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Item 1A. Risk Factors

2025-04-15 compared with 2024-04-15 · 549 added, 470 removed, 76 unchanged (93% of the section changed)

purchase of our common stock involves a very high degree of risk.

evaluating our common stock and our business, you should carefully consider the risks and uncertainties described below and the other

information and our consolidated financial statements and related notes included herein.

If any of the events described in the risks

below actually occurs, our financial condition or operating results may be materially and adversely affected, the price of our common

stock may decline, perhaps significantly, and you could lose all or a part of your investment.

risks below can be characterized into three groups:

The purchase of our common stock involves a very

high degree of risk.

In evaluating our common stock and our business,

you should carefully consider the risks and uncertainties described below and the other information and our consolidated financial statements

and related notes included herein.

If any of the events described in the risks below actually occurs, our financial condition or

operating results may be materially and adversely affected, the price of our common stock may decline, perhaps significantly, and you

could lose all or a part of your investment.

The risks below can be characterized into three groups:

Risks related to our business, including risks specific to the defense and aerospace industry;

Risks arising from our indebtedness;

Risks related to our status as a public company and our common stock.

Risks Related to Our Business

including risks specific to the defense and aerospace industry;

Risks arising from our

indebtedness;

Risks related to our status

as a public company and our common stock.

Related to Our Business

may need additional financing to fund investments in new or upgraded property or equipment .

may require additional financing to fund investments in new or upgraded property or equipment, in order to remain competitive.

If we do, we may also need to obtain the agreement of holders of portions of our debt to extend or otherwise refinance such debt.

order to gain consent, we may need to offer these holders increases in the rates of interest they receive or otherwise compensate them

through payments of cash or issuances of our equity securities.

Such additional financing or refinancing may involve the issuance of

debt, equity and/or securities convertible into or exercisable or exchangeable for our equity securities and may not be available to

us on reasonable terms, if at all.

If we are unable to consummate such additional financing or re-financing, the trading price of our

common stock could be adversely affected, and the terms of such financing may adversely affect the interests of our existing stockholders.

Any failure to fund working capital when required would have a material adverse effect on our business and financial condition and may

result in a decline in our stock price.

Any issuances of our common stock, preferred stock, or securities such as warrants or notes that

are convertible into, exercisable or exchangeable for, our capital stock, would have a dilutive effect on the voting and economic interest

of our existing stockholders.

reduction in budgeted or actual U.S.

government spending for defense or changes in the mix of defense products could materially adversely

impact our business strategy, revenues, operating results and financial condition.

ultimate end-user for most of our products is the U.S.

Government, with significant use on military aircraft.

In certain instances, our

products may be exported to allied foreign governments by the U.S.

Although we expect to generate net sales from all of our

key aerospace and defense platforms and programs for many years, they are subject to significant risk.

Congressional appropriation and

presidential approval are required for funding leaving our platforms and programs vulnerable to potential budget reductions at any point.

We may need additional financing to fund

investments in new or upgraded property or equipment .

We may require additional financing to fund investments

in new or upgraded property or equipment, in order to remain competitive.

If we do, we may also need to obtain the agreement of holders

of portions of our debt to extend or otherwise refinance such debt.

In order to gain consent, we may need to offer these holders increases

in the rates of interest they receive or otherwise compensate them through payments of cash or issuances of our equity securities.

additional financing or refinancing may involve the issuance of debt, equity and/or securities convertible into or exercisable or exchangeable

for our equity securities and may not be available to us on reasonable terms, if at all.

If we are unable to consummate such additional

financing or re-financing, the trading price of our common stock could be adversely affected, and the terms of such financing may adversely

affect the interests of our existing stockholders.

Any failure to fund working capital when required would have a material adverse effect

on our business and financial condition and may result in a decline in our stock price.

Any issuances of our common stock, preferred stock,

or securities such as warrants or notes that are convertible into, exercisable or exchangeable for, our capital stock, would have a dilutive

effect on the voting and economic interest of our existing stockholders.

A reduction in budgeted or actual U.S.

spending for defense or changes in the mix of defense products could materially adversely impact our business strategy, revenues, operating

results and financial condition.

The ultimate end-user for most of our products

Government, with significant emphasis on military aircraft.

In certain instances, our products may be exported to allied foreign

governments by the U.S.

Although we expect to generate net sales from all of our key aerospace and defense platforms and programs

for many years, they are subject to significant risk.

Congressional appropriation and presidential approval are required for funding, leaving

our platforms and programs vulnerable to potential budget reductions at any point.

For instance, a decrease in U.S.

government defense spending or a strategy shift to rocket and drone platforms instead of large military

aircraft platforms, could curtail demand for our landing gear parts and other components we provide which would likely have a materially

adverse effect on our business strategy, revenues, operating results and financial condition.

operations have historically been subject to the fluctuations in government procurement cycles and spending patterns by our customers.

There can be no assurance that our financial condition and future results of operations will not be materially adversely impacted by

volatility in defense spending or changes in the mix of product favored by the U.S.

Government or other nations, or the perception among

our customers regarding the likelihood of such shifts.

we have cultivated long-standing relationships with many of our customers, the aerospace and defense industry is characterized by a smaller

number of large and well-known prime customers.

We depend on revenues from these relationships and any loss, cancellation, reduction,

or interruption in these relationships could harm our business.

products are purchased by a relatively small number of large aerospace and defense customers who incorporate them into larger products

for ultimate end-use by the U.S.

Government, international governments, and commercial global airlines.

Consequently, we have a high

degree of sales concentration among specific customers making it challenging to diversify our customer base.

In fiscal years 2023 and

2022, four and three customers, respectively, accounted for approximately 64.2% and 76.5% of net sales, respectively.

future success relies heavily on nurturing expanding and effectively managing these relationships.

Nevertheless, we cannot assure retention

of these customers or their continuing to purchasing at previous levels.

The loss of any key customers, a decline or interruption in

sales to them, or our inability to establish relationships with new customers, could significantly impact our business.

depend on revenues from components for a few aircraft programs and platforms and the cancellation or reduction of funding of them will

harm our business.

derive a significant portion of our net sales from supplying components for select aircraft programs and platforms, such as the F-18

Hornet, the E-2D Hawkeye, the UH-60 Black Hawk Helicopter, Pratt & Whitney Geared Turbo-Fan Engine, the CH-53 Helicopter, the F-35

Lightning II (also known as the Joint Strike Fighter) and the F-15 Eagle Tactical Fighter.

A decrease in demand for our products, stemming

from reduced aircraft production or diminished aircraft utilization, would adversely affect our future operating results and financial

in outsourcing strategies and intense competition in our markets may lead to a reduction in our revenues and market share.

defense and aerospace component manufacturing market is highly competitive.

Competition has been increasing and is expected to intensify

Our large aerospace and defense prime customers, Tier One suppliers and many of our competitors have significantly greater technical,

manufacturing, financial and marketing resources than we do.

In the future, our defense and aerospace customers could make changes in

their supply chain strategies that could adversely impact us.

For instance, they could decide to in-source manufacturing, stop purchasing

pursuant to existing LTA agreements or seek other sources at any time.

If they seek other suppliers, we may not be able to compete successfully

against either current or future competitors (including commercial manufacturers that wish to diversify their revenues and expand into

the defense supply chain).

Increased competition could result in reduced revenue, lower margins or loss of market share, any of which

could significantly harm our business, our operating results and financial condition.

may lose sales if we fail to timely meet the specifications and requirements of our customers.

of our customers incorporate our products into larger products such as aircraft assemblies or completed aircraft.

They rely upon us to

deliver products pursuant to existing LTA agreements that include detailed specifications and requirements.

If a customer were to conclude

that it could not rely upon us for any reason, it could look to dual source a product or rely upon another party altogether.

be informed of a change in sourcing decisions with limited notice or not at all.

