UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2025

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to __________

Commission File Number: 1-11398

CPI AEROSTRUCTURES, INC.

(Exact name of registrant as specified in its charter)

New York		11-2520310
(State or other jurisdiction		(IRS Employer Identification Number)
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)
of incorporation or organization)

91 Heartland Blvd., Edgewood, NY		11717
(Address of principal executive offices)		(Zip code)

(631) 586-5200

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value per share	CVU	NYSE American

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~August~~November 1112, 2025, the registrant had 13,~~030~~185,~~743~~249 shares of common stock, $.001 par value, outstanding

INDEX
Part I - Financial Information		1
Item 1 – Consolidated Financial Statements (Unaudited)		1
Condensed Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and December 31, 2024		1
Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024		1
Condensed Consolidated Statements of Operations for the Three and Six months ended June 30, 2025 and 2024 (Unaudited)		2
Condensed Consolidated Statements of Operations for the Three and Nine months ended September 30, 2025 and 2024 (Unaudited)		2
Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six months ended June 30, 2025 and 2024 (Unaudited)		3
Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine months ended September 30, 2025 and 2024 (Unaudited)		3
Condensed Consolidated Statements of Cash Flows for the Six months ended June 30, 2025 and 2024 (Unaudited)		4
Condensed Consolidated Statements of Cash Flows for the Nine months ended September 30, 2025 and 2024 (Unaudited)		4
Notes to Condensed Consolidated Financial Statements (Unaudited)		5
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Item 3 – Quantitative and Qualitative Disclosures About Market Risk		20
Item 4 – Controls and Procedures		20
Part II - Other Information		2122
Item 1 – Legal Proceedings		2122
Item 1A – Risk Factors		2122
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		2122
Item 3 – Defaults Upon Senior Securities		2122
Item 4 – Mine Safety Disclosures		2122
Item 5 – Other Information		2122
Item 6 – Exhibits		2122
Signatures		2223

Part I - Financial Information

Item 1 - Consolidated Financial

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2025 (Unaudited)			December 31, 2024
	September 30, 2025 (Unaudited)			December 31, 2024
ASSETS
Current Assets:
Cash	$	~~674~~546,~~481~~591		$	5,490,963
Accounts receivable, net		6,~~054~~399,~~015~~594			3,716,378
Contract assets, net		3133,~~027~~695,~~022~~994			32,832,290
Inventory		1593,~~025,172~~605			918,288
Prepaid expenses and other current assets		~~541~~552,~~084~~585			634,534
Total Current Assets		3941,~~321~~788,~~774~~369			43,592,453
Operating lease right-of-use assets		109,~~220~~871,~~405~~784			2,856,200
Property and equipment, net		~~643~~565,~~476~~542			767,904
Deferred tax asset, net		2019,~~153~~918,~~104~~449			18,837,576
Goodwill		1,784,254			1,784,254
Other assets		~~132~~127,~~954~~624			143,615
Total Assets	$	7274,~~255~~056,~~967~~022		$	67,982,002
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	1516,~~179~~487,~~687~~974		$	11,097,685
Accrued expenses		4,~~727~~449,~~857~~051			7,922,316
Contract liabilities		1,~~896~~992,~~936~~910			2,430,663
Loss reserve		7095,~~137~~082			22,832
Current portion of line of credit		31,~~000~~500,000			2,750,000
Current portion of long-term debt		105,~~822~~449			26,483
Operating lease liabilities, current		1,~~367~~400,~~604~~596			2,162,154
Income taxes payable		221,~~348~~253			58,209
Total Current Liabilities		2625,~~255~~952,~~391~~315			26,470,342
Line of credit, net of current portion		1314,~~140~~390,000			14,640,000
Long-term operating lease liabilities		98,~~087~~724,~~405~~638			938,418
Total Liabilities		4849,~~482~~066,~~796~~953			42,048,760
Commitments and Contingencies (see note 11)					—
Shareholders’ Equity:
Common stock - $.001 par value; authorized 50,000,000 shares, 12,978,259 and 12,978,741 shares, respectively, issued and outstanding		12,978			12,979
Common stock - $.001 par value; authorized 50,000,000 shares, 12,988,814 and 12,978,741 shares, respectively, issued and outstanding		12,989			12,979
Additional paid-in capital		7475,~~913~~015,~~464~~659			74,424,651
Accumulated deficit		(5150,~~153~~039,~~271~~579	)		(48,504,388	)
Total Shareholders’ Equity		2324,~~773~~989,~~171~~069			25,933,242
Total Liabilities and Shareholders’ Equity	$	7274,~~255~~056,~~967~~022		$	67,982,002

See Notes to Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2025			2024			2025			2024
Revenue	$	1519,~~179~~269,~~108~~102		$	2019,~~810~~419,~~334~~879		$	3049,~~579~~848,~~716~~818		$	3959,~~891~~311,~~477~~356
Cost of sales		14,~~515~~962,~~726~~788			15,~~694~~200,~~910~~210			2843,~~266~~229,~~859~~647			3146,~~222~~422,~~304~~514
Gross profit		~~663~~4,~~382~~306,314			54,~~115~~219,~~424~~669			26,~~312~~619,~~857~~171			812,~~669~~888,~~173~~842
Selling, general and administrative expenses		2,~~654~~551,~~024~~355			2,~~775~~742,~~935~~036			58,~~489~~041,~~801~~156			58,~~489~~231,~~839~~875
(Loss) income from operations		(1,990,642)			2,339,489			(3,176,944)			3,179,334
Income (loss) from operations		1,754,959			1,477,633			(1,421,985	)		4,656,967
Other income		~~5,480~~—			—			6,980			—
Interest expense		(~~287~~387,~~546)~~922	)		(~~587~~573,~~971)~~366	)		(~~775~~1,~~637)~~163,559	)		(1,~~220~~793,~~106)~~472	)
(Loss) income before provision for income taxes		(2,272,708)			1,751,518			(3,945,601)			1,959,228
Income (loss) before provision for income taxes		1,367,037			904,267			(2,578,564	)		2,863,495
(Benefit) provision for income taxes		(947,749)			341,572			(1,296,718)			381,044
Provision (benefit) provision for income taxes		253,345			154,590			(1,043,373	)		535,634
Net (Loss) income	$	(1,324,959)		$	1,409,946		$	(2,648,883)		$	1,578,184
Net Income (loss)	$	1,113,692		$	749,677		$	(1,535,191	)	$	2,327,861
Income per common share, basic	$	(0.10)		$	0.11		$	(0.21)		$	0.13
Income (loss) per common share, basic	$	0.09		$	0.06		$	(0.12	)	$	0.19
Income per common share, diluted	$	(0.10)		$	0.11		$	(0.21)		$	0.12
Income (loss) per common share, diluted	$	0.09		$	0.06		$	(0.12	)	$	0.18
Shares used in computing income per common share:
Basic		12,~~748~~763,~~869~~486			12,~~440~~647,~~426~~023			12,~~728~~740,~~209~~097			12,~~515~~559,~~824~~876
Diluted		12,~~748~~818,~~869~~191			12,~~554~~717,~~153~~128			12,~~728~~740,~~209~~097			12,~~656~~650,~~753~~340

See Notes to Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

	Common Stock Shares			Common Stock Amount			Additional Paid-in Capital		Accumulated Deficit			Total Shareholders’ Equity
Balance at January 1, 2025		12,978,741		$	12,979		$	74,424,651	$	(48,504,388	)	$	25,933,242
Net loss		—			—			—		(1,323,924	)		(1,323,924	)
Issuance of common stock upon settlement of restricted stock, net		30,553			30			—		—			30
Stock-based compensation expense		—			—			320,199		—			320,199
Balance at March 31, 2025		13,009,294		$	13,009		$	74,744,850	$	(49,828,312	)	$	24,929,547
Net loss		—			—			—		(1,324,959	)		(1,324,959	)
Issuance of common stock upon settlement of restricted stock, net		(31,035	)		(31	)		—		—			(31	)
Stock-based compensation expense		—			—			168,614		—			168,614
Balance at June 30, 2025		12,978,259		$	12,978		$	74,913,464	$	(51,153,271	)	$	23,773,171
Net income		—			—			—		1,113,692			1,113,692
Issuance of common stock upon settlement of restricted stock, net		10,555			11			—		—			11
Stock-based compensation expense		—			—			102,195		—			102,195
Balance at September 30, 2025		12,988,814		$	12,989		$	75,015,659	$	(50,039,579	)	$	24,989,069
Balance at January 1, 2024		12,771,434		$	12,771		$	73,872,679	$	(51,803,722	)	$	22,081,728
Net income		—			—			—		168,238			168,238
Issuance of common stock upon settlement of restricted stock, net		13,334			13			—		—			13
Stock-based compensation expense		—			—			281,510		—			281,510
Balance at March 31, 2024		12,784,768		$	12,784		$	74,154,189	$	(51,635,484	)	$	22,531,489
Net income		—			—			—		1,409,946			1,409,946
Issuance of common stock upon settlement of restricted stock, net		178,095			179			—		—			179
Stock-based compensation expense		—			—			175,356		—			175,356
Balance at June 30, 2024		12,962,863		$	12,963		$	74,329,545	$	(50,225,538	)	$	24,116,970
Net income		—			—			—		749,677			749,677
Issuance of common stock upon settlement of restricted stock, net		(29,455	)		(30	)		—		—			(30	)
Stock-based compensation expense		—			—			72,743		—			72,743
Balance at September 30, 2024		12,933,408		$	12,933		$	74,402,288	$	(49,475,861	)	$	24,939,360

See Notes to Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Six Months ended June 30,
	For the Nine Months ended September 30,
	2025			2024
Cash flows from operating activities:
Net (loss) income	$	(21,~~648~~535,~~883)~~191	)	$	12,~~578~~327,~~184~~861
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization		~~187~~266,~~365~~262			~~202~~305,~~413~~260
Amortization of debt issuance cost		1015,~~661~~991			2638,~~971~~697
Stock-based compensation		~~488~~591,~~812~~018			~~457~~529,~~058~~771
Deferred income taxes		(1,~~315~~080,~~528)~~873	)		~~355~~512,~~219~~717
Provision for credit losses		(86,814)	)		144,565
Amortization of operating lease right-of-use assets		~~826~~1,~~431~~175,052			~~931~~1,~~290~~405,201
Changes in operating assets and liabilities:
Increase in accounts receivable		(2,~~250~~596,~~823)~~402	)		(2,~~021~~367,~~008~~222	)
Decrease in contract assets		1,805,268			1,128,080
(Increase) decrease in contract assets		(863,704	)		1,693,097
(Increase) decrease in inventory		(106,884)			304,127
Decrease in inventory		324,683			384,361
Decrease in prepaid expenses and other assets		9381,~~450~~949			~~114~~300,~~879~~168
Increase (decrease) in accounts payable and accrued expenses		1,057,552			(64,565	)
Increase in accounts payable and accrued expenses		2,170,637			236,130
Decrease in contract liabilities		(~~533~~437,~~727)~~753	)		(34,~~455~~547,~~094~~502	)
Increase (decrease) in operating lease liabilities		(836,199)			(978,541	)
Decrease in operating lease liabilities		(1,165,974	)		(1,486,359	)
Increase (decrease) in loss reserve		4772,~~305~~250			(~~277~~312,~~429~~463	)
(Decrease) increase in income taxes payable		(55,861)			1,627
Decrease in income taxes payable		(36,956	)		(1,359	)
Net cash used in operating activities		(3,~~317~~105,~~875)~~825	)		(1837,~~552,224~~077	)
Cash flows from investing activities:
Purchase of property and equipment		(6263,~~937)~~900	)		(~~202~~330,~~021~~282	)
Net cash used in investing activities		(6263,~~937)~~900	)		(~~202~~330,~~021~~282	)
Cash flows from financing activities:
Principal payments on line of credit		(1,~~250~~500,000)	)		(1,~~200~~920,000	)
Principal payments on long-term debt		(1521,~~661)~~034	)		(2936,~~497~~917	)
Repayments of insurance financing obligation		(~~170~~253,~~009)~~613	)		(~~174~~261,~~355~~531	)
Net cash used in financing activities		(1,~~435~~774,~~670)~~647	)		(12,~~403~~218,~~852~~448	)
Net decrease in cash		(4,~~816~~944,~~482)~~372	)		(3,~~158~~385,~~097~~807	)
Cash at beginning of period		5,490,963			5,094,794
Cash at end of period	$	~~674~~546,~~481~~591		$	1,~~936~~708,~~697~~987
Supplemental disclosure of cash flow information:
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	~~864~~1,~~820~~258,054		$	1,~~218~~795,~~775~~495
Income Taxes	$	1975,~~996~~933		$	3536,~~000~~457
Supplemental disclosure of Non Cash item:
Supplemental disclosure Non-Cash item:
Increase to operating right-of-use asset and operating lease liability from lease amendment	$	8,190,636		$	—

See Notes to Condensed Consolidated Financial Statements

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

INTERIM FINANCIAL STATEMENTS

Basis of Presentation

The Company consists of CPI Aerostructures, Inc. (“CPI Aero”), Welding Metallurgy, Inc. (“WMI”), a wholly owned subsidiary of CPI Aero, and Compac Development Corporation, a wholly owned subsidiary of WMI (collectively, the “Company”, “we”, “us”, or “our”).

The condensed consolidated interim financial statements of the Company as of ~~June~~September 30, 2025 and for the three and ~~six~~nine months ~~ended~~ ~~June~~ended September 30, 2025 and 2024 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and notes normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to those rules and regulations. The consolidated balance sheet at December 31, 2024 has been derived from audited consolidated financial statements, but does not include all of the information and notes required by U.S. GAAP. The Company believes that the disclosures are adequate to make the information presented not misleading.

