What changed in this filing

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Item 1. Business

2026-03-27 compared with 2025-04-15 · 122 added, 93 removed, 253 unchanged (46% of the section changed)

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our sales and marketing efforts, with a sharp focus on expanding relationships with customers and cultivating new ones.

Fiscal 2024 marked

a year of progress and positioning for growth.

We finished 2025 with $47.9 million of net sales.

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backlog on December 31, 2024.

Our marketing efforts bore fruit and we secured our first order with a new foreign-based defense and aerospace

prime customer.

We made significant investments in capital equipment and related processes.

On the bottom-line, we reported a net loss

of $1.4 million.

As we enter fiscal 2025, we believe our future is looking brighter.

Moving forward, our business strategy is geared

towards competing and winning contracts that enable us to achieve sustainable and profitable business growth and delivering high quality

reliable products to our customers.

At its core, lies a highly trained and close-knit team of over 180 individuals committed to driving

excellence and precision in every aspect of our operations.

We are firmly focused on securing new contract awards, improving operations

and successful execution.

With total unfilled contract values amounting to $271.3 million (including our $117.9 million in funded backlog

and all potential orders against LTA agreements previously awarded to us), as of December 31, 2024, we are confident in our ability to

boost sales in 2025, attain profitability and improve our financial position.

On the bottom-line, we reported a net loss of $1.3 million.

As we enter fiscal 2026, we believe our future

is looking brighter.

Our business strategy is geared towards competing

and winning contracts that enable us to achieve sustainable and profitable business growth and delivering high quality reliable products

to our customers.

At its core, lies a highly trained and close-knit team of 160 individuals committed to driving excellence and precision

in every aspect of our operations.

We are firmly focused on securing new contract awards, improving operations and successful execution.

As of December 31, 2025, we have total unfilled contract values amounting to $270.1 million (including our $136.8 million in funded backlog

and all potential orders against LTA agreements previously awarded to us).

As discussed below under “Recent Developments” our go-forward

business may materially change.

Recent Developments

On February 17,

2026, we filed a Current Report on Form 8-K (the “Merger 8-K”) with respect to the Agreement and Plan of Merger (the

“ Merger Agreement ”) we and Transitory Air Sub LLC , our wholly

owned subsidiary (“ Merger Sub ”), entered into on February 16, 2026, with Tenax Aerospace Acquisition, LLC, a

Delaware limited liability company (“ Tenax ”).

Upon consummation of the Merger Agreement, Tenax will become a

wholly owned Subsidiary of AIR.

Tenax is a leading provider of special mission aviation solutions that combine aircraft sourcing,

financing and modification with aviation services including pilots, maintenance and other types of program support.

Additionally,

they have long standing relationships with key government customers.

Pursuant to the Merger

Agreement, we will issue shares of our common stock (the “ Merger Consideration ”) to the holders of the membership interests

of Tenax at the Closing (the “ Tenax Members ”).

A portion of the Merger Consideration allocated in respect of membership

interests of Tenax underlying certain Tenax warrants that remain unexercised as of the Closing, if any, will be reserved by us for future

issuance upon the exercise of such warrants.

The number of shares of our common stock to be issued to the Tenax Members will be adjusted

based on a calculation of AIR Net Indebtedness (as defined in the Merger Agreement).

Based on the amount of Air Net Indebtedness as of

December 31, 2025, the calculation would result in the issuance of approximately 112.5 million shares of AIR Common Stock.

Consequently,

based upon the calculation of the Merger Consideration as of December 31, 2025, following the closing of the Merger, the Tenax Members

will collectively own approximately 95% of the outstanding shares of our Common stock.

For a more complete description

of the Merger Agreement, transactions to be consummated, actions to be taken and agreements entered into or to be entered in connection

therewith, reference is made to the Merger 8-K and the full text of the Merger Agreement and the documents that are exhibits thereto which

are incorporated herein by reference.