Any decision by a customer to rely upon an alternate

supplier for some or all of its needs could significantly harm our business, our operating results and our financial condition.

may lose sales if our suppliers fail to meet our needs or ship raw materials to us on timely.

government defense

spending or a strategy shift to rocket and drone platforms instead of large military aircraft platforms, could curtail demand for our

landing gear parts and other components we provide which would likely have a materially adverse effect on our business strategy, revenues,

operating results and financial condition.

Our operations have historically been subject

to the fluctuations in government procurement cycles and spending patterns by our customers.

There can be no assurance that our financial

condition and future results of operations will not be materially adversely impacted by volatility in defense spending or changes in the

mix of product favored by the U.S.

Government or other nations, or the perception among our customers regarding the likelihood of such

Although we have cultivated long-standing

relationships with many of our customers, the aerospace and defense industry is characterized by a smaller number of large and well-known

prime customers.

We depend on revenues from these relationships and any loss, cancellation, reduction, or interruption in these relationships

could harm our business.

Our products are purchased by a relatively small

number of large aerospace and defense customers who incorporate them into larger products for ultimate end-use by the U.S.

international governments, and commercial global airlines.

Consequently, we have a high degree of sales concentration among specific customers

making it challenging to diversify our customer base.

In fiscal years 2024 and 2023, four customers, accounted for approximately 73.4%

and 64.2% of net sales, respectively.

Our future success relies heavily on nurturing

expanding and effectively managing these relationships.

Nevertheless, we cannot assure retention of these customers or their continuing

to purchasing at previous levels.

The loss of any key customers, a decline or interruption in sales to them, or our inability to establish

relationships with new customers, could significantly impact our business.

We depend on revenues from components for

a few aircraft programs and platforms and the cancellation or reduction of funding of them will harm our business.

We derive a significant portion of our net sales

from supplying components for select aircraft programs and platforms, such as the F-18 Hornet, the E-2D Hawkeye, the UH-60 Black Hawk

Helicopter, Pratt & Whitney Geared Turbo-Fan Engine, the CH-53 Helicopter, the F-35 Lightning II (also known as the Joint Strike Fighter)

and the F-15 Eagle Tactical Fighter.

A decrease in demand for our products, stemming from reduced aircraft production or diminished aircraft

utilization, would adversely affect our future operating results and financial condition.

Changes in outsourcing strategies and intense competition in

our markets may lead to a reduction in our revenues and market share.

The defense and aerospace component manufacturing

market is highly competitive.

Competition has been increasing and is expected to intensify further.

Our large aerospace and defense prime

customers, Tier One suppliers and many of our competitors have significantly greater technical, manufacturing, financial and marketing

resources than we do.

In the future, our defense and aerospace customers could make changes in their supply chain strategies that could

adversely impact us.

For instance, they could decide to in-source manufacturing, stop purchasing pursuant to existing LTA agreements or

seek other sources at any time.

If they seek other suppliers, we may not be able to compete successfully against either current or future

competitors (including commercial manufacturers that wish to diversify their revenues and expand into the defense supply chain).

competition could result in reduced revenue, lower margins or loss of market share, any of which could significantly harm our business,

our operating results and financial condition.

We may lose sales if we fail to timely meet the specifications

and requirements of our customers.

Most of our customers incorporate our products

into larger products such as aircraft assemblies or completed aircraft.

They rely upon us to deliver products pursuant to existing LTA

agreements that include detailed specifications and requirements.

If a customer were to conclude that it could not rely upon us for any

reason, it could look to dual source a product or rely upon another party altogether.

We could be informed of a change in sourcing decisions

with limited notice or not at all.

Any decision by a customer to rely upon an alternate supplier for some or all of its needs could significantly

harm our business, our operating results and our financial condition.

We may lose sales if our suppliers fail to meet our needs or

ship raw materials to us on timely.

We must deliver our products timely with high

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results and our financial condition.

may not be able to improve our gross margin and a reduction in future sales levels could have a disproportionate effect on our gross

profit as a percentage of our net sales.

state-of-the-art manufacturing facilities currently has a large percentage of fixed factory overhead relative to our overall expenses.

Consequently, our gross profit as a percentage of new sales is highly linked with sales volume.

If we do not increase our sales volume,

it will be difficult to materially improve our gross profit margin.

Although we have plans to improve operating efficiencies at our current

sales levels, we may not be able to do so.

Further, any reduction in future sales volume would likely causes us to absorb the fixed overhead

costs over a smaller base of sales, causing our gross profit as a percentage of sales to decline from current levels.

Any reduction in

our profit margin adversely impacts our reported performance and would have a material adverse impact on results of operation and our

financial position.

are risks associated with the bidding processes in which we compete.

obtain many LTA and other contracts through a competitive bidding process.

We must devote substantial time and resources to prepare bids

and proposals and may not have contracts awarded to us.

Even if we win contracts, there can be no assurance that the prices that we have

bid will be sufficient to allow us to generate a profit from any particular contract.

There are significant costs involved with producing

a small number of initial units of any new product and it may not be possible to recoup such costs on later production runs.

to fixed contract pricing, increasing contract costs expose us to reduced profitability and the potential loss of business.

cost estimation process requires significant judgment and expertise.

Reasons for cost growth include unavailability and productivity

of labor, the nature and complexity of the work to be performed, the effect of change orders, the availability of materials, the effect

of delays in performance, availability and timing of funding from the customer, natural disasters, supply chain disruptions and the inability

to recover any claims for added services necessary to complete production.

A significant change in costs from those on which we based

our estimates on one or more programs could have a material effect on our consolidated financial position or results of operations.

prices of raw materials we use are volatile.

prices of raw materials used in our manufacturing processes are volatile.

Some LTA agreement with customers allow us to increase our

prices due to increases in the price of raw materials.

However, these LTA agreements generally require that we first absorb all or a

portion of the price increases before being able to pass on the increase the customer.

For some LTA agreements, we are at full risk for

future price agreements.

If the prices of raw materials rise, we may not be able to pass along all of such increases to our customers

and this could have an adverse impact on our financial position and results of operations.

It is possible that some of the raw materials

we use might become subject to new or increased tariffs.

Significant increases in the prices of raw materials could adversely impact

our customers’ demand for certain products which could lead to a reduction in our revenues and have a material adverse impact on

our revenues and on our financial position and results of operations.

of the products we produce have long lead times.

of the products we produce require months to produce and we sometimes produce products in excess of the number ordered intending to sell

the excess as spares when orders arise.

As a result, our inventory turns slowly and ties up our working capital.

Our inventory represented

approximately 59% of our assets as of December 31, 2023.

Any requirement to write down the value of our inventory due to obsolescence,

excess and slow moving, or a drop in the price of materials could have a material adverse effect on our consolidated financial position

We may not be able to improve our gross

margin and a reduction in future sales levels could have a disproportionate effect on our gross profit as a percentage of our net sales.

Our state-of-the-art manufacturing facilities

currently have a large percentage of fixed factory overhead relative to our overall expenses.

Consequently, our gross profit as a percentage

of sales is highly linked with sales volume.

If we do not increase our sales volume, it will be difficult to materially improve our gross

profit margin.

Although we have plans to improve operating efficiencies at our current sales levels, we may not be able to do so.

any reduction in sales volume would likely cause us to absorb the fixed overhead costs over a smaller base of sales, causing our gross

profit as a percentage of sales to decline from current levels.

Any reduction in our profit margin adversely impacts our reported performance

and would have a material adverse impact on results of operation and our financial position.

There are risks associated with the bidding processes in which

We obtain many LTA and other contracts through

a competitive bidding process.

We must devote substantial time and resources to prepare bids and proposals and may not have contracts

awarded to us.

Even if we win contracts, there can be no assurance that the prices that we bid will be sufficient to allow us to generate

a profit from any particular contract.

There are significant costs involved with producing a small number of initial units of any new

product and it may not be possible to recoup such costs on later production runs.