All adjustments that, in the opinion of the management, are necessary for a fair presentation for the periods presented have been reflected. Such adjustments are of a normal, recurring nature. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Form 10-K”). The results of operations for interim periods are not necessarily indicative of the operating results to be expected for the full year or any other interim period.

An operating segment, in part, is a component of an enterprise whose operating results are regularly reviewed by the chief operating decision maker (the “CODM”) to make decisions about resources to be allocated to the segment and assess its performance. Operating segments may be aggregated only to a limited extent. The Company’s CODM, the Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. The Company has determined that it has a single operating and reportable segment.

The Company maintains its cash in multiple financial institutions. The balances are insured by the Federal Deposit Insurance Corporation. From time to time, the Company’s balances may exceed insurance limits. As of ~~June~~September 30, 2025, the Company had $~~458~~334,~~281 of~~493 of uninsured balances. The Company limits its credit risk by selecting financial institutions considered to be highly creditworthy.

Recently Issued Accounting Standards – Adopted

In 2025, the Company adopted ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. The updated accounting guidance requires expanded income tax disclosures, including the disaggregation of existing disclosures related to the effective tax rate reconciliation and income taxes paid. The guidance is effective for fiscal years beginning after December 15, 2024. An entity may apply the amendments in this ASU prospectively, but an election to treat this retrospectively is permitted. The Company has adopted this ASU, which is expected to impact the annual disclosure in its 10-K.

Recently Issued Accounting Standards – Not Adopted

In ~~July~~September 2025, the Financial Accounting Standards Board (FASB) issued Accounting ~~Standards~~Standard Update (ASU) No. 2025-0506, ~~Measurement of~~Intangibles ~~Credit~~– ~~Losses~~Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for ~~Accounts~~Internal-Use Software (“ASU ~~Receivable~~2025-06”). This guidance removes all references to prospective and ~~Contract~~sequential ~~Assets,~~stages ~~which~~(referred to ~~provides~~as a“project ~~practical~~stages”) ~~expedient~~throughout ASC 350-40 and clarifies the threshold entities apply to ~~measure~~begin ~~credit~~capitalizing ~~losses~~costs. Under onASU 2025-06, cost capitalization should only commence when both management has authorized and committed to funding a software ~~accounts~~project ~~receivable~~and it is probable the project will be completed and ~~contract~~the ~~assets.~~software ~~The~~will be used to perform the function intended. ASU 2025-06 is effective for annual reporting periods beginning after December 15, ~~2025,~~2027 and interim reporting periods within those annual reporting periods. Entities may apply the guidance using a prospective, modified transition or retrospective approach. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the ~~timing~~preferred ~~of the~~transition ~~adoption~~ approach and assessing the impact of ~~this~~the ASU on ~~its~~our ~~consolidated~~disclosures and financial statements, ~~and~~including ~~related~~the ~~disclosures~~timing of adoption.

In July ~~November 2024~~2025, the ~~FASB~~Financial ~~issued~~Accounting ~~ASU~~Standards ~~2024-03,~~Board ~~Income~~(FASB) ~~Statement-Reporting~~issued ~~Comprehensive~~Accounting ~~Income-Expense~~Standards ~~Disaggregation~~Update ~~Disclosures~~ (~~Subtopic 220-40~~ASU): ~~Disaggregation of Income Statement Expenses~~2025-05, ~~which~~Measurement ~~requires disclosure in the notes to the financial statements~~ of ~~specified~~ ~~information~~Credit ~~about~~Losses ~~certain~~for ~~costs~~Accounts Receivable and ~~expenses.~~Contract ~~In January 2025~~Assets, ~~the FASB issued~~ (“ASU 2025-~~01,~~05”) ~~“Income~~which ~~Statement~~provides -a ~~Reporting~~practical ~~Comprehensive~~expedient ~~Income~~to -measure ~~Expense~~credit ~~Disaggregation~~losses ~~Disclosures~~on ~~(Subtopic~~accounts ~~220-40):~~receivable ~~Clarifying~~and ~~the~~contract ~~Effective~~assets. ~~Date,”~~ASU ~~which~~2025-05 ~~clarifies~~is ~~that~~effective ~~all~~for ~~public business entities should initially adopt the disclosure requirements in the final~~ annual ~~reporting~~periods ~~period~~ beginning after December 15, ~~2026~~2025, and interim ~~reporting~~ periods within those annual reporting periods. ~~beginning~~Early ~~after~~adoption ~~December~~is ~~15, 2027~~permitted. The ~~new~~Company ~~guidance~~ is ~~effective for fiscal~~currently ~~years~~evaluating ~~beginning~~the ~~after~~timing ~~December~~of ~~15,~~the ~~2026,~~adoption ~~which is our annual period beginning January 1, 2027,~~ and ~~interim~~the ~~reporting~~impact ~~periods beginning after December 15, 2027, which will be our interim period beginning January 1, 2028. Early adoption~~ of ASU ~~2024~~2025-0305 ~~is permitted.~~on Weits ~~are~~consolidated ~~evaluating~~financial ~~the~~statements ~~impact~~and ofrelated ~~ASU 2025-01in conjunction with ASU 2024-03~~disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. In January 2025, the FASB issued ASU 2025-01, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date,” which clarifies that all public business entities should initially adopt the disclosure requirements in the final annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The new guidance is effective for fiscal years beginning after December 15, 2026, which is our annual period beginning January 1, 2027, and interim reporting periods beginning after December 15, 2027, which will be our interim period beginning January 1, 2028. Early adoption of ASU 2024-03 is permitted. We are evaluating the impact of ASU 2025-01 in conjunction with ASU 2024-03.

2.	REVENUE

Disaggregation of Revenue

The following tables present the Company’s revenue disaggregated by contract type and revenue recognition method:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

2025

2024

2025

2024

Government subcontracts

1215,~~266~~522,~~475~~738

16,~~963~~986,~~874~~106

2339,~~593~~115,~~083~~821

3148,~~965~~951,~~642~~748

Prime government contracts

12,~~335~~560,~~358~~673

21,~~601~~673,~~347~~483

46,~~128~~689,~~970~~643

57,~~383~~056,~~228~~711

Commercial contracts

1,~~577~~185,~~275~~691

1760,~~245,113~~290

24,~~857~~043,~~663~~354

23,~~542~~302,~~607~~897

1519,~~179~~269,~~108~~102

2019,~~810~~419,~~334~~879

3049,~~579~~848,~~716~~818

3959,~~891~~311,~~477~~356

	Three months ended June 30,				Six months ended June 30,
	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Revenue recognized using over time revenue recognition model	$	1519,~~067~~087,~~724~~180	$	2019,~~596~~092,~~186~~000	$	3049,~~325~~412,~~516~~696	$	3958,~~466~~558,552
Revenue recognized using point in time revenue recognition model		~~111~~181,~~384~~922		~~214~~327,~~148~~879		~~254~~436,~~200~~122		~~424~~752,~~925~~804
	$	1519,~~179~~269,~~108~~102	$	2019,~~810~~419,~~334~~879	$	3049,~~579~~848,~~716~~818	$	3959,~~891~~311,~~477~~356

Favorable/(Unfavorable) Adjustments to Gross Profit

We review our Estimates at Completion (“EAC”) at least quarterly. Due to the nature of the work required to be performed on many of the Company’s performance obligations, the estimation of total revenue and cost at completion is complex, subject to many inputs, and requires significant judgment by management on a contract-by-contract basis. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities, and the related changes in estimates of revenues and costs. The risks and opportunities relate to management’s judgment about the ability and cost to achieve the schedule, consideration of customer-directed delays or reductions in scheduled deliveries, technical requirements, customer activity levels, and related variable consideration. Management must make assumptions and estimates regarding contract revenue and costs, including estimates of labor productivity and availability, the complexity and scope of the work to be performed, the availability and cost of materials including any impact from changing costs or inflation, the length of time to complete the performance obligation, the availability and timing of funding from our customer, and overhead cost rates, among others.

Changes in estimates of net sales, cost of sales, and the related impact to operating profit on contracts recognized over time are recognized on a cumulative catch-up basis, which recognizes the cumulative effect of the profit changes on current and prior periods based on a performance obligation’s percentage-of-completion in the current period. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. Our EAC adjustments also include the establishment of, and changes to, loss provisions for our contracts accounted for on a percentage-of-completion basis.

Net EAC adjustments had the following impact on our gross profit during the three and ~~six~~nine months ended ~~June~~September 30, 2025 and 2024:

	Three months ended						Six months ended
	Three months ended September 30,						Nine months ended September 30,
	June 30,						June 30,
	2025			2024			2025			2024
Net adjustments	$	(3,966,358	)	$	(185,317	)	$	(7,095,588	)	$	(1,358,178	)
Net Adjustment	$	(1,014,387	)	$	(865,493	)	$	(8,109,975	)	$	(2,223,671	)

The net adjustment of $41.0 million for the three months ended ~~June~~September 30, 2025 is driven primarily by an unfavorable adjustment ~~of $2.3 million~~ associated with the ~~termination of our A~~F-1016 ~~program.~~Rudder ~~Additional~~Island ~~net unfavorable~~program, ~~adjustments~~and ofincreased ~~$1.7~~labor ~~million~~and ~~were~~material ~~driven~~costs ~~primarily~~on by the ~~Next Generation Jammer Mid-Band Pod program (“~~NGJ Mid-Band Pod”) , and ~~the~~Embraer TPhenom-38300 ~~Classic~~Engine ~~Structural~~Inlets ~~Modification~~Assembly ~~Kits program were due to increased labor and material costs~~programs.

The net adjustment of $78.1 million for the nine ~~six~~ months ended ~~June~~September 30, 2025 is driven primarily by an unfavorable adjustment ~~of $4.5 million~~ associated with the termination of ~~our~~the Boeing A-10 program. ~~Additional~~and ~~net~~increased ~~unfavorable adjustments~~labor ofand ~~$2.6~~material ~~million~~costs ~~were~~on ~~driven primarily by~~ the NGJ Mid-Band Pod, ~~and the~~ T-38 Classic Structural Modification Kits ~~program~~and ~~were~~Embraer Phenom-300 ~~due~~Engine toInlets ~~increased~~Assembly ~~labor and material costs~~programs.

Transaction Price Allocated to Remaining Performance Obligations

As of ~~June~~September 30, 2025, the aggregate amount of transaction price allocated to the remaining performance obligations was approximately $86100.81 million. This represents the amount of revenue the Company expects to recognize in the future on contracts with unsatisfied or partially satisfied performance obligations as of ~~June~~September 30, 2025.

3.	CONTRACT ASSETS AND LIABILITIES

Contract assets represent revenue recognized on contracts in excess of amounts invoiced to the customers and the Company’s right to consideration is conditional on something other than the passage of time. Amounts may not exceed their net realizable value. Under the typical payment terms of our government as well as military contractor contracts, the customer retains a portion of the contract price until completion of the contract, as a measure of protection for the customer. Our government and military contract or contracts therefore typically result in revenue recognized in excess of billings, which we present as contract assets. Contract assets are classified as current assets. The Company’s contract liabilities represent customer payments received or due from the customer in excess of revenue recognized. Contract liabilities are classified as current liabilities.

	June 30, 2025		December 31, 2024		December 31, 2023
	September 30, 2025		December 31, 2024		December 31, 2023
Contract assets	$	3133,~~027~~695,~~022~~994	$	32,832,290	$	35,312,068
Contract liabilities		1,~~896~~992,~~936~~910		2,430,663		5,937,629

Revenue recognized for the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024 that was included in the contract liabilities balance as of January 1, 2025 and 2024, was approximately $1.46 million and $45.10 million, respectively.

4.	INVENTORY

The components of inventory consisted of the following:

	June 30, 2025		December 31, 2024
	September 30, 2025		December 31, 2024
Raw materials	$	~~719~~275,~~596~~888	$	414,806
Work in progress		57,~~223~~166		60,719
Finished goods		~~300~~310,~~353~~551		442,763
Inventory	$	1593,~~025,172~~605	$	918,288

5.	STOCK-BASED COMPENSATION

In 2009, the Company adopted the Performance Equity Plan 2009 (the “2009 Plan”). The 2009 Plan reserved 500,000 common shares for issuance. The 2009 Plan provides for the issuance of either incentive stock options or nonqualified stock options to employees, consultants or others who provide services to the Company. The Company has 2,364 shares available for grant under the 2009 Plan as of ~~June~~September 30, 2025.

In 2016, the Company adopted the 2016 Long Term Incentive Plan (the “2016 Plan”). The 2016 Plan reserved 600,000 common shares for issuance, provided that no more than 200,000 common shares be granted as incentive stock options. Awards may be made or granted to employees, officers, directors and consultants in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. Any shares of common stock granted in connection with awards other than stock options and stock appreciation rights are counted against the number of shares reserved for issuance under the 2016 Plan as one and one-half shares of common stock for every one share of common stock granted in connection with such award. Any shares of common stock granted in connection with stock options and stock appreciation rights are counted against the number of shares reserved for issuance under the 2016 Plan as one share for every one share of common stock issuable upon the exercise of such stock option or stock appreciation right awarded. In the fourth quarter of 2020, the Company added 800,000 shares to the 2016 Plan, which increased the number of shares reserved for issuance under the 2016 Plan to 1,400,000 shares. In the second quarter of 2023, the Company added an additional 800,000 shares to the 2016 Plan, which increased the number of shares for reserved for issuance under the 2016 Plan to 2,200,000 shares. The Company has ~~308~~292,~~818~~985 shares available for grant under the 2016 Plan as of ~~June~~September 30, 2025.

