AMS components orders received were valued in excess of $60 million and completed delivery as of December 31, 2022. On November 16, 2021 the Company announced it was authorized by Raytheon to start the production phase of the program. The Company was awarded low rate production (“LRIP”) I and II orders valued at approximately $18.5 million.
All SDTA pods and AMS assemblies’ orders received were valued in excess of $60.0 million and completed delivery as of December 31, 2022. On November 16, 2021 the Company announced it was authorized by Raytheon to start the production phase of the program. The Company was awarded low rate production (“LRIP”) I and II orders valued at approximately $18.5 million.
CPI Aero has a deep well of experience on various types of detail part manufacturing that allows us to provide detailed design for manufacturing input during the design refinement process. We have significant experience working in a full model-based definition environment, both CATIA and NX, due to our long sustainment support on older airframes.
CPI Aero has experience with various types of detail part manufacturing that allows us to provide detailed design for manufacturing input during the design refinement process. We have significant experience working in a full model-based definition environment, both CATIA and NX, due to our long sustainment support on older airframes.
Additionally, the FAR generally provide that we will not be held liable for any loss of or damage to property of the U.S. Government that occurs after the U.S.
Additionally, the FAR generally provides that we will not be held liable for any loss of or damage to property of the U.S. Government that occurs after the U.S.
We have obtained a permit from the Town of Islip, New York, Building Division in order to maintain a paint booth containing flammable liquids. Federal Aviation Administration Regulation We are subject to regulation by the Federal Aviation Administration (“FAA”) under the provisions of the Federal Aviation Act of 1958, as amended.
We have obtained a permit from the Town of Islip, New York, Building Division to maintain a paint booth containing flammable liquids. 8 Federal Aviation Administration Regulation We are subject to regulation by the Federal Aviation Administration (“FAA”) under the provisions of the Federal Aviation Act of 1958, as amended.
We attract and compensate our employees by offering a competitive total rewards package which includes benefits, resources, and programs that support health, physical, mental, and financial wellness. The benefits package we offer, coupled with employee recognition opportunities and employee engagement activities help create a comprehensive employee experience. We periodically benchmark our benefits programs and associated costs to remain competitive.
We attract and compensate our employees by offering a competitive total rewards package which includes benefits, resources, and programs that support health, physical, mental, and financial wellness. The benefits package we offer, together with employee recognition opportunities and employee engagement activities helps create a comprehensive employee experience. We periodically benchmark our benefits programs and associated costs to remain competitive.
Navy plans to install these pods on 139 EA-18G Growlers during the production phase. There are two pods per aircraft. There are also 11 EA-18Gs operated by the Royal Australian Air Force. Raytheon received a $1 billion sole source contract from the U.S.
Navy plans to install these pods on 139 EA-18G Growlers during the production phase. There are two pods per aircraft. There are also 11 EA-18Gs operated by the Royal Australian Air Force. Raytheon received an approximate $1.0 billion sole source contract from the U.S.
Since 2008, the cumulative orders we have received on this program through December 31, 2024 exceed $210 million. We anticipate shipping against these orders into 2025. In February 2020, the Company’s subsidiary WMI received approximately $4 million in purchase orders from NGC to produce numerous welded structures and tubes for the E-2D Advanced Hawkeye.
Since 2008, the cumulative orders we have received on this program through December 31, 2025 exceed $210 million. We anticipate continuing to ship against these orders into 2026. In February 2020, the Company’s subsidiary WMI received approximately $4 million in purchase orders from NGC to produce numerous welded structures and tubes for the E-2D Advanced Hawkeye.
We believe this coverage is adequate for claims that have been and may be brought against us, and for the types of products presently marketed because of the strict inspection standards imposed on us by our customers before they take possession of our products.
We believe this coverage is adequate for the types of claims that have been and may be brought against us, and for the types of products presently marketed, particularly in light of the strict inspection standards imposed on us by our customers before they take possession of our products.
A third five-year long-term agreement was awarded in January 2022, also for gunner window assemblies, estimated at $13.6 million with a period of performance from 2023-2027. Also, since October 2018, CPI Aero has received multiple purchase orders totaling $22 million for hover infrared suppression system (“HIRSS”) module assemblies for use as spares on older variants of the BLACK HAWK.
A third five-year long-term agreement was awarded in January 2022, also for gunner window assemblies, estimated at $13.6 million with a period of performance from 2023-2027. In October 2024, CPI Aero received multiple purchase orders totaling $2.3 million for hover infrared suppression system (“HIRSS”) module assemblies for use as spares on older variants of the BLACK HAWK.
In addition, the Occupational Safety and Health Act, which requires employers to provide a place of employment that is free from recognized and preventable hazards that are likely to cause serious physical harm to employees, obligates employers to provide notice to employees regarding the presence of hazardous chemicals and to train employees in the use of such substances.
In addition, the Occupational Safety and Health Act, which requires employers to provide a workplace free from recognized hazards that are likely to cause serious physical harm to employees, obligates employers to provide notice to employees regarding the presence of hazardous chemicals and to train employees in the use of such substances.
As of December 31, 2024, we had 212 full-time employees as compared to 203 full-time employees as of December 31, 2023. On an as-needed basis, we employ temporary personnel with specialized disciplines to fill staffing gaps. We do not have any employees represented by a union, and we believe that our relations with our employees are good.
As of December 31, 2025, we had 192 full-time employees as compared to 212 full-time employees as of December 31, 2024. On an as-needed basis, we employ temporary personnel with specialized disciplines to fill staffing gaps. We do not have any employees represented by a union, and we believe that we maintain good relations with our employees.
The table below represents our result from the two most recent calendar years: Safety Metric 2024 2023 TRIR 4.8 2.9 DART 2.7 1.0 TRIR = total number of recordable cases x 200,000 / total hours worked DART = number of cases with days away from work x 200,000 / total hours worked by all employees 11 Community Involvement Having a positive impact on the community around us is one of our most important values.
The table below represents our result from the two most recent calendar years: Safety Metric 2025 2024 TRIR 4.6 4.8 DART 2.3 2.7 TRIR = total number of recordable cases x 200,000 / total hours worked DART = number of cases with days away from work x 200,000 / total hours worked by all employees Community Involvement Having a positive impact on the community around us is one of our most important values.
Executive Jets – we provide engine inlet assemblies for Embraer S.A.’s (“Embraer”) Phenom 300 business jet and recently were awarded a contract to manufacture engine inlets for the Phenom 100 business jet. 6% and 5% of our revenue in 2024 and 2023, respectively, was generated by commercial contract sales.
Executive Jets – we provide engine inlet assemblies for Embraer S.A.’s (“Embraer”) Phenom 300 business jet and were subsequently awarded a contract to manufacture engine inlets for the Phenom 100 business jet. 9% and 6% of our revenue in 2025 and 2024, respectively, was generated by commercial contract sales.
Item 1. BUSINESS General CPI Aerostructures, Inc., including its wholly owned subsidiary Welding Metallurgy, Inc. (“WMI”) and Compac Development Corporation, a wholly owned subsidiary of WMI (collectively, “CPI Aero”, the “Company”, “us”, or “we”) is a manufacturer of structural assemblies, integrated systems, and kitted components for the domestic and international aerospace and defense (“A&D”) markets.
Item 1. BUSINESS General CPI Aerostructures, Inc., including its wholly owned subsidiary Welding Metallurgy, Inc. (“WMI”) and Compac Development Corporation, a wholly owned subsidiary of WMI (collectively, “CPI Aero”, the “Company”, “us”, or “we”) manufactures structural assemblies, integrated systems, and kitting services for the domestic and international aerospace and defense (“A&D”) markets.
We conduct an investigation, including root cause analysis and corrective action, any time a safety incident or a near miss occurs.
We conduct an investigation, including root cause analysis and corrective action, when a safety incident or a near miss occurs.
LRIP III, for which the Company was awarded an order of approximately $14.0 million in October 2022, and later definitized at $32.5 million. In November 2023, Raytheon issued a Memorandum for Record for Lot4 with an anticipated Program Value of $32 million and an initial funding limit of $16 million. In December 2024, Lot 4 was fully funded at $33.4M.
LRIP III, for which the Company was awarded an order of approximately $14.0 million in October 2022, and later definitized at $32.5 million. In November 2023, Raytheon issued a Memorandum for Record for Lot 4 with an anticipated Program Value of $32 million and an initial funding limit of $16.0 million.
Our success as a subcontractor to defense prime contractors has provided us with opportunities to also act as a subcontractor to prime contractors in the production of commercial aircraft structures, which we believe will also reduce our exposure to defense industry consolidation, government spending decisions, and other defense industry risks.
Our role as a subcontractor to defense prime contractors has also provided opportunities to act as a subcontractor in the production of commercial aircraft structures, which we believe may also reduce our exposure to defense industry consolidation, government spending decisions, and other defense industry risks.
The final element of CPI Aero’s business development strategy is to build upon the Company’s existing customer relationships and to develop relationships with new customers. We intend to increase customer engagements by deploying our business development personnel to solidify existing customer relationships which have been established by performance excellence, transparency and trust over many years and multiple programs.
The final element of CPI Aero’s business development strategy is to build upon the Company’s existing customer relationships and to develop relationships with new customers. We intend to increase customer engagements by deploying our business development personnel to solidify existing customer relationships which have developed over many years and multiple programs.
Under the terms of the purchase orders, WMI manufactured more than 140 different items in support of the production of at least 25 E-2D aircraft. CPI received follow-on orders for additional quantities of welded products in 2024 totaling $2.8 million and anticipates additional orders in 2025.
Under the terms of the purchase orders, WMI manufactured more than 140 different items in support of the production of at least 25 E-2D aircraft. CPI received follow-on orders for additional quantities of welded products in 2024 and 2025 totaling $2.2 million with deliveries out through 2028.
The estimated value of this first development phase of the program is $12.1 million with initial Purchase Order funding received in fourth quarter of 2024 of $5 million for long lead material, manufacturing engineering services, development of assembly tooling, and the production of the initial units. Military Aircraft – Prime Contracts with U.S.
The estimated value of this first development phase of the program is approximately $12.1 million with initial Purchase Order funding received in fourth quarter of 2024 of $5 million for long lead material, manufacturing engineering services, development of assembly tooling, and the production of the initial units.
We obtain our raw materials from several commercial sources. Although certain items are only available from limited sources of supply, we believe that the loss of any single supplier would not have a material adverse effect on our business. Government Regulation Environmental Regulation We are subject to regulations administered by the U.S. Environmental Protection Agency, the U.S.
Although certain items are available only from limited sources of supply, we believe that alternative sources generally are available and that the loss of any single supplier would not have a material adverse effect on our business. Government Regulation Environmental Regulation We are subject to regulations administered by the U.S. Environmental Protection Agency, the U.S.
Our operations require the use of a limited amount of chemicals and other materials for painting and cleaning, including solvents and thinners, which are classified under applicable laws as hazardous chemicals and substances. We follow all federal, state and local rules and regulations regarding the disposal of these chemicals and associated waste.
Our operations require the use of a limited amount of chemicals and other materials for painting and cleaning, including solvents and thinners, which are classified under applicable laws as hazardous chemicals and substances. We believe that we are in material compliance with applicable federal, state and local rules and regulations regarding the disposal of these chemicals and associated waste.
We also provide structural assemblies to Sikorsky, a Lockheed Martin company (“Sikorsky”), for many of their military helicopter platforms including the UH-60 BLACK HAWK©, MH-60 Seahawk, CH-53E and CH-53K King Stallion, and a special purpose helicopter. ● RTX Corporation, formerly Raytheon Technologies – we provide products to multiple business divisions of RTX Corporation (“Raytheon”): Raytheon (Next Generation Jammer – Mid-Band Pod, Advanced Tactical Pods, Intelligence, Surveillance and Airborne Reconnaissance Pods, Missile Wings and Components, and Radar Racks) and Collins Aerospace (RF Enclosures). 5 ● The Boeing Company - we provide critical wing structure for The Boeing Company’s (“Boeing”) A-10 re-wing program and welded structures for the CH-47 Chinook helicopter. ● Northrop Grumman Corporation – we provide structural components and kits for the Northrop Grumman Corporation (“NGC”) E-2D Advanced Hawkeye, various integrated radar and laser pod structures, welded tubes, and welded fluid tanks for a classified program. 80% and 81% of our revenue in 2024 and 2023, respectively, was generated by subcontracts with defense prime contractors.
We also provide structural assemblies to Sikorsky, a Lockheed Martin company (“Sikorsky”), for many of their military helicopter platforms including the UH-60 BLACK HAWK©, MH-60 Seahawk, CH-53E and CH-53K King Stallion, and a special purpose helicopter. ● RTX Corporation, formerly Raytheon Technologies – we provide products to multiple business divisions of RTX Corporation (“Raytheon”): Raytheon (Next Generation Jammer – Mid-Band Pod, Advanced Tactical Pods, Intelligence, Surveillance and Airborne Reconnaissance Pods, Missile Wings, and Radar Racks) and Collins Aerospace (RF Enclosures). ● Northrop Grumman Corporation – we provide structural assemblies and kitting services for the Northrop Grumman Corporation (“NGC”) E-2D Advanced Hawkeye, various integrated radar and laser pod structures, welded tubes and aerial refueling probes, and welded fluid tanks for a classified program. 80% of our revenue in 2025 and 2024, was generated by subcontracts with defense prime contractors.