Due to fixed contract pricing, increasing

contract costs expose us to reduced profitability and the potential loss of business.

The cost estimation process requires significant

judgment and expertise.

Reasons for cost growth include unavailability and productivity of labor, the nature and complexity of the work

to be performed, the effect of change orders, the availability of materials, the effect of delays in performance, availability and timing

of funding from the customer, natural disasters, supply chain disruptions and the inability to recover any claims for added services necessary

to complete production.

A significant change in costs from those on which we based our estimates on one or more programs could have a

material effect on our consolidated financial position or results of operations.

The prices of raw materials we use are volatile.

The prices of raw materials used in our manufacturing

processes are volatile.

Some LTA agreement with customers allow us to increase our prices due to increases in the price of raw materials.

However, these LTA agreements generally require that we first absorb all or a portion of the price increases before being able to pass

on the increase to the customer.

For some LTA agreements, we are at full risk for future price agreements.

If the prices of raw materials

rise, we may not be able to pass along all of such increases to our customers and this could have an adverse impact on our financial position

and results of operations.

do not own the intellectual property rights to products we produce.

we develop our internal processes, nearly all the parts and subassemblies we produce are built to customer specifications and the customer

owns the intellectual property, if any, related to the product.

Consequently, if a customer desires to use another manufacturer to fabricate

its part or subassembly, it would be free to do so, which could have a material adverse effect on our business, our operating results

and financial condition.

are risks associated with new programs.

programs typically carry risks associated with design changes, acquisition of new production tools, funding commitments, imprecise or

changing specifications, timing delays and the accuracy of cost estimates associated with such programs.

In addition, any new program

may experience delays for a variety of reasons after significant expenditures are made.

If we were unable to perform under new programs

to the customers’ satisfaction or if a new program in which we had made a significant investment was terminated or experienced

weak demand, delays or other problems, then our business, financial condition and results of operations could be materially adversely

This could result in low margin or forward loss contracts, and the risk of having to write-off costs and estimated earnings

in excess of billings on uncompleted contracts if it were deemed to be unrecoverable over the life of the program.

perform on new programs, we may be required to incur material up-front costs which may not have been separately negotiated and may not

be recoverable.

Such charges and the loss of up-front costs could have a material impact on our liquidity.

need to control our expenses will place a significant strain on our management and operational resources.

If we are unable to control

our expenses effectively, our business, results of operations and financial condition may be adversely affected.

are risks associated with offering new services to our customers.

It is possible that some of the raw materials we use might become subject to new or increased tariffs.

increases in the prices of raw materials could adversely impact our customers’ demand for certain products which could lead to a

reduction in our revenues and have a material adverse impact on our revenues and on our financial position and results of operations.

Some of the products we produce have long lead times.

Some of the products we produce require months

to produce and we sometimes produce products in excess of the number ordered intending to sell the excess as spares when orders arise.

As a result, our inventory turns slowly and ties up our working capital.

Our inventory represented approximately 56% of our assets as

of December 31, 2024.

Any requirement to write down the value of our inventory due to obsolescence, excess and slow moving, or a drop

in the price of materials could have a material adverse effect on our consolidated financial position and results of operations.

We do not own the intellectual property rights to products we

Although we develop our internal processes, nearly

all the parts and subassemblies we produce are built to customer specifications and the customer owns the intellectual property, if any,

related to the product.

Consequently, if a customer desires to use another manufacturer to fabricate its part or subassembly, it would

be free to do so, which could have a material adverse effect on our business, our operating results and financial condition.

There are risks associated with new programs.

New programs typically carry risks associated

with design changes, acquisition of new production tools, funding commitments, imprecise or changing specifications, timing delays and

the accuracy of cost estimates associated with such programs.

In addition, any new program may experience delays for a variety of reasons

after significant expenditures are made.

If we were unable to perform under new programs to the customers’ satisfaction or if a

new program in which we made a significant investment was terminated or experienced weak demand, delays or other problems, then our business,

financial condition and results of operations could be materially adversely affected.

This could result in low margin or forward loss

contracts, and the risk of having to write-off costs and estimated earnings in excess of billings on uncompleted contracts if it were

deemed to be unrecoverable over the life of the program.

To perform on new programs, we may be required

to incur material up-front costs which may not have been separately negotiated and may not be recoverable.

Such charges and the loss of

up-front costs could have a material impact on our liquidity.

The need to control our expenses places a significant

strain on our management and operational resources.

If we are unable to control our expenses effectively, our business, results of operations

and financial condition may be adversely affected.

There are risks associated with offering

new services to our customers.

From time-to-time in order to reduce our dependence

on subcontractors or increase our gross margins we offer new services to our customers, such as painting and finishing products we already

manufacture for them.

There are risks associated with offering these services and even if performed timely and correctly, it is likely

that our margins for these new services will be relatively low, or even negative, in the initial phases when volume is low.

be successful in achieving positive gross margins for these new services or be able to ultimately meet our customer requirements.

are unsuccessful, it could hurt our relationship with our customers.

and retaining executive talent and other key personnel is an essential element of our future success.

future success depends to a significant extent upon our ability to attract executive talent, as well as the continued service of our

existing executive officers and other key management and technical personnel.

We are a relatively small company and experienced management

and technical, marketing and support personnel in the defense and aerospace industries are in demand and competition for their talents

Our failure to attract or retain executive, key management and technical personnel, could have a material adverse effect

on our business, financial condition and results of operations.

are subject to intense competition for the skilled machinists necessary to manufacture our products.

are subject to intense competition for the services of skilled machinists necessary to manufacture our products and those of other companies

in the aerospace and defense industry.

In recent years, the competition for skilled employees has intensified and we have experienced

wage inflation.

We have strategically located our operations in the U.S.

on subcontractors, increase our customers’ reliance upon us or increase our gross margins we offer new services to our customers,

such as painting and finishing products we already manufacture for them.

There are risks associated with offering new services and even

if performed timely and correctly, it is likely that our margins for these new services will be relatively low, or even negative, in the

initial phases when volume is low.

We may not be successful in achieving positive gross margins for new services or be able to ultimately

meet our customer requirements.

If we are unsuccessful, it could hurt our relationship with our customers.

Attracting and retaining executive talent and other key personnel

is an essential element of our future success.

Our future success depends to a significant extent

upon our ability to attract executive talent, as well as the continued service of our existing executive officers and other key management

and technical personnel.

We are a relatively small company and experienced management and technical, marketing and support personnel in

the defense and aerospace industries are in demand and competition for their talents is intense.

Our failure to attract or retain executive,

key management and technical personnel, could have a material adverse effect on our business, financial condition and results of operations.

We are subject to intense competition for

the skilled machinists necessary to manufacture our products.

We are subject to intense competition for the

services of skilled machinists necessary to manufacture our products and those of other companies in the aerospace and defense industry.

In recent years, the competition for skilled employees has intensified and we have experienced wage inflation.

We have strategically located

our operations in the U.S.

and many companies are expanding their domestic production.

As such, there is currently a shortage of skilled workers in the U.S.

In order to maintain and increase production levels, we must hire

new employees and machinists for our two state-of-the art manufacturing facilities and we may not be able to do so or the costs to hire

and/or train them may significantly exceed our budget.

economy continues to experience inflation, our labor costs may further

increase which could have a material adverse effect on our business, financial condition and results of operations.

are subject to strict governmental regulations relating to the environment, which could result in fines and remediation expense in the

event of non-compliance.

are required to comply with extensive and frequently changing environmental regulations at the federal, state and local levels.

other things, these regulatory bodies impose restrictions to control air, soil and water pollution, to protect against occupational exposure

to chemicals, including health and safety risks, and to require notification or reporting of the storage, use and release of certain

hazardous substances into the environment.

This extensive regulatory framework imposes significant compliance burdens and risks on us.