On June 24, 2025, the shareholders of the Company approved the 2025 Long-Term Incentive Plan (the “2025 Plan”) at the Company’s 2025 annual meeting of shareholders. The 2025 Plan had previously been approved by the Company’s Board of Directors (the “Board”) on April 28, 2025, upon the recommendation of the Company’s Compensation and Human ~~Resources~~ Resources Committee, subject to shareholder approval. The 2025 Plan is intended to advance the Company’s interests by providing equity-based incentives to attract, retain, and motivate employees, officers, directors, and consultants. The plan authorizes the issuance of up to 800,000 shares of the Company’s common stock and allows for a variety of award types, including stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, and other stock-based awards. The 2025 Plan is administered by the Company’s Compensation and Human Resources Committee, which has broad authority to determine the terms of individual awards, including eligibility, size, vesting conditions, performance criteria, and other terms. Awards may generally not be transferred and are subject to forfeiture under certain conditions. As of September 30, 2025, the Company had not issued any shares from the 2025 Plan.

Stock-based compensation expense for restricted stock in the consolidated statements of operations is summarized as follows:

	Three months ended June 30,				Six months ended June 30,
	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Cost of sales	$	—	$	—14,430	$	—	$	~~(10~~3,~~755)~~675
Selling, general and administrative		~~168~~102,~~583~~206		~~175~~58,~~536~~283		~~488~~591,~~812~~018		~~467~~526,~~813~~096
Total stock-based compensation expense	$	~~168~~102,~~583~~206	$	~~175~~72,~~536~~713	$	~~488~~591,~~812~~018	$	~~457~~529,~~058~~771

The Company grants restricted stock units (“RSUs”) to ~~its~~directors ~~Board of Directors~~ as partial compensation. These RSUs vest quarterly on a straight-line basis over a one-year period and will fully vest on October 1, 2025.

The following table summarizes activity related to outstanding RSUs for the ~~six~~nine months ended ~~June~~September 30, 2025:

	~~RSUs~~	RSUs			~~Weighted Average Grant Date Fair Value of RSUs~~	Weighted Average Grant Date Fair Value of RSUs
Non-vested – January 1, 2025		—	—		$	—$	—
Granted		~~122,224~~	122,224		$	~~4.29~~$	4.29
Vested		~~(61,110~~	)(91,665	)	$	~~4.29~~$	4.29
Forfeited		—	(3,704	)	$	—$	4.29
Non-vested – June 30, 2025		61,114			$	4.29
Non-vested – September 30, 2025			26,855			$	4.29

The Company grants shares of common stock (“Restricted Stock Awards” or “RSAs”) to select employees. These shares have various vesting dates, ranging from vesting on the grant date to as late as four years from the date of grant. In the event that the employee’s employment is voluntarily terminated prior to certain vesting dates, portions of the shares may be forfeited. At ~~June~~September 30, 2025, the weighted average remaining amortization period was 21.09 years.

The following table summarizes activity related to outstanding Restricted Stock Awards for the ~~six~~nine months ended ~~June~~September 30, 2025:

	~~Restricted Stock Awards~~	Restricted Stock Awards			~~Weighted Average Grant Date Fair Value of Restricted Stock Awards~~	Weighted Average Grant Date Fair Value of Restricted Stock Awards
Non-vested – January 1, 2025		~~152,875~~	152,875		$	~~2.86~~$	2.86
Granted		—	—		$	—$	—
Vested		~~(44,075)~~	(44,075	)	$	~~2.98~~$	2.98
Forfeited		—	(20,000	)	$	—$	2.65
Non-vested – June 30, 2025		108,800			$	2.81
Non-vested – September 30, 2025			88,800			$	2.85

The Company grants shares of common stock (“Performance Restricted Stock Awards” or “PRSAs”) to select officers as part of our long-term incentive program that will result in that number of PRSAs being paid out if the target performance metric is achieved. The award vesting is based on specific performance metrics related to accounts payable delinquency, debt, and net income during the performance period. The PRSAs vest at 0% or 100% and all three metrics must be met to vest at 100%. The PRSAs granted under this program will vest on the fourth anniversary of the grant date, subject to the aforementioned performance criteria. At ~~June~~September 30, 2025, ~~there~~weighted ~~was~~average no remaining amortization period was 0.5 years.

The following table summarizes activity related to outstanding PRSAs for the ~~six~~nine months ended ~~June~~September 30, 2025:

	~~PRSAs~~	PRSAs			~~Weighted Average Grant Date Fair Value of PRSAs~~	Weighted Average Grant Date Fair Value of PRSAs
Non-vested – January 1, 2025		~~44,076~~	44,076		$	~~2.98~~$	2.98
Granted		—	42,572		$	—$	2.94
Vested		—	—		$	—$	—
Forfeited		~~(44,076)~~	(44,076	)	$	~~2.98~~$	2.98
Non-vested – June 30, 2025		—			$	—
Non-vested – September 30, 2025			42,572			$	2.94

The fair value of all RSUs, PRSAs and RSAs is based on the closing price of our common stock on the grant date. All RSUs, PRSAs, and Restricted Stock Awards vest and settle in common stock (on a one-for-one basis).

As of ~~June~~September 30, 2025, unamortized stock-based compensation costs related to restricted share arrangements was $~~271~~114,~~967~~831.

6.	NET INCOME (LOSS) PER SHARE

Basic loss per common share is computed using the weighted average number of common shares outstanding. Diluted ~~loss~~income per common share is adjusted for the ~~three~~incremental shares attributed to unvested RSUs and ~~six~~RSAs. Incremental shares of 54,706 were used in the calculation of diluted income per common share for the three months ended ~~June~~September 30, 2025. ~~and~~Diluted ~~2024~~loss per common share for the nine months ended September 30, 2025 is computed using the weighted-average number of common shares outstanding adjusted for the securities attributed to ~~outstanding~~unvested ~~options~~RSUs toand ~~purchase common stock, as well as~~ unvested ~~RSUs~~RSAs. Securities that could potentially dilute basic earnings per share in the future, but that were excluded from the computation of diluted earnings per share because they were antidilutive for the ~~three~~nine ~~and six~~ months ended ~~June~~September 30, 2025 include 61 26,~~114~~ 855 RSU and ~~108~~ 88,800 RSA. Incremental shares of ~~113~~ 70,~~727~~ 105 and ~~140~~ 90,~~929~~ 463 were used in the calculation of diluted income per common share for the three and ~~six~~nine months ended ~~June~~September 30, 2024, respectively.

7.	LINE OF CREDIT AND LONG-TERM DEBT

On March 24, 2016, the Company entered into the Amended and Restated Credit Agreement with the lenders named therein and BankUnited N.A. as Sole Arranger, Agent and Collateral Agent (as amended from time to time, the “Credit Agreement” or the “BankUnited Facility”). The BankUnited Facility originally provided for a revolving credit loan commitment of $30 million (the “Revolving ~~Loan~~Credit Loans”) and a $10 million term loan (“Term Loan”). The ~~Revolving~~Term Loan ~~bears~~has been repaid. The Revolving Credit Loans bear interest at a rate based upon a pricing grid, as defined in the Credit Agreement.

On February 20, 2024, the Company entered into a Thirteenth Amendment to the Credit Agreement (the “Thirteenth Amendment”). Under the Thirteenth Amendment, the parties amended the Credit Agreement by (a) extending the maturity date of the Company’s ~~existing~~Revolving ~~revolving~~Credit ~~line~~Loans ~~of credit~~ to August 31, 2025; and (b) setting the aggregate maximum principal amount of all revolving line of credit loans to $19,800,000 from January 1, 2024 through March 31, 2024, $19,080,000 from April 1, 2024 through June 30, 2024, $18,360,000 from July 1, 2024 through September 30, 2024, $17,640,000 from October 1, 2024 through December 31, 2024, $16,920,000 from January 1, 2025 through March 31, 2025, $16,200,000 from April 1, 2025 through June 30, 2025 and $15,480,000 from July 1, 2025 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.

On November 13, 2024, the Company entered into a Fourteenth Amendment to the Credit Agreement (the “Fourteenth Amendment”). 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 (the “Additional Payment Obligation”).

~~The~~As of ~~Credit~~March ~~Agreement~~31, ~~as amended~~2025, ~~requires~~the usCompany towas ~~maintain the~~not ~~following~~in ~~financial~~compliance ~~covenants:~~with ~~(a)~~the Credit Agreement’s minimum debt service coverage ratio, ~~of no less than 1.5 to 1.0 for trailing four fiscal quarter~~minimum ~~periods; (b) maximum leverage ratio of no less than 4.0 to 1.0 for trailing four~~ fiscal quarter ~~periods; (c) minimum~~ net income after taxes, ~~as of the end of each fiscal quarter being no less than $1.00;~~ and ~~(d) a~~ minimum quarterly adjusted EBITDA atfinancial ~~the~~covenants end of each fiscal quarter of no less than $1.0 million (collectively, the “Financial Covenants”). As of March 31, 2025, the Company was not in compliance with the Financial Covenants described in items (a), (c) and ~~(d) above and~~ the Company obtained a written waiver from the Lenders waiving the specified covenant non-compliance for the fiscal quarter ended March 31, 2025. As of June 30, 2025, the Company was not in compliance with all of the Financial Covenants. In addition, the Company did not satisfy the July 1, 2025 mandatory repayment requirement under the Credit Agreement (the “July 2025 Payment Obligation”), On August 14, 2025, the Company obtained a written waiver from the Lenders pursuant to which the Lenders (i) waived the Financial Covenant non-compliance for the fiscal quarter ended June 30, 2025 and (ii) temporarily waived non-compliance with the July 2025 Payment Obligation until September 30, 2025. The waiver is limited strictly to its terms and does not constitute a waiver or modification of any other provision of the Credit Agreement. Although the waivers cured the defaults for the second quarter, failure to comply with the financial covenants in future periods or make mandatory repayments could result in additional events of default unless further waivers or amendments are obtained, of which there is no assurance, future non-compliance could permit the Lenders to accelerate the Company’s outstanding obligations under the Credit Agreement and exercise other remedies available under the loan documents.

OnAs of ~~August~~June 1930, 2025, the Company ~~executed~~was anot ~~Fifteenth~~in ~~Amendment to~~compliance with all the Credit Agreement’s ~~(the~~financial ~~“Fifteenth Amendment”)~~covenants. ~~The~~In ~~amendment~~addition, ~~revised~~the Company ~~certain~~did ~~financial~~not ~~covenants~~satisfy tothe ~~reflect specified~~July ~~adjustments~~1, ~~for~~2025 ~~the~~mandatory ~~quarters~~repayment ~~ended~~requirement ~~March~~under ~~31,~~the ~~2025~~Credit ~~and~~Agreement ~~June~~(the ~~30,~~“July 2025 Payment Obligation”). ~~These~~On ~~covenant-based~~August ~~adjustments~~14, ~~were~~2025, ~~designed to offset~~ the ~~effect~~Company ofobtained ~~the~~a ~~termination~~written ofwaiver from the ~~Company’s~~Lenders ~~A-10~~pursuant ~~Program~~to onwhich the ~~Company’s~~Lenders ~~compliance~~(i) waived ~~with~~the ~~its~~financial ~~covenants.~~covenant Asnon-compliance ~~a result~~for of the ~~Fifth~~fiscal ~~Amendment,~~quarter inended ~~accordance~~June ~~with ASC-470~~30, ~~the~~2025 ~~Company~~and ~~determined~~(ii) ~~that~~temporarily itwaived isnon-compliance with ~~reasonably~~the ~~possible~~July it2025 ~~will~~Payment ~~meet~~Obligation ~~its covenants~~until ~~within~~September ~~the~~30, ~~next twelve months~~2025.

~~The~~On ~~BankUnited~~August ~~Facility~~19, is2025, ~~secured~~the byCompany ~~all~~executed ofa ~~the~~Fifteenth ~~Company’s~~Amendment ~~assets~~to ~~and~~ the ~~Revolving~~Credit ~~Loan~~Agreement ~~bore~~(the ~~interest~~“Fifteenth atAmendment”). ~~the~~The amendment ~~Prime~~revised ~~Rate~~certain +financial ~~2.0%. The~~covenants ~~Prime~~to ~~Rate~~reflect ~~was~~specified ~~7.5%~~adjustments asfor ofthe ~~June~~quarters 30ended March 31, 2025 and ~~as such~~June 30, ~~the~~2025. ~~Company’s~~These ~~interest~~covenant-based ~~rate~~adjustments onwere ~~the~~designed ~~Revolving~~to ~~Loan~~offset ~~was~~the ~~9.5%~~effect asof the termination of the Company’s Boeing ~~June~~A-10 ~~30,~~Program ~~2025~~on covenant compliance.

As of ~~June~~September 30, 2025, the Company was not in compliance with the aggregate principal amount of all Revolving Credit Loans and ~~December~~the Company 31obtained a Waiver and Sixteenth Amendment to the Credit Agreement (the “Sixteenth Amendment”). The Sixteenth Amendment reset the aggregate maximum principal amount of all Revolving Credit Loans to $15,890,000 from ~~2024~~July 1, ~~the~~2025 ~~Company~~through ~~had~~March 31, 2026, $1615,140,000 from ~~and~~April 1, 2026 through June 30, 2026, $1714,390,000 from ~~outstanding~~July ~~under~~1, ~~the~~2026 ~~Revolving~~through ~~Loan~~September 30, ~~respectively.~~ 2026, and $313,~~000~~640,000 onward, ofand ~~the~~for ~~Revolving~~payments ~~Loan~~to isbe ~~payable~~made by ~~June~~the ~~30,~~Company ~~2026~~to ~~and~~comply ~~the~~therewith ~~remaining~~(if ~~balance~~any ofsuch ~~$13~~payments are necessary),~~140,000~~ ofon the ~~revolving~~first ~~line~~day of ~~credit~~each ~~matures~~such period, and iswaived ~~payable~~the byCompany’s ~~August~~failure ~~31,~~to ~~2026~~make the July 2025 Payment Obligation on September 30, as2025. ~~amended~~The Sixteenth Amendment also extended the maturity date of the Revolving Credit Loans to November 30, 132026, ~~2024~~and waived the Additional Payment Obligation.