The closing of the

merger contemplated by the Merger Agreement (the “Merger”) is subject to risks and uncertainties and certain specified

conditions, including, among other things:

(a) the expiration or termination of the applicable waiting period under the

Hart-Scott-Rodino Act, (b) the listing of the Merger Consideration on the NYSE American, and (c) other customary conditions for

a transaction such as the Merger, such as the absence of any legal restraint prohibiting the consummation of the Merger and there

not having occurred with respect to AIR or Tenax’s business a material adverse event, subject to certain customary

Except where specifically noted, the discussion of our business, operations, management team and financial results contained

herein, gives no effect to changes that would occur as a result of or subsequent to the consummation of the Merger.

Customer Profiles

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with many large and well-known customers including:

Corporation (“RTX” ) – a multinational aerospace and defense conglomerate and a major player in the aerospace and

defense industry.

We sell to several business units and/or subsidiaries of RTX, including Collins Aerospace (which includes Collins Landing

Systems and Collins Aerostructures) and Pratt Whitney.

RTX was formerly known as Raytheon Technologies Corporation and prior to that

United Technologies Corporation.

Martin Corporation (“Lockheed Martin”) – Lockheed Martin is a leading global security and aerospace company with

its principal customers being agencies of the U.S.

We sell directly to one of its legal subsidiaries, Sikorsky Aircraft Corporation

(“Sikorsky”).

RTX Corporation (“RTX” ) – a multinational aerospace and defense conglomerate and a major player in the aerospace and defense industry.

We sell to several business units and/or subsidiaries of RTX, including Collins Aerospace (which includes Collins Landing Systems and Collins Aerostructures) and Pratt Whitney.

RTX was formerly known as Raytheon Technologies Corporation and prior to that United Technologies Corporation.

Lockheed Martin Corporation (“Lockheed Martin”) – Lockheed Martin is a leading global security and aerospace company with its principal customers being agencies of the U.S.

We sell directly to one of its subsidiaries, Sikorsky Aircraft Corporation (“Sikorsky”).

Northrop Grumman (“Northrop”) – We supply product used on the E2-D Hawkeye, airborne warning and control aircraft.

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and 79.3% of our net sales in 2025 and 2024, respectfully:

The E-2D Hawkeye:

We provide the main and nose landing gear, as well as the arresting gear for the E-2D Hawkeye, a twin-engine, tactical aircraft utilized for providing advanced airborne warning and control for carrier-based operations.

Often referred to as the “digital quarterback,” it conducts battlefield management and command and control operations for aircraft carrier strike groups.

While primarily used by the U.S.

Navy, a small number have been sold to U.S.

allies, notably Japan.

Pratt & Whitney Geared Turbo-Fan Engine (“GTF”):

Used in commercial aviation, the GTF represents a new generation of jet engines that offer improved fuel efficiency, reduced emissions, and lower noise levels compared to traditional turbofan engines.

We manufacture Thrust Struts, a critical component that essentially absorbs and distributes the forward thrust produced by the jet engine, ensuring that the force is evenly applied across the structure of the aircraft to maintain stability and integrity during takeoff, cruising and landing.

We supply our Thrust Struts to Collins Aerostructures for integration into Geared Turbofan engines, utilized by smaller airlines such as those operating the Airbus A220 and Embraer E2 aircraft.

Demand for these engines increased in 2025, thus reducing the concentration in the net sales attributable to military end users.

Demand for these engines is anticipated to increase over the next few years.

UH-60 Black Hawk Helicopter :

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Deployment of new helicopters is projected to continue through at least 2027, with ongoing sustainment activities anticipated for many years thereafter.

Pratt & Whitney Geared Turbo-Fan Engine (“GTF”):

We supply our Thrust Struts to Collins Aerostructures for integration into Geared Turbofan engines, utilized by smaller airlines such as those operating the Airbus A220 and Embraer E2 aircraft.

Demand for these engines increased in 2024, thus reducing the concentration in the net sales attributable to military end users.

Demand for these engines is anticipated to increase over the next few years.

The CH-53 Helicopter (including the CH53K variant):

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In 2024 we received a purchase order to manufacture Swashplates and Hubs to be used on the CH-53K.