In addition, these regulations may impose liability for the cost of removal or remediation of certain hazardous substances released on

or in our facilities without regard to whether we knew of, or caused, the release of such substances.

are also required to provide a place of employment that is free from recognized and preventable hazards that are likely to cause serious

physical harm to employees, provide notice to employees regarding the presence of hazardous chemicals and to train employees in the use

of such substances.

Our operations require the use of chemicals and other materials for painting and cleaning that are classified under

applicable laws as hazardous chemicals and substances.

If we are found to be in violation of any of these rules, regulations or permits,

we may be subject to fines, remediation expenses and the obligation to change our business practice, any of which could result in substantial

costs that would adversely impact our business operations and financial condition.

may be subject to fines and disqualification for non-compliance with Federal Aviation Administration regulations.

are subject to regulation by the FAA under the provisions of the Federal Aviation Act of 1958, as amended.

The FAA prescribes standards

and licensing requirements for aircraft and aircraft components.

We are subject to inspections by the FAA and may be subjected to fines

and other penalties (including orders to cease production) for noncompliance with FAA regulations.

Our failure to comply with applicable

regulations could result in the termination of or our disqualification from some of our contracts, which could have a material adverse

effect on our operations.

We have never been subject to such fines or disqualification.

security attacks, internal system or service failures, and any unauthorized access to our customer data will have an adverse effect on

our business and reputation.

As such, there is currently a shortage of skilled

workers in the U.S.

In order to maintain and increase production levels, we must hire new employees and machinists for our two state-of-the

art manufacturing facilities and we may not be able to do so or the costs to hire and/or train them may significantly exceed our budget.

economy continues to experience inflation, our labor costs may further increase which could have a material adverse effect

on our business, financial condition and results of operations.

We are subject to strict governmental regulations

relating to the environment, which could result in fines and remediation expense in the event of non-compliance.

We are required to comply with extensive and frequently

changing environmental regulations at the federal, state and local levels.

Among other things, these regulatory bodies impose restrictions

to control air, soil and water pollution, to protect against occupational exposure to chemicals, including health and safety risks, and

to require notification or reporting of the storage, use and release of certain hazardous substances into the environment.

This extensive

regulatory framework imposes significant compliance burdens and risks on us.

In addition, these regulations may impose liability for the

cost of removal or remediation of certain hazardous substances released on or in our facilities without regard to whether we knew of,

or caused, the release of such substances.

We are also required to provide a place of employment

that is free from recognized and preventable hazards that are likely to cause serious physical harm to employees, provide notice to employees

regarding the presence of hazardous chemicals and to train employees in the use of such substances.

Our operations require the use of

chemicals and other materials for painting and cleaning that are classified under applicable laws as hazardous chemicals and substances.

If we are found to be in violation of any of these rules, regulations or permits, we may be subject to fines, remediation expenses and

the obligation to change our business practice, any of which could result in substantial costs that would adversely impact our business

operations and financial condition.

We may be subject to fines and disqualification for non-compliance

with Federal Aviation Administration regulations.

We are subject to regulation by the FAA under

the provisions of the Federal Aviation Act of 1958, as amended.

The FAA prescribes standards and licensing requirements for aircraft and

aircraft components.

We are subject to inspections by the FAA and may be subjected to fines and other penalties (including orders to cease

production) for noncompliance with FAA regulations.

Our failure to comply with applicable regulations could result in the termination

of or our disqualification from some of our contracts, which could have a material adverse effect on our operations.

We have never been

subject to such fines or disqualification.

Cyber security attacks, internal system

or service failures, and any unauthorized access to our customer data will have an adverse effect on our business and reputation.

Most of our products are used by large aerospace

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Any system or service disruptions caused by hackers or even those caused by projects to improve our information

technology capabilities, if not mitigated, could significantly disrupt our production assembly could have an immediate material adverse

technology capabilities, if not mitigated, could significantly disrupt our production and assembly could have an immediate material adverse

effect on our business.

1 unchanged sentence

by us or third-party service providers, computer viruses, natural disasters or power shortages.

hackers gain access to sensitive, confidential or otherwise protected information, they may attempt to force us to pay a ransom before

stopping their attack.

Any hacker penetration could cause loss of data and interruptions or delays in our business, cause us to incur

remediation costs or subject us to claims and damage our reputation.

In addition, the failure or disruption of our communications or

utilities could cause us to interrupt or suspend our operations or otherwise adversely affect our business.

Although we utilize various

procedures and controls to monitor and mitigate the risk of these threats and have increased recent investment to improve our cyber-security

posture, there can be no assurance that these procedures and controls or new investments will be sufficient.

Our property and business

interruption insurance may be inadequate to compensate us for all losses that may occur as a result of any system or operational failure

or disruption which would adversely affect our business, results of operations and financial condition.

Moreover, expenditures incurred

in implementing cyber security and other procedures and controls could adversely affect our results of operations and financial condition.

are subject to an extensive and highly-evolving regulatory landscape, and requirements imposed by our customers to secure our communications,

and any adverse changes to, or our failure to comply with, any laws and regulations or requirements of our clients could adversely affect

our brand, reputation, business, operating results, and financial condition.

subject to extensive laws, rules and regulations directed to those who conduct business over the internet, in addition to security requirements

imposed by our clients, including those governing privacy, data governance, data protection and cybersecurity.

Many LTAs that we sign

with our customers also require us to comply with strict vendor clauses including replications of specific sections of the FAR.

legal and regulatory regimes, including the laws, rules, and regulations thereunder, may be modified, interpreted, and applied in an

inconsistent manner.

To the extent we have not complied with such laws, rules, and regulations, or requirements imposed by our LTAs,

we could be subject to significant fines, limitations the products and services we provide, reputational harm, and other regulatory consequences,

each of which may be significant and could adversely affect our business, operating results, and financial condition.

disruptive national or international events, such as potential future public health crises, ongoing or new conflicts, domestic or foreign

terrorist activities, banking crises, and responses from the U.S.

Government, other nations, and the public to such occurrences, could

significantly disrupt the operations of us or our suppliers and impede our ability to procure, receive, or replenish inventory (including

raw materials).

These disruptions may also present challenges in communication and lead to sudden and unexpected shifts in product demand

by our customers.

Furthermore, global financial markets could experience disruptions, affecting our business and our ability to secure

future financing, including accessing debt or equity.

The occurrence of any of these events could result in lost sales and otherwise

adversely affect our business, operating results, and financial condition.

between nations (such as the ongoing Russia-Ukraine conflict), or between nations and terrorist organizations (such as the ongoing conflict

between terrorist groups and Israel), as well as terrorist attacks, natural disasters (such as hurricanes, fires, floods and earthquakes),

unusually adverse weather conditions, pandemic outbreaks or a banking crisis could adversely affect our operations and financial performance.

If any of these events affect us or our suppliers, it could result in an inability on our part to manufacture products and/or result

in lost sales, materially affecting our operations and financial performance.

Additionally,

such events could disrupt travel, making it a challenge to communicate with our customers, as evidenced during the coronavirus pandemic.

Moreover, they could lead to increases in fuel or other energy prices, fuel shortages, temporary labor shortages, temporary or long-term

disruptions in delivery of products from our suppliers and disruption to our information systems, any of which could have an adverse

impact on our business, operating results and financial condition.

Disruptive events could make it difficult for us to access debt and

equity capital on attractive terms, or at all, and impact our ability to service or refinance our debt, fund business activities, and

repay debt on a timely basis.

invasion of Ukraine, the conflict in the Middle East, continued tensions between the US and the European Union with China and Russia,

and tension between the US and the European Union with respect to funding Ukraine’s war effort, may alter countries’ willingness

If hackers gain access to sensitive, confidential

or otherwise protected information, they may attempt to force us to pay a ransom before stopping their attack.

Any hacker penetration

could cause loss of data and interruptions or delays in our business, cause us to incur remediation costs or subject us to claims and

damage our reputation.