The ~~Company~~Credit ~~has~~Agreement, ~~cumulatively~~as ~~paid~~amended, ~~approximately~~requires ~~$962,000~~us ofto ~~total~~maintain the following financial covenants: (a) minimum debt ~~issuance~~service ~~costs~~coverage inratio of ~~connection~~no ~~with~~less ~~the~~than ~~BankUnited~~1.5 ~~Facility,~~to 1.0 for trailing four fiscal quarter periods; (b) maximum leverage ratio of no less than 4.0 to 1.0 for trailing four fiscal quarter periods; (c) minimum net income after taxes as of ~~which~~the ~~approximately~~end ~~$25,000~~of ~~and~~each ~~$36,000~~fiscal isquarter ~~unamortized~~being no less than $1.00; and is(d) ~~included~~a inminimum ~~other~~adjusted ~~assets~~EBITDA at ~~June~~the ~~30,~~end ~~2025~~of ~~and~~each ~~December~~fiscal 31quarter of no less than $1.0 million (collectively, ~~2024~~the “Financial Covenants”). In accordance with ASC 470, the Company has determined that it is reasonably possible it will meet its covenants ~~respectively~~within the next 12 months.

Also included in long-term debt are financing leases of $10,822 and $26,483 at June 30, 2025 and December 31, 2024, respectively, included as current liabilities.

Although waivers and Credit Agreement amendments cured the events of defaults described above, the Company’s failure to comply with the Financial Covenants in future periods or make mandatory repayments could result in additional events of default, and unless further waivers or amendments are obtained, of which there is no assurance, future non-compliance could permit the Lenders to accelerate the Company’s outstanding obligations under the Credit Agreement and exercise other remedies available under the loan documents.

The BankUnited Facility is secured by all the Company’s assets and the Revolving Credit Loans bore interest at the Prime Rate + 2.0%. The Prime Rate was 7.25% as of September 30, 2025 and as such, the Company’s interest rate on the Revolving Credit Loans was 9.5% as of September 30, 2025.

As of September 30, 2025 and December 31, 2024, the Company had $15,890,000 and $17,390,000 outstanding under the Revolving Credit Loans, respectively. $1,500,000 of the Revolving Credit Loans is payable by September 30, 2026 and the remaining balance of $14,390,000 of the Revolving Credit Loans matures and is payable by November 30, 2026, as amended November 13, 2025.

The Company has cumulatively paid approximately $962,000 of total debt issuance costs in connection with the BankUnited Facility, of which approximately $20,000 and $36,000 is unamortized and is included in other assets at September 30, 2025 and December 31, 2024, respectively.

Also included in short-term debt is financing leases of $5,449 and $26,483 at September 30, 2025 and December 31, 2024, respectively, included as current liabilities.

8.	MAJOR CUSTOMERS AND VENDORS

During the ~~six~~nine months ended ~~June~~September 30, 2025, our four largest customers accounted for 3137%, 2419%, 1513% and 1413% of revenue. During the ~~six~~ nine months ended ~~June~~September 30, 2024, our four largest customers accounted for 3235%, 2524%, 1312%, and 12% of revenue. During the three ~~months~~ months ended ~~June~~September 30, 2025, our three largest customers accounted for 4246%, 2613% and 1012% of revenue. During the three months ended ~~June~~ September 30, 2024, our ~~four~~three largest customers accounted for 3640%, 2523%, ~~13%,~~ and 1211% of revenue

At ~~June~~September 30, 2025, 3654%, 2513% and 1011% of our accounts receivable were from three of our largest customers. At December 31, 2024, 21%, 18%, 16%, 12%, 12%, and 12% of accounts receivable were due from our six largest customers.

At ~~June~~September 30, 2025, 4139%, 26%, and 1719% of our contract assets were from three of our largest customers. At December 31, 2024, 27%, 20%, 16% and 15% of our contract assets were related to our four largest customers.

At ~~June~~September 30, 2025 12% of our accounts payable was from one of our largest vendors. At December 31, 2024, 13%, 12%, 11%, and 11% of of our accounts payable was from our top 4 largest vendors.

LEASES

The Company leases manufacturing and office space under an agreement classified as an operating lease. The company entered into an amendment to the lease agreement for its operating facility on April 15, 2025 that extends the term of the lease until April 30, 2031. The lease agreement does not include any renewal options. The agreement provides for an initial monthly base amount plus annual escalations through the term of the lease. In addition to the monthly base amounts in the lease agreement, the Company is required to pay real estate taxes and operating expenses during the lease terms.

The Company also leases office equipment in agreements classified as operating leases.

For the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024, the Company’s operating lease expense was $1,~~189~~784,~~958~~937 and $1,~~059~~611,~~249~~487, respectively. For the three months ended ~~June~~September 30, 2025 and 2024, the Company’s operating lease expense was $594,979 and $~~529~~528,~~624~~127, respectively.

Future minimum lease payments under non-cancellable operating leases as of June 30, 2025 were as follows:

For the Year Ending December 31,
Remainder of 2025	$	1,152,266
2026		2,304,533
2027		2,336,077
2028		2,300,990
2029		2,360,515
Thereafter		3,249,720
Total undiscounted operating lease payments		13,704,101
Less imputed interest		(3,249,092	)
Present value of operating lease payments	$	10,455,009

The following table sets forth the right-of-use assets and operating lease liabilities as of:

	June 30, 2025		December 31, 2024
Assets
Right-of-use assets, net	$	10,220,405	$	2,856,200
Liabilities
Current operating lease liabilities	$	1,367,604	$	2,162,154
Long-term operating lease liabilities		9,087,405		938,418
Total lease liabilities	$	10,455,009	$	3,100,572

The Company’s weighted average remaining lease term for its operating leases is 5.7 years as of June 30, 2025. The Company’s weighted average discount rate for its operating leases is 9.5% as of June 30, 2025.

Future minimum lease payments under non-cancellable operating leases as of September 30, 2025 were as follows:

For the Year Ending December 31,
Remainder of 2025	$	576,133
2026		2,304,533
2027		2,336,077
2028		2,300,990
2029		2,360,515
Thereafter		3,249,720
Total undiscounted operating lease payments		13,127,968
Less imputed interest		(3,002,734	)
Present value of operating lease payments	$	10,125,234

The following table sets forth the right-of-use assets and operating lease liabilities as of:

	September 30, 2025		December 31, 2024
Assets
Right-of-use assets, net	$	9,871,784	$	2,856,200

Liabilities
Current operating lease liabilities	$	1,400,596	$	2,162,154
Long-term operating lease liabilities		8,724,638		938,418
Total lease liabilities	$	10,125,234	$	3,100,572

The Company’s weighted average remaining lease term for its operating leases is 5.5 years as of September 30, 2025. The Company’s weighted average discount rate for its operating leases is 9.5% as of September 30, 2025.

10. INCOME TAXES

On July 4, 2025, H.R.1, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) was enacted. OBBBA includes a broad range of tax reform provisions affecting businesses. The Company does not expect this legislation to have a significant impact on its financial statements.

The (benefit)/provision for income tax for the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024 was $(1,~~296~~043,~~718~~373) and $~~381~~535,~~044~~634, respectively. The ~~(benefit)/~~provision for income tax for the three months ended ~~June~~September 30, 2025, and ~~June~~September 30, 2024 was $~~(947~~253,~~749)~~345 and $~~341~~154,~~572~~590, respectively.

The effective income tax rate for the ~~six~~nine months ended ~~June~~September 30, 2025 is 3440.25%. The difference between the effective income tax rate for the ~~six~~nine months ended ~~June~~September 30, 2025 and the statutory income tax rate of 21% is due primarily to the estimated R&D credit, ~~relative~~state toincome ~~annual~~taxes ~~expectation~~and ofpermanent ~~taxable~~tax ~~income~~differences.

The effective income tax rate for the three months ended ~~June~~September 30, 2025 is 4418.75%. The difference between the effective income tax rate for the three months ended ~~June~~September 30, 2025 and the statutory income tax rate of 21% is due primarily to the estimated R&D credit, ~~relative~~state toincome ~~annual~~taxes ~~expectation~~and ofpermanent ~~taxable~~tax ~~income~~differences.

11.

COMMITMENTS AND CONTINGENCIES

The Company may be involved in various claims, suits, assessments, investigations, and legal proceedings that arise from time to time in the ordinary course of its business. The Company accrues a liability when it is both probable a liability has been incurred and the amount of the loss can be reasonably estimated. The Company reviews these accruals at least quarterly and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other relevant information. To the extent new information is obtained and the Company’s views on the probable outcomes of claims, suits, assessments, investigations, or legal proceedings change, changes in the Company’s accrued liabilities would be recorded in the period such determination is made. For some matters, the amount of liability is not probable or the amount cannot be reasonably estimated and, therefore, accruals have not been made.

The Company reached a settlement with the SEC on June 20, 2024 related to the Company’s previously announced and filed restatements of certain of its financial statements for fiscal periods between January 1, 2018 and December 31, 2022. Under the terms of this settlement, if the Company fails to comply with various undertakings, a civil monetary penalty in the amount of $400,000 will be due to the SEC by June 30, 2025 (the “Undertakings”). The Undertakings are as follows: (a) the Company shall fully remediate its outstanding material weaknesses in Internal Controls over Financial Reporting (“ICFR”) and have effective ICFR and disclosure controls and procedures (“DCP”) by December 31, 2024; (b) the Company shall publicly disclose, concurrent with the filing of the 2024 Form 10-K, whether in management’s opinion, the Company has fully remediated its material weaknesses in ICFR and has effective ICFR and DCP; and (c) the Company shall certify, in writing, compliance with the undertaking(s) set forth above. The certification shall be made by the Company’s CEO and identify the undertaking(s), provide written evidence of compliance in the form of a narrative, and be supported by exhibits sufficient to demonstrate compliance. The certification and supporting material shall be submitted to the SEC no later than sixty (60) days from the date of the completion of the undertakings. As of May 29, 2025 the Company completed the certification to the SEC as required per the settlement agreement and therefore there is no liability. 12

12.

SEGMENT REPORTING

We manage our business activities on a consolidated basis and operate as a single operating segment. We primarily derive our revenue in the United States by supplying aircraft parts, complex aerostructure assemblies, aerosystems, maintenance repair and overhaul (“MRO”) and kitting contracts for fixed wing aircraft and helicopters in both the commercial and defense markets. The accounting policies are the same as those described in Note 1 – Principal Business Activity and Summary of Significant Accounting Policies of the form 10-K.

Our CODM is our Chief Executive Officer, Dorith Hakim. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions including the allocation of resources and assessing financial performance.

As the Company has only one operating segment and is managed on a consolidated basis, the measure of profit or loss is consolidated net income or loss, which include all significant expenses and assets as presented in the consolidated financial statements which is consistent with the information provided to the CODM. Refer to the Condensed Consolidated Balance Sheet as of ~~June~~September 30, 2025 and December 31, 2024 and the Condensed Consolidated Statements of Operations for the financial information ~~with~~ with respect to the Company’s single operating segment for the three and ~~six~~nine months ended ~~June~~September 30, 2025 and 2024.

13.

RISK AND UNCERTAINTIES

~~New~~Economic or increased economic and trade sanctions, including tariffs, may create economic and political uncertainties and could potentially impact the cost of our raw materials and subassemblies having an adverse effect on our business, operations and profitability. Although our supply chain predominantly consists of US based suppliers, and our material costs are established on issued purchase orders, future procurements may be impacted by economic and political uncertainties including tariffs, and may directly affect the Company’s profitability on previously negotiated Firm Fixed Price contracts.Environment

New or increased economic and trade sanctions, including tariffs, may create economic and political uncertainties and could potentially impact the cost of our raw materials and subassemblies having an adverse effect on our business, operations and profitability. Although our supply chain predominantly consists of US based suppliers, and our material costs are established on issued purchase orders, future procurements may be impacted by economic and political uncertainties including tariffs, and may directly affect the Company’s profitability on previously negotiated firm fixed price contracts.

On October 1, 2025, the federal government entered a shutdown, after Congress failed to reach an agreement on a short-term spending deal or full-year appropriation. The defense industry, including our company, could be impacted if the shutdown becomes prolonged, stemming from slow downs in incremental funding on existing contracts or delays in payments on government contract invoices. Since government employees are furloughed, many critical operations will cease, including purchase order acceptance and new contract awards.

Boeing A-10 Program Contract Termination

On May 7, 2025, the Company submitted to The Boeing Company a Request for Equitable Pricing Adjustment on the Boeing A-10 program addressing higher manufacturing costs on its 2019 firm fixed price contract. Subsequently, on July 14, 2025, the Company received a Termination Notice from The Boeing Company with respect to the Boeing A-10 program directing the Company to scrap and return materials and tooling to the Air Force prior to August 15, 2025 when funding would no longer be available. The company continues to have correspondence with the Boeing Company over the termination of the Boeing A-10 program.

In light of these events, and in conjunction with the Air Force’s decision to accelerate the retirement of the Boeing A-10 fleet, the Company evaluated the situation and recognized an adjustment to address the risk during the quarter ended June 30, 2025. The Company will continue to evaluate the situation and will recognize further adjustments if required, in the period in which a reasonable estimate can be determined.