Finally, in May 2021, the Company announced receiving a multi-year contract valued at up to $17.2 million for the repair and overhaul of outboard stabilator assemblies in support of the Sikorsky MH-60 SEAHAWK . In late 2024, Sikorsky kicked off proposal efforts for the next SEAHAWK PBL commencing in 2027. Through December 31, 2024, CPI received orders totaling $6.5 million.
Finally, in May 2021, the Company announced receiving a multi-year contract valued at up to $17.2 million for the repair and overhaul of outboard stabilator assemblies in support of the Sikorsky MH-60 SEAHAWK with deliveries through 2027. In late 2024, Sikorsky kicked off proposal efforts for the next SEAHAWK PBL commencing in 2027.
Government contracts, even if the U.S. Government is unable to make timely payments. Insurance We maintain a $2.0 million general liability insurance policy, a $100 million products liability insurance policy, and a $5.0 million umbrella liability insurance policy. Additionally, we maintain $10.0 million of director and officers’ liability insurance.
Government contracts, even if the U.S. Government is unable to make timely payments. Insurance We maintain general liability insurance coverage of $2.0 million, products liability insurance coverage of $100 million, and umbrella liability insurance coverage of $5.0 million. Additionally, we maintain $15.0 million of directors’ and officers’ liability insurance coverage.
Our OEM customers in the defense sector include leading prime defense contractors such as: ● Lockheed Martin Corporation - we provide products used in the production of Lockheed Martin Corporation’s (“Lockheed Martin”) F-35 Joint Strike Fighter and an international variant of the F-16 Fighting Falcon.
Our OEM customers in the defense sector include leading prime defense contractors such as: ● Lockheed Martin Corporation - we provide products used in the production of Lockheed Martin Corporation’s (“Lockheed Martin”) F-16 Fighting Falcon.
We rely on proprietary know-how and information and employ various methods to protect the processes, concepts, ideas, and documentation associated with our products. These methods, however, may not afford complete protection and there can be no assurance that others will not independently develop such processes, concepts, ideas, and documentation. CPI Aero® is a registered trademark of the Company.
We rely on proprietary know-how and information and employ various methods to protect the processes, concepts, ideas, and documentation associated with our products. These methods, however, may not afford complete protection and there can be no assurance that others will not independently develop similar processes, concepts, ideas, or documentation.
UH-60 “BLACK HAWK”: The Sikorsky UH-60 BLACK HAWK helicopter is the leader in multi-mission rotary wing aircraft. Among the mission configurations it serves are troop transport, medical evacuation, electronic warfare, attack, assault support, and special operations. More than 4,000 BLACK HAWK helicopters are in use today, operating in 29 countries.
UH-60 “BLACK HAWK”: The Sikorsky UH-60 BLACK HAWK helicopter is a multi-mission rotary wing aircraft used by the U.S. military and other military operators. Among the mission configurations it serves are troop transport, medical evacuation, electronic warfare, attack, assault support, and special operations. More than 4,000 BLACK HAWK helicopters are in use today.
These expansions have provided us the ability to supply larger and more complex Aerostructures and Aerosystems products in support of our government-based programs as well as to pursue opportunities within the commercial and business jet markets. Our capabilities have also allowed us to obtain MRO, kitting, tube bending, welding, and electronics related contracts.
These developments have supported the Company’s ability to supply larger and more complex aerostructures and aerosystems products in support of government-related programs and to pursue opportunities within the commercial and business jet markets. The Company’s capabilities have also supported contracts related to MRO, kitting, tube bending, welding, and electronics.
In June 2020, we announced that we had received firm orders valued in excess of $43 million and $5 million in long-lead funding in anticipation of purchase orders for OWP structural components and kits. In 2021, we received additional orders valued at approximately $11 million.
In February of 2019, we announced a new multi-year award valued at up to approximately $47.5 million. In June 2020, we announced that we had received firm orders valued in excess of $43 million and $5 million in long-lead funding in anticipation of purchase orders for OWP structural kits. In 2021, we received additional orders valued at approximately $11 million.
Through December 31, 2020, the Company had received orders valued at approximately $15.3 million for the PC III, Phase 3 and TRIM programs, and in 2021, the Company announced it had received three separate orders for additional requirements valued at approximately $16.2 million. Through December 2024, CPI has received funded orders under this long term agreement totaling $48.7 million.
Through December 31, 2020, the Company had received orders valued at approximately $15.3 million for the PC III, Phase 3 and TRIM programs, and in 2021, the Company announced it had received three separate orders for additional requirements valued at approximately $16.2 million. In 2025, CPI received orders totaling $12.4 million.
Our products are generally used by customers in the production and refurbishment of fixed wing aircraft, helicopters, electronic warfare (“EW”) systems, intelligence, surveillance, and reconnaissance (“ISR”) systems, missiles, autonomous systems, and other sophisticated A&D products. We are primarily a Tier 1 supplier to Original Equipment Manufacturers (“OEMs”).
Our products are generally used by customers in the production and refurbishment of fixed wing aircraft, helicopters, electronic warfare (“EW”) systems, intelligence, surveillance, and reconnaissance (“ISR”) systems, missiles, autonomous systems, and other sophisticated A&D products. CPI Aero is a prime contractor to the U.S.
All other revenue for the years ended December 31, 2024 and 2023 has been attributable to customers within the U.S. We have no assets outside the U.S.
Our Customers Approximately $5.8 million and $5.1 million of our revenue for the years ended December 31, 2025 and 2024, respectively, were from customers outside the U.S. All other revenue for the years ended December 31, 2025 and 2024 has been attributable to customers within the U.S. We have no assets outside the U.S.
We have positioned our Company to take advantage of opportunities in the military aerospace market to a broad customer base, which we believe will reduce the potential impact of industry consolidation or potential defense budget reductions.
We serve a broad customer base in the military aerospace market, which we believe may reduce the potential impact of industry consolidation or potential defense budget reductions.
The non-recurring and tooling phase of the program was completed and the initial 11 racks have been delivered in 2024. CPI submitted proposals for follow-on lots of racks and an award is anticipated in 2025.
The value of the order was approximately $4.0 million for manufacturing engineering services, development of assembly tooling, and the production of the initial units. The non-recurring and tooling phase of the program was completed and the initial 11 racks have been delivered in 2024. CPI submitted proposals for follow-on lots of racks and an award is anticipated in 2026.
Our backlog attributable to government contracts at December 31, 2024 and 2023 was as follows: Backlog (Government) December 31, 2024 December 31, 2023 Funded $ 82,262,000 $ 115,681,000 Unfunded 404,256,000 383,574,000 Total $ 486,518,000 $ 499,255,000 Our backlog attributable to commercial contracts at December 31, 2024 and 2023 was as follows: Backlog (Commercial) December 31, 2024 December 31, 2023 Funded $ 2,777,000 $ 2,537,000 Unfunded 20,976,000 11,559,000 Total $ 23,753,000 $ 14,096,000 Material and Parts We subcontract production of substantially all parts incorporated into our products to third-party manufacturers under firm fixed price orders.
Our backlog attributable to government contracts at December 31, 2025 and 2024 was as follows: Backlog (Government) December 31, 2025 December 31, 2024 Funded $ 89,067,000 $ 82,262,000 Unfunded 393,530,000 404,256,000 Total $ 482,597,000 $ 486,518,000 Our backlog attributable to commercial contracts at December 31, 2025 and 2024 was as follows: Backlog (Commercial) December 31, 2025 December 31, 2024 Funded $ 2,751,000 $ 2,777,000 Unfunded 19,174,000 20,976,000 Total $ 21,925,000 $ 23,753,000 Material and Parts We subcontract the production of substantially all the detail parts incorporated into our products to third-party manufacturers under firm fixed-price orders.
Business Strategy CPI Aero is committed to achieving revenue, gross profit margin, and earnings growth through the successful implementation of our business development strategy. CPI Aero’s future strategic direction is tied to aerostructures, aerosystems, supply chain, and kitting services, and a deeper market penetration of formerly acquired businesses in welding, tube bending, wire harnesses, and electronics.
CPI Aero’s future strategic direction is tied to aerostructures, aerosystems, supply chain, and kitting services, and a deeper market penetration of formerly acquired businesses in welding, tube bending, wire harnesses, and electronics.
Backlog We produce custom assemblies pursuant to long-term contracts and customer purchase orders. Funded backlog consists of aggregate funded values under such contracts and purchase orders, excluding the portion previously included in operating revenues pursuant to Accounting Standards Codification Topic 606 (“ASC 606”). Unfunded backlog is the estimated amount of future orders under the expected duration of the program.
We anticipate our first deliveries to take place in 2026. Backlog We produce custom assemblies pursuant to long-term contracts and customer purchase orders. Funded backlog consists of the aggregate funded value of remaining performance obligations under such contracts and purchase orders, excluding the portion previously included in operating revenues pursuant to Accounting Standards Codification Topic 606 (“ASC 606”).
This trend fits in well with CPI Aero’s strengths. In addition, we expect to identify and close contracts for which we can provide more value added content to our customer (like integrating sub-assemblies into higher level Aerostructures and Aerosystems statements of work) and we intend to pursue statements of work that require proportionately higher CPI Aero value added content.
This trend aligns with CPI Aero’s build-to-print manufacturing capabilities. In addition, we expect to identify and close contracts for which the Company can provide additional manufacturing and integration services to customers (such as integrating sub-assemblies into higher level aerostructures and aerosystems statements of work) and we intend to pursue statements of work that require proportionately higher CPI Aero manufacturing content.
Our total backlog as of December 31, 2024 and 2023 was as follows: Backlog (Total) December 31, 2024 December 31, 2023 Funded $ 85,039,000 $ 118,218,000 Unfunded 425,232,000 395,133,000 Total $ 510,271,000 $ 513,351,000 8 Approximately 95% and 97% of the total amount of our backlog at December 31, 2024 and 2023 was attributable to government contracts.
Our total backlog as of December 31, 2025 and 2024 was as follows: Backlog (Total) December 31, 2025 December 31, 2024 Funded $ 91,818,000 $ 85,039,000 Unfunded 412,704,000 425,232,000 Total $ 504,522,000 $ 510,271,000 7 Approximately 96% and 95% of the total amount of our backlog at December 31, 2025 and 2024 was attributable to government contracts.
The contents of our website are not incorporated in or otherwise to be regarded as a part of this Annual Report on Form 10-K. History Conceived and started as a technical consulting firm on January 11, 1980, within a few years, Composite Products International Inc. (“CPI”) was manufacturing aircraft structural components for U.S. military aircraft under contract to the U.S.
The contents of our website are not incorporated in or otherwise to be regarded as a part of this Annual Report on Form 10-K. History CPI Aerostructures, Inc. was founded in 1980 as a technical consulting firm under the name Composite Products International Inc.
While larger prime contractors compete for significant modification awards, they generally do not compete for awards in smaller modifications, spares and replacement parts, even for aircraft for which they are the original manufacturer.
Our ability to combine manufacturing capabilities with the operational flexibility and responsiveness of a smaller company supports our ability to compete for certain contracts. 3 While larger prime contractors compete for significant modification awards, they generally do not compete for awards in smaller modifications, spares and replacement parts, even for aircraft for which they are the original manufacturer.
In these restricted contracts for the U.S. Government, CPI Aero typically competes against numerous small business competitors.
In these restricted contracts for the U.S. Government, CPI Aero typically competes against numerous small business competitors. We compete for these contracts based on our experience and expertise in responding to requests for proposals for government contracts.
Our management, with oversight from the Compensation and Human Resources Committee of our board of directors, monitors the hiring, retention, and management of our employees and regularly conducts succession planning to ensure that we continue to cultivate the pipeline of talent needed to operate our business. 10 Diversity and Inclusion We value diversity and inclusion in our workforce as we understand that diversity of background, thought, and experience leads to greater innovation and improved business results.
Our management, with oversight from the Compensation and Human Resources Committee of our board of directors, monitors the hiring, retention, and workforce management and regularly conducts succession planning to ensure that we continue to cultivate the pipeline of talent needed to operate our business. Safety Ensuring the safety and well-being of our employees is a top priority.
CPI Aero also is a prime contractor to the DOD, primarily through contracts directly with the USAF and the Defense Logistics Agency (“DLA”), providing supply chain management, assembly & integration, and kitting services for the F-16 and T-38 programs. 14% and 14 % of our revenue in 2024 and 2023, respectively, were generated by direct government sales.
CPI Aero also is a prime contractor to the DOD, primarily through contracts directly with the USAF and the Defense Logistics Agency (“DLA”), providing supply chain management, assembly & integration, and kitting services for the T-38 program. 11% and 14% of our revenue in 2025 and 2024, respectively, were generated by direct government sales. 4 Significant Contracts Our most significant contracts are described below: Military Aircraft – Subcontracts with Prime Contractors E-2D Advanced Hawkeye: The NGC E-2D Advanced Hawkeye is an all-weather, carrier-based tactical Airborne Early Warning aircraft.