In addition, the failure or disruption of our communications or utilities could cause us to interrupt or suspend

our operations or otherwise adversely affect our business.

Although we utilize various procedures and controls to monitor and mitigate

the risk of these threats and have increased recent investment to improve our cyber-security posture, there can be no assurance that these

procedures and controls or new investments will be sufficient.

Our property and business interruption insurance may be inadequate to compensate

us for all losses that may occur as a result of any system or operational failure or disruption which would adversely affect our business,

results of operations and financial condition.

Moreover, expenditures incurred in implementing cyber security and other procedures and

controls could adversely affect our results of operations and financial condition.

We are subject to an extensive and highly-evolving

regulatory landscape, and requirements imposed by our customers to secure our communications, and any adverse changes to, or our failure

to comply with, any laws and regulations or requirements of our clients could adversely affect our brand, reputation, business, operating

results, and financial condition.

We subject to extensive laws, rules and regulations

directed to those who conduct business over the internet, in addition to security requirements imposed by our clients, including those

governing privacy, data governance, data protection and cybersecurity.

Many LTAs that we sign with our customers also require us to comply

with strict vendor clauses including replications of specific sections of the FAR.

These legal and regulatory regimes, including the laws,

rules, and regulations thereunder, may be modified, interpreted, and applied in an inconsistent manner.

To the extent we have not complied

with such laws, rules, and regulations, or requirements imposed by our LTAs, we could be subject to significant fines, limitations the

products and services we provide, reputational harm, and other regulatory consequences, each of which may be significant and could adversely

affect our business, operating results, and financial condition.

Complying with the requirements imposed by the

Government and our customers with respect to privacy, data governance, data protection and cybersecurity is costly and requires a

significant amount of attention form management.

Any disruptive national or international

events, such as potential future public health crises, ongoing or new conflicts, domestic or foreign terrorist activities, banking crises,

the imposition of tariffs, shifts in government alliances, and responses from the U.S.

Government, other nations, and the public to such

occurrences, could significantly disrupt the operations of us or our suppliers and impede our ability to procure, receive, or replenish

inventory (including raw materials).

These disruptions may also present challenges in communication and lead to sudden and unexpected

shifts in product demand by our customers.

Furthermore, global financial markets could experience disruptions, affecting our business

and our ability to secure future financing, including accessing debt or equity.

The occurrence of any of these events could result in

lost sales and otherwise adversely affect our business, operating results, and financial condition.

Conflicts between nations (such as the ongoing

Russia-Ukraine conflict), or between nations and terrorist organizations (such as the ongoing conflict between terrorist groups and Israel),

as well as terrorist attacks, natural disasters (such as hurricanes, fires, floods and earthquakes), unusually adverse weather conditions,

pandemic outbreaks or a banking crisis, the imposition of tariffs, shifts in government alliances, could adversely affect our operations

and financial performance.

If any of these events affect us or our suppliers, it could result in an inability on our part to manufacture

products and/or result in lost sales, materially affecting our operations and financial performance.

Additionally, such events could disrupt travel,

making it a challenge to communicate with our customers, as evidenced during the coronavirus pandemic.

Moreover, they could lead to increases

in fuel or other energy prices, fuel shortages, temporary labor shortages, temporary or long-term disruptions in delivery of products

from our suppliers and disruption to our information systems, any of which could have an adverse impact on our business, operating results

and financial condition.

Disruptive events could make it difficult for us to access debt and equity capital on attractive terms, or at

all, and impact our ability to service or refinance our debt, fund business activities, and repay debt on a timely basis.

Russia’s ongoing war with Ukraine,

the conflict in the Middle East, continued tensions between the US and the European Union with China and Russia, and tension between the

US and the European Union with respect to funding Ukraine’s war effort, tariffs and other issues, may alter countries’ willingness

to rely on others as the source of certain products and material.

Historically,

prime contractors and the entire U.S.

aerospace and defense supply chain have relied upon parts, components, and raw materials from foreign

suppliers including those located in Russia and China.

Geo-political tensions have increased during the past several years and we expect

them to continue.

Supply chain disruptions resulting from escalating political tensions and the economic disruption resulting from retaliatory

measures between any countries could result in production delays and cancellations of programs.

Additionally,

any material changes to the current aerospace and defense supplier structure resulting from geo-political tensions or otherwise could

disrupt the markets for raw materials and supplies and our ability and the ability of our suppliers to obtain raw materials, may be significantly

We cannot forecast with any certainty whether such disruptions, restrictions imposed by various governments in response thereto

and resulting changes in business practices, may materially impact our ability and the ability of our suppliers to obtain necessary raw

material, our business and our consolidated financial position, results of operations, and cash flows.

Related to Our Indebtedness

Historically, prime contractors and the entire

aerospace and defense supply chain have relied upon parts, components, and raw materials from foreign suppliers including those located

in Russia and China.

Conversely, many nations chose to rely upon U.S.

manufacturers as their primary source for defense products, such

as helicopters and fighter aircraft.

Geo-political tensions have increased during the past several years and we expect them to continue.

Supply chain disruptions resulting from escalating political tensions and the economic disruption resulting from retaliatory measures

between any countries could result in production delays and cancellations of programs.

Additionally, any material changes to the current

aerospace and defense supplier structure resulting from geo-political tensions or otherwise could disrupt the markets for raw materials

and supplies and our ability and the ability of our suppliers to obtain raw materials, may be significantly impacted.

We cannot forecast

with any certainty whether such disruptions, restrictions imposed by various governments in response thereto and resulting changes in

business practices, may materially impact our ability and the ability of our suppliers to obtain necessary raw material, our business

and our consolidated financial position, results of operations, and cash flows.

Risks Related to Our Indebtedness

As of December 31, 2024, we have total indebtedness

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Failure to do so would materially impact our business and our stock price.

of December 31, 2023, we had approximately $15,849,000 of indebtedness outstanding pursuant to a loan facility that matures on December

30, 2025 with Webster Bank (“Current Credit Facility”).

The average interest rate on this indebtedness during fiscal 2023

This indebtedness is secured by a lien on substantially all our assets.

Additionally, we have approximately $6,162,000 of subordinated notes

payables (“Related Party Notes”) that mature on July 1, 2026 and which are held by two directors Michael N.

Taglich and Robert

As of December 31, 2024, we had approximately

$18,130,000 of indebtedness outstanding pursuant to a loan facility that matures on December 30, 2025 with Webster Bank (“Current

Credit Facility”).

The average interest rate on this indebtedness during fiscal 2024 was 7.66%.

This indebtedness is secured by

a lien on substantially all our assets.

Additionally, as of December 31, 2024, we had

approximately $6,162,000 of subordinated notes payables (“Related Party Notes”) that mature on July 1, 2026 and which are

held by two directors Michael N.

Taglich and Robert F.

Taglich, and their affiliates.

The Related Party Notes payable carry an interest rate ranging between 7% and 12% per year.

The Related Party Notes payable carry interest rate

ranging between 7% and 12% per year.

Subsequent to December 31, 2024, we repaid approximately $1,291,000 of this debt.

In addition to $1,007,000 of finance lease obligations

and a $22,000 vehicle loan, we also had $393,000 of borrowings for solar energy systems pursuant to a financing agreement (“Solar

Facility”) with CT Green Bank.

The Solar Facility requires borrowings for completed projects to be repaid over a 20-year level payment

If we are unable to pay our indebtedness when

due, our operations may be materially and adversely affected.

We must pay or refinance large portions of this indebtedness prior to December

30, 2025, and July 1, 2026.

During fiscal 2024, we initiated steps to refinance this debt.

Refinancing may require us to pay higher interest

rates than we currently pay, agree to more restrictive business or financial covenants or involve the issuance of debt, equity and/or

new securities convertible into or exercisable or exchangeable for our common stock which may adversely affect the trading price of our

common stock and the interests of our existing stockholders.

and a $14,000 vehicle loan, we also had $970,000 of borrowings for the solar energy systems installed at our Barkhamsted facility pursuant

to a financing agreement (“Solar Facility”) with CT Green Bank.