14.

SUBSEQUENT EVENTS

Credit Agreement Waiver; ~~Fifteenth~~Sixteenth Amendment to Credit Agreement

On November ~~August 14~~13, 2025, the ~~Lenders~~Company ~~issued~~entered ~~the~~into ~~waiver~~a ~~described~~Sixteenth inAmendment ~~Note 7,~~to ~~which~~its ~~waived~~Credit ~~the~~Agreement. ~~Company’s~~The ~~Financial~~amendment ~~Covenant~~extended ~~non-compliance~~the ~~for~~maturity of the ~~quarter~~revolving ~~ended~~credit ~~June~~facility to November 30, ~~2025~~2026, ~~and~~adjusted ~~waived~~borrowing ~~non-compliance~~limits ~~with the~~for ~~July~~future ~~2025~~periods, ~~Payment~~waived ~~Obligation~~a ~~until~~failure ~~September~~to ~~30,~~pay ~~2025. On August 19~~principal, ~~2025,~~and ~~the~~eliminated ~~Company~~a ~~executed~~prior contingent ~~the~~payment ~~Fifteenth~~requirement. ~~Amendment~~See ~~described in~~ Note 7. ~~The~~for ~~amendment~~additional ~~revised~~information ~~certain~~concerning ~~covenants to reflect specified adjustments for~~ the ~~quarter~~amendment ~~ended March 31, 2025~~ and ~~June~~the ~~30, 2025~~Credit Facility.

A-10 Program Contract Termination

On May 7, 2025, the Company submitted to The Boeing Company a Request for Equitable Pricing Adjustment on the A-10 program addressing higher manufacturing costs on its 2019 Firm Fixed Price contract. Subsequently, on July 14, 2025, the Company received a Termination Notice from The Boeing Company with respect to the A-10 program directing the Company to scrap and return materials and tooling to the Air Force prior to August 15, 2025 when funding would no longer be available.

In light of these events, and in conjunction with the Air Force’s decision to accelerate the retirement of the A-10 fleet, the Company has evaluated the situation and decided to recognize an adjustment to address the risk in the reported period. The Company will continue to evaluate the situation and will recognize further adjustments if required, in the period in which a reasonable estimate can be determined.

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in this report.

Forward Looking Statements

When used in this Form 10-Q and in future filings by us with the Securities and Exchange Commission (the “SEC”), the words or phrases “will likely result,” “management expects” or “we expect,” “will continue,” “is anticipated,” “estimated” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on any such forward-looking statements, each of which speaks only as of the date made. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The risks are included in Part I, Item 1A – Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024 (the “Form 10-K”). We have no obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.

Business Operations

WeCPI ~~are~~Aero ~~engaged~~is ina ~~the~~prime ~~contract~~contractor ~~production~~to ~~of structural aircraft parts for fixed wing aircraft and helicopters in both~~ the ~~commercial and defense markets~~U.S. WeDepartment ~~also~~of ~~have~~Defense aas ~~strong~~well ~~and~~as ~~growing~~a ~~presence~~Tier in1 ~~the~~subcontractor ~~aerosystems~~to ~~sector~~some of the ~~market,~~largest ~~with~~aerospace ~~our~~and ~~production of~~defense ~~various~~contractors ~~reconnaissance~~in ~~pod~~the ~~structures and fuel panel systems~~world. ~~Within~~CPI ~~the~~Aero ~~global~~provides ~~aerostructure~~engineering, ~~and~~program ~~aerosystem~~management, supply chain management, ~~we are~~assembly ~~either~~operations aand ~~Tier~~MRO ~~1 supplier~~ services to ~~aircraft~~this ~~original~~global ~~equipment~~network ~~manufacturers~~of ~~(“OEMs”)~~customers. orCPI aAero ~~Tier~~is 2recognized ~~subcontractor~~as toa ~~major Tier~~leader 1within ~~manufacturers.~~the Weinternational ~~also~~aerospace ~~are~~market ain ~~prime~~such ~~contractor~~areas toas ~~the~~aircraft structural ~~United~~assemblies, ~~States~~military ~~Department~~advanced oftactical ~~Defense~~pod ~~(“DOD”)~~structures, ~~primarily the~~engine ~~United~~air ~~States~~inlets, ~~Air~~and ~~Force~~complex ~~(“USAF”)~~welded products. InCPI ~~conjunction~~Aero’s ~~with~~customer base ~~our~~enjoys ~~assembly~~a ~~operations,~~unique wecombination ~~provide~~of ~~engineering,~~large-company ~~program management~~capabilities, ~~supply~~matched ~~chain~~with ~~management~~small-company ~~and~~value, ~~kitting~~responsiveness, and ~~MRO~~personal customer service.

Recent Developments

Credit Agreement Waiver

On November ~~August 14~~13, 2025, ~~the~~CPI ~~Company~~Aerostructures, ~~obtained~~Inc. aentered ~~waiver from~~into ~~its~~a ~~lenders~~Sixteenth ~~under~~Amendment to its ~~existing~~ Credit Agreement with ~~respect~~BankUnited, toN.A. ~~financial covenant~~ and the ~~payment~~lenders ~~noncompliance~~party thereto. OnThe ~~August~~amendment ~~19,~~extended ~~2025,~~ the ~~Company~~maturity ~~entered~~of the ~~Fifteenth~~revolving ~~Amendment~~credit ~~(defined~~facility ~~below).~~to ~~The~~November ~~amendment~~30, ~~revised~~2026, ~~certain~~adjusted ~~covenants~~borrowing limits tofor ~~reflect~~future ~~covenant-based~~periods, ~~adjustments related~~waived a failure to ~~the~~pay ~~termination~~principal, ofand ~~the~~eliminated ~~Company’s~~a ~~A-10~~prior ~~Program~~contingent payment requirement. For additional information, see “Liquidity and Capital Resources — Bank Credit Facilities” below.

~~Departure and~~ Appointment of ~~Directors~~Interim orChief ~~Certain~~Financial ~~Officers~~Officer

Effective ~~July~~ July 22, 2025, Pamela Levesque, ~~was~~a ~~appointed~~Company bydirector, ~~the~~was ~~board~~appointed ~~of directors of the Company~~ to the positions of Interim Chief Financial Officer and Secretary. Ms. Levesque will also serve as Interim Chief Financial Officer and Secretary of each of the Company’s wholly owned subsidiaries, Welding Metallurgy, Inc. and Compac Development Corporation. Philip Passarello, who resigned as Chief Financial Officer and Secretary of the Company and its subsidiaries on July 22, 2025, will assist in the transition of Chief Financial Officer responsibilities to Ms. Levesque as Vice President of Finance. Please refer to our Form 8-K filed on July 28, 2025 for additional information.

Long-Term Incentive Plan

On June 24, 2025, the shareholders of the Company approved the 2025 Plan at the Company’s 2025 annual meeting of shareholders. The plan authorizes the issuance of up to 800,000 shares of the Company’s common stock and allows for a variety of award types. The Company registered these shares on a Form S-8 registration statement filed with the SEC on July 18, 2025.

Backlog

We produce complex custom structural 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 programs. Substantially all of our backlog is subject to termination at will and rescheduling, ~~without~~ 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. Therefore, our funded backlog does not include the full value of our contracts.

Our total backlog as of ~~June~~September 30, 2025 and December 31, 2024 is shown below.

Backlog (Total)	~~June~~September 30, 2025		December 31, 2024
Funded	$	86100,~~778~~051,000	$	85,039,000
Unfunded		~~419~~408,~~709~~912,000		425,232,000
Total	$	~~506~~508,~~487~~963,000	$	510,271,000

Approximately 96% of the total amount of our backlog at ~~June~~September 30, 2025 was attributable to government and military contractor contracts. ~~Our~~ Our backlog attributable to government contracts at ~~June~~September 30, 2025 and December 31, 2024 was as follows:

Backlog (Government)	~~June~~September 30, 2025		December 31, 2024
Funded	$	8597,~~253~~091,000	$	82,262,000
Unfunded		~~401~~390,~~878~~875,000		404,256,000
Total	$	487,~~131~~966,000	$	486,518,000

Our backlog attributable to commercial contracts at ~~June~~September 30, 2025 and December 31, 2024 was as follows:

Backlog (Commercial)	~~June~~September 30, 2025		December 31, 2024
Funded	$	12,~~525~~960,000	$	2,777,000
Unfunded		1718,~~831~~037,000		20,976,000
Total	$	1920,~~356~~997,000	$	23,753,000

The total backlog at ~~June~~September 30, 2025 is primarily comprised of long-term programs with Raytheon (NGJ Mid-Band Pods and Advanced ~~Tactical~~ Tactical Pods), L3Harris (NGJ Low-Band Pods), Lockheed Martin (F-16 RI/DCC’s), Raytheon (B-52 Radar Racks), Sikorsky (MH-60 ~~Seahawk~~ Seahawk Stabilator MRO).

The funded backlog at ~~June~~September 30, 2025 is primarily from purchase orders under long-term contracts with Raytheon (NGJ Mid-Band Pods ~~and~~ and Advanced Tactical Pods), USAF (T-38 Classic Structural Modification Kits), and Lockheed Martin (F-16 RI/DCC’s)~~, and L3Harris (NGJ Low-Band Pods),~~.

Critical Accounting Estimates

We make a number of significant estimates, assumptions and judgments in the preparation of our financial statements. See Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Form 10-K, for a discussion of our critical accounting estimates. There have been no significant changes to the application of our critical accounting estimates during the ~~six~~nine ~~month~~months ~~period~~ ended ~~June~~September 30, 2025.

Results of Operations

Revenue

Total Revenue for the three months ended ~~June~~September 30, 2025 was $1519,~~179~~269,~~108~~102 compared to $2019,~~810~~419,~~334~~879 for the same period last year, a ~~decrease~~ decrease of $5150,~~631,226~~777 or 270.18%, driven primarily by the ~~unfavorable adjustment associated with the~~ termination of ~~our~~the Boeing A-10 Main Landing Gear Pods program, offset by timing of material receipts ~~on our MS-110 and an unfavorable adjustment~~ to our ~~USAF~~NGJ TMid-38Band ~~Pacer~~Pods ~~Classic Structural Modification Kits program~~Programs.

Total Revenue for the ~~six~~nine months ended ~~June~~September 30, 2025 was $3049,~~579~~848,~~716~~818 compared to $3959,~~891~~311,~~477~~356 for the same period last year, a ~~decrease~~ decrease of $9,~~311~~462,~~761~~538 or ~~23.3~~16%, driven primarily by the unfavorable adjustment associated with the termination of ~~our~~the Boeing A-10 Main Landing Gear Pods program, timing of material receipts on our MS-110/TACSAR pod program and completion of the F-35 program, offset by higher production volume in our NGJ Mid-Band Pods and MH-60 Seahawk Stabilator MRO programs.

Revenue from military subcontracts was $1215,~~266~~522,~~475~~738 for the three months ended ~~June~~September 30, 2025 compared to $16,~~963~~986,~~874~~106 for the three ~~months~~ months ended ~~June~~September 30, 2024, a decrease of $41,~~697~~463,~~399~~368 or ~~27,7~~8.6%, driven primarily ~~by the unfavorable adjustment~~ associated with the termination of ~~our~~the Boeing A-10 Main Landing Gear Pods program and lower revenue on the Sikorsky CH-53K Welded Tubes program offset by timing of material receipts on our MSNGJ Mid-~~110~~Band ~~program~~Pods Programs.

Revenue from military subcontracts was $2339,~~593~~115,~~083~~821 for the ~~six~~nine months ended ~~June~~September 30, 2025 compared to $3148,~~965~~951,~~642~~748 for the ~~six~~nine months ~~ended~~ ~~June~~ended September 30, 2024, a decrease of $89,~~372~~835,~~559~~927 or 2620.21%, driven primarily by the unfavorable adjustment associated with the ~~termination~~ termination of ~~our~~the Boeing A-10 Main Landing Gear Pods program, ~~and~~ timing of material receipts on our MS-110/TACSAR pod program and completion of the F-35 program, offset by higher production volume in our NGJ Mid-Band Pods and MH-60 Seahawk Stabilator MRO programs.

Revenue from government military contracts was $12,~~335~~560,~~358~~673 for the three months ended ~~June~~September 30, 2025 compared to $21,~~601~~673,~~347~~483 for the ~~three~~ three months ended ~~June~~September 30, 2024, aan ~~decrease~~increase of $1887,~~265,989~~190 or 4853.70%, driven primarily by ~~unfavorable~~timing ~~adjustments~~of material receipts in our USAF T-38 Pacer Classic Structural Modification Kits program.

Revenue from government military contracts was $46,~~128~~689,~~970~~643 for the ~~six~~nine months ended ~~June~~September 30, 2025 compared to $57,~~383~~056,~~228~~711 for the nine ~~six~~ months ended ~~June~~September 30, 2024, a decrease of $1367,~~254,258~~068 or 235.32%, driven primarily by ~~unfavorable~~timing ~~adjustments~~of material receipts in our USAF T-38 Pacer Classic Structural Modification Kits program.

Revenue from commercial subcontracts was $1,577,275 for the three months ended June 30, 2025 compared to $1,245,113 for the three months ended June 30, 2024, an increase of $332,162 or 26.7%, driven primarily by an increase in our Embraer Phenom-300 and Phenom-100 Engine Inlet Assemblies programs.

Revenue from commercial subcontracts was $2,857,663 for the six months ended June 30, 2025 compared to $2,542,607 for the six months ended June 30, 2024, an increase of $315,056 or 12.4%, primarily driven by an increase in our Embraer Phenom-300 and Phenom-100 Engine Inlet Assemblies programs.