Initial deliveries of these parts has commenced.

The E-2D Hawkeye:

Often referred to as the “digital quarterback,” it conducts battlefield management and command and control operations for aircraft carrier strike groups.

While primarily used by the U.S.

Navy, a small number have been sold to U.S.

allies, notably Japan.

The F-35 Lightning II (also known as the Joint Strike Fighter):

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We have produced landing gear components for all three variants and currently manufacture landing gear components for the US Navy version.

The production of this aircraft is expected to continue for many years, with the DoD aiming for an inventory objective of 2,456 aircraft, in addition to expected demand from other countries.

The production of this aircraft is expected to continue for many years, with the DoD aiming for an inventory objective of 2,456 aircrafts, in addition to expected demand from other countries.

The F-18 Hornet, the U.S.

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Although it is anticipated that this plane will be ultimately replaced by the Joint Strike Fighter, we believe it will be flying for years to come.

It boasts an impeccable combat record with no known losses in aerial combat.

It boasts an impeccable combat record.

We ship most of our components directly to the U.S.

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Sales and Marketing

Sales and marketing activities during 2024 were robust, resulting in

a book-to-bill ratio of 1.29x, growth in our funded backlog to $117.9 million and total unfilled contract values amounting to $271.3 million

(including our $117.9 million funded backlog and all potential orders against LTA agreements).

Sales and marketing activities during 2025 were

robust, resulting in a book-to-bill ratio of 1.36x, growth in our funded backlog to $136.8 million and total unfilled contract values

amounting to $270.1 million (including our $136.8 million funded backlog and all potential orders against LTA agreements).

We primarily rely upon a small team of highly

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high ratings and leverage these metrics in our sales and marketing activities.

Our sales cycle varies significantly,

ranging from a few weeks to over a year, depending on the complexity of the product and manufacturing steps involved.

customers may occasionally engage in spot buys, most of our orders (also known as bookings) stem from LTAs.

LTAs outline the

quantity and price of products the customer may order within a specified time frame.

When actual products are needed, the customer

places a funded order against the LTA.

The value of this funded order is included in our funded backlog until we ship it.

cancellations of funded orders are possible, customers are usually subject to termination liability, necessitating payment to us for

costs incurred up to the termination date.

In certain termination cases, the customer is also required to pay us a reasonable

Our sales cycle varies significantly, ranging

from a few weeks to over a year, depending on the complexity of the product and manufacturing steps involved.

While customers may occasionally

engage in spot buys, most of our orders (also known as bookings) stem from LTAs.

LTAs outline the quantity and price of products the customer

may order within a specified time frame.

When actual products are needed, the customer places a funded order against the LTA.

of this funded order is included in our funded backlog until we ship it.

Although cancellations of funded orders are possible, customers

are usually subject to termination liability, necessitating payment to us for costs incurred up to the termination date.

In certain termination

cases, the customer is also required to pay us a reasonable profit.

We secure new or follow-on LTAs through competitive

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a given financial period.

In fiscal 2024, bookings were $71,000,000, a 14% increase compared to $62,262,000 in 2023.

In fiscal 2025, bookings were $65,000,000, a 8.5% decrease compared to $71,000,000 in 2024.

Our “book-to-bill”

ratio, which is our bookings divided by net sales, was 1.29x for 2024, a significant improvement over the 1.20x ratio of 2023.

bookings are subject to wide variations in timing, resulting in period-to-period comparisons not necessarily being meaningful, we do use

bookings and our book-to-bill as a gauge of future net sales.

Our backlog, which can be considered our “funded backlog,”

stood at $117.9 million as of December 31, 2024, marking a 19.9% increase from $98.3 million on December 31, 2023.

This represents the

net sales we expect to realize from funded orders received and is equivalent to our remaining performance obligations pursuant to Accounting

Standards Codification (“ASC”) 606, Revenue from Contracts with Customers.

These funded orders, approved by customers, come

from LTAs, spot-buys, or other contracts and are for essential machined components and assemblies used in the key platforms and programs

ratio, which is our bookings divided by net sales, was 1.36x for 2025, an improvement over the 1.29x ratio of 2024.