On October 1, 2024, the Solar Facility converted to a 20-year

level payment term loan.

If we are unable to pay or refinance our indebtedness

when due, our operations may be materially and adversely affected.

We must pay or refinance large portions of this indebtedness prior

to December 30, 2025, and July 1, 2026.

Since it is unlikely that we will be able to pay this debt, we have initiated steps to satisfy

portions and refinance the balance.

Refinancing may require us to pay higher interest rates than we currently pay, agree to more restrictive

business or financial covenants or involve the issuance of debt, equity and/or new securities convertible into or exercisable or exchangeable

for our common stock which may adversely affect the trading price of our common stock and the interests of our existing stockholders.

Any failure to refinance our existing debt or obtain additional working capital when required would have a material adverse effect on

our business and financial condition and may result in a decline in our stock price.

Any issuances of our common stock, preferred stock,

or securities such as warrants or notes that are convertible into, exercisable or exchangeable for, our capital stock, would have a dilutive

effect on the voting and economic interest of our existing stockholders.

Our current or future leverage may adversely affect

our ability to finance future operations and capital needs, may limit our ability to pursue business opportunities and may make our results

of operations more susceptible to adverse economic conditions.

Ultimately, we may not be able to successfully refinance our indebtedness

and if we cannot, we would become insolvent.

The weighted average interest rate we paid

in 2024 on borrowings outstanding on the Current Credit Facility was 7.66% and this interest rate may increase in the future.

The weighted average interest rate paid during

the year-ended December 31, 2024 on borrowings outstanding on the Current Credit Facility was 7.66% as compared to 7.55% for the year-ended

December 31, 2023, the increase reflects the increase in the target rates set by the Federal Reserve.

Under the terms of our Current Credit

Facility, amounts due bear interest at a per annum rate equal to the greater of (i) 3.50% and (ii) a rate per annum equal to the rate

per annum published from time to time in the “Money Rates” table of the Wall Street Journal (or such other presentation within

The Wall Street Journal as may be adopted hereafter for such information) as the base or prime rate for corporate loans at the nation’s

largest commercial bank, less sixty-five hundredths (-0.65%) of one percent per annum.

Consequently, we may be susceptible to future increased

rates if the Federal Reserve chooses to increase its target rate of interest.

We have a history of net losses, need to refinance our bank debt

and the opinion of our auditor contains an explanatory paragraph as to our ability to continue as a going concern.

We incurred net losses for the years ended December

31, 2024, 2023 and 2022 of $1,366,000, $2,131,000 and $1,076,000, respectively.

As of December 31, 2024, we had approximately $18,130,000

of indebtedness outstanding pursuant to our Current Credit Facility that matures on December 30, 2025 with Webster Bank (“Current

Credit Facility”) and approximately $6,162,000 of subordinated notes payables (“Related Party Notes”) that mature on

July 1, 2026 and which are held by two directors Michael N.

Taglich and Robert F.

Taglich, and their affiliates.

We must pay or refinance

large portions of this indebtedness prior to its respective due dates.

Further, as a condition to refinancing our Current Credit Facility

prior to December 31, 2025, Webster may require that the holders of our Related Party Notes extend or otherwise modify the subordination

agreements they have given in favor of the lender.

Since it is not likely that we will be able to pay this debt, we have initiated steps

to satisfy portions and refinance the balance.

These steps included the sale of shares of our common stock pursuant to our Registration

Statement on Form S-3 that was declared effective on December 19, 2024.

As of March 31, 2025, we have sold 326,791 shares of our common

stock for gross proceeds of $1,412,000 of which $1,291,000 has been used to satisfy portions of the Related Party Notes.

Because of the

uncertainty regarding our ability to refinance our indebtedness, our auditors have included an explanatory paragraph in their opinion

as to our ability to continue as a going concern.

Refinancing our indebtedness may require us to pay higher interest rates than we currently

pay, agree to more restrictive business or financial covenants or involve the issuance of debt, equity and/or new securities convertible

into or exercisable or exchangeable for our common stock.

Any failure to refinance our existing debt or obtain additional working capital

when required would have a material adverse effect on our business and financial condition and may result in a decline in our stock price.

Any issuances of our common stock, preferred stock, or securities such as warrants or notes that are convertible into, exercisable or

exchangeable for, our capital stock, would have a dilutive effect on the voting and economic interest of our existing stockholders.

current or future leverage may adversely affect our ability to finance future operations and capital needs, may limit our ability to

pursue business opportunities and may make our results of operations more susceptible to adverse economic conditions.

Ultimately, we

may not be able to successfully refinance our indebtedness and if we cannot, we would become insolvent.

weighted average interest rate we paid in 2023 on borrowings outstanding on the Current Credit Facility was 7.55% and this interest rate

may increase in the future.

weighted average interest rate paid during the year-ended December 31, 2023 on borrowings outstanding on the Current Credit Facility

was 7.55% as compared to 4.50% for the year-ended December 31, 2022, the increase primarily the result of the increase in the target

rates set by the Federal Reserve.

Under the terms of our Current Credit Facility, amounts due bear interest at a per annum rate equal

to the greater of (i) 3.50% and (ii) a rate per annum equal to the rate per annum published from time to time in the “Money Rates”

table of the Wall Street Journal (or such other presentation within The Wall Street Journal as may be adopted hereafter for such information)

as the base or prime rate for corporate loans at the nation’s largest commercial bank, less sixty-five hundredths (-0.65%) of one

percent per annum.

Consequently, we may be susceptible to future increased rates if the Federal Reserve chooses to increase its target

rate of interest.

when required would have a material adverse effect on our business and financial condition.

We may not be able to comply with the covenants

1 unchanged sentence

Under the terms of the Current Credit Facility,

we are required to maintain certain business and financial covenants including a Fixed Charge Coverage Ratio (as defined) that is determined

at the end of each fiscal quarter.

This ratio is a financial metric that we use to measure our ability to cover fixed charges such as

interest and leases expenses as divided by EBITDA (as defined in the Current Credit Facility) which represents net income (or loss) before

interest, taxes, depreciation, and amortization.

For the year ended December 31, 2023, we achieved a Fixed Charge Coverage Ratio of 1.31x

as compared to the required ratio of 0.95x and were in full compliance with all other covenants.

As of March 31, 2024, we were not in

compliance with the required ratio of 1.10x.

We are currently in discussions with our lender to obtain waivers, but may not be able to

During our first and third quarters of fiscal

2023, primarily because of the unexpected and dramatic increase in interest rates and the failure to receive certain raw materials from

a supplier, we were unable to comply with the Fixed Charge Coverage Ratio.

In 2023, our lender provided waivers for these quarters and

provided for more relaxed Fixed Charge Coverage ratios for future periods, including the 0.95x as of December 31, 2023.

we are required to maintain certain business and financial covenants.

As of December 31, 2024, we were in compliance with the minimum

EBITDA (as defined in the Current Credit Facility) which represents net income (or loss) before interest, taxes, depreciation and amortization

of $2,800,000 on a rolling twelve-month basis.

Beginning in with the fiscal quarter ending March 31, 2025 on a rolling twelve-month basis

and continuing for the fiscal quarter ending June 30, 2025 on a rolling twelve-month basis we are required to achieve a Fixed Charge Coverage

Ratio (as defined) of 1.05x which is a financial metric that is used to measure our ability to cover fixed charges such as interest and

lease expenses as divided by EBITDA.

This metric increase for future fiscal quarter on a rolling twelve-month basis to 1.25x.

not in compliance with the required covenant we would have to seek a waiver with our lender, but we may not be able to do so.