Revenue from commercial subcontracts was $1,185,691 for the three months ended September 30, 2025 compared to $760,290 for the three months ended September 30, 2024, an increase of $425,401 or 56.0%, driven primarily by the commencement in our Embraer Phenom-100 Engine Inlet Assemblies programs.

Revenue from commercial subcontracts was $4,043,354 for the nine months ended September 30, 2025 compared to $3,302,897 for the nine months ended September 30, 2024, an increase of $740,457 or 22.4%, primarily driven by the commencement in our Embraer Phenom-100 Engine Inlet Assemblies and Collins Compac Enclosures programs.

Cost of Sales

Total Cost of Sales for the three months ended ~~June~~September 30, 2025 and 2024 was $14,~~515~~962,~~726~~788 and $15,~~694~~200,~~910~~210, respectively, a decrease of $1237,~~1749,184or 7~~422 or 1.56%.

Total Cost of Sales for the ~~six~~nine months ended ~~June~~September 30, 2025 and 2024 was $2843,~~266~~229,~~859~~647 and $3146,~~222~~422,~~304~~514, respectively, a decrease of $23,~~955~~192,~~445~~ 867 or 96.59%.

The components of the cost of sales were as follows:

Three months ended

~~Six~~Nine months ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

Procurement

89,~~860~~605,~~302~~276

109,~~118~~219,~~041~~097

1726,~~154~~760,~~890~~166

1928,~~483~~702,~~061~~158

Labor

1,~~504~~470,~~475~~358

1,~~800~~861,~~940~~505

34,~~147~~617,~~061~~419

35,~~598~~460,~~730~~235

Factory overhead

34,~~952~~101,~~350~~453

34,~~770~~021,~~396~~411

812,~~070~~172,~~931~~384

812,~~037~~058,~~491~~902

Other cost of sales

~~198~~(214,~~599~~299

)

598,~~533~~197

(~~106~~320,~~023~~322

)

~~103~~201,~~022~~219

Cost of sales

14,~~515~~962,~~726~~788

15,~~694~~200,~~910~~210

2843,~~266~~229,~~859~~647

3146,~~222~~422,~~304~~514

Procurement for the three months ended ~~June~~September 30, 2025 was $89,~~860~~605,~~302~~276 compared to $109,~~118~~219,~~041~~097 for the three months ended ~~June~~September 30, 2024, an aincrease ~~decrease~~ of $1386,~~256,739~~179 or ~~12.~~4.2%, driven primarily by ~~lower~~increased material receipts onfor our ~~Collins~~NGJ MSMid-~~110~~band ~~program,~~pod ~~Embraer~~and ~~Phenom~~USAF T-~~300~~38 ~~Engine Inlet~~Pacer ~~Assemblies~~Classic ~~and~~Structural ~~A-10~~Modification ~~Main~~Kits ~~Landing~~programs ~~Gear~~offset ~~Pods~~by ~~program,~~the ~~partially~~termination ~~offset~~of bythe ~~increased~~Boeing ~~material~~A-10 ~~receipts~~Main ~~for~~Landing ~~our~~Gear ~~NGJ~~Pods ~~POD~~ program.

Procurement for the ~~six~~nine months ended ~~June~~September 30, 2025 was $1726,~~154~~760,~~890~~166 compared to $1928,~~483~~702,~~061~~158 for the ~~six~~nine months ended ~~June~~September 30, 2024, a decrease of $21,~~328~~941,~~171~~992 or 116.98%, driven primarily by ~~lower~~the ~~material~~termination ~~receipts~~of onthe ~~our~~Boeing ~~Collins MS-110 program, our~~ A-10 Main Landing Gear Pods program, ~~completion~~and oflower material ~~our~~receipts Fon the Collins MS-35110 program, ~~partially~~ offset by increased material receipts on our NGJ POD program.

Labor costs for the three months ended ~~June~~ September 30, 2025 were $1,~~504~~470,~~475~~358 compared to $1,~~800~~861,~~940~~505 for the three months ended ~~June~~ September 30, 2024, a decrease of $~~296~~391,~~465~~147 or 1621.50% primarily driven by the termination of ~~our~~the Boeing A-10 Main Landing Gear Pods program.

Labor costs for the ~~six~~nine months ended ~~June~~September 30, 2025 were $34,~~147~~617,~~061~~419 compared to $35,~~598~~460,~~730~~235 for the ~~six~~nine months ended ~~June~~ September 30, 2024, a decrease of $~~451~~842,~~669~~816 or 1215.64% primarily driven by the termination of ~~our~~the Boeing A-10 Main Landing Gear Pods program, and ~~decreased~~timing of work performed on ~~our~~the ~~B-52 Radar Racks program and~~ F-16 Rudder Island program.

Factory overhead for the three months ended ~~June~~September 30, 2025 was $34,~~952~~101,~~350~~453 compared to $34,~~770~~021,~~396~~411 for the three months ended ~~June 30, 2024,~~September ~~an increase of $181,954 or 4.8%. Factory overhead for the six months ended June~~ 30, ~~2025 was $8,070,931 compared to $8,037,491 for the six months ended June 30,~~ 2024, an increase of $3380,~~440~~042 or 02.40%.

~~Other~~Factory ~~cost~~overhead of sales relates to items that can increase or decrease cost of sales such as changes in inventory reserves, changes in loss contract provisions, absorption variances and direct charges to cost of sales. Other cost of sales for the ~~three~~nine months ended ~~June~~ September 30, 2025 was $~~198~~12,~~599~~172,384 compared to a $512,~~533~~058,902 for the ~~three~~nine months ended ~~June~~ September 30, 2024, an increase of $~~193~~113,~~066~~482 or ~~3,489~~0.49%. ~~The increase is primarily the result of increased inventory reserve requirements due to aged material.~~

Other cost of sales relates to items that can increase or decrease cost of sales such as changes in inventory reserves, changes in loss contract provisions, absorption variances and direct charges to cost of sales. Other cost of sales for the ~~six~~three months ended September ~~June~~ 30, 2025 was $(~~106~~214,~~023~~299) compared to a $~~103~~98,~~022~~197 for the ~~six~~three months ended ~~June~~September 30, 2024, a decrease ~~in cost~~ of $~~209~~312,~~045~~ 496 or ~~202~~318.92%. The decrease is primarily ~~driven~~the by benefits realized on programs nearing completion ~~during the three months ended March 31, 2025 partially offset by changes in inventory loss reserve~~.

~~Gross~~Other ~~Profit~~cost of sales for the nine months ended September 30, 2025 was $(320,322) compared to $201,219 for the nine months ended September 30, 2024, a decrease in cost of $521,541 or 259.2%. The decrease is primarily driven by benefits realized on programs nearing completion during the three months ended March 31, 2025 partially offset by changes in inventory loss reserve.

Gross profit and gross profit percentage (“gross margin”) for the three months ended June 30, 2025 and June 30, 2024 was $663,382 and 4.4% compared to $5,115,424 and 24.6% respectively, a decrease of $4,452,042, or 87.0%, and 2,020 basis points for the reasons noted above.

Gross profit and gross profit percentage (“gross margin”) for the six months ended June 30, 2025 was $2,312,857 and 7.6%, respectively, compared to $8,669,173 and 21.7%, respectively, for the six months ended June 30, 2024, a decrease of $6,356,316 or 73.3%, and 1,410 basis points for the reasons noted above.

Gross Profit

Gross profit and gross profit percentage (“gross margin”) for the three months ended September 30, 2025 and September 30, 2024 was $4,306,314 and 22.3% compared to $4,219,669 and 21.7% respectively, an increase of $86,645 or 2.1%, and 60 basis points for the reasons noted above.

Gross margin for the nine months ended September 30, 2025 was $6,619,171 and 13.3%, respectively, compared to $12,888,842 and 21.7%, respectively, for the nine months ended September 30, 2024, a decrease of $6,269,671 or 48.6%, and 840 basis points for the reasons noted above.

Favorable/Unfavorable Adjustments to Gross Profit

During the three and ~~six~~nine months ended ~~June~~September 30, 2025 and 2024, circumstances required that we make changes in estimates to various contracts. Such changes in estimates resulted in changes in total gross profit as follows:

	Three months ended June 30,						Six months ended June 30,
	Three months ended September 30,						Nine months ended September 30,
	2025			2024			2025			2024
Net Adjustment	$	(31,~~966~~014,~~358~~387	)	$	(~~185~~865,~~317~~493	)	$	(78,~~095~~109,~~588~~975	)	$	(12,~~358~~223,~~178~~671	)

The net adjustment of $41.0 million for the three months ended ~~June~~September 30, 2025 is driven primarily by an unfavorable adjustment ~~of $2.3 million~~ associated with the ~~termination~~F-16 ofRudder ~~our~~Island ~~A-10~~ program., ~~Additional~~and ~~net~~increased ~~unfavorable adjustments~~labor ofand ~~$1.7~~material ~~million~~costs ~~were~~on ~~driven primarily by~~ the NGJ Mid-Band Pod, and ~~the~~Embraer TPhenom-38300 ~~Classic~~Engine ~~Structural Modification Kits program were~~Inlets ~~due~~Assembly ~~to increased labor and material costs~~programs.

The net adjustment of $78.1 million for the ~~six~~nine months ended ~~June~~September 30, 2025 is driven primarily by an unfavorable adjustment ~~of $4.5 million~~ associated with the termination of ~~our~~the Boeing A-10 program. ~~Additional~~and ~~net~~increased ~~unfavorable adjustments~~labor ofand ~~$2.6~~material ~~million~~costs ~~were~~on ~~driven primarily by~~ the NGJ Mid-Band Pod, ~~and the~~ T-38 Classic Structural Modification Kits ~~program~~and ~~were due~~Embraer toPhenom-300 ~~increased~~Engine ~~labor~~Inlets ~~and~~Assembly ~~material costs~~programs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended ~~June~~September 30, 2025 were $2,~~654~~551,~~024~~355 compared to $2,~~775~~742,~~935~~036 for the ~~three~~ three months ended ~~June~~September 30, 2024, a decrease of $~~121~~190,~~911~~681 or 47.40%. The decrease was primarily ~~the~~due ~~result~~to of lower ~~professional~~salary ~~fees and~~related ~~lower accrued compensation~~costs.

Selling, general and administrative expenses for the ~~six~~nine months ended ~~June~~September 30, 2025 were $58,~~489~~041,~~801~~156 compared to $58,~~489~~231,~~839~~875 for the ~~six~~ nine months ended ~~June~~September 30, 2024, ~~remained~~a ~~consistent~~decrease of $190,719 or 2.3%. The decrease was primarily due to lower salary related costs.

Interest expense

Interest expense for the three months ended ~~June~~September 30, 2025 was $~~287~~387,~~546~~922, compared to $~~587~~573,~~971for~~366 for the three months ended ~~June~~ September 30, 2024, a decrease of $~~300~~185,~~425~~444 or 5132.13%. The decrease was primarily the result of lower year-over-year interest rates charged on our outstanding debt under the Credit Agreement, combined with a year-over-year decrease in the amount of our outstanding debt under the Credit Agreement.

Interest expense for the ~~six~~nine months ended ~~June~~September 30, 2025 was $~~775~~1,~~637~~163,559, compared to $1,~~220~~793,~~106~~472 for the ~~six~~nine months ended ~~June~~ September 30, 2024, a decrease of $~~444~~629,~~469~~913 or 3635.41%. The decrease was the result of lower year-over-year interest rates charged on our outstanding ~~debt~~ debt under the Credit Agreement, combined with a year-over-year decrease in the amount of our outstanding debt under the Credit Agreement.

Income (loss) Before Provision for Income Taxes

~~(Loss)~~Income ~~income~~ before provision for income taxes for the three months ended ~~June~~September 30, 2025 was ($21,~~272~~367,~~708)~~037 compared to $1904,~~751,518~~267 for the ~~three~~ three months ended ~~June~~September 30, 2024.

(Loss) income before provision for income taxes for the ~~six~~nine months ended ~~June~~September 30, 2025 was ($32,~~945~~578,~~601~~564) compared to $12,~~959~~863,~~228~~ 495 for the ~~six~~ nine months ended ~~June~~September 30, 2024.

(Benefit)/Provision for Income Taxes

(Benefit)/provision for income taxes for the three months ended June 30, 2025 was $(947,749) compared to provision for income taxes of $341,572 for the three months ended June 30, 2024, a benefit increase of $1,289,321 or 377.5% is primarily related to the decrease in income.

The effective income tax rate for the three months ended June 30, 2025 and June 30, 2024 is 44.7% and 19.5%, respectively. The difference between the effective income tax rate for the three months ended June 30, 2025, and the statutory income tax rate of 21% is primarily due to the change in income and the relative impact of the estimated R&D credit, state income taxes and permanent tax differences.

(Benefit)/provision for income taxes for the six months ended June 30, 2025 was $(1,296,718) compared to a provision for income taxes of $381,044 for the six months ended June 30, 2024, a benefit increase of $1,677,762 or 440.3% is primarily the result of the change in income for the period.

The effective income tax rate for the six months ended June 30, 2025 and June 30, 2024 is 34.2% and 19.4%, respectively. The difference between the effective income tax rate for the six months ended June 30, 2025 and the statutory income tax rate of 21% for the six months ended June 30, 2024 is primarily due to the change in income and the relative impact of the estimated R&D credit, state income taxes and permanent tax differences.