We believe our unique skills related to integrated pod structures combined with a very efficient and generally lower cost structure create a competitive advantage for bidding on Aerosystems contracts. For certain unrestricted contracts for the U.S. Government, we may compete against well-established prime contractors, including Northrop Grumman, Lockheed Martin, and Boeing.
In these cases, we typically compete with the internal manufacturing arm of our customers. Our experience related to integrated pod structures, combined with our cost structure, supports our ability to compete for aerosystems contracts. For certain unrestricted contracts for the U.S. Government, we may compete against well-established prime contractors, including Northrop Grumman, Lockheed Martin, and Boeing.
Human Capital Management Our ability to attract, develop and retain top talent across all of our business functions, and particularly in highly technical areas, has a significant impact on organizational success.
CPI Aero® is a registered trademark of the Company. 9 Human Capital Management Our ability to attract, develop and retain top talent across all of our business functions, and particularly in highly technical areas, is important to the operation and development of our business.
The undisclosed pod structure is currently under development. In October 2021, the Company announced that Raytheon awarded the Company an approximately $6.1 million contract modification that changes the scope of work the Company would perform and increases the quantity of pods to be produced. The program value as of December 31, 2024 was $9.5 million for deliveries into 2025.
In October 2021, the Company announced that Raytheon awarded the Company an approximately $6.1 million contract modification that changes the scope of work the Company would perform and increases the quantity of pods to be produced. In December 2024 CPI received the initial funding for the follow-on order with additional funding received in June 2025.
With respect to Aerosystems products, such as our portfolio of EW and ISR integrated pod structures, we find more limited competition and are not aware of competition from any of the Aerostructures companies mentioned above. In these cases, we typically compete with the internal manufacturing arm of our customers.
We compete with these larger companies by delivering products with comparable levels of quality and performance while maintaining competitive pricing for our customers. With respect to aerosystems products, such as our portfolio of EW and ISR integrated pod structures, we generally encounter fewer competitors and are not aware of competition from any of the aerostructures companies mentioned above.
CPI Aero has been awarded the follow-on to this development statement of work. 7 Undisclosed Vehicle: In 2018, the Company started production of a welded tank for NGC for an undisclosed application on an undisclosed platform. The total value of orders received as of December 31, 2024 is $3.2 million. Anticipated spares orders are expected to continue in 2025.
The total funding received as of December 31, 2025 was $22.7 million with additional funded orders anticipated in 2026. Undisclosed Vehicle: In 2018, the Company started production of a welded tank for NGC for an undisclosed application on an undisclosed platform. The total value of orders received as of December 31, 2025 is $3.9 million.
Commercial Aircraft – Subcontracts with Prime Contractors Embraer Phenom 300 : The Phenom 300 is a twin-engine, executive jet produced by Brazilian aircraft company Embraer that can carry between six and ten passengers and a crew of two. We have been producing engine inlet assemblies for Embraer under a long-term agreement we entered into in 2012.
Through December 2025, CPI has received funded orders under this long-term agreement totaling $61.1 million. Commercial Aircraft – Subcontracts with Prime Contractors Embraer Phenom 300: The Phenom 300 is a twin-engine, executive jet produced by Brazilian aircraft company Embraer that can carry between six and ten passengers and a crew of two. It is a widely used light business jet.
Substantially all of our unfunded backlog is subject to termination at will and rescheduling, without significant penalty. Funds are often appropriated for programs or contracts on a yearly or quarterly basis, even though the contract may call for performance that is expected to take a number of years.
Funds are often appropriated for programs or contracts on a yearly or quarterly basis, even though the contract may call for performance that is expected to take a number of years. Therefore, our funded backlog does not include the full value of our contracts. Backlog is not necessarily indicative of future revenues or the timing of such revenues.
Accordingly, our human capital management strategy places a significant focus on both attracting a diverse, highly skilled workforce and engaging and developing talent from within by creating a work environment that promotes inclusion and equitability.
Accordingly, our human capital management strategy places a significant focus on both attracting a, highly skilled workforce and engaging and developing talent from within by creating a work environment that promotes equitable treatment. We provide employees opportunities to enhance their skills and develop their careers through training and development programs and emphasize innovation and continuous improvement throughout our organization.
In January 2024, we celebrated the delivery of the 800th Shipset of Inlets. In 2024, we received funded orders totaling $5.0 million. Embraer Phenom 100 : The Phenom 100 is a light executive business jet twin-engine, produced by Brazilian aircraft company Embraer that can carry up to six passengers and a crew of two.
Embraer Phenom 100: The Phenom 100 is a light executive business jet twin-engine, produced by Brazilian aircraft company Embraer that can carry up to six passengers and a crew of two. Embraer unveiled the Phenom 100EX, the Company’s latest evolution from the Phenom 100 series with over 400 aircraft in operation.
F-16V Fighting Falcon: The Lockheed Martin F-16 is the world’s most successful, combat-proven multirole fighter. Approximately 3,000 operational F-16s are in service today in 25 countries. The F-16V is a new variant, sold exclusively to international air forces and is the most technologically advanced fourth generation fighter in the world.
In 2025, CPI received orders totaling $4.1 million. 5 F-16V Fighting Falcon: The Lockheed Martin F-16 multirole fighter aircraft widely used by military forces around the world. Approximately 3,000 operational F-16s are in service today in 25 countries. The F-16V is a newer variant sold to international air forces.
Our decision to purchase certain components generally is based upon whether the components are available to meet required specifications at a cost and with a delivery schedule consistent with customer requirements. From time to time, we are required to purchase custom made parts from sole suppliers and manufacturers in order to meet specific customer requirements.
Our decision of what to buy from which company is generally based upon whether the detail parts are available to meet required specifications at a cost and delivery schedule consistent with CPI’s build plan and our customer’s requirements.
Our competitive advantage lies in our ability to offer large contractor capabilities with the flexibility and responsiveness of a small company, while staying competitive in cost and delivering superior quality products. We maintain a website located at www.cpiaero.com .
CPI Aero has over 45 years of experience as a contractor. Our team possesses extensive technical expertise, program and supply chain management, and integration capabilities. Our competitive advantage lies in our ability to offer large contractor capabilities with the flexibility and responsiveness of a small company, while staying competitive in cost and delivering superior quality products.
Government accepts delivery of our products and that results from any defects or deficiencies in our products unless the liability results from willful misconduct or lack of good faith on the part of our managerial personnel. Proprietary Information None of our current assembly processes or products is protected by patents.
Government accepts delivery of our products and that results from any defects or deficiencies in our products unless the liability results from willful misconduct or lack of good faith on the part of our managerial personnel. However, there can be no assurance that our insurance coverage will be sufficient to cover all claims that may arise.
This allowed for a small but strategically important amount of vertical integration in complex fusion welding and large diameter tube bending capability. The acquisition included Miller Stuart and Compac Development Corporation, two other business lines that added fabrication of electrical cables, harnesses and enclosures to the Company’s capabilities.
In 2018, CPI Aero acquired WMI, which expanded the Company’s manufacturing capabilities to include complex fusion welding and large-diameter tube bending. The acquisition also included Miller Stuart and Compac Development Corporation, which added capabilities in the fabrication of electrical cables, harnesses and enclosures.
Navy aircraft has been progressively updated with the latest variant, the E-2D, first flying in 2007. In 2008, we received an initial $7.9 million order from NGC to provide structural kits used in the production of Outer Wing Panels (“OWP”) of the E-2D.
In 2008, we received an initial $7.9 million order from NGC to provide structural kits used in the production of Outer Wing Panels (“OWP”) of the E-2D. We initially valued the long-term agreement at approximately $98 million over an eight-year period, with the potential to be in excess of $195 million over the life of the aircraft program.
This statement of work includes CPI Aero intellectual property. Undisclosed Pod Structure: In 2019, the Company received an initial purchase order from Raytheon to manufacture pod structures for an undisclosed application. The value of the order was approximately $2.3 million for manufacturing engineering services, development of assembly tooling, and the production of the prototypes.
The value of the order was approximately $2.3 million for manufacturing engineering services, development of assembly tooling, and the production of the prototypes. The undisclosed pod structure is currently under development.
B-52 Radar Rack: In late 2021, the Company received an initial purchase order from Raytheon to manufacture radar rack structures for the B-52 Radar Modernization Program. The value of the order was approximately $4.0 million for manufacturing engineering services, development of assembly tooling, and the production of the initial units.
NGC awarded a new spares order in November 2025 with deliveries in 2026. B-52 Radar Rack: In late 2021, the Company received an initial purchase order from Raytheon to manufacture radar rack structures for the B-52 Radar Modernization Program.
Over time, our Company has expanded in both capabilities and size, as evidenced by our growth in our operational, global supply chain management, program management, and engineering capabilities, as well as the growth in our manufacturing shop floor size and equipment base.
The Company’s role as a subcontractor to defense prime contractors has also provided opportunities to act as a subcontractor in the production of commercial aircraft structures. Over time, our Company has expanded its capabilities and operations, including its operational, global supply chain management, program management, and engineering capabilities, as well as its manufacturing facilities and equipment base.
All of these competitors possess significantly larger infrastructures, greater resources and the capabilities to respond to much larger contracts. We believe that our competitive advantage lies in our ability to offer large contractor capabilities with the flexibility and responsiveness of a small company, while staying competitive in cost and delivering superior quality products.
All of these competitors possess significantly larger infrastructures, greater resources and the capabilities to respond to much larger contracts.
Government. By the late 1980s, CPI was also providing structural components for civil aircraft in the commercial market. In the 1990s, CPI became a publicly traded company and changed its name to CPI Aerostructures, Inc. (“CPI Aero”). The Company continued to grow, both in size and in its business. U.S.
During the 1990s, the Company became publicly traded and changed its name to CPI Aerostructures, Inc. Government contracts continued to represent a significant portion of the Company’s business, while the Company also increased its participation in the commercial aerospace market and expanded its relationships with original equipment manufacturers.
Significant Contracts Our most significant contracts are described below: Military Aircraft – Subcontracts with Prime Contractors E-2D Advanced Hawkeye: The NGC E-2D Advanced Hawkeye is an all-weather, carrier-based tactical Airborne Early Warning aircraft. The twin turboprop aircraft was designed and developed in the 1950s by the Grumman Aircraft Company for the U.S. Navy. The U.S.
The twin turboprop aircraft was designed and developed in the 1950s by the Grumman Aircraft Company for the U.S. Navy. The U.S. Navy aircraft has been progressively updated with the latest variant, the E-2D, first flying in 2007.
In addition to our assembly operations, we provide manufacturing engineering, program management, supply chain management, kitting, and maintenance repair and overhaul (“MRO”) services. CPI Aero has over 45 years of experience as a contractor. Our team possesses extensive technical expertise, program and supply chain management, and integration capabilities.
CPI Aero’s international customer base enjoys a unique combination of large-company capabilities, matched with small-company value, responsiveness, and personal customer service. Our products are used by OEMs within both commercial aerospace and national security markets. In addition to our assembly operations, we provide manufacturing engineering, program management, supply chain management, kitting, and maintenance repair and overhaul (“MRO”) services.

… 50 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

53 edited+63 added−29 removed27 unchanged
Biggest changeWe face potential liability for property damage, personal injury, or death as a result of the failure of products designed or manufactured by us. Although we currently maintain product liability insurance (including aircraft product liability insurance), any material product liability not covered by insurance could have a material adverse effect on our financial condition, results of operations, and cash flows.
Biggest changeAny such events could materially adversely affect our business, financial condition and results of operations. 14 Product liability claims in excess of insurance could adversely affect our financial results and financial condition . We face potential liability for property damage, personal injury, or death as a result of the failure of products designed or manufactured by us.
New programs with new technologies typically carry risks associated with design changes, development of new production tools, increased capital and funding commitments, ability to meet customer specifications, delivery schedules and unique contractual requirements, supplier performance, ability of the customer to meet its contractual obligations to us, and our ability to accurately estimate costs associated with such programs.
New programs with new technologies typically carry risks associated with design changes, development of new production tools, increased capital and funding commitments, ability to meet customer specifications, delivery schedules and unique contractual requirements, supplier performance, ability of the customer to meet its contractual obligations, and our ability to accurately estimate costs associated with such programs.
If we fail to satisfy the expectations of investors and other key stakeholders, or our initiatives are not executed as planned, our reputation, employee retention, and willingness of our customers and suppliers to do business with us, financial results, and stock price could be materially and adversely affected.
If we fail to satisfy the expectations of investors and other stakeholders, or our initiatives are not executed as planned, our reputation, employee retention, willingness of our customers and suppliers to do business with us, financial results and stock price could be materially and adversely affected.
Our business may be affected by certain characteristics and trends of the commercial aerospace industry or general economic conditions that affect our customers, such as the current inflationary and high interest rate environment in the U.S. and the resultant impacts on the supply chain, the labor market and the general economy, as well as fluctuations in the aerospace industry’s business cycle, varying fuel and labor costs, intense price competition and regulatory scrutiny, certain trends, including a possible decrease in aviation activity and a decrease in outsourcing by aircraft manufacturers, or the failure of projected market growth to materialize or continue.
Our business may be affected by certain characteristics and trends of the commercial aerospace industry or general economic conditions that affect our customers, such as the inflationary and interest rate environment in the U.S. and the resultant impacts on the supply chain, the labor market and the general economy, as well as fluctuations in the aerospace industry’s business cycle, varying fuel and labor costs, intense price competition and regulatory scrutiny, certain trends, including a possible decrease in aviation activity and a decrease in outsourcing by aircraft manufacturers, or the failure of projected market growth to materialize or continue.
Reasons for cost growth may include unavailability and productivity of labor, the nature and complexity of the work to be performed, the effect of change orders, the availability and cost of materials, the effect of any delays in performance, availability, and timing of funding from the customer, natural disasters, pandemics, and the inability to recover any claims included in the estimates to complete.
Reasons for cost growth may include unavailability and productivity of labor, the nature and complexity of the work to be performed, the effect of change orders, the availability and cost of materials, tariffs, inflationary pressures, the effect of any delays in performance, availability and timing of funding from the customer, natural disasters, pandemics, and the inability to recover any claims included in the estimates to complete.
In addition, beginning new work on existing programs also carries risk associated with the transfer of technology, knowledge, and tooling. To perform on new programs, we may be required to expend up-front costs which may not have been negotiated in our selling price.
In addition, beginning new work on existing programs also carries risk associated with the transfer of technology, knowledge, and tooling. To perform on new programs, we may be required to expend upfront costs which may not have been negotiated in our selling price.
As a result of the risk factors set forth below, actual results did and could continue to differ materially from those projected in any forward-looking statements. Risks Related to Our Business We depend on government contracts for a significant portion of our revenues. We are a supplier, either directly or as a subcontractor, to the U.S. Government and its agencies.
As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements. Risks Related to Our Business We depend on government contracts for a significant portion of our revenues. We are a supplier, either directly or as a subcontractor, to the U.S.
As a result, there can be a significant disparity between earnings (both for accounting and taxes) as reported and actual cash received by us during any reporting period. We continually evaluate all the issues related to the assumptions, risks and uncertainties inherent with the application of ASC 606; however, there is no assurance that our estimates will be accurate.
As a result, there can be a significant disparity between earnings as reported and the cash actually received during any reporting period. We continually evaluate all the issues related to the assumptions, risks and uncertainties inherent with the application of ASC 606; however, there is no assurance that our estimates will be accurate.
We depend on government contracts for a significant portion of our business. If we are suspended or barred from contracting with the U.S. Government, if our reputation or relationship with individual federal agencies were impaired, or if the U.S.
Government and its agencies and a significant portion of our business depends on government contracts. If we are suspended or barred from contracting with the U.S. Government, if our relationship with individual federal agencies were impaired, or if the U.S.
We can give no assurance that we would be awarded new U.S. Government contracts to offset the revenues lost as a result of the termination of any of our U.S. Government contracts. We have risks associated with competing in the bidding process for contracts. We obtain many of our contracts through a competitive bidding process.
We can give no assurance that we would be awarded new U.S. Government contracts to offset the revenues lost as a result of the termination of any of our U.S. Government contracts. We face risks associated with competing for and performing under competitively awarded contracts. Many of our contracts are awarded through a competitive bidding process.
We may be unable to attract and retain personnel who are key to our operations. Our success, among other things, is dependent on our ability to attract and retain highly qualified senior officers and employees at all levels. Competition for key personnel is intense.
Our success, among other things, is dependent on our ability to attract and retain highly qualified senior officers and employees at all levels. Competition for key personnel is intense.
Several factors associated, directly or indirectly, with actual or potential military conflicts, terrorism, perceived nuclear, biological, and chemical and cyber threats, and other global political crises and responses thereto, may adversely affect the mix of products purchased by defense departments in the U.S. or other countries to platforms not serviced by us.
Several factors associated, directly or indirectly, with actual or potential military conflicts, terrorism, perceived nuclear, biological, chemical or cyber threats and other geopolitical crises, and governmental responses thereto, may adversely affect the mix of products purchased by defense departments in the United States or other countries.
Risks Related to Our Indebtedness and Liquidity In the past, CPI obtained amendments to and received waivers of and consents to non-compliance with certain covenants under our credit facility with BankUnited and there can be no assurance that we will not fall out of compliance with our covenants in the future.
In the past, we obtained amendments to, and received waivers and consents relating to non-compliance with certain covenants under our prior credit facility with BankUnited, N.A. There can be no assurance that we will not fall out of compliance with the covenants under the Loan and Security Agreement in the future.
In addition, these regulations may impose liability for the cost of removal or remediation of certain hazardous substances released on or in our facilities without regard to whether we knew of, or caused, the release of such substances.
This extensive regulatory framework imposes significant compliance burdens and risks on us. In addition, these regulations may impose liability for the cost of removal or remediation of certain hazardous substances released on or in our facilities without regard to whether we knew of, or caused, the release of such substances.
A prohibition on progress billing may have an adverse effect upon our cash flow and profitability and a default termination could expose us to liability and have a material adverse effect on our ability to compete for future contracts and orders.
A prohibition on progress billing may have an adverse effect upon our cash flow and profitability and a default termination could expose us to liability and have a material adverse effect on our ability to compete for future contracts and orders. We are subject to intense competition for the skilled technicians necessary to manufacture our products.
A failure by one or more of our subcontractors to satisfactorily provide on a timely basis the agreed-upon supplies or perform the agreed-upon services may materially and adversely affect our ability to fulfill our obligations as the prime contractor. Subcontractor performance deficiencies could result in a customer eliminating our ability to progress bill or terminate our contract for default.
A failure by one or more of our subcontractors to satisfactorily provide on a timely basis the agreed-upon supplies or perform the agreed-upon services may materially and adversely affect our ability to fulfill our obligations as the prime contractor.
Congress appropriates funds on a fiscal year basis even though a program may extend over several fiscal years. Consequently, programs are often only partially funded initially and additional funds are committed only as Congress makes further appropriations. Appropriations are driven by numerous factors, including geopolitical events, macroeconomic conditions, the ability of the U.S.
Consequently, programs are often only partially funded initially and additional funds are committed only as Congress makes further appropriations. Appropriations are driven by numerous factors, including geopolitical events, macroeconomic conditions, the ability of the U.S.
Operating margin is adversely affected when contract costs that cannot be billed to customers are incurred. This cost growth can occur if estimates to complete a contract increase due to technical challenges or if initial estimates used for calculating the contract price were incorrect. The cost estimation process requires significant judgment and expertise.
This cost growth can occur if estimates to complete a contract increase due to technical challenges or if initial estimates used for calculating the contract price were incorrect. The cost estimation process requires significant judgment and expertise.
We are subject to inspections by the FAA and may be subjected to fines and other penalties (including orders to cease production) for noncompliance with FAA regulations.
We are subject to regulation by the Federal Aviation Administration (“FAA”). The FAA prescribes standards and licensing requirements for aircraft and aircraft assemblies. We are subject to inspections by the FAA and may be subjected to fines and other penalties (including orders to cease production) for noncompliance with FAA regulations.
This risk includes the potential for default, quality problems, or inability to meet specifications, as well as our inability to negotiate final pricing for program changes and could result in low margin or forward loss contracts, and the risk of having to write-off contract assets if they were deemed to be unrecoverable.
These risks include the potential for default, quality problems or inability to meet specifications, our inability to negotiate final pricing for program changes, the potential for low-margin or forward-loss contracts and the risk of writing off contract assets if they are deemed unrecoverable.
As of December 31, 2024, we had approximately $66.0 million of gross net operating losses (“NOLs”) for federal tax purposes and approximately $18.0 million of post-apportionment NOLs for state tax purposes.
As of December 31, 2025, we had approximately $68.2 million of federal net operating loss carryforwards (“NOLs”) and approximately $18.3 million of post-apportionment NOLs for state tax purposes.
We risk damage to our reputation in the event our corporate responsibility procedures or goals do not meet the standards or goals set by various constituencies. In addition, if our competitors’ corporate responsibility performance is perceived to be greater than ours, potential or current investors may elect to invest in our competitors instead.
We risk damage to our reputation if our practices or goals do not meet the standards or expectations of various stakeholders. In addition, if our competitors’ performance with respect to environmental practices, sustainability initiatives or similar matters is perceived to be greater than ours, potential or current investors may elect to invest in our competitors instead.
Our failure to comply with applicable regulations could result in the termination of or our disqualification from some of our contracts, which could have a material adverse effect on our operations and financial condition.
Our failure to comply with applicable regulations could result in the termination of or our disqualification from some of our contracts, which could have a material adverse effect on our operations and financial condition. We are presently classified as a small business and the loss of our small business status may adversely affect our ability to compete for government contracts.
The ESG factors by which companies’ corporate responsibility practices are assessed may change. This could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria. If we are unable to satisfy the new corporate responsibility criteria, investors may view our policies related to corporate responsibility as inadequate.
This could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria. If we are unable to satisfy these evolving expectations, investors may view our policies relating to these matters as inadequate.
If this were to occur, we may be unable to secure outside financing, if needed, to fund ongoing operations and for other capital needs. Any sources of financing that may be available to us could also be at higher costs and require us to satisfy more restrictive covenants, which could limit or restrict our operations, cash flows, and earnings.
Any sources of financing that may be available to us could be at higher costs and may require us to satisfy more restrictive covenants, which could limit or restrict our operations, cash flows and earnings.
Government to enact relevant legislation, such as appropriations bills and continuing resolutions, the threat or existence of a government shutdown and potential downgrades of the United States’ credit rating, and risks relating to the recent U.S. presidential election.
Government to enact relevant legislation, such as appropriations bills and continuing resolutions, the threat or existence of a government shutdown and potential downgrades of the United States’ credit rating, and changes in government priorities resulting from elections or changes in administration.
Further consolidation in the aerospace industry could adversely affect our business and financial results. The A&D industry has experienced significant consolidation, including among our customers, competitors, and suppliers.
Even when we are successful in obtaining a contract, the contract may not achieve the profitability we anticipated when the bid was submitted. 12 Further consolidation in the aerospace industry could adversely affect our business and financial results. The A&D industry has experienced significant consolidation, including among our customers, competitors, and suppliers.
We also cannot predict the impact of potential changes in priorities due to military transformation and planning and/or the nature of war-related activity on existing, follow-on, or replacement programs.
Government, which could have a material adverse effect on our future sales under such program and on our financial position, results of operations, and cash flows. We also cannot predict the impact of potential changes in priorities due to military transformation and planning and/or the nature of war-related activity on existing, follow-on, or replacement programs.
Among other things, these regulatory bodies impose restrictions to control air, soil, and water pollution, to protect against occupational exposure to chemicals, including health and safety risks, and to require notification or reporting of the storage, use, and release of certain hazardous substances into the environment. This extensive regulatory framework imposes significant compliance burdens and risks on us.
We are required to comply with extensive and frequently changing environmental regulations at the federal, state, and local levels. Among other things, these regulatory bodies impose restrictions to control air, soil, and water pollution, to protect against occupational exposure to chemicals and to require notification or reporting of the storage, use, and release of certain hazardous substances into the environment.
There is no assurance that our current significant customers will continue to buy products from us at current levels, that we will retain any or all our existing significant customers, or that we will be able to form new relationships with other customers upon the loss of one or more of our existing significant customers.
There can be no assurance that these customers will continue to purchase products from us at current levels, that we will retain these relationships, or that we will be able to establish comparable relationships with other customers if one or more of these customers reduces or terminates its business with us.
Because the techniques used by cyber-attackers to access or sabotage networks change frequently and may not be recognized until launched against a target, we may be unable to anticipate these tactics.
Because the techniques used by attackers change frequently and may not be recognized until they are deployed, we may be unable to anticipate or prevent all such attacks.
If our subcontractors or suppliers fail to perform their contractual obligations, our contract performance, and our ability to obtain future business and our profitability could be materially and adversely impacted. Most of our contracts involve subcontracts with other companies upon which we rely to perform a portion of the services that we must provide to our customers.
Most of our contracts involve subcontracts with other companies upon which we rely to perform a portion of the services that we must provide to our customers.
In the event that appropriations for any of our programs becomes unavailable, or is reduced or delayed, our contract or subcontract under such program may be terminated or adjusted by the U.S. Government, which could have a material adverse effect on our future sales under such program, and on our financial position, results of operations and cash flows.
In the event that appropriations for any of our programs become unavailable, or are reduced or delayed, our contract or subcontract under such program may be terminated, including for convenience, or otherwise adjusted by the U.S.
Further, in the event we communicate certain initiatives or goals related to ESG, we could fail, or be perceived to have failed, in our achievement of such initiatives or goals.
Further, if we communicate initiatives or goals related to environmental practices, sustainability or climate-related matters, we could fail, or be perceived to have failed, to achieve such initiatives or goals.
There is an increasing focus from certain investors, customers, and other key stakeholders concerning corporate responsibility, specifically related to environmental, social, and governance (“ESG”) factors. Some investors may use ESG criteria to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies relating to corporate responsibilities are inadequate.
Some investors may use sustainability or similar criteria to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies relating to these matters are inadequate.
Such charges and the loss of up-front costs could have a material adverse impact on our liquidity. We are presently classified as a small business and the loss of our small business status may adversely affect our ability to compete for government contracts.
Such charges and the loss of up-front costs could have a material adverse effect on our financial condition and results of operations. 13 We depend on suppliers for materials, and services, and disruptions in our supply chain could adversely affect our ability to fulfill our contracts.
We cannot ensure that additional financing would be available to us or be sufficient or available on satisfactory terms. Our capital requirements, liquidity and financial condition raise significant risks as to our ability to continue as a going concern .
We cannot ensure that additional financing would be available to us, or that it would be available in sufficient amounts to meet our needs or on satisfactory terms.
In addition, our NOL carryforwards may be limited if we experience an ownership change as defined by Section 382 of the Internal Revenue Code (“Section 382”).
In addition, under Section 382 of the Internal Revenue Code, our ability to utilize our NOLs could be significantly limited if we experience an “ownership change,” generally defined as a cumulative change in ownership of more than 50% by certain shareholders over a three-year period.
Government otherwise ceased doing business with us or significantly decreased the amount of business it does with us, our business, prospects, financial condition, and operating results would be materially adversely affected. We face risks relating to government contracts. The funding of U.S. Government programs is subject to congressional budget authorization and appropriation processes. For many programs, the U.S.
Government otherwise ceased doing business with us or significantly decreased the amount of business it does with us, our business, financial condition, and results of operations could be materially adversely affected. We depend on a limited number of prime contractors and government customers for a significant portion of our revenue.
Cyber security attacks, internal system or service failures and technological changes, including the use of machine learning and generative artificial intelligence, may adversely impact our business and operations.
The inability to hire and retain these people may adversely affect our production operations and other aspects of our business. Cybersecurity incidents, system failures and technological changes, including developments in machine learning and generative artificial intelligence, could adversely affect our business and operations.
The inability to hire and retain these people may adversely affect our production operations and other aspects of our business. We are subject to intense competition for the skilled technicians necessary to manufacture our products. We are subject to intense competition for the services of skilled technicians necessary to manufacture our products.
We are subject to intense competition for the services of skilled technicians necessary to manufacture our products. The demand for these individuals may increase as other manufacturers seek to bring to the U.S. manufacturing processes currently outsourced overseas.
Our pre-2018 NOLs totaled approximately $51.6 million; these NOLs will expire in varying amounts from 2034 through 2037, if not utilized, and can offset 100% of future taxable income for regular tax purposes.
These tax attributes could reduce future taxable income and cash tax obligations; however, their value depends on our ability to generate sufficient taxable income in future periods. 16 Approximately $51.6 million of our federal NOLs arose prior to January 1, 2018 and will expire in varying amounts between 2034 and 2037 if not utilized.
If we fall out of compliance with our banking covenants under our credit facility (the “BankUnited Facility” or the “Credit Agreement”) with BankUnited, N.A. (“BankUnited”), they may declare a default under the BankUnited Facility and, among other remedies, could declare the full amount of the BankUnited Facility immediately due and payable and could foreclose against our collateral.
If we fail to comply with the covenants under the Loan and Security Agreement, Western Alliance Bank may declare a default and, among other remedies, could declare all amounts outstanding under the Loan and Security Agreement immediately due and payable and could foreclose against our collateral.
Our working capital requirements can vary significantly, depending in part on the timing of the conclusion of mature programs and new program awards and the payment terms with our customers and suppliers. There is currently no availability for borrowings under the BankUnited Facility and the Company finances its operations from internally generated cash flow.
Our working capital requirements can vary significantly depending on, among other things, the timing of new program awards, the completion of mature programs, the ramp-up of new production programs, production schedules, changes in production rates on existing programs, inventory requirements and the payment terms with our customers and suppliers.
These significant customers – Raytheon, Lockheed Martin and United States Air Force – constituted approximately 36%, 24% and 14%, respectively of our 2024 revenue.
A significant portion of our revenues is derived from programs performed for a limited number of prime defense contractors and government customers. These significant customers – Raytheon, Sikorsky, Lockheed Martin, and the United States Air Force – constituted approximately 38%, 20%, 11% and 11%, respectively, of our 2025 revenue.
Interest rates under our Credit Agreement are based on the Prime Rate, and as a result, we have exposure to interest rate risk. Certain central banks, such as the U.S. Federal Reserve, effected multiple interest rate decreases in 2024. Decreases in interest rates decrease our cost of borrowing and/or potentially make it more viable to refinance our existing indebtedness.
Interest rates under the Loan and Security Agreement are based on a variable interest rate. As a result, we have exposure to interest rate risk. Increases in interest rates increase our cost of borrowing and could adversely affect our profitability and cash flows.
Increased scrutiny from investors, lenders, regulators and other market participants regarding our environmental, social, governance, sustainability or climate responsibilities could expose us to additional costs and adversely impact our liquidity, results of operations, reputation, employee retention, and stock price.
If these characteristics and trends adversely affect customers in the commercial aerospace industry, they may reduce the overall demand for our products. Increased scrutiny from investors, regulators, customers and other stakeholders regarding environmental practices, sustainability initiatives and climate-related matters could expose us to additional costs and adversely affect our reputation, operations and stock price.
If our estimates are not accurate or a contract is terminated, we will be forced to adjust revenue in later periods. Furthermore, even if our estimates are accurate, we may have a shortfall in our cash flow and we may need to borrow money to pay for costs until the reported earnings materialize to actual cash receipts.
If our estimates are not accurate or a contract is terminated, we will be forced to adjust revenue in later periods. These estimates and adjustments may also affect revenue recognition, contract assets and liabilities and cash receipts under our contracts, which could adversely affect our financial condition and results of operations. We incur risks associated with new programs.
We could also be subject to systems failures, including network, software, or hardware failures, whether caused by us, third-party service providers, intruders or hackers, computer viruses, natural disasters, power shortages, or terrorist attacks.
In addition, our operations could be disrupted by failures of network, software or hardware systems, including failures affecting our systems or those of third-party service providers, as well as by natural disasters, power outages or other operational disruptions.
The demand for these individuals may increase as other manufacturers seek to bring to the U.S. manufacturing processes currently outsourced overseas. If the U.S. economy continues to undergo a period of inflation, our labor costs may increase which could have a material adverse effect on our business, financial condition, and results of operations.
Continued inflationary pressures may increase our labor costs which could have a material adverse effect on our business, financial condition, and results of operations. We may be unable to attract and retain personnel who are key to our operations.
We are subject to strict governmental regulations relating to the environment, which could result in fines and remediation expenses in the event of non-compliance. We are required to comply with extensive and frequently changing environmental regulations at the federal, state, and local levels.
Although we currently maintain product liability insurance (including aircraft product liability insurance), any material product liability not covered by insurance could have a material adverse effect on our financial condition, results of operations, and cash flows. We are subject to strict governmental regulations relating to the environment, which could result in fines and remediation expenses in the event of non-compliance.
U.S. and global responses to actual or potential military conflicts such as Russia’s invasion of Ukraine, terrorism, perceived nuclear, biological, and chemical threats and other global political crises increase uncertainties with respect to the U.S. and other business and financial markets.
Geopolitical conflicts, terrorism, military actions and other global political crises may create significant uncertainties in U.S. and international business and financial markets, including the potential for rapid escalation of existing conflicts or the emergence of new regional conflicts.
A shift in defense budgets to product lines we do not produce could have a material adverse effect on our business, financial condition and results of operations. We cannot predict the consequences of future geo-political events on our operations or our profitability .
A shift in defense budgets or procurement priorities toward programs, technologies or platforms that we do not support could reduce demand for our products and services and adversely affect our business, financial condition and results of operations.
Removed
In the bidding process, we face the following risks: ● we must bid on programs in advance of their completion, which may result in unforeseen technological difficulties or cost overruns; 12 ● we must devote substantial time and effort to prepare bids and proposals for competitively awarded contracts that may not be awarded to us; and ● awarded contracts may not generate sales sufficient to result in profitability.
Added
A significant portion of our revenue is derived from a limited number of aerospace and defense programs. Production levels for specific aerospace or defense programs may vary due to changes in government funding, customer demand, program priorities or technical issues.
Removed
We depend upon a select base of large prime defense contractors for the majority of our revenue, which subjects us to unique risks which may adversely affect us. We currently generate a majority of our revenues by producing products for numerous programs under contracts with three prime defense contractors to the U.S. Government.
Added
If production levels for programs on which we depend are reduced or if those programs are delayed, terminated or experience lower demand, our revenues and results of operations could be adversely affected. Our backlog may not be indicative of future revenue and may not result in realized revenue.
Removed
We may be subject to fines and disqualification for non-compliance with Federal Aviation Administration (“FAA”) regulations. We are subject to regulation by the FAA under the provisions of the Federal Aviation Act of 1958, as amended. The FAA prescribes standards and licensing requirements for aircraft and aircraft components.
Added
Our backlog represents the estimated value of expected future sales under existing contracts and purchase orders. However, backlog is not necessarily indicative of future revenue to be realized or the timing of such revenue. Production quantities and delivery schedules under existing programs may change, and customers may modify, delay or cancel orders.
Removed
In addition, a delay in our ability to obtain components and equipment parts from our suppliers may affect our ability to meet our customers’ needs and may have a material adverse effect upon our profitability. 13 Due to fixed contract pricing, increasing contract costs exposes us to reduced profitability and the potential loss of future business.
Added
In addition, many of our contracts are subject to engineering changes, scope modifications, contract adjustments or requests for equitable adjustment, which may affect program scope, pricing or delivery schedules. As a result, the amounts included in backlog may change over time and may not be realized as revenue in the periods we expect or at all.
Removed
If these characteristics and trends adversely affect customers in the commercial aerospace industry, they may reduce the overall demand for our products. Our working capital requirements may negatively affect our liquidity and capital resources. Our working capital requirements can vary significantly, depending in part on the timing of new program awards and the payment terms with our customers and suppliers.
Added
In addition, a portion of our backlog relates to long-term production programs that may extend over several years. These programs are subject to changes in production rates, program requirements and other factors that may affect the timing and amount of revenue recognized.
Removed
If our working capital needs exceed our cash flows from operations, we would look to our cash balances and any availability for borrowings under our credit facility to satisfy those needs. See “Risks Related to Our Indebtedness and Liquidity” below. 14 We incur risks associated with new programs.
Added
Backlog amounts may also reflect assumptions regarding production quantities, pricing, contract scope and other factors that may change over time. Changes in program requirements, production schedules, contract terms or customer demand could affect our ability to convert backlog into revenue and could adversely affect our results of operations and financial condition.
Removed
Any system or service disruptions, including those caused by projects to improve our information technology systems, if not anticipated and appropriately mitigated, could disrupt our business, and impair our ability to effectively provide products and related services to our customers and could have a material adverse effect on our business.
Added
We may experience liquidity constraints if we are unable to finance working capital requirements associated with our contracts. Our business requires significant working capital to support the production of complex aerospace and defense aerostructures and aerosystems. Under many of our contracts, we must incur costs for materials, labor and production activities before receiving corresponding customer payments.
Removed
Cyber security threats are evolving and include, but are not limited to, malicious software, phishing, and other unauthorized attempts to gain access to sensitive, confidential, or otherwise protected information related to us or our products, customers, or suppliers, or other acts that could lead to disruptions in our business.
Added
As a result, we may be required to finance inventory purchases, long-lead materials, engineering work and other production costs for extended periods before reimbursement through contract billings or milestone payments.
Removed
Any such failures to prevent or mitigate cyber-attacks could cause loss of data and interruptions or delays in our business, cause us to incur remediation costs, or subject us to claims and damage our reputation.
Added
In certain circumstances, customer payment terms may require us to fund production activities before receiving payment, while our suppliers may require shorter payment terms, deposits, price increases or other changes in commercial terms, which may significantly increase the amount of working capital required to support our operations.
Removed
In addition, the failure or disruption of our communications or utilities could cause us to interrupt or suspend our operations or otherwise adversely affect our business.
Added
In addition, many of our contracts are subject to engineering changes, scope modifications, customer-directed design changes or other contract adjustments. In some cases, we may be required to perform additional work or incur additional costs before the related pricing adjustments are finalized with the customer, including through requests for equitable adjustment or other contract modifications.
Removed
Although we utilize various procedures and controls to monitor and mitigate the risk of these threats, including contracting with an outside cyber security firm to provide constant monitoring of our systems, and training our employees to recognize attacks, there can be no assurance that these procedures and controls will be sufficient.
Added
The negotiation, approval and recovery of amounts associated with these adjustments may take significant time and may not align with the timing at which we incur the related costs which may require us to finance those costs for extended periods. 11 Our liquidity position may also be affected by the need to maintain inventory for production programs, including long-lead materials detail parts, and by changes in supplier pricing or payment terms.
Removed
Our property and business interruption insurance may be inadequate to compensate us for all losses that may occur because of any system or operational failure or disruption which could adversely affect our business, results of operations, and financial condition.
Added
In addition, changes in production schedules, program delays or reductions in production rates by our customers may affect the timing of revenue recognition and cash receipts while we continue to incur production costs. As a result of these factors, our cash flows from operations may fluctuate and may not always be sufficient to fund our working capital requirements.
Removed
Moreover, expenditures incurred in implementing cyber security and other procedures and controls could adversely affect our results of operations and financial condition. Our ability to utilize our tax benefits could be substantially limited if we fail to generate sufficient income or if we experience an “ownership change”.
Added
At times, our liquidity may become constrained, particularly if program changes, payment delays, supply chain disruptions, production rate changes or other operational factors increase our working capital needs, or if financing is not available to fund those requirements.
Removed
As a result of the Tax Cuts and Jobs Act of 2017 and the Coronavirus Aid, Relief, and Economic Security Act of 2020, NOLs arising before January 1, 2018, and NOLs arising after January 1, 2018, are subject to different rules.

… 65 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

11 edited+3 added−2 removed3 unchanged
Biggest changeHowever, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced undetected cybersecurity incidents. For additional information about these risks, see Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K.
Biggest changeFor additional information about these risks, see Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K. Our board of directors has oversight of our strategic and business risk management and oversees management’s execution of our cybersecurity risk management program. The board receives regular updates from management on our cybersecurity risks.
Item 1C. CYBERSECURITY Cybersecurity Cybersecurity risk management is an important part of our overall risk management efforts. We maintain a cybersecurity program that is comprised of policies, procedures, controls and plans whose objective is to help us prevent and effectively respond to cybersecurity threats or incidents.
Item 1C. CYBERSECURITY Cybersecurity risk management is an important part of our overall risk management efforts. We maintain a cybersecurity program that is comprised of policies, procedures, controls and plans whose objective is to help us prevent and effectively respond to cybersecurity threats or incidents.
Our Director of Information Technology brings extensive experience in cybersecurity, including conducting DIBCAC (Defense Industrial Base Cybersecurity Assessment Center) audit and overseeing NIST (National Institute of Standards and Technology) internal audits. This expertise ensures our organization aligns with strict industry standards and maintains robust compliance measures.
Our Director of Information Technology brings extensive experience in cybersecurity, including conducting DIBCAC (Defense Industrial Base Cybersecurity Assessment Center) audits and overseeing NIST (National Institute of Standards and Technology) internal audits. This expertise ensures our organization aligns with strict industry standards and maintains robust compliance measures.
In the event of an incident, we intend to follow our incident response plan, which outlines the steps to be followed from incident detection to mitigation, recovery and notification, including notifying functional areas (e.g. legal), as well as senior leadership and the board, as appropriate.
In the event of an incident, we intend to follow our incident response plan, which outlines the steps to be followed from incident detection to mitigation, recovery and notification, including notifying functional areas, as well as senior leadership and the board, as appropriate.
Additionally, we gather information and review the SOC-2 reports of certain third-parties who integrate with our systems, such as our payroll processor, managed solutions provider and software as a service providers on an annual basis to identify and manage risk. We continuously evaluate and seek to improve and mature our cybersecurity processes.
We have implemented cybersecurity frameworks, policies and practices which incorporate industry-standards and contractual requirements. We gather information and review the SOC-2 reports of certain third parties who integrate with our systems, such as our payroll processor, managed solutions provider and software as a service provider on an annual basis to identify and manage risk.
We apply lessons learned from our defense and monitoring efforts to help prevent future attacks and utilize data analytics to detect anomalies and search for cyber threats. Additionally, our Internal Audit function regularly assesses our program effectiveness through audits of systems and processes to help maintain compliance with policies.
We continuously evaluate and seek to improve and mature our cybersecurity processes. We apply lessons learned from our defense and monitoring efforts to help prevent future attacks and utilize data analytics to detect anomalies and search for cyber threats.
We conduct regular testing of these controls and systems including vulnerability scanning, penetration testing and simulating the execution of parts of our disaster recovery plan.
We conduct regular testing of these controls and systems including vulnerability scanning, penetration testing and simulating the execution of parts of our disaster recovery plan. All employees are required to pass a mandatory cybersecurity training course on a regular basis and we regularly conduct phishing simulations to train our employees on how to recognize phishing attempts.
Governance Our board of directors has oversight of our strategic and business risk management and oversees management’s execution of our cybersecurity risk management program. The board receives regular updates from management on our cybersecurity risks. In addition, management updates the board as necessary, regarding any material cybersecurity incidents, as well as incidents with lesser impact potential.
In addition, management updates the board as necessary, regarding any material cybersecurity incidents, as well as incidents with lesser impact potential.
While we have implemented measures to safeguard our information technology systems, the evolving nature of cybersecurity attacks and vulnerabilities means that these protections may not always be effective. In 2024, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition.
We believe that our current preventative actions and response planning provide adequate measures of protection against cybersecurity risks. While we have implemented measures to safeguard our information technology systems, the evolving nature of cybersecurity attacks and vulnerabilities means that these protections may not always be effective.
Cybersecurity threats of all types, such as attacks from computer hackers, cyber criminals, nation-state actors, social engineering and other malicious internet-based activities, continue to increase. We believe that our current preventative actions and response planning provide adequate measures of protection against cybersecurity risks.
Additionally, our Internal Audit function regularly assesses our program effectiveness through audits of systems and processes to help maintain compliance with policies. Cybersecurity threats of all types, such as attacks from computer hackers, cyber criminals, nation-state actors, social engineering and other malicious internet-based activities, continue to increase.
We also contractually flow cybersecurity regulatory requirements to our subcontractors as required by the Defense Federal Acquisition Regulation Supplement and other government agency specific requirements. These contractual flow downs include the requirement that our subcontractors implement certain information security controls.
Our program includes policies, procedures and controls design to safeguard controlled unclassified information and to detect, respond to, and recover from cybersecurity incidents. We continue to invest in cybersecurity capabilities and third-party assessments to support ongoing compliance. We also contractually flow CMMC requirements to our subcontractors as required by the Defense Federal Acquisition Regulation Supplement.
Removed
All employees are required to pass a mandatory cybersecurity training course on an annual basis and we regularly conduct phishing simulations to train our employees on how to recognize phishing attempts. 17 We have implemented cybersecurity frameworks, policies and practices which incorporate industry-standards and contractual requirements.
Added
In 2025, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced undetected cybersecurity incidents.
Removed
Our cybersecurity program is regularly assessed through management self-evaluation and ongoing monitoring procedures to evaluate our program effectiveness, including assessments associated with internal controls over financial reporting as well as vulnerability management through active discovery and testing to validate patching and configuration.
Added
Our cybersecurity program is aligned with NIST SP 800-171 and the requirements of the Cybersecurity Maturity Model Certification (CMMC) applicable to our Department of Defense (DOD) contracts and when flowed down through prime contractors. We are currently in the process of achieving CMMC Level 2.0 certification.
Added
Failure to achieve or maintain these requirements could adversely affect our ability to perform on or compete for certain government contracts. 18

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeItem 2. PROPERTIES CPI Aero’s executive offices and production facility is situated in an approximately 171,000 square foot building located at 91 Heartland Blvd., Edgewood, New York 11717. We use approximately 131,000 square feet of this building for manufacturing space and 40,000 square feet for offices and laboratories for engineering and design work.
Biggest changeItem 2. PROPERTIES CPI Aero’s executive offices and production facility are located in an approximately 171,000 square foot building at 91 Heartland Boulevard, Edgewood, New York 11717. We use approximately 131,000 square feet of this building for manufacturing and approximately 40,000 square feet for offices and laboratories supporting engineering and design work.
CPI Aero occupies this facility under a lease that expires on April 30, 2026.
CPI Aero occupies this facility under a lease that expires on April 30, 2031.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+3 added−1 removed2 unchanged
Biggest changeSales of Unregistered Securities and Repurchase of Equity Securities There were no sales of unregistered equity securities and no repurchases of our outstanding common stock during the year ended December 31, 2024. 19 Securities Authorized for Issuance under Equity Compensation Plans The following table sets forth certain information at December 31, 2024 with respect to our equity compensation plans that provide for the issuance of options, warrants or rights to purchase our securities: Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in the first column) Equity Compensation Plans Approved by Security Holders — $ — 310,458 Equity Compensation Plans Not Approved by Security Holders — — — Total — $ — 310,458 Long-term equity incentives are an important component of compensation and are designed to align the interests of our executive officers and directors who receive long-term equity awards with the Company’s long-term performance and to increase shareholder value.
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans The following table sets forth certain information at December 31, 2025 with respect to our equity compensation plans that provide for the issuance of options, warrants or rights to purchase our securities: Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in the first column) Equity Compensation Plans Approved by Security Holders — $ — 845,984 Equity Compensation Plans Not Approved by Security Holders — — — Total — $ — 845,984 Long-term equity incentives are an important component of compensation and are designed to align the interests of our executive officers and directors who receive long-term equity awards with the Company’s long-term performance and to increase shareholder value.
Our board of directors does not intend to declare any cash or other dividends in the foreseeable future, but intends instead to retain earnings, if any, for use in our business operations.
Our board of directors does not intend to declare any cash or other dividends in the foreseeable future, but instead intends to retain earnings, if any, for use in our business operations.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our shares of common stock are listed on the NYSE American exchange under the symbol “CVU”. On March 28, 2025, there were 157 holders of record of our shares of common stock. We believe there are substantially more beneficial holders of our common stock.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our shares of common stock are listed on the NYSE American exchange under the symbol “CVU.” On March 26, 2026, there were 150 holders of record of our shares of common stock. We believe there are substantially more beneficial holders of our common stock.
As of December 31, 2024, we have granted 1,891,906 shares under this plan and 308,094 shares remained available for grant under this plan. Performance Equity Plan 2009 . The Performance Equity Plan 2009 authorizes the grant of 500,000 stock options, stock appreciation rights, restricted stock, deferred stock, stock reload options, and other stock-based awards.
As of December 31, 2025, we have granted 1,978,404 shares under this plan and 221,596 shares remained available for grant under this plan. Performance Equity Plan 2009 . The Performance Equity Plan 2009 authorizes the grant of 500,000 stock options, stock appreciation rights, restricted stock, deferred stock, stock reload options, and other stock-based awards.
Any payment of dividends in the future is within the discretion of our board of directors (subject to the limitation on dividends contained in the BankUnited Facility, as described more fully in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations) and will depend on our earnings, if any, our capital requirements and financial condition and other relevant factors.
Any payment of dividends in the future will be at the discretion of our board of directors (subject to the limitations on dividends contained in the Loan and Security Agreement, as described more fully in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) and will depend on our earnings, if any, our capital requirements and financial condition, and other relevant factors.
As of December 31, 2024, we have granted 497,636 shares under this plan and 2,364 shares remained available for grant. Item 6. [RESE RVED] Not applicable.
As of December 31, 2025, we have granted 497,636 shares under this plan and 2,364 shares remained available for grant. 20
Removed
The Company has awarded long-term incentive compensation pursuant to two plans: 2016 Long-Term Incentive Plan.
Added
Sales of Unregistered Securities and Repurchase of Equity Securities There were no sales of unregistered equity securities and no repurchases of our outstanding common stock during the year ended December 31, 2025.
Added
The Company has awarded long-term incentive compensation pursuant to three plans: 2025 Long-Term Incentive Plan . The 2025 Long-Term Incentive Plan authorizes the grant of 800,000 shares of our company common stock which may be granted in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, and other stock-based awards.
Added
As of December 31, 2025, we have granted 177,976 shares under this plan and 622,024 shares remained available for grant under this plan. 2016 Long-Term Incentive Plan.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

32 edited+17 added−20 removed11 unchanged
Biggest changeLabor costs for the year ended December 31, 2024 were $7,303,563 compared to $7,054,308 for the year ended December 31, 2023, an increase of $249,255 or 3.5%. The increase is primarily the result of work performed on the Boeing A-10 program, offset by decreases on our Raytheon NGJ – Mid Band Pods program due to efficiencies.
Biggest changeThis decrease was driven primarily by the termination of the Boeing A-10 Main Landing Gear Pods program. 22 Labor costs for the year ended December 31, 2025 were $5,924,180 compared to $7,303,563 for the year ended December 31, 2024, a decrease of $1,379,383 or 18.9%.
See Part II, Item 8, Note 1 “Principal Business Activity and Summary of Significant Accounting Policies” in the notes to the consolidated financial statements included in this Form 10-K for additional information regarding the Company’s revenue recognition policy.
See Part II, Item 8, Note 1, “Principal Business Activity and Summary of Significant Accounting Policies,” in the notes to the consolidated financial statements included in this Form 10-K for additional information regarding the Company’s revenue recognition policy.
Costs for which we are not able to bill on a progress basis are components of contract assets on our consolidated balance sheet and represent the aggregate costs and related earnings for uncompleted contracts for which the customer has not yet been billed.
Costs for which we are not able to bill on a progress basis are made up of contract assets on our consolidated balance sheet and represent the aggregate costs and related earnings for uncompleted contracts for which the customer has not yet been billed.
The majority of the Company’s long term contracts with its customers and suppliers reflect fixed pricing. When bidding for work, the Company takes inflation risk and supply side pricing risk into account in its proposals. 24
The majority of the Company’s long-term contracts with its customers and suppliers reflect fixed pricing. When bidding for work, the Company takes inflation risk and supply-side pricing risk into account when preparing its proposals. 25
Accordingly, it is possible that we may have a shortfall in our cash flow and may need to borrow money or take steps to defer cash outflows until the reported earnings materialize into actual cash receipts. 23 Several of our programs require us to expend up-front costs that may have to be amortized over a portion of production units.
Accordingly, it is possible that we experience shortfalls in our cash flow and may need to borrow money or take steps to delay certain cash outflows until the reported earnings materialize into actual cash receipts. Several of our programs require us to expend up-front costs that may have to be amortized over a portion of production units.
Because ASC 606 requires us to use estimates in determining revenues, costs and profits and in assigning the amounts to accounting periods, there can be a significant disparity between earnings (both for accounting and tax purposes) as reported and actual cash that we receive during any reporting period.
Because ASC 606 requires us to use estimates in determining revenues, costs and profits and in assigning those amounts to accounting periods, there can be a significant disparity between earnings as reported and the actual cash we receive during any reporting period.
Deferred Income Taxes – Valuation Allowance On a quarterly basis, we assess the likelihood that we will be able to recover our deferred tax assets against future sources of taxable income and reduce the carrying amounts of deferred tax assets by recording a valuation allowance if, based on the available evidence, it is more likely than not (defined as a likelihood of more than 50%) that all or a portion of such assets will not be realized.
Deferred Income Taxes – Valuation Allowance On a quarterly basis, we assess the realizability of our deferred tax assets against future sources of taxable income and record a valuation allowance if, based on the available evidence, it is more likely than not (defined as a likelihood of more than 50%) that all or a portion of the deferred tax assets will not be realized.
Provision (benefit) for income taxes The income tax (benefit) for the year ended December 31, 2024 was $1,143,454, which was an effective tax (benefit) rate of 25.7%, as compared to the income tax (benefit) of ($13,349,414) for the year ended December 31, 2023, which was an effective tax (benefit) rate of (346.6%).
Provision (benefit) for income taxes The income tax (benefit) for the year ended December 31, 2025 was $(900,861), which was an effective tax (benefit) rate of (51.6%), as compared to income tax expense of $1,143,454 for the year ended December 31, 2024, which was an effective tax rate of 25.7%.
Management has (i) negotiated and executed a further amendment to the Credit Agreement which extended the maturity date of the Credit Agreement to August 31, 2026, (ii) obtained and regularly seeks additional progress payment and advance payment customer contract funding provisions, (iii) maintained procedures to minimize investments in inventory and contract assets, (iv) remained focused on its military customer base and (v) maintained its approximately $85.0 million backlog of funded orders, 97% of which are for military programs.
Management has (i) obtained and regularly seeks additional progress payment and advance payment customer contract funding provisions, (ii) maintained procedures to minimize investments in inventory and contract assets, (iii) remained focused on its military customer base and (iv) maintained its approximately $91.8 million backlog of funded orders, 97% of which are for military programs.
We also are a prime contractor to the U.S. DOD, primarily the USAF. In conjunction with our assembly operations, we provide engineering, program management, supply chain management and kitting, and MRO services.
Within the global aerostructures and aerosystems supply chain, we are either a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers. We also are a prime contractor to the U.S. DOD, primarily the USAF. In conjunction with our assembly operations, we provide engineering, program management, supply chain management and kitting, and MRO services.
Under the over time revenue recognition model, revenue and gross profit are recognized over the contract period as work is performed based on actual costs incurred and an estimate of costs to complete and resulting total estimated costs at completion.
The application of this method requires management to make estimates of total contract costs and progress toward completion. 21 Under the over-time revenue recognition model, revenue and gross profit are recognized over the contract period as work is performed based on the relationship of actual costs incurred to total estimated costs at completion (the cost-to-cost method).
We continue to work to obtain better payment terms with our customers, including accelerated progress payment arrangements, as well as exploring alternative funding sources. At December 31, 2024, our cash balance was $5,490,963 compared to $5,094,794 at December 31, 2023, an increase of $396,169 or 7.8%.
We continue to work to obtain better payment terms with our customers, including accelerated progress payment arrangements, as well as exploring alternative funding sources. At December 31, 2025, our cash balance was $899,199 compared to $5,490,963 at December 31, 2024, a decrease of $4,591,764 or 83.6%.
BankUnited Facility This information is set forth in Note 8 to our Consolidated Financial Statements, appearing following Item 15 of this Annual Report on Form 10-K which is hereby incorporated by reference.
Western Alliance Bank Loan and Security Agreement This information is set forth in Note 8 to the consolidated financial statements, which appears following Item 15 of this Annual Report on Form 10-K and is incorporated herein by reference.
Cost of sales Cost of sales for the year ended December 31, 2024 was $63,840,803 compared to $69,400,693 for the year ended December 31, 2023, a decrease of $5,559,890 or 8.0%.
Cost of sales Cost of sales for the year ended December 31, 2025 was $58,706,055 compared to $63,840,803 for the year ended December 31, 2024, representing a decrease of $5,134,748 or 8.0%.
Such risks and uncertainties could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Recent Developments On November 13, 2024, the Company entered into a Fourteenth Amendment to the Credit Agreement (the “Fourteenth Amendment”).
Such risks and uncertainties could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Recent Developments On December 12, 2025, the Company entered into the Loan and Security Agreement with Western Alliance Bank (the “Bank”).
However, there can be no assurance that such plans will accomplish their intended goals. Contractual Obligations The table below summarizes information about our contractual obligations as of December 31, 2024 and the effects these obligations are expected to have on our liquidity and cash flow in the future years.
Contractual Obligations The table below summarizes information about our contractual obligations as of December 31, 2025 and the effects these obligations are expected to have on our liquidity and cash flow in future periods.
Such changes in estimates resulted in changes in total gross profit as net unfavorable adjustments totaling $3,750,020 and 1,450,502 for the years ended December 31, 2024 and December 31, 2023.
Favorable/(Unfavorable) Adjustments to Gross Profit During the years ended December 31, 2025 and 2024, we made changes in estimates to various contracts. Such changes in estimates resulted in net unfavorable adjustments to gross profit totaling $10,171,038 and $3,750,020 for the years ended December 31, 2025 and December 31, 2024.
Diluted earnings per share was $0.26 for the year ended December 31, 2024 calculated utilizing 12,709,237 weighted average shares outstanding as compared to $1.38 for the year ended December 31, 2023 calculated utilizing 12,471,961 weighted average shares outstanding, an decrease of $1.12 per share, or 81.2%.
Diluted earnings (loss) per share was $(0.07) for the year ended December 31, 2025 calculated using 12,788,937 weighted average shares outstanding compared to $0.26 for the year ended December 31, 2024 calculated using 12,709,237 weighted average shares outstanding, representing a decrease of $0.33 per share, or 126.9%.
In assessing the need for a valuation allowance, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, loss carryback and tax-planning strategies. Generally, more weight is given to objectively verifiable evidence, such as a cumulative loss in recent years, as a significant piece of negative evidence to overcome.
In assessing the need for a valuation allowance, the Company evaluates both positive and negative evidence regarding the realizability of deferred tax assets, including future reversals of existing taxable temporary differences, projected future taxable income, loss carryback and tax-planning strategies.
Leases This information is set forth in Note 9 to our Consolidated Financial Statements, appearing following Item 15 of this Annual Report on Form 10-K which is hereby incorporated by reference.
Leases This information is set forth in Note 9 to the consolidated financial statements, which appears following Item 15 of this Annual Report on Form 10-K and is incorporated herein by reference. 24 Liquidity Our working capital requirements can vary significantly, depending in part on the timing of the conclusion of mature programs and new program awards and the payment terms with our customers and suppliers.
The components of cost of sales were as follows: Years ended December 31, 2024 December 31, 2023 Procurement $ 40,100,196 $ 46,020,628 Labor 7,303,563 7,054,308 Factory overhead 16,154,150 16,028,140 Other cost of sales 282,894 297,617 Cost of sales $ 63,840,803 $ 69,400,693 Procurement for the year ended December 31, 2024 was $40,100,196 compared to $46,020,628 for the year ended December 31, 2023, a decrease of $5,920,432 or 12.9%.
The components of cost of sales were as follows: Years ended December 31, 2025 December 31, 2024 Procurement $ 36,588,501 $ 40,383,090 Labor 5,924,180 7,303,563 Factory overhead 16,193,374 16,154,150 Cost of sales $ 58,706,055 $ 63,840,803 Procurement for the year ended December 31, 2025 was $36,588,501 compared to $40,383,090 for the year ended December 31, 2024, a decrease of $3,794,589 or 9.4%.
This decrease is the result of decreased revenue recognized on the T-38 Pacer Classic program. Revenue generated from government subcontracts for the year ended December 31, 2024 was $64,704,370 compared to $69,672,602 for the year ended December 31, 2023, a decrease of $4,968,232, or 7.1%.
Revenue generated from prime government contracts for the year ended December 31, 2025 was $7,415,434 compared to $11,677,152 for the year ended December 31, 2024, a decrease of $4,261,718, or 36.5%. This decrease primarily reflects lower revenue recognized on the T-38 Pacer Classic program.
Payments Due By Period Contractual Obligations Total Less than 1 year 1-3 years 4-5 years After 5 years Line of credit $ 17,390,000 $ 2,750,000 $ 14,640,000 $ — $ — Finance Leases 26,483 26,483 — — — Operating Leases 3,100,572 2,162,154 938,418 — — Insurance Financing Agreement 278,679 278,679 — — — Total Contractual Cash Obligations $ 20,795,734 $ 5,217,316 $ 15,578,418 $ — $ — Inflation Inflation historically has not had a material effect on our operations, although the current inflationary environment in the U.S., and its impact on interest rates, supply chain, labor markets and general economic conditions, are factors that the Company actively monitors in an attempt to mitigate and manage potential negative impacts on and risks faced by the Company.
Payments Due By Period Contractual Obligations Total 2026 2027 - 2029 2030 - 2031 Line of credit $ 8,373,672 $ — $ — $ 8,373,672 Term Loan 10,000,000 187,500 1,375,000 8,437,500 Operating Leases 12,551,835 2,304,533 6,997,582 3,249,720 Insurance Financing Agreement 369,467 369,467 — — Total Contractual Cash Obligations $ 31,294,974 $ 2,861,500 $ 8,372,582 $ 20,060.892 Inflation Inflation historically has not had a material effect on our operations, although the current inflationary environment in the U.S., and its impact on interest rates, supply chains, labor markets and general economic conditions, are factors that the Company actively monitors in an effort to mitigate potential negative impacts and risks to the Company.
Based upon the aforementioned factors, it is management’s estimation that there will likely not be any individual conditions or combination of events that will occur in the coming year which would cause the Company to be unable to meet its obligations or otherwise continue as a going concern.
Based on these factors, management believe there are no conditions or events currently anticipated in the coming year that would cause the Company to be unable to meet its obligations or otherwise continue as a going concern. However, there can be no assurance that these plans will achieve their intended results.
Liquidity and Capital Resources General At December 31, 2024, we had working capital of $17,122,111 compared to working capital of $15,402,381 at December 31, 2023, an increase of $1,719,730, or 11.2%.
Liquidity and Capital Resources General At December 31, 2025, we had working capital of $20,388,755 compared to working capital of $17,122,111 at December 31, 2024, an increase of $3,266,644, or 19.1%. The increase is primarily the result of a decreases in accrued expenses.
Selling, general and administrative expenses Selling, general and administrative expenses (“SG&A”) for the year ended December 31, 2024 were $10,506,439 compared to $10,758,624 for the year ended December 31, 2023, a decrease of $252,185 or 2.3%. The decrease was primarily due to a reduction of consulting and legal fee expenses.
The decrease was primarily related to an unfavorable contract adjustment associated with the termination of the Boeing A-10 Main Landing Gear Pods program. Selling, general and administrative expenses Selling, general and administrative expenses (“SG&A”) for the year ended December 31, 2025 were $10,732,451 compared to $10,506,439 for the year ended December 31, 2024, an increase of $226,012 or 2.2%.
Net income Net income for the year ended December 31, 2024 was $3,299,334 compared to $17,201,204 for the year ended December 31, 2023, a decrease of $13,901,870 or 80.8%. The decrease in net income was driven by the 2023 income tax benefit.
Net (loss) income Net (loss) income for the year ended December 31, 2025 was $(843,361) compared to $3,299,334 for the year ended December 31, 2024, a decrease of $4,142,695 or 125.6%.
The income tax recorded in 2024 and income tax benefit realized in 2023 was primarily due to federal and state statutory rates in 2024 and the reduction of the Company’s deferred tax asset valuation allowance recorded by the Company in the fourth quarter of 2023, respectively.
The income tax expense recorded in 2024 was primarily due to the application of federal and state statutory tax rates, partially offset by a decrease in income tax expense attributable to the research and development credit.
Revenue generated from commercial contracts for the year ended December 31, 2024 was $4,697,342 compared to $4,951,574 for the year ended December 31, 2023, a decrease of $254,232 or 5.1%. The decrease in revenue resulted from decreased revenue recognized on the timing of work performed on the Embraer Phenom 300 Inlet program.
Revenue generated from commercial contracts for the year ended December 31, 2025 was $6,299,011 compared to $4,697,342 for the year ended December 31, 2024, an increase of $1,601,669 or 34.1%. The increase in revenue was primarily driven by the commencement of production on our Embraer Phenom-100 Engine Inlet Assemblies and Collins Compac Enclosures programs.
Income before provision for income taxes Income before provision for income taxes for the year ended December 31, 2024 was $4,442,788 compared to $3,851,790 for the year ended December 31, 2023, an increase of $590,998 or 15.3%. The increase was driven by the aforementioned increase in gross profit and decreases in both SG&A and interest expense described above.
(Loss) income before provision for income taxes (Loss) income before provision for income taxes for the year ended December 31, 2025 was $(1,744,222) compared to $4,442,788 for the year ended December 31, 2024, a decrease of $6,187,010 or 139.3%.
Factory overhead costs for the year ended December 31, 2024 were $16,154,150 compared to $16,028,140 for the year ended December 31, 2023, an increase of $126,010 or 0.8%.
The decrease was primarily driven by the termination of the Boeing A-10 Main Landing Gear Pods program and timing of work performed on the F-16 Rudder Island program. Factory overhead costs for the year ended December 31, 2025 were $16,193,374 compared to $16,154,150 for the year ended December 31, 2024, an increase of $39,224 or 0.2%.
Results of Operations The following discussion provides an analysis of our results of operations and should be read in conjunction with the accompanying consolidated financial statements and notes thereto. Revenue Revenue for the year ended December 31, 2024 was $81,078,864 compared to $86,466,321 for the year ended December 31, 2023, representing a decrease of $5,387,457, or 6.2%.
Revenue Revenue for the year ended December 31, 2025 was $69,262,124 compared to $81,078,864 for the year ended December 31, 2024, representing a decrease of $11,816,740, or 14.6%.
Removed
Under the Fourteenth Amendment, the parties amended the Credit Agreement by: (i) extending the maturity date of the Company’s existing revolving line of credit (the “Revolving Credit Loans”) to August 31, 2026; (ii) reducing the Base Rate Margin (as defined in the Credit Agreement) from 3.50% to 2.0%; (iii) resetting the aggregate maximum principal amount of all Revolving Credit Loans to $16,890,000 from January 1, 2025 through March 31, 2025, $16,140,000 from April 1, 2025 through June 30, 2025, $15,390,000 from July 1, 2025 through September 30, 2025, $14,640,000 from October 1, 2025 through December 31, 2025, $13,890,000 from January 1, 2026 through March 31, 2026, $13,140,000 from April 1, 2026 through June 30, 2026, and $12,390,000 from July 1, 2026 onward and for payments to be made by the Company to comply therewith (if any such payments are necessary), on the first day of each such period; and (iv) requiring the Company, if it does not deliver to BankUnited, N.A. by December 31, 2025, a commitment letter with banks and terms and conditions reasonably acceptable to the Lenders for refinancing the obligations under the Credit Agreement, to make a payment by January 31, 2026, equal to 2% of the aggregate outstanding principal amount of the Revolving Credit Loans as of December 31, 2025, with 50% of such payment applied to reduce the aggregate outstanding principal and the remaining 50% retained by the Lenders as an amendment fee with respect to the Fourteenth Amendment. 20 Business Operations We are engaged in the contract production of structural aircraft assemblies for fixed wing aircraft and helicopters in both the commercial and defense markets.
Added
The Loan and Security Agreement provides for a revolving line of credit in the maximum principal amount of $10.0 million (the “Revolving Line”) and a term loan in the original principal amount of $10.0 million (the “Term Loan” and, together with the Revolving Line, the “Credit Facilities”).
Removed
We also have a strong and growing presence in the aerosystems sector of the market, with our production of various reconnaissance pod structures and fuel panel systems. Within the global aerostructure and aerosystem supply chain, we are either a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers.
Added
In connection with entering into the Loan and Security Agreement, the Company used a portion of the proceeds of the Credit Facilities, including the full amount of the Term Loan and borrowings under the Revolving Line in the amount of $6,220,722 to repay in full all outstanding obligations under that certain Amended and Restated Credit Agreement, dated as of March 24, 2016, (as amended), among the Company, the several lenders from time to time parties thereto and BankUnited, N.A., as sole arranger, administrative agent and collateral agent (the “BankUnited Credit Agreement”).
Removed
Assessing the realizability of deferred tax assets requires the determination of whether it is more likely than not that some portion or all the deferred tax assets will not be realized.
Added
Upon such repayment, the BankUnited Credit Agreement and the related loan documents were terminated in accordance with their terms, and all liens and security interests securing the obligations thereunder were released. The Company did not incur any early termination or prepayment penalties in connection with the termination of the BankUnited Credit Agreement.
Removed
For the period ended December 31, 2023, the Company achieved three years of cumulative book and taxable income, along with projections of profitability, for which management determined that there was sufficient positive evidence to conclude that it is more likely than not that a portion of the deferred tax assets will be realized.
Added
Business Operations We are engaged in the contract production of structural aircraft assemblies for fixed wing aircraft and helicopters in both the commercial and defense markets. We also participate in the aerosystems sector through our production of reconnaissance pod structures and fuel panel systems.
Removed
As such, $14,170,891 of the valuation allowance was released during the fourth quarter of 2023. During 2024 the Company continued to assess its ability to realize its deferred tax asset.
Added
These estimates are reviewed periodically as work progresses and adjustments to estimated costs may affect the timing and amount of revenue and gross profit recognized.
Removed
The Company continued to be profitable in 2024 and there was no significant change to the Company’s forecast of income or its ability to realize the deferred tax asset at December 31, 2024. The increase of $404,224 is most significantly related to the state valuation allowance.
Added
Greater weight is generally given to objectively verifiable evidence, such as cumulative losses in recent years, which may represent significant negative evidence regarding realizability. Results of Operations The following discussion provides an analysis of our results of operations and should be read in conjunction with the accompanying consolidated financial statements and notes thereto.
Removed
The decrease was primarily related to various programs that neared completion in 2024 including NGC E-2D and Sikorsky HIRRS programs coupled with the timing of work performed on the Lockheed Martin F-16 program.
Added
The decrease was driven primarily by an unfavorable contract adjustment associated with the termination of the Boeing A-10 Main Landing Gear Pods program, and lower revenue recognized on the T-38 Pacer Classic program, partially offset by the commencement of the L3Harris NGJ Low-Band Pods program.
Removed
These decreases were partly offset by NGJ Mid Band production and Sikorsky Welded Tubes. 21 Revenue generated from prime government contracts for the year ended December 31, 2024 was $11,677,152 compared to $11,842,145 for the year ended December 31, 2023, a slight decrease of $164,993, or 1.4%.
Added
Revenue generated from government subcontracts for the year ended December 31, 2025 was $55,547,679 compared to $64,704,370 for the year ended December 31, 2024, a decrease of $9,156,691, or 14.2%. The decrease was primarily related to an unfavorable contract adjustment associated with the termination of the Boeing A-10 Main Landing Gear Pods program.
Removed
The decrease was primarily related to various programs that neared completion in 2024 including NGC E-2D and Sikorsky HIRRS programs coupled with the timing of work performed on the Lockheed Martin F-16 program. These decreases were partly offset by NGJ Mid Band production and Sikorsky Welded Tubes.
Added
Gross profit Gross profit for the year ended December 31, 2025 was $10,556,069 compared to $17,238,061 for the year ended December 31, 2024, a decrease of $6,681,992 or 38.8%. Gross profit percentage (“gross margin”) for the year ended December 31, 2025 was 15.2% compared to 21.3% for the year ended December 31, 2024.
Removed
This decrease is primarily the result of a decrease in procurement for the NGC E-2D MYP II OWP program, Sikorsky HIRRS program, USAF T-38 Pacer Classic Structural Modification Kits program, offset by an increase in our Raytheon NGJ – Mid Band Pods program and Sikorsky Welded Tubes .
Added
The increase was primarily due to higher legal fees partially offset by a decrease in office expenses. Interest expense Interest expense for the year ended December 31, 2025 was $1,567,840, compared to $2,288,834 for the year ended December 31, 2024, a decrease of $720,994 or 31.5%.
Removed
Other cost of sales relates to items that can increase or decrease cost of sales such as changes in inventory levels, changes in inventory valuation, changes to inventory reserves, changes in loss contract provisions and direct charges to cost of sales.
Added
The decrease was the result of lower average outstanding debt balances, lower interest rates during 2025, and the refinancing of our prior credit facility at a lower interest rate.
Removed
For the year ended December 31, 2024, there were costs in the amount of $282,894 compared to $297,617 for the year ended December 31, 2023, a decrease of $14,723 or 4.9%. Gross profit Gross profit for the year ended December 31, 2024 was $17,238,061 compared to $17,065,628 for the year ended December 31, 2023, an increase of $172,433 or 1.0%.
Added
The decrease was driven by the decrease in gross profit discussed above and the increase in SG&A, partially offset by the decrease in interest expense described above.
Removed
Gross profit percentage (“gross margin”) for the year ended December 31, 2024 was 21.3% compared to 19.7% for year ended December 31, 2023. 22 Favorable/(Unfavorable) Adjustments to Gross Profit During the years ended December 31, 2024 and 2023, we made changes in estimates to various contracts.
Added
The income tax benefit recorded in 2025 was primarily due to the application of federal and state statutory tax rates and an increase in the income tax benefit attributable to the research and development credit.
Removed
Interest expense Interest expense for the year ended December 31, 2024 was $2,288,834, compared to $2,455,214 for the year ended December 31, 2023, a decrease of $166,380 or 6.8%. The decrease is the result of a year-over-year decrease in the amount of our outstanding debt under the Credit Agreement coupled with a lower year-over-year interest rates charged.
Added
The decrease in net income was driven primarily by the reduction in gross margin related to an unfavorable contract adjustment associated with the termination of the Boeing A-10 Main Landing Gear Pods program, partially offset by lower interest expense and the income tax benefit. 23 (Loss) earnings per share Basic (loss) earnings per share was $(0.07) for the year ended December 31, 2025 calculated using 12,788,937 weighted average shares outstanding, compared to $0.26 for the year ended December 31, 2024, calculated using 12,593,213 weighted average shares outstanding, representing a decrease of $0.33 per share, or 126.9%.
Removed
Earnings per share Basic earnings per share was $0.26 for the year ended December 31, 2024 calculating utilizing 12,593,213 weighted average shares outstanding as compared to $1.40 for the year ended December 31, 2023 calculated utilizing 12,311,219 weighted average shares outstanding, an decrease of $1.14 per share, or 81.4%.
Added
The decrease in basic and diluted earnings per share was driven primarily by the unfavorable adjustment associated with the termination of the Boeing A-10 Main Landing Gear Pods program.
Removed
Decrease in the basic and diluted earnings per share are due to the reduction of the Company’s deferred tax asset valuation allowance recorded by the Company in the fourth quarter of 2023 which favorably impacted 2023 by $1.12 per share.
Added
The decrease was driven by $(5,200,025) in cash used by operations including $1,979,189 increase in accounts receivable and a $1,638,161 increase in prepaid expenses and other current assets, $(65,036) used for the purchase of equipment, partially offset by proceeds from financing activities of $673,297.
Removed
The increase is primarily the result of an increase in net contract assets and a decrease to accrued expenses offset by decreases in accounts receivable and inventory, and an increase in accounts payable.
Added
There is currently availability for borrowings under the Western Alliance Bank Loan and Security Agreement, and the Company finances its operations primarily from internally generated cash flow. Note 8 to the consolidated financial statements included in Part II – Item 8 contains additional information regarding the Western Alliance Bank Loan and Security Agreement.
Removed
The increase was driven by $3,558,935 in cash provided by operations, partly offset by our pay down of outstanding debt during 2024 of $2,694,498 and purchase of equipment of $403,854.
Removed
Liquidity Our working capital requirements can vary significantly, depending in part on the timing of the conclusion of mature programs and new program awards and the payment terms with our customers and suppliers. There is currently no availability for borrowings under the BankUnited Facility and the Company finances its operations from internally generated cash flow.
Removed
Note 8 to our consolidated financial statements included in Part II - Item 8 includes a discussion regarding the BankUnited Facility and recent amendments thereto which provide, among other things, for increases in principal payments and the interest rate on the loans provided for therein.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 7A. QUANTITATIVE AND QUALITATIVE DISC LOSURE ABOUT MARKET RISK Interest Rate Risk We are exposed to interest rate risk on variable-rate credit facilities for which there was $17,390,000 outstanding at December 31, 2024. Additionally, if we were to refinance our long-term debt, it may be refinanced at higher interest rates.
Biggest changeItem 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Interest Rate Risk We are exposed to interest rate risk on variable-rate credit facilities for which $18,373,672 was outstanding at December 31, 2025. Additionally, if we were to refinance our long-term debt in the future, it could be refinanced at higher interest rates.

Other CVU 10-K year-over-year comparisons