Even if we obtain a waiver for the failure to

meet the fixed charge coverage ratio as of March 31, 2024, if we do not achieve our fiscal 2024 plan and successfully execute our business

strategy, we may not be able to comply with future quarterly covenant requirements.

If we fail to do so and/or are unable to obtain future

waivers, we may have to pay increased interest rates or may be required to immediately pay any outstanding debt.

An increase in the interest

rate would likely have a material adverse impact on our consolidated financial position and results of operations.

If we were required

to make immediate repayment, we may not be able to obtain financing to do so and would become insolvent.

currently do not pay dividends and the terms of our Current Credit Facility limit our ability to pay dividends.

currently do not pay dividends and have no foreseeable plans to do so.

Additionally, the terms and covenants of our Current Credit Facility

do not currently allow us to.

In the future should we decide to pay dividends, we would need to seek covenant changes or a waiver under

our Current Credit Facility.

There can be no assurance our lenders would agree to covenant changes or grant a waiver.

In addition, we

may in the future incur additional indebtedness or otherwise become subject to agreements whose terms restrict our ability to pay dividends

in the future.

Related to our status as a public company and our common stock

is only a limited public market for our common stock.

our common stock is listed on the NYSE American, there is only a limited number of our shares available in the public float and the related

market capitalization of such float is relatively small.

The trading volume for our common stock has been limited and a more active public

market for our common stock may not develop or be sustained over time.

The lack of a robust market may impair a stockholder’s ability

to sell shares of our common stock.

In the absence of a more active trading market, any attempt to sell our shares could result in a

decrease in the price of our stock.

Specifically, our shareholders may not be able to resell their shares of common stock at or above

the price paid for such shares or at all.

sales of our common stock in the public market, or the perception that such sales could occur, could negatively impact the price of our

common stock.

As a result, our shareholders may not be able to sell your shares of our common stock in short time periods, or possibly

at all, and the price per share of our common stock may fluctuate significantly.

ownership of our common stock is highly concentrated amongst related parties, and their interests may conflict with the interests of

other stockholders.

meet a financial covenant, if we do not achieve our fiscal 2025 plan and successfully execute our business strategy, we may not be able

to comply with future quarterly covenant requirements.

If we fail to do so and/or are unable to obtain future waivers, we may have to

pay increased interest rates or may be required to immediately pay any outstanding debt.

An increase in the interest rate would likely

have a material adverse impact on our consolidated financial position and results of operations.

If we were required to make immediate

repayment, we may not be able to obtain financing to do so and would become insolvent.

We currently do not pay dividends and the

terms of our Current Credit Facility limit our ability to pay dividends.

We currently do not pay dividends and have no

foreseeable plans to do so.

Additionally, the terms and covenants of our Current Credit Facility do not currently allow us to.

future should we decide to pay dividends, we would need to seek covenant changes or a waiver under our Current Credit Facility.

can be no assurance our lenders would agree to covenant changes or grant a waiver.

In addition, we may in the future incur additional

indebtedness or otherwise become subject to agreements whose terms restrict our ability to pay dividends in the future.

Risks Related to our status as a public

company and our common stock

There is only a limited public market for our common stock.

Although our common stock is listed on the NYSE

American, there is only a limited number of our shares available in the public float and the related market capitalization of such float

is relatively small.

The trading volume for our common stock has been limited and a more active public market for our common stock may

not develop or be sustained over time.

The lack of a robust market may impair a stockholder’s ability to sell shares of our common

In the absence of a more active trading market, any attempt to sell our shares could result in a decrease in the price of our stock.

Specifically, our shareholders may not be able to resell their shares of common stock at or above the price paid for such shares or at

Moreover, sales of our common stock in the public

market, or the perception that such sales could occur, could negatively impact the price of our common stock.

As a result, our shareholders

may not be able to sell your shares of our common stock in short time periods, or possibly at all, and the price per share of our common

stock may fluctuate significantly.

The ownership of our common stock is highly

concentrated amongst related parties, and their interests may conflict with the interests of other stockholders.

Two of our directors, Michael N.

2 unchanged sentences

They also hold $4,871,000 of Related

Party Notes, some of which are convertible into our common stock.

Although the Related Party Notes are subordinate to the $15,849,000

of debt outstanding pursuant to the Current Credit Facility, we may require additional concessions from the holders of the Related Party

Notes when we seek to refinance the Current Credit Facility.

These related parties have significant influence over the outcome of corporate

actions, including those requiring stockholder approval.

The interests of these related parties may be different from the interests of

other stockholders on these and other matters.

Additionally, this concentration of ownership could also have the effect of delaying or

preventing a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which in turn

could reduce the price of our common stock.

market price of our common stock is likely to be highly volatile, which could result in substantial losses to investors.

The market price of our common stock has historically been volatile

and is likely to continue to be volatile.

The market price of our common stock could fluctuate widely due to factors relating to our operations

as well as those beyond our control.

Because our common stock is thinly traded, the trading price may be volatile due to factors concerning

our operations, such as variations in our operating results, failure to meet the covenants under the Current Credit Facility, news regarding

the loss of a major customer or termination or a reduction in funding for a program we are on, the loss of management personnel, the outcome

or perception of the potential outcome of any litigation, general industry conditions and significant industry developments.

the market price of our common stock may be affected by factors unrelated to our operations, such as general economic factors, government

budgeting decisions affecting our industry and developments in the financial markets and availability of credit.

national and international events and the response of the United States, other countries and the public to such events, and the resulting

macroeconomic disruption to the financial markets could lead to increased volume and price volatility for publicly traded securities

which could adversely impact the price of our common stock.

national and international events, such as the outbreak of a public health crisis, conflicts between nations or between nations and terrorist

organizations, terrorists acts, natural disasters, a banking crisis, the possibility of default by the U.S.

Government on its obligations

due to its debt ceiling or the actuality of such an event, and the response of the U.S.

Government, other countries and the public to

such events, and the resulting macroeconomic disruption to the financial markets could lead to increased volume and price volatility

for publicly traded securities which could adversely impact the price of our common stock.

Party Notes as of March 31, 2025, some of which are convertible into our common stock.

Although the Related Party Notes are subordinate

to the $18,130,000 of debt outstanding pursuant to the Current Credit Facility, we may require additional concessions from the holders

of the Related Party Notes when we seek to refinance the Current Credit Facility.

These related parties have significant influence over

the outcome of corporate actions, including those requiring stockholder approval.

The interests of these related parties may be different

from the interests of other stockholders on these and other matters.

Additionally, this concentration of ownership could also have the

effect of delaying or preventing a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control

of us, which in turn could reduce the price of our common stock.

The market price of our common stock is

likely to be highly volatile, which could result in substantial losses to investors.

The market price of our common stock has historically

been volatile and is likely to continue to be volatile.

The market price of our common stock could fluctuate widely due to factors relating

to our operations as well as those beyond our control.

Because our common stock is thinly traded, the trading price may be volatile due

to factors concerning our operations, such as variations in our operating results, failure to meet the covenants under the Current Credit

Facility, news regarding the loss of a major customer or termination or a reduction in funding for a program we are on, the loss of management

personnel, the outcome or perception of the potential outcome of any litigation, general industry conditions and significant industry

developments.

In addition, the market price of our common stock may be affected by factors unrelated to our operations, such as general

economic factors, government budgeting decisions affecting our industry and developments in the financial markets and availability of

Disruptive national and international events

and the response of the United States, other countries and the public to such events, and the resulting macroeconomic disruption to the

financial markets could lead to increased volume and price volatility for publicly traded securities which could adversely impact the

price of our common stock.

Disruptive national and international events,

such as the outbreak of a public health crisis, conflicts between nations or between nations and terrorist organizations, terrorists acts,

natural disasters, a banking crisis, the imposition of tariffs, shifts in international alliances, the possibility of default by the U.S.

Government on its obligations due to its debt ceiling or the actuality of such an event, and the response of the U.S.