~~Net~~ (~~Loss~~Benefit)/Provision for Income ~~and Earnings per Share~~Taxes

~~Net~~Provision ~~(loss)~~for income taxes for the three months ended ~~June~~September 30, 2025 was $(1253,~~324,959)~~345 ~~or $(0.10) per basic share,~~ compared to ~~net~~provision for income taxes of ~~$1,409,946~~ or $~~0.11 per basic share~~154, 590 for the ~~same period last year. Diluted (loss) per share was $(0.10) for the~~ three months ended ~~June~~September 30, ~~2025 calculated utilizing 12~~2024,~~748,869~~ ~~weighted~~an ~~average~~increase ~~shares~~of ~~outstanding. Diluted income per share was~~ $~~0.11 for the three months ended June 30~~98,755 ~~2024~~or ~~calculated utilizing 12,554,153 weighted average shares outstanding~~63.9% ~~The~~is ~~decrease in net income was~~ primarily ~~driven~~related byto athe ~~decrease~~increase in ~~gross~~net ~~profit~~income.

~~Net~~The ~~(loss)~~effective income tax rate for the ~~six~~three months ended ~~June~~September 30, 2025 ~~was~~and ~~$(2~~September 30,~~648,883)~~ or2024 ~~$(0~~is 18.~~21)~~5% ~~per~~and ~~basic share~~17.1%, ~~compared~~respectively. toThe difference ~~net~~between the effective income oftax ~~$1,578,184 or~~rate ~~$0.13~~for ~~per~~the ~~basic~~three ~~share,~~months ~~for~~ended ~~the~~September ~~same~~30, ~~period~~2025 ~~last~~and ~~year.~~the ~~Diluted~~statutory ~~(loss)~~income ~~per~~tax ~~share~~rate ~~was~~of ~~$(0.~~21)% is ~~for~~primarily ~~the~~due ~~six~~to ~~months~~the ~~ended~~estimated ~~June~~R&D 30credit, ~~2025~~ ~~calculated~~state ~~utilizing~~income ~~12,728,209~~taxes ~~weighted~~and ~~average~~permanent ~~shares~~tax ~~outstanding~~differences. The ~~Diluted~~difference ~~income~~between ~~per~~the ~~share~~effective ~~was~~income ~~$0.12~~tax rate for the ~~six~~three months ended ~~June~~September 30, 2024 and ~~calculated~~the ~~utilizing~~statutory ~~12,656,753~~income ~~weighted~~tax ~~average shares~~rate ~~outstanding.~~of ~~The~~21% ~~decrease~~is inprimarily ~~net~~due ~~income~~to ~~was~~estimated ~~primarily~~R&D ~~driven~~credit, bystate aincome ~~decrease~~taxes inand ~~gross~~permanent ~~profit~~tax differences.

(Benefit)/provision for income taxes for the nine months ended September 30, 2025 was $(1,043,373) compared to a provision for income taxes of $535,634 for the nine months ended September 30, 2024, a benefit increase of $1,579,007 or 294.8% is primarily the result of the change in net income for the period.

The effective income tax rate for the nine months ended September 30, 2025 and September 30, 2024 is 40.5% and 18.7%, respectively. The difference between the effective income tax rate for the nine months ended September 30, 2025 and the statutory income tax rate of 21% is primarily due to the estimated R&D credit, state income taxes and permanent tax differences. The difference between the effective income tax rate for the nine months ended September 30, 2024 and the statutory income tax rate of 21% is primarily due to estimated R&D credit, state income taxes and permanent tax differences.

Net Income/(Loss) and Earnings per Share

Net income for the three months ended September 30, 2025 was $1,113,692 or $0.09 per basic share using 12,763,486 weighted average basic shares outstanding, compared to net income of $749,677 or $0.06 per basic share using 12,647,023 weighted average basic shares outstanding, for the same period last year. Diluted income per share was $0.09 for the three months ended September 30, 2025 calculated utilizing 12,818,191 weighted average shares outstanding. Diluted income per share was $0.06 for the three months ended September 30, 2024 calculated utilizing 12,717,128 weighted average shares outstanding. The increase in net income was primarily driven by decreases in selling, general and administrative expenses and interest expense.

Net (loss) income for the nine months ended September 30, 2025 was $(1,535,191) or $(0.12) per basic share using 12,740,097 weighted average basic shares outstanding, compared to net income of $2,327,861 or $0.19 per basic share using 12,559,876 weighted average basic shares outstanding, for the same period last year. Diluted (loss) per share was $(0.12) for the nine months ended September 30, 2025 calculated utilizing 12,740,097 weighted average shares outstanding. Diluted income per share was $0.18 for the nine months ended September 30, 2024 calculated utilizing 12,650,340 weighted average shares outstanding. The decrease in net income was primarily driven by a decrease in gross profit offset by the benefit increase in income taxes.

Liquidity and Capital Resources

General

At ~~June~~September 30, 2025, we had working capital of $1315,~~066~~836,~~383~~054 compared to $17,122,111 at December 31, 2024, a decrease of $41,~~055~~286,~~728 or~~057 ~~23.~~or 7.5%. The decrease was driven primarily by a decrease in cash and accrued liabilities offset by increases in accounts payable, accounts receivable, contract assets and current portion of line of credit.

Cash Flow

A large portion of our cash flow is used to pay for materials and processing costs associated with contracts that are in process and which do not provide for progress payments. Costs and related earnings for which we do not bill on a progress basis, and which, as a result, we bill upon shipment of products, are components of contract assets on our consolidated balance sheets and represent the aggregate costs and related earnings for uncompleted contracts for which the customer has not yet been billed. These costs and earnings are recovered upon shipment of products and presentation of billings in accordance with contract terms.

Because ASC 606 requires us to use estimates in determining revenue, 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. 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.

Some of our programs require us to expend up-front costs that may have to be amortized over a portion of production units. In the case of significant program delays and/or program cancellations, we could experience margin degradation, which may be material for costs that are not recoverable. Such charges and the loss of up-front costs could have a material impact on our liquidity and results of operations.

We continuously work to improve our payment terms from our customers, including accelerated progress payment arrangements, as well as exploring alternate funding sources.

At ~~June~~September 30, 2025, we had cash of $~~674~~546,~~481~~591 compared to $5,490,963 at December 31, 2024, a decrease of $4,~~816~~944,~~482~~372 or ~~87.7~~90%. This ~~decrease~~ decrease was primarily the result of cash flow used in operating activities and repayment of debt.

Bank Credit Facilities

On March 24, 2016, the Company entered into an Amended and Restated Credit Agreement with the lenders named therein and BankUnited N.A. as Sole Arranger, Agent and Collateral Agent (as amended from time to time, the “Credit Agreement” or the “BankUnited Facility”). The Credit Agreement originally provided for a revolving credit loan commitment of $30 million (the “Revolving Loan”) and a $10 million term loan (“Term Loan”). The Revolving Loan bears interest at a rate as defined in the Credit Agreement.

On February 20, 2024, the Company entered into a Thirteenth Amendment to the Credit Agreement (the “Thirteenth Amendment”). Under the Thirteenth Amendment, the parties amended the Credit Agreement by (a) extending the maturity date of the Company’s existing revolving line of credit to August 31, 2025; and (b) setting the aggregate maximum principal amount of all revolving line of credit loans to $19,800,000 from January 1, 2024 through March 31, 2024, $19,080,000 from April 1, 2024 through June 30, 2024, $18,360,000 from July 1, 2024 through September 30, 2024, $17,640,000 from October 1, 2024 through December 31, 2024, $16,920,000 from January 1, 2025 through March 31, 2025, $16,200,000 from April 1, 2025 through June 30, 2025 and $15,480,000 from July 1, 2025 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.

On November 13, 2024, the Company entered into a Fourteenth Amendment to the Credit Agreement (the “Fourteenth Amendment”). 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.

~~The Credit Agreement, as amended, requires us to maintain~~Bank the following financial covenants: (a) minimum debt service coverage ratio of no less than 1.5 to 1.0 for trailing four fiscal quarter periods; (b) maximum leverage ratio of no less than 4.0 to 1.0 for trailing four fiscal quarter periods; (c) minimum net income after taxes as of the end of each fiscal quarter being no less than $1.00; and (d) a minimum adjusted EBITDA at the end of each fiscal quarter of no less than $1.0 million (collectively, the “Financial Covenants”). As of March 31, 2025, the Company was not in compliance with the Financial Covenants described in items (a), (c) and (d) above and the Company obtained a written waiver from the Lenders waiving the specified covenant non-compliance for the fiscal quarter ended March 31, 2025. As of June 30, 2025, the Company was not in compliance with all of the Financial Covenants. In addition, the Company did not satisfy the July 1, 2025 mandatory repayment requirement under the Credit Agreement (the “July 2025 Payment Obligation”), On August 14, 2025, the Company obtained a written waiver from the Lenders pursuant to which the Lenders (i) waived the Financial Covenant non-compliance for the fiscal quarter ended June 30, 2025 and (ii) temporarily waived non-compliance with the July 2025 Payment Obligation until September 30, 2025. The waiver is limited strictly to its terms and does not constitute a waiver or modification of any other provision of the Credit Agreement. A copy of the August 14, 2025 waiver letter is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q. Although the waivers cured the defaults for the first and second quarters, failure to comply with the financial covenants in future periods or make mandatory repayments could result in additional events of default, and unless further waivers or amendments are obtained, of which there is no assurance, future non-compliance could permit the Lenders to accelerate the Company’s outstanding obligations under the Credit Agreement and exercise other remedies available under the loan documents. The Company continues to monitor its financial performance and covenant compliance and may seek further waivers or amendments if necessary.Facilities

On March ~~August 19~~24, ~~2025~~2016, the Company entered into athe ~~Fifteenth Amendment~~Amended toand ~~the~~Restated Credit Agreement (with the ~~“Fifteenth~~lenders ~~Amendment”).~~named ~~The~~therein ~~amendment~~and ~~revised certain covenants to reflect~~BankUnited ~~specified~~N.A. ~~adjustments~~as ~~for~~Sole ~~the quarter ended March 31~~Arranger, ~~2025~~Agent and ~~for~~Collateral ~~the~~Agent ~~quarter~~(as ~~ended~~amended ~~June~~from ~~30,~~time ~~2025. These covenant-based adjustments were designed~~ to ~~offset~~time, the ~~effect~~“Credit ofAgreement” ~~the~~or ~~termination of~~ the ~~A-10~~“BankUnited Facility”). ~~Program~~The onBankUnited ~~the~~Facility ~~Company’s~~originally ~~compliance~~provided ~~with~~for ~~its~~a ~~financial covenants.~~revolving Ascredit aloan ~~result~~commitment of ~~the~~$30 ~~Fifteenth~~million ~~Amendment, in accordance with ASC-470,~~ (the ~~Company~~“Revolving Credit ~~determined~~Loans”) ~~that~~and ita is$10 ~~reasonably~~million ~~possible it~~term ~~will~~loan ~~meet~~(“Term ~~its~~Loan”). ~~covenants~~The ~~within~~Term ~~the~~Loan ~~next~~has ~~twelve~~been ~~months~~repaid. AThe ~~copy~~Revolving ofLoan bears ~~the~~interest ~~Fifteenth~~at ~~Amendment~~a israte ~~filed~~based asupon ~~Exhibit~~a ~~10.2~~pricing togrid, ~~this Quarterly~~as ~~Report~~defined onin ~~Form~~the ~~10-Q~~Credit Agreement.

~~The~~On ~~BankUnited~~February ~~Facility~~20, is2024, ~~secured~~the Company entered into a Thirteenth Amendment to the Credit Agreement (the “Thirteenth Amendment”). Under the Thirteenth Amendment, the parties amended the Credit Agreement by ~~all~~(a) extending the maturity date of the Company’s Revolving ~~assets~~Credit Loans to August 31, 2025; and ~~both~~(b) setting the ~~Revolving~~aggregate ~~Loan~~maximum ~~and~~principal ~~Term~~amount ~~Loan~~of ~~bear~~all ~~interest~~revolving ~~at the~~line ~~Prime~~of ~~Rate~~credit loans ~~+ 2.0%~~to ~~per~~$19,800,000 ~~the~~from ~~14th Amendment~~January ~~effective~~1, on2024 ~~November~~through 13March 31, 2024., ~~The~~$19,080,000 ~~Prime~~from ~~Rate~~April ~~was 7.50%~~1, as2024 ofthrough June 30, 2024, $18,360,000 from July 1, 2024 through September 30, ~~2025~~2024, ~~and~~$17,640,000 asfrom ~~such~~October 1, ~~the~~2024 ~~Company’s~~through ~~interest~~December ~~rate~~31, on2024, ~~the~~$16,920,000 ~~Revolving~~from ~~Loan~~January 1, ~~and~~2025 ~~Term~~through ~~Loan~~March ~~was 9.50%~~31, as2025, of$16,200,000 from April 1, 2025 through June 30, 2025 and $15,480,000 from July 1, 2025 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.

AsOn November 13, 2024, the Company entered into a Fourteenth Amendment to the Credit Agreement (the “Fourteenth Amendment”). Under the Fourteenth Amendment, the parties amended the Credit Agreement by: (i) extending the maturity date of the Company’s 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, ~~and~~$15,390,000 from July 1, 2025 through September 30, 2025, $14,640,000 from October 1, 2025 through December 31, ~~2024~~2025, ~~the~~$13,890,000 ~~Company~~from ~~had~~January 1, 2026 through March 31, 2026, $1613,140,000 from April 1, 2026 through June 30, 2026, and $1712,390,000 ~~outstanding~~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 ~~Loan~~Credit Loans as of December 31, ~~respectively~~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 (the “Additional Payment Obligation”).

~~There~~As isof ~~currently~~March no31, ~~availability~~2025, ~~for~~the ~~borrowings~~Company ~~under~~was not in compliance with the ~~Revolving~~Credit ~~Loan~~Agreement’s minimum debt service coverage ratio, minimum fiscal quarter net income after taxes, and minimum quarterly adjusted EBITDA financial covenants and the Company ~~finances~~obtained ~~its~~a ~~operations~~written waiver from ~~internally~~the ~~generated cash~~Lenders ~~flow~~waiving the specified covenant non-compliance for the fiscal quarter ended March 31, 2025.

As of June 30, 2025, the Company was not in compliance with all the Credit Agreement’s financial covenants. In addition, the Company did not satisfy the July 1, 2025 mandatory repayment requirement under the Credit Agreement (the “July 2025 Payment Obligation”). On August 14, 2025, the Company obtained a written waiver from the Lenders pursuant to which the Lenders (i) waived the financial covenant non-compliance for the fiscal quarter ended June 30, 2025 and (ii) temporarily waived non-compliance with the July 2025 Payment Obligation until September 30, 2025.

On August 19, 2025, the Company executed a Fifteenth Amendment to the Credit Agreement (the “Fifteenth Amendment”). The amendment revised certain financial covenants to reflect specified adjustments for the quarters ended March 31, 2025 and June 30, 2025. These covenant-based adjustments were designed to offset the effect of the termination of the Company’s Boeing A-10 Program on covenant compliance.

As of September 30, 2025, the Company was not in compliance with the aggregate principal amount of all Revolving Credit Loans and the Company obtained a Waiver and Sixteenth Amendment to the Credit Agreement (the “Sixteenth Amendment”). The Sixteenth Amendment reset the aggregate maximum principal amount of all Revolving Credit Loans to $15,890,000 from July 1, 2025 through March 31, 2026, $15,140,000 from April 1, 2026 through June 30, 2026, $14,390,000 from July 1, 2026 through September 30, 2026, and $13,640,000 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 waived the Company’s failure to make the July 2025 Payment Obligation on September 30, 2025. The Sixteenth Amendment also extended the maturity date of the Revolving Credit Loans to November 30, 2026, and waived the Additional Payment Obligation. A copy of the Waiver and Sixteenth Amendment to the Credit Agreement is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q.

The Credit Agreement, as amended, requires us to maintain the following financial covenants: (a) minimum debt service coverage ratio of no less than 1.5 to 1.0 for trailing four fiscal quarter periods; (b) maximum leverage ratio of no less than 4.0 to 1.0 for trailing four fiscal quarter periods; (c) minimum net income after taxes as of the end of each fiscal quarter being no less than $1.00; and (d) a minimum adjusted EBITDA at the end of each fiscal quarter of no less than $1.0 million (collectively, the “Financial Covenants”). In accordance with ASC 470, the Company has determined that it is reasonably possible it will meet its covenants within the next 12 months.

Although waivers and Credit Agreement amendments cured the events of defaults described above, the Company’s failure to comply with the financial covenants in future periods or make mandatory repayments could result in additional events of default, and unless further waivers or amendments are obtained, of which there is no assurance, future non-compliance could permit the Lenders to accelerate the Company’s outstanding obligations under the Credit Agreement and exercise other remedies available under the loan documents. The Company continues to monitor its financial performance and covenant compliance and may seek further waivers or amendments, if necessary.

As of September 30, 2025 and December 31, 2024, the Company had $15,890,000 and $17,390,000 outstanding under the Revolving Credit Loans, respectively.

There is currently no availability for borrowings under the Revolving Credit Loans and the Company finances its operations from internally generated cash flow.

Liquidity

We believe that our existing resources as of ~~June~~September 30, 2025 will be sufficient to meet our current working capital needs for at least the next 12 months from the date of issuance of our consolidated financial statements. However, 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. If our working capital needs exceed our cash flows from operations, we would look to our cash balances and availability for borrowings under our borrowing arrangement to satisfy those needs, as well as potential sources of additional capital, which may not be available on satisfactory terms and in adequate amounts, if at all.

Contractual Obligations

For information concerning our contractual obligations, see Contractual Obligations under Item 7 of Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Form 10-K.

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. 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.

Item 3 – Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4 – Controls and Procedures

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that:

●

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

●

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

●

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Disclosure Controls and Procedures

Under the supervision and with the participation of our Chief Executive Officer and Interim Chief Financial Officer, management evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2025. Based on that evaluation, management concluded that our disclosure controls and procedures were not effective as of that date due to the material weakness described below.

During the second quarter, a Material Weakness was identified concerning the application of ASC-470 – Debt, more specifically as it relates to 470-10-45-11, that if a company is in violation of a debt covenant and it is probable that the borrower will not be able to comply with the covenant at measurement dates within the next twelve months, this debt shall be classified as short term. Due to the financial impact of the Boeing A-10 program, the Company was not able to meet the financial covenants for the second quarter and therefore obtained a waiver to remediate the non-compliance. As this waiver did not cover the twelve months from the date of the Company’s financial statements the Company had a potential misclassification of short and long term debt.

On August 19, 2025, the Company ~~entered~~executed the Fifteenth Amendment, which revised ~~certain~~the ~~financial~~definition ~~covenants~~of toEBITDA ~~reflect~~for ~~specified~~covenant-calculation purposes ~~adjustments~~by permitting add-backs for the ~~quarter~~six months ended ~~March~~June 3130, 2025 ~~and for~~due to the ~~quarter~~Boeing ~~ended~~A-10 ~~June~~program ~~30, 2025~~adjustments. The Fifteenth Amendment also has customary terms and conditions, including representations, reaffirmations of prior obligations, and related provisions.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

~~We are evaluating the material weakness and are developing a plan of remediation to strengthen the effectiveness of the design and operation of our internal control environment.~~ The ~~remediation plan will include enhancing our review procedures within our accounting department, implementing~~ ~~additional~~Company ~~review~~has ~~procedures~~begun ~~with respect~~ to ~~accumulation~~develop ~~and~~new ~~evaluation~~controls ofdesigned ~~information that is known or knowable~~ to ~~the~~remediate ~~Company at~~ the ~~time,~~ ~~and~~aforementioned ~~applying~~material ~~that~~weakness ~~information~~pertaining to the ~~applicable~~application of ~~accounting~~ASC-470 ~~guidance~~– ~~specifically~~Debt ~~as it relates to evaluating credit related covenants~~which ~~and~~ the ~~potential~~Company ~~impact~~implemented toduring the ~~debt~~quarter ~~classification~~ended atSeptember ~~period~~30, ~~end in accordance with U~~2025.S. ~~GAAP.~~

These matters have been reviewed with our audit committee.

Changes in Internal Control Over Financial Reporting

~~Except for~~ During the ~~material~~ ~~weakness described above,~~quarter ~~there~~ended ~~were~~September no30, ~~changes~~2025, inthe ~~our~~Company ~~internal~~implemented ~~control~~a ~~over~~compliance ~~financial~~checklist ~~reporting~~based ~~(as~~on ~~defined~~ASC ~~in Rules 13a~~470-~~15(f)~~10 ~~and~~which ~~15d-15(f)~~provides ~~under the Exchange~~guidance ~~Act)~~on ~~that occurred during~~ the ~~quarter~~classification ~~ended~~determination ~~June~~for ~~30,~~obligations ~~2025,~~of ~~that~~callable ~~have~~debt ~~materially~~for ~~affected,~~use orby ~~are~~CPI’s ~~reasonably~~finance ~~likely~~management toin ~~materially~~reviewing ~~affect,~~the ~~our~~quarterly ~~internal~~and ~~control~~annual ~~over~~covenant ~~financial reporting~~requirements.

20 21

Part II - Other Information

Item 1 – Legal Proceedings

None.

Item 1A – Risk Factors

“Part I Item 1A - Risk Factors” of our Comprehensive Form 10-K for the year ended December 31, 2024, includes a discussion of significant factors known to us that could materially adversely affect our business, financial condition, or results of operations. There have been no material changes from the risk factors described in such report except as follows.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3 – Defaults Upon Senior Securities

None.

Item 4 – Mine Safety Disclosures

Not applicable.

Item 5 – Other Information

Credit Agreement Waiver and Amendment

On November ~~August 14~~13, 2025, the ~~Lenders~~Company ~~issued~~entered ainto ~~waiver under~~ the ~~Credit~~Sixteenth ~~Agreement~~Amendment. ~~that~~The ~~waived~~Sixteenth ~~the~~Amendment ~~Company’s~~amended ~~Financial Covenant non-compliance for~~ the ~~fiscal~~Credit ~~quarter~~Agreement ~~ended~~by ~~June 30, 2025~~extending ~~and temporarily waived~~ the ~~non-compliance~~maturity ~~with~~date of the ~~July~~Revolving ~~2025~~Credit ~~Payment~~Loans ~~Obligation~~to ~~until~~November ~~September~~ 30, ~~2025.~~2026, Onand ~~August~~(ii) ~~19,~~resetting ~~2025,~~ the ~~Company~~ ~~executed~~aggregate ~~the~~maximum ~~Fifteenth~~principal ~~Amendment,~~amount ~~which~~of ~~reflects~~all Revolving ~~specified~~Credit ~~adjustments~~Loans to ~~the~~$15,890,000 ~~Credit~~from ~~Agreement~~July ~~for~~1, ~~the~~2025 ~~quarter~~through ~~ended~~ March 31, ~~2025~~2026, ~~and~~$15,140,000 ~~for~~from ~~the~~April ~~quarter~~1, ~~ended~~2026 through June 30, ~~2025.~~2026, $14,390,000 ~~These~~from ~~covenant-based~~July ~~adjustments~~1, ~~are~~2026 ~~intended~~through toSeptember ~~mitigate~~30, ~~the~~2026, ~~impact~~and of$13,640,000 ~~the termination~~onward, ofand ~~the~~for ~~Company’s~~payments ~~A-10~~to ~~Program~~be onmade by the Company’s ~~compliance~~to ~~with its financial covenants. The Fifteenth~~comply ~~Amendment~~therewith ~~also~~(if ~~has~~any ~~customary~~such ~~terms~~payments ~~and~~are ~~conditions~~necessary), ~~including~~on ~~representations,~~the ~~reaffirmations~~first day of ~~prior~~each ~~obligations,~~such ~~and related provisions~~period. The ~~foregoing~~Sixteenth ~~descriptions~~Amendment ofalso waived the ~~waiver~~Company’s failure ~~and~~make the ~~Fifteenth~~July ~~Amendment~~2025 ~~are~~Payment ~~qualified~~Obligation inon ~~their~~September ~~entirety~~30, by2025 ~~reference~~and towaived the ~~text~~ ~~thereof,~~Additional ~~copies~~Payment ofObligation. ~~which~~The ~~are~~Sixteenth ~~filed~~Amendment contains ascustomary ~~Exhibits~~terms ~~10.1~~ and ~~10.2~~conditions, ~~respectively~~including torepresentations, ~~this~~reaffirmations ~~Quarterly~~of ~~Report~~prior onobligations, ~~Form 10-Q~~ and ~~incorporated~~ ~~herein~~related ~~by reference~~provisions.

The Company paid a $39,725 fee to the Lenders in connection with the Sixteenth Amendment.

The foregoing description is qualified in its entirety by reference to the Sixteenth Amendment, a copy of which is attached to this Form 10-Q as Exhibit 10.1 and incorporated herein by reference.

Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements

During the three months ended September 30, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities and Exchange Act of 1934) adopted or terminated any "Rule 10b5-1 trading arrangement" or "non-rule 10b5-1 trading arrangement" as each term is defined in Item 408(a) of Regulation S-K.

Item 6 – Exhibits

Exhibit No.	Description
10.1*	Waiver ~~Letter~~and ~~dated~~Sixteenth ~~August~~Amendment ~~14, 2025,~~ to Amended and Restated Credit Agreement, dated as of ~~March~~November 2413, ~~2016~~2025, ~~as amended,~~ by and among CPI Aerostructures, Inc., BankUnited, N.A., and Dime Community Bank.
10.2*	Fifteenth Amendment to Amended and Restated Credit Agreement, dated as of August 19, 2025, by and among CPI Aerostructures, Inc., BankUnited, N.A., and Dime Community Bank.
31.1*	Section 302 Certification by Chief Executive Officer and President
31.2*	Section 302 Certification by Chief Financial Officer (Principal Accounting Officer)
32.1**	Section 906 Certification by Chief Executive Officer and Chief Financial Officer
101.INS**	Inline XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104**	Cover Page Interactive Data File. The cover page XBRL tags are embedded within the Inline XBRL document.

* Filed herewith

** Furnished herewith

Attached as Exhibit 101 to this report are the following formatted in Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statement of Operations for the three months ended ~~June~~September 30, 2025 and 2024, (ii) Condensed Consolidated Balance ~~Sheet~~ Sheet as of ~~June~~September 30, 2025 and December 31, 2024, (iii) Condensed Consolidated Statement of Cash Flows for the three months ended ~~June~~ September 30, 2025 and 2024, (iv) Condensed Consolidated Statement of Changes in Equity for the three months ended ~~June~~ September 30, 2025 and 2024 and (v) Notes to Condensed Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CPI AEROSTRUCTURES, INC.
Dated: August 19, 2025	By.	/s/ Dorith Hakim
Dated: November 13, 2025	By.	/s/ Dorith Hakim
		Dorith Hakim
		Chief Executive Officer and President (Principal Executive Officer)
Dated: August 19, 2025	By.	/s/ Pamela Levesque
Dated: November 13, 2025	By.	/s/ Pamela Levesque
		Pamela Levesque
		Interim Chief Financial Officer (Principal Financial and Accounting Officer)

22 23

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