Although bookings

are subject to wide variations in timing, resulting in period-to-period comparisons not necessarily being meaningful, we do use bookings

and our book-to-bill as a gauge of future net sales.

Our backlog, which can be considered our “funded

backlog,” stood at $136.8 million as of December 31, 2025, marking a 16.0% increase from $117.9 million on December 31, 2024.

represents the net sales we expect to realize from funded orders received and is equivalent to our remaining performance obligations pursuant

to Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers.

These funded orders, approved by

customers, come from LTAs, spot-buys, or other contracts and are for essential machined components and assemblies used in the key platforms

and programs we serve.

Our definition provides visibility into the value of all firm orders.

The bulk of our $117.9 million backlog is expected to

ship over the next 24 months.

but does not include possible or probable future orders pursuant to existing LTAs or probable contract renewals

that would also contribute sales during such period.

The total potential net sales under contracts actually awarded to us as of December

31, 2024, was $271.3 million, including the value of our existing funded backlog of $117.9 million.

The bulk of our $136.8 million backlog is

expected to ship over the next 24 months.

but does not include possible or probable future orders pursuant to existing LTAs or probable

contract renewals that would also contribute sales during such period.

The total potential net sales under contracts actually awarded

to us as of December 31, 2025, was $270.1 million, including the value of our existing funded backlog of $136.8 million.

Winning a new contract award is highly competitive.

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in new property and equipment to support our goals.

These investments have increased production efficiency and speed, while maintaining

closer tolerances, have expanded the size of products we can manufacture and have been appreciated by our customers.

While we plan to

continue this strategy in 2025 it will likely be on a much smaller level.

These investments have enabled us to increase production efficiency and speed, while

maintaining closer tolerances, have expanded the size of products we can manufacture and have been appreciated by our customers.

Any investment

in 2026 will be at a much lower level.

Our competitors include:

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In some cases, customers

may provide us with these raw materials as they may be able to obtain better processing or delivery schedules from other suppliers and

in other cases the customer chooses to rely on us to manage suppliers.

may provide us with raw materials as they may be able to obtain better processing or delivery schedules from other suppliers and in other

cases the customer chooses to rely on us to manage suppliers.

The price and availability of many raw materials

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As of March 7, 2026, we employed 160 people.

Of these, 98 were involved in manufacturing and production activities, 26 were in quality control, 52 were in administration, and the

remaining 8 were in sales and procurement.

All of our employees are covered under a co-employment agreement with Insperity Services, LLC,

a professional employer organization.

This arrangement allows us to provide employees with comprehensive benefits at a lower cost than

we could provide.

these, 89 were involved in manufacturing and production activities, 20 were in quality control, 45 were in administration, and the remaining

6 were in sales and procurement.

All of our employees are covered under a co-employment agreement with Insperity Services, LLC, a professional

employer organization.

This arrangement allows us to provide employees with comprehensive benefits at a lower cost than we could provide.

Our AIM subsidiary has a collective bargaining

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2027 and covers the majority of AIM’s 125 personnel.

We are required to make a monthly contribution to Union’s United Welfare

Fund and the United Services Worker’s Security Fund, the sole pension benefit for covered employees.

We are not obligated to provide

any future defined benefits.

Additionally, the collective bargaining agreement contains a “no-strike” clause, and a “no-lock-out”

We believe we maintain good relationships with the Union and expect to renew the collective bargaining agreement before it expires.

The agreement requires us to make specified contributions to the Union’s

United Welfare Fund and Unted Service Worker’s Security Fund which provide pension benefits to our employees.

We are not obligated

to provide any additional pension benefits to our employees.

Additionally, the collective bargaining agreement contains a “no-strike”

clause, and a “no-lock-out” clause.

We believe we maintain good relationships with the Union.

We believe that we are in compliance with all

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the operation of our business.

They key regulations impacting our business are further discussed below:

The key regulations impacting our business are further discussed below:

Environmental Regulation and Employee

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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 1. Business