Government, other

countries and the public to such events, and the resulting macroeconomic disruption to the financial markets could lead to increased volume

and price volatility for publicly traded securities which could adversely impact the price of our common stock.

We can provide no assurance that our common

stock will continue to be listed on the NYSE American.

If we fail to meet the continued listing standards of the NYSE American, our

common stock could be delisted.

The delisting of our common stock could impair your ability to purchase shares of our common stock or

sell your common stock when you wish to do so which could have a negative effect on the price of our common stock.

If we fail to satisfy the continued listing requirements of the NYSE

American, it may take steps to delist our common stock.

There are measures that can be taken to remain in compliance with certain of the

listing requirements of NYSE American which often require the undertaking of a reverse stock split, selling common stock at prices below

what the Board of Directors may believe is its true value or completing a merger to acquire a new business.

There are other exchanges

and trading platforms on which we could choose to list our common stock.

Our Board periodically examines the costs and benefits of listing

our common stock on the NYSE American with the costs and benefits that would result from an alternative trading platform.

Board were to choose to seek another platform for the trading of our common stock, this could entail suspending our obligation to file

periodic reports with the SEC and using other means to make information publicly available to shareholders and potential buyers of our

common stock.

There can be no assurance that any cost savings and other benefits we might achieve from trading on another platform

would outweigh any negative impact to the trading market and price of our common stock that would result from delisting from the NYSE

we fail to meet the expectations of securities analysts or investors, our stock price could decline significantly.

If we fail to meet the continued listing standards of the NYSE American, our common

stock could be delisted.

The delisting of our common stock could impair your ability to purchase shares of our common stock or sell your

common stock when you wish to do so which could have a negative effect on the price of our common stock.

If we fail to satisfy the continued listing requirements

of the NYSE American, it may take steps to delist our common stock.

There are measures that can be taken to remain in compliance with

certain of the listing requirements of NYSE American which often require the undertaking of a reverse stock split, selling common stock

at prices below what the Board of Directors may believe is its true value or completing a merger to acquire a new business.

other exchanges and trading platforms on which we could choose to list our common stock.

Our Board periodically examines the costs and

benefits of listing our common stock on the NYSE American with the costs and benefits that would result from an alternative trading platform.

If our Board were to choose to seek another platform for the trading of our common stock, this could entail suspending our obligation

to file periodic reports with the SEC and using other means to make information publicly available to shareholders and potential buyers

of our common stock.

There can be no assurance that any cost savings and other benefits we might achieve from trading on another

platform would outweigh any negative impact to the trading market and price of our common stock that would result from delisting from

the NYSE American.

If we fail to meet the expectations of securities

analysts or investors, our stock price could decline significantly.

Our quarterly and annual operating results fluctuate

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variations in manufacturing efficiencies, our ability to obtain components and subassemblies from contract manufacturers and suppliers,

general economic conditions and economic conditions specific to the defense market and disruptions caused by global events such as COVID-19

and Russia’s invasion of Ukraine.

Because we base our operating expenses on anticipated revenue trends and a high percentage of

our expenses are fixed in the short term, any delay in generating or recognizing forecasted revenues could significantly harm our business.

general economic conditions and economic conditions specific to the defense market and disruptions caused by global events.

base our operating expenses on anticipated revenue trends and a high percentage of our expenses are fixed in the short term, any delay

in generating or recognizing forecasted revenues could significantly harm our business.

Fluctuations in quarterly results may cause earnings

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reflect the value of our expected performance.

financings or acquisitions may adversely affect the market price of our common stock.

sales or issuances of our common stock, including upon conversion of our outstanding convertible notes, upon exercise of our outstanding

warrants and options, or as part of future financings or acquisitions, would be substantially dilutive to the outstanding shares of common

Any dilution or potential dilution may cause our stockholders to sell their shares, which would contribute to a downward movement

in the price of common stock.

Future financings or acquisitions may adversely affect the market

price of our common stock.

Future sales or issuances of our common stock,

including upon conversion of our outstanding convertible notes, upon exercise of our outstanding warrants and options, or as part of future

financings or acquisitions, would be substantially dilutive to the outstanding shares of common stock.

Any dilution or potential dilution

may cause our stockholders to sell their shares, which would contribute to a downward movement in the price of common stock.

We incur significant costs as a result of

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Costs to comply may increase in the future.

As a public company,

we incur significant legal, accounting and other expenses under the Sarbanes-Oxley Act of 2002, together with rules implemented by the

Securities and Exchange Commission and applicable market regulators.

These rules impose various requirements on public companies, including

requiring certain corporate governance practices.

Our management and other personnel will need to devote a substantial amount of time

to these requirements.

Moreover, if new rules or regulations are adopted in future periods, they will likely increase our compliance

costs and will make some activities more time-consuming and costlier.

The Sarbanes-Oxley

Act, among other things, requires that we maintain effective internal controls for financial reporting and disclosure controls and procedures.

In particular, we must perform system and process evaluations and testing of our internal controls over financial reporting to allow

management to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley

Compliance with Section 404 may require that we incur substantial accounting expenses and expend significant management efforts.

Our testing may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses.

event we identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner,

the market price of our stock could decline if investors and others lose confidence in the reliability of our financial statements and

we could be subject to sanctions or investigations by the SEC or other applicable regulatory authorities.

If we are unable

to effectively maintain a system of internal control over financial reporting, we may not be able to accurately or timely report our

financial results and our stock price could be adversely affected.

As a public company, we incur significant legal,

accounting and other expenses under the Sarbanes-Oxley Act of 2002, together with rules implemented by the Securities and Exchange Commission

and applicable market regulators.

These rules impose various requirements on public companies, including requiring certain corporate governance

Our management and other personnel will need to devote a substantial amount of time to these requirements.

Moreover, if new

rules or regulations are adopted in future periods, they will likely increase our compliance costs and will make some activities more

time-consuming and costlier.

The Sarbanes-Oxley Act, among other things, requires

that we maintain effective internal controls for financial reporting and disclosure controls and procedures.

In particular, we must perform

system and process evaluations and testing of our internal controls over financial reporting to allow management to report on the effectiveness

of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act.

Compliance with Section 404 may

require that we incur substantial accounting expenses and expend significant management efforts.

Our testing may reveal deficiencies in

our internal controls over financial reporting that are deemed to be material weaknesses.

In the event we identify significant deficiencies

or material weaknesses in our internal controls that we cannot remediate in a timely manner, the market price of our stock could decline

if investors and others lose confidence in the reliability of our financial statements and we could be subject to sanctions or investigations

by the SEC or other applicable regulatory authorities.

If we are unable to effectively maintain

a system of internal control over financial reporting, we may not be able to accurately or timely report our financial results and our

stock price could be adversely affected.

Our management determined that as of December

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We first determined this weakness in fiscal 2022.

Although new controls have been implemented during fiscal 2023, they were put in place

late in the year which did not allow sufficient time for testing of the effectiveness of such controls.

We expect to conclude our testing

of effectiveness in fiscal 2024 but we may find that fiscal 2023 remediations were not effective and have to incur additional costs to

adopt new controls.

A significant increase in costs in 2024 or any failure to maintain our controls or operation of these controls, could

harm our operations, decrease the reliability of our financial reporting, and cause us to fail to meet our financial reporting obligations,

which could adversely affect our business and reduce our stock price.

Although new controls have been implemented during fiscal 2023 and 2024, we will need

to enhance and further formalize these controls during fiscal 2025.

We expect to conclude our testing of effectiveness in fiscal 2025

but we may find that fiscal 2023 and 2024 remediations were not effective and have to incur additional costs to adopt new controls.

significant increase in costs in 2025 or any failure to maintain our controls or operation of these controls, could harm our operations,

decrease the reliability of our financial reporting, and cause us to fail to meet our financial reporting obligations, which could adversely

affect our business and reduce our stock price.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors