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Item 1. Business

2026-03-31 compared with 2025-03-31 · 486 added, 512 removed, 85 unchanged (92% of the section changed)

Aerostructures, Inc., including its wholly owned subsidiary Welding Metallurgy, Inc.

(“WMI”) and Compac Development

Corporation, a wholly owned subsidiary of WMI (collectively, “CPI Aero”, the “Company”, “us”,

or “we”) is a manufacturer of structural assemblies, integrated systems, and kitted components for the domestic and

international aerospace and defense (“A&D”) markets.

and Compac Development Corporation, a wholly owned subsidiary of WMI (collectively, “CPI Aero”, the “Company”,

“us”, or “we”) manufactures structural assemblies, integrated systems, and kitting services for the domestic

and international aerospace and defense (“A&D”) markets.

Our products are generally used by customers in the production

and refurbishment of fixed wing aircraft, helicopters, electronic warfare (“EW”) systems, intelligence, surveillance,

and reconnaissance (“ISR”) systems, missiles, autonomous systems, and other sophisticated A&D products.

primarily a Tier 1 supplier to Original Equipment Manufacturers (“OEMs”).

We are also a Tier 2 supplier to larger

Tier 1 manufacturers and a prime contractor to the United States (“U.S.”) Department of Defense (“DOD”),

primarily the U.S.

Air Force (“USAF”).

Our products are used by OEMs within both commercial aerospace and national

security markets.

In addition to our assembly operations, we provide manufacturing engineering, program management, supply chain

management, kitting, and maintenance repair and overhaul (“MRO”) services.

and refurbishment of fixed wing aircraft, helicopters, electronic warfare (“EW”) systems, intelligence, surveillance, and

reconnaissance (“ISR”) systems, missiles, autonomous systems, and other sophisticated A&D products.

CPI Aero is a prime

contractor to the U.S.

Department of Defense as well as a Tier 1 subcontractor to some of the largest aerospace and defense contractors

in the world.

CPI Aero is recognized as a leader within the international aerospace market in such areas as aircraft structural assemblies,

military advanced tactical pod structures, engine air inlets, and complex welded products.

CPI Aero’s international customer base

enjoys a unique combination of large-company capabilities, matched with small-company value, responsiveness, and personal customer service.

Our products are used by OEMs within both commercial aerospace and national security markets.

In addition to our assembly operations,

we provide manufacturing engineering, program management, supply chain management, kitting, and maintenance repair and overhaul (“MRO”)

Aero has over 45 years of experience as a contractor.

Our team possesses extensive technical expertise, program and supply chain

management, and integration capabilities.

Our competitive advantage lies in our ability to offer large contractor capabilities

with the flexibility and responsiveness of a small company, while staying competitive in cost and delivering superior quality

Our team possesses extensive technical expertise, program and supply chain management,

and integration capabilities.

Our competitive advantage lies in our ability to offer large contractor capabilities with the flexibility

and responsiveness of a small company, while staying competitive in cost and delivering superior quality products.

maintain a website located at www.cpiaero.com .

Our corporate filings, including our Annual Reports on Form 10-K, our Quarterly

Reports on Form 10-Q, our Current Reports on Form 8-K, our proxy statements and reports filed by our officers and directors under

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any amendments to those

filings, are available, free of charge, on our website as soon as reasonably practicable after we electronically file such material

with the SEC.

The contents of our website are not incorporated in or otherwise to be regarded as a part of this Annual Report

and started as a technical consulting firm on January 11, 1980, within a few years, Composite Products International Inc.

was manufacturing aircraft structural components for U.S.

military aircraft under contract to the U.S.

1980s, CPI was also providing structural components for civil aircraft in the commercial market.

the 1990s, CPI became a publicly traded company and changed its name to CPI Aerostructures, Inc.

(“CPI Aero”).

Company continued to grow, both in size and in its business.

Government contracts served as the mainstay of CPI Aero’s

business, and the Company continued to grow its presence in the commercial market as well.

Commitment to customer satisfaction

and pride in a job well done propelled CPI Aero to the forefront as a reputable and hardworking supplier to OEMs.

September 5, 2000, CPI Aero shares were listed on the American Stock Exchange (now known as NYSE American).

We also started to

focus on diversifying our business model to pursue more commercial contracts.

In 2007, the Company won three major contracts and

experienced great growth and expansion.

2018, CPI Aero acquired Welding Metallurgy Inc.

This allowed for a small but strategically important amount of vertical integration

in complex fusion welding and large diameter tube bending capability.

The acquisition included Miller Stuart and Compac Development

Corporation, two other business lines that added fabrication of electrical cables, harnesses and enclosures to the Company’s

capabilities.

CPI Aero continues to engage in traditional high quality structural assembly manufacturing while incorporating the latest in technology

to improve quality and streamline production.

Our success is rooted in our core company values, the dedication and skill of our

employees, and our commitment to providing our customers the full-service solution they require.

offer design, engineering, manufacture, build, MRO services, and supply chain and kitting services capabilities to the A&D

industry as follows:

Reports on Form 10-Q, our Current Reports on Form 8-K, our proxy statements and reports filed by our officers and directors under Section

16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any amendments to those filings, are available,

free of charge, on our website as soon as reasonably practicable after we electronically file such material with the SEC.

of our website are not incorporated in or otherwise to be regarded as a part of this Annual Report on

Aerostructures, Inc.

was founded in 1980 as a technical consulting firm under the name Composite Products International Inc.

Within several

years, the Company expanded its activities to include the manufacture of aircraft structural assemblies for U.S.

military aircraft under

contracts with the U.S.

By the late 1980s, the Company had broadened its operations to include the manufacture of aerostructures

for commercial aircraft.

During the 1990s, the Company became publicly traded and changed its name to CPI Aerostructures, Inc.

contracts continued to represent a significant portion of the Company’s business, while the Company also increased its participation

in the commercial aerospace market and expanded its relationships with original equipment manufacturers.

On September 5, 2000, the Company’s

common stock was listed on the American Stock Exchange (now known as NYSE American).

During the following decade, the Company expanded

its operations through additional aerospace program awards and by broadening the range of complex, mixed-commodity assemblies it manufactures.

In 2018, CPI Aero acquired WMI, which expanded the Company’s manufacturing capabilities to include complex fusion welding and large-diameter

tube bending.

The acquisition also included Miller Stuart and Compac Development Corporation, which added capabilities in the fabrication

of electrical cables, harnesses and enclosures.

CPI Aero currently manufactures structural assemblies, integrated systems and provides

repair/overhaul and kitting services for customers in the aerospace and defense industry and continues to expand its manufacturing capabilities

in support of its aerospace and defense programs.

Aero provides a range of manufacturing and related services in support of aerospace and defense programs.

These services include program

management, assembly integration, manufacturing engineering, tool design and fabrication, subcontracting, logistics, data management,

configuration control, final assembly and test, quality assurance, product support, and maintenance, repair and overhaul.

are described in the following categories:

● Aerostructures:

New Production and Repair/Overhaul of Fielded Wing Structures and other Control

Surfaces, Rudder Island, Engine Inlets/Nacelles, Engine Exhaust Manifolds, Aircraft Doors

and Windows, Aircraft Steps and Racks, and other Aircraft Secondary Structures

New Production and Repair/Overhaul of Fielded Wing Structures and other Control Surfaces, Rudder Island/Drag Chute Canisters, Engine

Inlets/Nacelles, Engine Exhaust Manifolds, Aircraft Doors and Windows, Aircraft Steps and Racks, and other Aircraft Secondary Structures

● Aerosystems:

Airborne Pod Structures and Integration of Internal Systems, Radar Housing Structures,

Panel Assemblies, Mechanical Door Locking Systems, and Canopy Lifting Systems

Airborne Pod Structures and Integration of Internal Systems, Radar Housing Structures and Integrated Radar Housing Rack Systems

● Small-to-Large

Diameter Tube Bending:

Complex Ducts and Tubes in Steel, Aluminum, Titanium,

and Nickel Alloys

Complex Ducts and Tubes in Steel, Aluminum, Titanium, and Nickel Alloys, from ¼” to 5” diameter

via fully automated NC Tube bending equipment

Specialty Welding:

Fusion Welded Fluid Tanks and Resistance Welding (Spot and

Seam) of complex metallic assemblies

Fusion Welded Fluid Tanks, Aerial Refueling Probes, Plenums, Tubes and Ducts and Resistance Welding (Spot and Seam)

of fairings and complex metallic assemblies

Cables, Harness, and Enclosures:

Wire Harnesses, Power Control Systems, Fuel

Management Systems, Power Distribution Systems, Fully Integrated Electrical Control Systems,

and RF enclosures

Wire Harnesses, Power Control Systems, Fuel Management Systems, Power Distribution Systems, Fully Integrated

Electrical Control Systems, and RF enclosures

Services and Capabilities

a build-to-print structural assemblies manufacturer, CPI Aero’s engineering focus is on executing customer contracts through

product realization, and to support collaborative design development using design for manufacturing and assembly (“DFMA”),

geometric dimensioning & tolerancing (“GD&T”), and tooling concept support.

CPI Aero has a deep well of experience

on various types of detail part manufacturing that allows us to provide detailed design for manufacturing input during the design

refinement process.

have significant experience working in a full model-based definition environment, both CATIA and NX, due to our long sustainment

support on older airframes.

a build-to-print structural assemblies manufacturer, CPI Aero’s engineering focus is on executing customer contracts through product

realization, and to support collaborative design development using design for manufacturing and assembly (“DFMA”), geometric

dimensioning & tolerancing (“GD&T”), and tooling concept support.

CPI Aero has experience with various types of detail

part manufacturing that allows us to provide detailed design for manufacturing input during the design refinement process.

have significant experience working in a full model-based definition environment, both CATIA and NX, due to our long sustainment support

on older airframes.

CPI Aero also possesses the capability to work with traditional blueprints, mylars and loft.

has executed several projects where older engineering data sets were “rehabilitated” to fully model-based datasets

per customers’ requests.

The Company has executed

several projects where older engineering data sets were “rehabilitated” to fully model-based datasets per customers’

Aero is capable and has experience in designing many types of assembly type tools up to and including large floor mounted, articulated

tooling at high levels of precision.

We are also capable of designing various types of tooling that can be 3D printed for rapid

Understanding our customers’ product performance needs and combining product GD&T layout and final tooling

definitions and requirements helps us maximize product realization success.

CPI Aero’s engineering team is dedicated to providing our customers an experience where our activities are an extension

of their business and complement their engineering goals.

Aero is committed to achieving revenue, gross profit margin, and earnings growth through the successful implementation of our

business development strategy.

CPI Aero’s future strategic direction is tied to aerostructures, aerosystems, supply chain,

and kitting services, and a deeper market penetration of formerly acquired businesses in welding, tube bending, wire harnesses,

and electronics.

To accomplish this strategy, we are focused on executing on our current customer programs while pursuing new

aerospace build-to-print opportunities - in both new production and MRO statements of work.

believe that there has been a shift in the market for more build-to-print contracts by OEMs versus the past trend of design and

build contracts.

This trend fits in well with CPI Aero’s strengths.

In addition, we expect to identify and close contracts

for which we can provide more value added content to our customer (like integrating sub-assemblies into higher level Aerostructures

and Aerosystems statements of work) and we intend to pursue statements of work that require proportionately higher CPI Aero value

added content.

tenet of the CPI Aero business development strategy is portfolio reshaping of our existing business by identifying and closing

long-term agreements or multi-year contracts, which provides an opportunity to firm-up supplier agreements and secure supplier

We are also capable of designing various types of tooling that can be 3D printed for rapid response.

Understanding customers’ product performance requirements and incorporating product GD&T layouts and final tooling definitions

and requirements supports product realization.

Aero’s engineering team supports customer programs through engineering and manufacturing activities associated with the production

and assembly of aerostructures and aerosystems.

Aero’s business development strategy focuses on supporting revenue and earnings growth through the expansion of its aerospace and

defense manufacturing programs.

CPI Aero’s future strategic direction is tied to aerostructures, aerosystems, supply chain, and

kitting services, and a deeper market penetration of formerly acquired businesses in welding, tube bending, wire harnesses, and electronics.

To accomplish this strategy, we are focused on executing on our current customer programs while pursuing new aerospace build-to-print

opportunities - in both new production and MRO statements of work.

believe that there has been a shift in the market for more build-to-print contracts by OEMs versus the past trend of design and build

This trend aligns with CPI Aero’s build-to-print manufacturing capabilities.

In addition, we expect to identify and

close contracts for which the Company can provide additional manufacturing and integration services to customers (such as integrating

sub-assemblies into higher level aerostructures and aerosystems statements of work) and we intend to pursue statements of work that require

proportionately higher CPI Aero manufacturing content.

tenet of the CPI Aero business development strategy is portfolio reshaping of our existing business by identifying and closing long-term

agreements or multi-year contracts, which provides an opportunity to firm-up supplier agreements and secure supplier capacity.

final element of CPI Aero’s business development strategy is to build upon the Company’s existing customer relationships

and to develop relationships with new customers.

We intend to increase customer engagements by deploying our business development

personnel to solidify existing customer relationships which have been established by performance excellence, transparency and

trust over many years and multiple programs.

We have also added additional resources to our business development function to cultivate

new relationships with new customers.

will make sure each customer has the best possible buying experience, by ensuring we are a best value partner through the delivery

of high quality products delivered on time.

The CPI Aero team will always work in a collaborative way to meet customers’

needs and solve their problems.

have positioned the Company to take advantage of opportunities in the military aerospace market to a broad customer base, thereby

reducing the impact of direct government contracting limitations.

Our success as a subcontractor to defense prime contractors

has provided us with opportunities to also act as a subcontractor to prime contractors in the production of commercial aircraft

time, our Company has expanded in both capabilities and size, as evidenced by our growth in our operational, global supply chain

management, program management, and engineering capabilities, as well as the growth in our manufacturing shop floor size and equipment

These expansions have provided us the ability to supply larger and more complex Aerostructures and Aerosystems products

in support of our government-based programs as well as to pursue opportunities within the commercial and business jet markets.

Our capabilities have also allowed us to obtain MRO, kitting, tube bending, welding, and electronics related contracts.

We intend to increase customer engagements by deploying our business development personnel

to solidify existing customer relationships which have developed over many years and multiple programs.

We have also added additional

resources to our business development function to cultivate new relationships with new customers.

Company seeks to support customer programs through the delivery of aerostructures and aerosystems in accordance with customer specifications

and program schedules.

Aero participates in the military aerospace market and serves a broad customer base, including defense prime contractors.

The Company’s

role as a subcontractor to defense prime contractors has also provided opportunities to act as a subcontractor in the production of commercial

aircraft structures.

time, our Company has expanded its capabilities and operations, including its operational, global supply chain management, program management,

and engineering capabilities, as well as its manufacturing facilities and equipment base.

These developments have supported the Company’s

ability to supply larger and more complex aerostructures and aerosystems products in support of government-related programs and to pursue

opportunities within the commercial and business jet markets.

The Company’s capabilities have also supported contracts related

to MRO, kitting, tube bending, welding, and electronics.

face competition in our role as both a prime contractor to the U.S.

Government and as a Tier 1 or Tier 2 subcontractor to military

and commercial aircraft manufacturers.

With respect to Aerostructures products, we often compete against much larger Tier 1 suppliers,

such as Spirit Aerosystems, Kaman Aerospace, GKN Aerospace, Ducommun, and LMI Aerospace.

We believe that we can compete effectively

with these larger companies by delivering products with the same level of quality and performance at a better value for our customer.

With respect to Aerosystems products, such as our portfolio of EW and ISR integrated pod structures, we find more limited competition

Government and as a Tier 1 or Tier 2 subcontractor to military and

commercial aircraft manufacturers.

With respect to aerostructures products, we often compete against much larger Tier 1 suppliers, such

as Spirit Aerosystems, Kaman Aerospace, GKN Aerospace, Ducommun, and LMI Aerospace.

We compete with these larger companies by delivering

products with comparable levels of quality and performance while maintaining competitive pricing for our customers.

respect to aerosystems products, such as our portfolio of EW and ISR integrated pod structures, we generally encounter fewer competitors

and are not aware of competition from any of the aerostructures companies mentioned above.

In these cases, we typically compete

with the internal manufacturing arm of our customers.

We believe our unique skills related to integrated pod structures combined

with a very efficient and generally lower cost structure create a competitive advantage for bidding on Aerosystems contracts.

In these cases, we typically compete with

the internal manufacturing arm of our customers.

Our experience related to integrated pod structures, combined with our cost structure,

supports our ability to compete for aerosystems contracts.

certain unrestricted contracts for the U.S.

1 unchanged sentence

Grumman, Lockheed Martin, and Boeing.

All of these competitors possess significantly larger infrastructures, greater resources

and the capabilities to respond to much larger contracts.

We believe that our competitive advantage lies in our ability to offer

large contractor capabilities with the flexibility and responsiveness of a small company, while staying competitive in cost and

delivering superior quality products.

While larger prime contractors compete for significant modification awards, they generally

do not compete for awards in smaller modifications, spares and replacement parts, even for aircraft for which they are the original

manufacturer.

In certain instances, the large prime contractors often subcontract much of the work they win to their Tier 1 suppliers

so we also may act as a subcontractor to them in these situations.

Furthermore, in some cases these prime contractors are not

permitted to bid, for example when the U.S.

Government designates a contract as a Small Business Set-Aside.

In these restricted

contracts for the U.S.

Government, CPI Aero typically competes against numerous small business competitors.

We believe we compete

effectively against the smaller competitors because of our 45 years of experience and expertise in responding to requests for

proposals for government contracts

All of these competitors possess significantly larger infrastructures, greater resources and the

capabilities to respond to much larger contracts.

Our ability to combine manufacturing capabilities with the operational flexibility

and responsiveness of a smaller company supports our ability to compete for certain contracts.

larger prime contractors compete for significant modification awards, they generally do not compete for awards in smaller modifications,

spares and replacement parts, even for aircraft for which they are the original manufacturer.

In certain instances, the large prime contractors

often subcontract much of the work they win to their Tier 1 suppliers, and we may act as a subcontractor to them in these situations.

Furthermore, in some cases these prime contractors are not permitted to bid, for example when the U.S.

Government designates a contract

as a Small Business Set-Aside.

In these restricted contracts for the U.S.

Government, CPI Aero typically competes against numerous small

business competitors.

We compete for these contracts based on our experience and expertise in responding to requests for proposals for

government contracts.

Approximately

$5.1 million and $6.0 million of our revenue for the years ended December 31, 2024 and 2023, respectively, were from customers

outside the U.S.

All other revenue for the years ended December 31, 2024 and 2023 has been attributable to customers within the

We have no assets outside the U.S.

have positioned our Company to take advantage of opportunities in the military aerospace market to a broad customer base, which

we believe will reduce the potential impact of industry consolidation or potential defense budget reductions.

Our success as a

subcontractor to defense prime contractors has provided us with opportunities to also act as a subcontractor to prime contractors

in the production of commercial aircraft structures, which we believe will also reduce our exposure to defense industry consolidation,

government spending decisions, and other defense industry risks.

$5.8 million and $5.1 million of our revenue for the years ended December 31, 2025 and 2024, respectively, were from customers outside

All other revenue for the years ended December 31, 2025 and 2024 has been attributable to customers within the U.S.

no assets outside the U.S.

serve a broad customer base in the military aerospace market, which we believe may reduce the potential impact of industry consolidation

or potential defense budget reductions.

Our role as a subcontractor to defense prime contractors has also provided opportunities to act

as a subcontractor in the production of commercial aircraft structures, which we believe may also reduce our exposure to defense industry

consolidation, government spending decisions, and other defense industry risks.

OEM customers in the defense sector include leading prime defense contractors such as:

Martin Corporation - we provide products used in the production of Lockheed Martin

Corporation’s (“Lockheed Martin”) F-35 Joint Strike Fighter and an

international variant of the F-16 Fighting Falcon.

We also provide structural assemblies

to Sikorsky, a Lockheed Martin company (“Sikorsky”), for many of their military

helicopter platforms including the UH-60 BLACK HAWK©, MH-60 Seahawk, CH-53E and

CH-53K King Stallion, and a special purpose helicopter.

Corporation, formerly Raytheon Technologies – we provide products to multiple

business divisions of RTX Corporation (“Raytheon”):

Raytheon (Next Generation

Jammer – Mid-Band Pod, Advanced Tactical Pods, Intelligence, Surveillance and Airborne

Reconnaissance Pods, Missile Wings and Components, and Radar Racks) and Collins Aerospace

(RF Enclosures).

Boeing Company - we provide critical wing structure for The Boeing Company’s

(“Boeing”) A-10 re-wing program and welded structures for the CH-47 Chinook

Grumman Corporation – we provide structural components and kits for the

Northrop Grumman Corporation (“NGC”) E-2D Advanced Hawkeye, various integrated

radar and laser pod structures, welded tubes, and welded fluid tanks for a classified

and 81% of our revenue in 2024 and 2023, respectively, was generated by subcontracts with defense prime contractors.

Lockheed Martin Corporation - we provide products used in the production of Lockheed Martin Corporation’s (“Lockheed Martin”)

F-16 Fighting Falcon.

We also provide structural assemblies to Sikorsky, a Lockheed Martin company (“Sikorsky”), for many

of their military helicopter platforms including the UH-60 BLACK HAWK©, MH-60 Seahawk, CH-53E and CH-53K King Stallion, and a special

purpose helicopter.

Corporation, formerly Raytheon Technologies – we provide products to multiple business divisions of RTX Corporation (“Raytheon”):

Raytheon (Next Generation Jammer – Mid-Band Pod, Advanced Tactical Pods, Intelligence, Surveillance and Airborne Reconnaissance

Pods, Missile Wings, and Radar Racks) and Collins Aerospace (RF Enclosures).

Grumman Corporation – we provide structural assemblies and kitting services for the Northrop Grumman Corporation (“NGC”)

E-2D Advanced Hawkeye, various integrated radar and laser pod structures, welded tubes and aerial refueling probes, and welded fluid

tanks for a classified program.

of our revenue in 2025 and 2024, was generated by subcontracts with defense prime contractors.

OEM customers in the civil aviation market include:

Executive Jets – we provide engine inlet assemblies for Embraer S.A.’s

(“Embraer”) Phenom 300 business jet and recently were awarded a contract

to manufacture engine inlets for the Phenom 100 business jet.

Executive Jets – we provide engine inlet assemblies for Embraer S.A.’s (“Embraer”) Phenom 300 business jet

and were subsequently awarded a contract to manufacture engine inlets for the Phenom 100 business jet.

and 6% of our revenue in 2025 and 2024, respectively, was generated by commercial contract sales.

Aero also is a prime contractor to the DOD, primarily through contracts directly with the USAF and the Defense Logistics Agency

(“DLA”), providing supply chain management, assembly & integration, and kitting services for the F-16 and T-38

14% and 14 % of our revenue in 2024 and 2023, respectively, were generated by direct government sales.

Aero also is a prime contractor to the DOD, primarily through contracts directly with the USAF and the Defense Logistics Agency (“DLA”),

providing supply chain management, assembly & integration, and kitting services for the T-38 program.

11% and 14% of our revenue

in 2025 and 2024, respectively, were generated by direct government sales.

most significant contracts are described below:

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The NGC E-2D Advanced Hawkeye is an all-weather, carrier-based tactical Airborne Early Warning aircraft.

The twin turboprop aircraft was designed and developed in the 1950s by the Grumman Aircraft Company for the U.S.

Navy aircraft has been progressively updated with the latest variant, the E-2D, first flying in 2007.

In 2008, we received an

initial $7.9 million order from NGC to provide structural kits used in the production of Outer Wing Panels (“OWP”)

We initially valued the long-term agreement at approximately $98 million over an eight-year period, with the potential

to be in excess of $195 million over the life of the aircraft program.

In February of 2019, we announced a new multi-year award

valued at up to approximately $47.5 million.

In June 2020, we announced that we had received firm orders valued in excess of $43

million and $5 million in long-lead funding in anticipation of purchase orders for OWP structural components and kits.

we received additional orders valued at approximately $11 million.

Since 2008, the cumulative orders we have received on this

program through December 31, 2024 exceed $210 million.

We anticipate shipping against these orders into 2025.

February 2020, the Company’s subsidiary WMI received approximately $4 million in purchase orders from NGC to produce numerous

welded structures and tubes for the E-2D Advanced Hawkeye.

Under the terms of the purchase orders, WMI manufactured more than

140 different items in support of the production of at least 25 E-2D aircraft.

CPI received follow-on orders for additional quantities

of welded products in 2024 totaling $2.8 million and anticipates additional orders in 2025.

twin turboprop aircraft was designed and developed in the 1950s by the Grumman Aircraft Company for the U.S.

Navy aircraft

has been progressively updated with the latest variant, the E-2D, first flying in 2007.

In 2008, we received an initial $7.9 million

order from NGC to provide structural kits used in the production of Outer Wing Panels (“OWP”) of the E-2D.

We initially valued

the long-term agreement at approximately $98 million over an eight-year period, with the potential to be in excess of $195 million over

the life of the aircraft program.

In February of 2019, we announced a new multi-year award valued at up to approximately $47.5 million.

In June 2020, we announced that we had received firm orders valued in excess of $43 million and $5 million in long-lead funding in anticipation

of purchase orders for OWP structural kits.

In 2021, we received additional orders valued at approximately $11 million.

Since 2008, the

cumulative orders we have received on this program through December 31, 2025 exceed $210 million.

We anticipate continuing to ship against

these orders into 2026.

February 2020, the Company’s subsidiary WMI received approximately $4 million in purchase orders from NGC to produce numerous welded

structures and tubes for the E-2D Advanced Hawkeye.

Under the terms of the purchase orders, WMI manufactured more than 140 different

items in support of the production of at least 25 E-2D aircraft.

CPI received follow-on orders for additional quantities of welded products

in 2024 and 2025 totaling $2.2 million with deliveries out through 2028.

Next Generation Jammer – Mid-Band Pod (“NGJ-MB”):

The Raytheon NGJ-MB pod is an external jamming pod

that will disrupt and degrade enemy aircraft and ground radar and communication systems, and will replace the ALQ-99 system on

Navy’s EA-6B Growler carrier-based electronic warfare aircraft.

Navy plans to install these pods on 139

EA-18G Growlers during the production phase.

The Raytheon NGJ-MB pod is an external jamming pod that will

disrupt and degrade enemy aircraft and ground radar and communication systems, and will replace the ALQ-99 system on the U.S.

EA-6B Growler carrier-based electronic warfare aircraft.

Navy plans to install these pods on 139 EA-18G Growlers during the

production phase.

There are two pods per aircraft.

There are also 11 EA-18Gs operated by the Royal

Australian Air Force.

Raytheon received a $1 billion sole source contract from the U.S.

Navy in April 2016, and CPI Aero has a

contract with Raytheon to assemble the pod structural housing and air management system (“AMS”) and integrate customer

furnished equipment.

In 2019, Raytheon authorized CPI Aero to begin production of pod structures and AMS components for the System

Demonstration and Test Article (“SDTA”) phase of the NGJ-MB program.

All SDTA pods and AMS components orders received

were valued in excess of $60 million and completed delivery as of December 31, 2022.

There are also 11 EA-18Gs operated by the Royal Australian Air Force.

Raytheon received

an approximate $1.0 billion sole source contract from the U.S.

Navy in April 2016, and CPI Aero has a contract with Raytheon to assemble

the pod structural housing and air management system (“AMS”) and integrate customer furnished equipment.

In 2019, Raytheon

authorized CPI Aero to begin production of pod structures and AMS assemblies for the System Demonstration and Test Article (“SDTA”)

phase of the NGJ-MB program.

All SDTA pods and AMS assemblies’ orders received were valued in excess of $60.0 million and completed

delivery as of December 31, 2022.

November 16, 2021 the Company announced it was authorized by Raytheon to start the production phase of the program.

was awarded low rate production (“LRIP”) I and II orders valued at approximately $18.5 million.

LRIP III, for which

the Company was awarded an order of approximately $14.0 million in October 2022, and later definitized at $32.5 million.

2023, Raytheon issued a Memorandum for Record for Lot4 with an anticipated Program Value of $32 million and an initial funding

limit of $16 million.

In December 2024, Lot 4 was fully funded at $33.4M.

We believe that the total value of the NGJ-MB program

through production will be in excess of $254 million through 2030.

Thunderbolt II “Warthog”:

The Boeing A-10 Thunderbolt II, also known as the Warthog, is a twin-engine aircraft

that provides close-air support of ground forces and employs a wide variety of conventional munitions including general-purpose

This simple, effective and survivable single-seat aircraft can be used against all ground targets, including tanks and

other armored vehicles.

On August 21, 2019, Boeing announced that it had received an Indefinite Delivery/Indefinite Quantity (“IDIQ”)

contract award from the USAF with a maximum contract value of $999 million to manage the production of up to 112 new wing sets

and spares kits for A-10 aircraft, and the USAF ordered 27 wing sets from Boeing immediately at contract award.

In 2019, CPI Aero

announced the receipt of an IDIQ contract with a maximum ceiling value of $48 million from Boeing for structural assemblies for

Under the terms of the IDIQ contract, CPI Aero will manufacture major structural subassemblies of the A-10 aircraft’s

The Company also announced that it had received initial purchase orders under the IDIQ contract valued at approximately

$6 million for the production of four shipsets of assemblies and associated program start-up costs.

In May 2020, CPI Aero announced

the receipt of additional purchase orders totaling approximately $14 million from Boeing.

In March of 2022, CPI Aero announced

the receipt of additional purchase orders totaling approximately $3.2 million.

Including additional orders received in 2023, the

total purchase orders received as of December 31, 2024 aggregated $23.8 million.

CPI will finish deliveries on this contract in

Lightning II:

The Lockheed Martin F-35 Lightning II is a family of single-seat, single-engine, all-weather stealth multirole

fighter aircraft that provides unmatched multi-role capability, survivability, and connectivity with data sharing capabilities

essential for joint all-domain operations.

Current DOD plans call for acquiring a total of 2,456 F-35s.

allies are expected

to purchase hundreds of additional F-35s, with eight nations participating as cost-sharing partners in the program with the United

States, and six other nations allied with the U.S.

purchasing the F-35 via foreign military sales agreements with the DOD.

2015, CPI Aero was awarded a multi-year contract to supply four different lock assemblies for the arresting gear door on the F-35C

Carrier Take Off and Landing variant.

CPI Aero made its first delivery under that contract in May 2017.

In November 2017, CPI

Aero was awarded an additional $15.8 million multi-year contract to manufacture canopy activation drive shaft assemblies for the

F-35A, F-35B, and F-35C variants.

In 2018, the Company received a new long-term agreement valued at approximately $8 million for

lock assemblies for which deliveries were completed in January 2025.

The Company was awarded

low rate production (“LRIP”) I and II orders valued at approximately $18.5 million.

LRIP III, for which the Company was awarded

an order of approximately $14.0 million in October 2022, and later definitized at $32.5 million.

In November 2023, Raytheon issued a

Memorandum for Record for Lot 4 with an anticipated Program Value of $32 million and an initial funding limit of $16.0 million.

2024, Lot 4 was fully funded at $33.4 million.

In September of 2025, Lot 5 was awarded with ceiling price of $42.3 million.

estimates that the total value of the NGJ-MB program through production will be in excess of $254.4 million through 2030.

“BLACK HAWK”:

The Sikorsky UH-60 BLACK HAWK helicopter is the leader in multi-mission rotary wing aircraft.

Among the mission configurations it serves are troop transport, medical evacuation, electronic warfare, attack, assault support,

and special operations.

More than 4,000 BLACK HAWK helicopters are in use today, operating in 29 countries.

CPI Aero manufactures

several different structural assemblies, including welded structure for the BLACK HAWK.

The majority of CPI Aero’s contracts

for the BLACK HAWK are as a Tier 1 supplier to Sikorsky.

The Company also is a Tier 2 supplier to GKN Aerospace and Ducommun for

products ultimately used on the BLACK HAWK.

In 2017, CPI Aero received an approximately $21 million long-term agreement through

2022 for the production of fuel panel assemblies, work it has performed for Sikorsky since 2010.

Also in 2017, the Company received

an $8 million long-term agreement through 2022 to manufacture machine gunner window assemblies for the BLACK HAWK, continuing

work it has performed since 2010.

A third five-year long-term agreement was awarded in January 2022, also for gunner window assemblies,

estimated at $13.6 million with a period of performance from 2023-2027.

Also, since October 2018, CPI Aero has received multiple

purchase orders totaling $22 million for hover infrared suppression system (“HIRSS”) module assemblies for use as

spares on older variants of the BLACK HAWK.

The HIRSS is a defensive countermeasures system that is integral to the survival of

the BLACK HAWK by reducing the opportunity for an infrared-seeking threat system to acquire, lock onto, track, and destroy the

Finally, in May 2021, the Company announced receiving a multi-year contract valued at up to $17.2 million for the repair

and overhaul of outboard stabilator assemblies in support of the Sikorsky MH-60 SEAHAWK .

The Sikorsky UH-60 BLACK HAWK helicopter is a multi-mission rotary wing aircraft used by the U.S.

and other military operators.

Among the mission configurations it serves are troop transport, medical evacuation, electronic warfare,

attack, assault support, and special operations.

More than 4,000 BLACK HAWK helicopters are in use today.

CPI Aero manufactures several

different structural assemblies, including welded structure for the BLACK HAWK.

The majority of CPI Aero’s contracts for the BLACK

HAWK are as a Tier 1 supplier to Sikorsky.

The Company also is a Tier 2 supplier to GKN Aerospace and Ducommun for products ultimately

used on the BLACK HAWK.

In 2017, CPI Aero received an approximate $21 million long-term agreement through 2022 for the production of

fuel panel assemblies, work it has performed for Sikorsky since 2010.

Also in 2017, the Company received an $8 million long-term agreement

through 2022 to manufacture machine gunner window assemblies for the BLACK HAWK, continuing work it has performed since 2010.

five-year long-term agreement was awarded in January 2022, also for gunner window assemblies, estimated at $13.6 million with a period

of performance from 2023-2027.

In October 2024, CPI Aero received multiple purchase orders totaling $2.3 million for hover infrared suppression

system (“HIRSS”) module assemblies for use as spares on older variants of the BLACK HAWK.

The HIRSS is a defensive countermeasures

system that is integral to the survival of the BLACK HAWK by reducing the opportunity for an infrared-seeking threat system to acquire,

lock onto, track, and destroy the aircraft.

Finally, in May 2021, the Company announced receiving a multi-year contract valued at up

to $17.2 million for the repair and overhaul of outboard stabilator assemblies in support of the Sikorsky MH-60 SEAHAWK with deliveries

through 2027.

In late 2024, Sikorsky kicked off proposal efforts for the next SEAHAWK PBL commencing in 2027.

Through December 31, 2024, CPI

received orders totaling $6.5 million.

In 2025, CPI received orders

totaling $4.1 million.

Fighting Falcon:

The Lockheed Martin F-16 is the world’s most successful, combat-proven multirole fighter.

The Lockheed Martin F-16 multirole fighter aircraft widely used by military forces around the world.

Approximately

3,000 operational F-16s are in service today in 25 countries.

The F-16V is a new variant, sold exclusively to international air

forces and is the most technologically advanced fourth generation fighter in the world.

In 2019, the Company announced it had

been awarded a multi-year contract by Lockheed Martin to manufacture Rudder Island and Drag Chute Canister (“RI/DCC”)

assemblies for the F-16V.

The RI/DCC is a large structural sub-assembly that is installed on the tail section of the aircraft.

The F-16V is a newer variant sold to international air forces.

the Company announced it had been awarded a multi-year contract by Lockheed Martin to manufacture Rudder Island and Drag Chute Canister

(“RI/DCC”) assemblies for the F-16V.

The RI/DCC is a large structural sub-assembly that is installed on the tail section

of the aircraft.

CPI Aero deliveries began in 2021.

In June 2020, the Company announced that it had been awarded an order from Lockheed Martin

as part of the previously announced multi-year contract to manufacture RI/DCC assemblies for new production F-16 Block 70/72 aircraft,

In June 2020, the Company announced that it had been awarded an order from Lockheed

Martin as part of the previously announced multi-year contract to manufacture RI/DCC assemblies for new production F-16 Block 70/72 aircraft,

in March 2021 the Company announced that it had received an additional order for these assemblies for $9.2 million and in November 2022,

the Company announced another follow-on order for these assemblies for $4 million.

On August 28, 2023 CPI announced the

receipt of a 2nd Multiyear long-term agreement with not-to-exceed funding of $34.4 million.

The total value of the RI/DCC program,

including both multi-year contracts is approximately $60 million.

In 2024, Lockheed initiated proposal efforts for the next pricing

period, the anticipated LTA3.

On August 28, 2023 CPI announced the receipt of a

2nd Multiyear long-term agreement with not-to-exceed funding of $34.4 million.

The total value of the RI/DCC program, including both

multi-year contracts is approximately $60 million.

In 2024, Lockheed initiated proposal efforts for the next pricing period, the anticipated

This order will see deliveries out in 2029 and 2030 worth approximately $15 million.

King Stallion:

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Marine Corps.

We manufacture composite

electronics racks as a Tier 2 supplier to Spirit AeroSystems, Inc., the manufacturer of the CH-53K cockpit and cabin.

December 31, 2024, we had received orders valued at more than $2.8 million from Spirit AeroSystems, Inc.

addition, the Company also manufactures welded titanium and aluminum tubes for the CH-53K as a Tier 1 supplier to Sikorsky.

August 2023, CPI received a Long-term Agreement with a ceiling price of $17.4 million and a funding limit of $7.3 million.

tubes will be required for the multi-year on this program.

This statement of work includes CPI Aero intellectual property.

We manufacture build-to-specification

titanium and aluminum welded tubes, The design of these tubes is proprietary to CPI Aero.

In 2023, CPI received an undefinitized ceiling

price order with a not-to-exceed of $17.4M.

Through December 31, 2025, we had received orders totaling $9.4 million.

Pod Structure:

In 2019, the Company received an initial purchase order from Raytheon to manufacture pod structures for

an undisclosed application.

In 2019, the Company received an initial purchase order from Raytheon to manufacture pod structures for an

undisclosed application.

The value of the order was approximately $2.3 million for manufacturing engineering services, development

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The undisclosed pod structure is currently under development.

2021, the Company announced that Raytheon awarded the Company an approximately $6.1 million contract modification that changes

the scope of work the Company would perform and increases the quantity of pods to be produced.

The program value as of December

31, 2024 was $9.5 million for deliveries into 2025.

CPI Aero has been awarded the follow-on to this development statement of work.

In 2018, the Company started production of a welded tank for NGC for an undisclosed application on an undisclosed

2021, the Company announced that Raytheon awarded the Company an approximately $6.1 million contract modification that changes the

scope of work the Company would perform and increases the quantity of pods to be produced.

In December 2024 CPI received the initial

funding for the follow-on order with additional funding received in June 2025.

This program adds to the growing list of Airborne Pod

Programs in CPI’s aerosystems portfolio.

The SOW includes the design and development of assembly tools and fixturing,

procurement of complex monolithic machine parts and other mixed-commodity parts, assembly and integration of the complete pod

structure, and required testing.

The total funding received as of December 31, 2025 was $22.7 million with additional funded orders

anticipated in 2026.

In 2018, the Company started production of a welded tank for NGC for an undisclosed application on an undisclosed platform.

The total value of orders received as of December 31, 2025 is $3.9 million.

Anticipated spares orders are expected to

continue in 2025.

In late 2021, the Company received an initial purchase order from Raytheon to manufacture radar rack structures

for the B-52 Radar Modernization Program.

The value of the order was approximately $4.0 million for manufacturing engineering

services, development of assembly tooling, and the production of the initial units.

The non-recurring and tooling phase of the

program was completed and the initial 11 racks have been delivered in 2024.

CPI submitted proposals for follow-on lots of racks

and an award is anticipated in 2025.

NGC awarded a new spares order in November 2025 with deliveries

In late 2021, the Company received an initial purchase order from Raytheon to manufacture radar rack structures for

the B-52 Radar Modernization Program.

The value of the order was approximately $4.0 million for manufacturing engineering services, development

of assembly tooling, and the production of the initial units.

The non-recurring and tooling phase of the program was completed and the

initial 11 racks have been delivered in 2024.

CPI submitted proposals for follow-on lots of racks and an award is anticipated in 2026.

Missile Wings:

In March 2025, CPI received an order from Raytheon for wings for an undisclosed hypersonic missile program.

initial contract is worth approximately $3.8 million.

Raytheon also requested proposals for the next two lots of missiles.

Generation Jammer – Low Band Pod:

In August of 2024, the Company received a letter contract from a new customer,

L3Harris Technologies to manufacture pod structures for the Next Generation Low Band Program.

The estimated value of this first

development phase of the program is $12.1 million with initial Purchase Order funding received in fourth quarter of 2024 of $5

million for long lead material, manufacturing engineering services, development of assembly tooling, and the production of the

initial units.

In August of 2024, the Company received a letter contract from a new customer, L3Harris

Technologies to manufacture pod structures for the Next Generation Low Band Program.

The estimated value of this first development phase

of the program is approximately $12.1 million with initial Purchase Order funding received in fourth quarter of 2024 of $5 million for

long lead material, manufacturing engineering services, development of assembly tooling, and the production of the initial units.

balance of funding, $7.1 million, for this development phase of the program is anticipated in 2026.

& TacSAR Reconnaissance Airborne Pods:

After nearly a decade-long hiatus, Raytheon (formerly Collins/UTC) awarded CPI Aero

a contract to build an upgraded reconnaissance pod for sale to foreign air forces known as the Multispectral 110 or MS110 Pod.

represents the next generation of the DB-110 Dual Band Reconnaissance System, which provides day and nighttime wide area, long-range

imagery coverage.

The initial contract was awarded to CPI in 2022 for approximately $7.5 million.

Through June of 2025 an additional $2.0

million was added to the contract.

Also in 2022, CPI was awarded a Developmental program for a Tactical Synthetic Aperture Radar (TacSAR)

variant of the MS-110 Optical based Pod.

The TacSAR Contract was funded at $4.0 million and includes Non-Recurring Engineering, Tooling,

and one prototype pod.

Aircraft – Prime Contracts with U.S.

Pacer Classic III, Phase 2:

For more than 50 years, the NGC T-38 has been the principal supersonic jet trainer used by

The T-38C Pacer Classic III Fuselage Structural Modification Kit Integration program (“PC III”) and the

Talon Repair Inspection and Maintenance (“TRIM”) program are expected to increase the structural service life of the

T-38 beyond 2030.

In 2015, CPI Aero was awarded Phase 2 of PC III and has received purchase orders valued at approximately $2.0

million from the USAF to provide structural modification kits for the PC III aircraft structural modification program.

For more than 50 years, the NGC T-38 has been the principal supersonic jet trainer used by the USAF.

The T-38C Pacer Classic III Fuselage Structural Modification Kit Integration program (“PC III”) and the Talon Repair Inspection

and Maintenance (“TRIM”) program are expected to increase the structural service life of the T-38 beyond 2030.

Aero was awarded Phase 2 of PC III and has received purchase orders valued at approximately $2.0 million from the USAF to provide structural

modification kits for the PC III aircraft structural modification program.

Pacer Classic III, Phase 3 and TRIM:

In July 2019, the Company announced a new $65.7 million IDIQ contract from the USAF

for the final phase of PC III as well as TRIM.

The TRIM program is a separate USAF structural modification effort that will extend

the structural service life of T-38A and T-38 model types, as well as T-38C models that were not modified during PC III.

December 31, 2020, the Company had received orders valued at approximately $15.3 million for the PC III, Phase 3 and TRIM programs,

and in 2021, the Company announced it had received three separate orders for additional requirements valued at approximately $16.2

In July 2019, the Company announced a new $65.7 million IDIQ contract from the USAF for

the final phase of PC III as well as TRIM.

The TRIM program is a separate USAF structural modification effort that will extend the structural

service life of T-38A and T-38 model types, as well as T-38C models that were not modified during PC III.

Through December 31, 2020,

the Company had received orders valued at approximately $15.3 million for the PC III, Phase 3 and TRIM programs, and in 2021, the Company

announced it had received three separate orders for additional requirements valued at approximately $16.2 million.

In 2025, CPI received

orders totaling $12.4 million.

Through December 2025, CPI has received funded orders under this long-term agreement totaling $61.1 million.

Aircraft – Subcontracts with Prime Contractors

The Phenom 300 is a twin-engine, executive jet produced by Brazilian aircraft company Embraer that can carry

between six and ten passengers and a crew of two.

We have been producing engine inlet assemblies for Embraer under a long-term

agreement we entered into in 2012.

In January 2024, we celebrated the delivery of the 800th Shipset of Inlets.

In 2024, we received

funded orders totaling $5.0 million.

The Phenom 100 is a light executive business jet twin-engine, produced by Brazilian aircraft

company Embraer that can carry up to six passengers and a crew of two.

Embraer unveiled the Phenom 100EX, the Company’s latest

evolution from the Phenom 100 series with over 400 aircraft in operation.

Embraer has informed us in December 2024 that we have been

selected to produce the engine inlets for this aircraft.

We anticipate our first deliveries to take place in 2025.

Embraer Phenom 300:

The Phenom 300 is a twin-engine, executive jet produced

by Brazilian aircraft company Embraer that can carry between six and ten passengers and a crew of two.

It is a widely used light business

We have been producing engine inlet assemblies for Embraer under a Life-of-Program agreement we entered into in 2012.

2024, we delivered the 800th shipset of inlets.

In 2025, we received funded orders totaling $2.4 million.

The Phenom 100 is a light executive business jet twin-engine, produced by Brazilian aircraft company Embraer that

can carry up to six passengers and a crew of two.

Embraer unveiled the Phenom 100EX, the Company’s latest evolution from the Phenom

100 series with over 400 aircraft in operation.

Embraer has informed us in December 2024 that we have been selected to produce the engine

inlets for this aircraft.

In early 2025, we received an initial order of $1.4 million for Non-recurring Engineering, Tooling, and Low

rate production of Inlets and incorporated these inlets into our Life-of-Program agreement with this customer.

We anticipate our first

deliveries to take place in 2026.

produce custom assemblies pursuant to long-term contracts and customer purchase orders.

Funded backlog consists of aggregate funded

values under such contracts and purchase orders, excluding the portion previously included in operating revenues pursuant to Accounting

Standards Codification Topic 606 (“ASC 606”).

Unfunded backlog is the estimated amount of future orders under the

expected duration of the program.

Substantially all of our unfunded backlog is subject to termination at will and rescheduling,

without significant penalty.

Funds are often appropriated for programs or contracts on a yearly or quarterly basis, even though

the contract may call for performance that is expected to take a number of years.

Therefore, our funded backlog does not include

the full value of our contracts.

total backlog at December 31, 2024 is $510,271,000.

Funded backlog consists of the aggregate funded

value of remaining performance obligations under such contracts and purchase orders, excluding the portion previously included in operating

revenues pursuant to Accounting Standards Codification Topic 606 (“ASC 606”).

Unfunded backlog is the estimated amount of

future orders under the expected duration of the program.

Substantially all of our unfunded backlog is subject to termination at will

and rescheduling, without significant penalty.

Funds are often appropriated for programs or contracts on a yearly or quarterly basis,

even though the contract may call for performance that is expected to take a number of years.

Therefore, our funded backlog does not

include the full value of our contracts.

is not necessarily indicative of future revenues or the timing of such revenues.

The realization of backlog depends on a number of factors,

including program funding, customer requirements, and the continuation of the underlying programs.

Backlog may also include amounts associated

with options or anticipated orders under existing contracts that are not yet funded or awarded and are subject to change.

total backlog as of December 31, 2025 and 2024 was as follows:

$ 504,522,000

$ 510,271,000

Approximately

96% and 95% of the total amount of our backlog at December 31, 2025 and 2024 was attributable to government contracts.

attributable to government contracts at December 31, 2024 and 2023 was as follows:

Our backlog attributable

to government contracts at December 31, 2025 and 2024 was as follows:

$ 482,597,000

$ 486,518,000

backlog attributable to commercial contracts at December 31, 2025 and 2024 was as follows:

subcontract production of substantially all parts incorporated into our products to third-party manufacturers under firm fixed

price orders.

Our decision to purchase certain components generally is based upon whether the components are available to meet

required specifications at a cost and with a delivery schedule consistent with customer requirements.

From time to time, we are

required to purchase custom made parts from sole suppliers and manufacturers in order to meet specific customer requirements.

subcontract the production of substantially all the detail parts incorporated into our products to third-party manufacturers under firm

fixed-price orders.

Our decision of what to buy from which company is generally based upon whether the detail parts are available to

meet required specifications at a cost and delivery schedule consistent with CPI’s build plan and our customer’s requirements.

From time to time, we are required to purchase custom-made parts from sole suppliers or manufacturers in order to meet specific customer

requirements.

obtain our raw materials from several commercial sources.

Although certain items are only available from limited sources of supply,

we believe that the loss of any single supplier would not have a material adverse effect on our business.

Although certain items are available only from limited sources of supply, we

believe that alternative sources generally are available and that the loss of any single supplier would not have a material adverse effect

on our business.

Environmental

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Occupational Safety and Health Administration,

various state, county, and local agencies acting in cooperation with federal and state authorities.

Among other things, these

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

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

chemicals and substances.

The extensive regulatory framework imposes compliance burdens and risks on us.

Governmental authorities

have the power to enforce compliance with these regulations and to obtain injunctions or impose civil and criminal fines in the

case of violations.

Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) imposes strict, joint and

several liability on the present and former owners and operators of facilities that release hazardous substances into the environment.

The Resource Conservation and Recovery Act of 1976 (“RCRA”) regulates the generation, transportation, treatment, storage,

and disposal of hazardous waste.

In New York State, the handling, storage, and disposal of hazardous substances are governed by

the Environmental Conservation Law, which contains the New York counterparts of CERCLA and RCRA.

In addition, the Occupational

Safety and Health Act, which requires employers to provide a place of employment that is free from recognized and preventable

hazards that are likely to cause serious physical harm to employees, obligates employers to provide notice to employees regarding

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

operations require the use of a limited amount of chemicals and other materials for painting and cleaning, including solvents

and thinners, which are classified under applicable laws as hazardous chemicals and substances.

We follow all federal, state and

local rules and regulations regarding the disposal of these chemicals and associated waste.

We have obtained a permit from the

Town of Islip, New York, Building Division in order to maintain a paint booth containing flammable liquids.

and various state, county, and local agencies acting in cooperation with federal and state authorities.

Among other things, these regulatory

bodies impose restrictions to control air, soil, and water pollution, to protect against occupational exposure to chemicals, including

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

The regulatory framework imposes compliance burdens and risks on us.

Governmental authorities have the power to enforce compliance

with these regulations and to obtain injunctions or impose civil and criminal fines in the case of violations.

Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) imposes strict, joint and several

liability on the present and former owners and operators of facilities that release hazardous substances into the environment.

Conservation and Recovery Act of 1976 (“RCRA”) regulates the generation, transportation, treatment, storage, and disposal

of hazardous waste.

In New York State, the handling, storage, and disposal of hazardous substances are governed by the Environmental

Conservation Law, which contains the New York counterparts of CERCLA and RCRA.

In addition, the Occupational Safety and Health Act, which

requires employers to provide a workplace free from recognized hazards that are likely to cause serious physical harm to employees, obligates

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

operations require the use of a limited amount of chemicals and other materials for painting and cleaning, including solvents and thinners,

which are classified under applicable laws as hazardous chemicals and substances.

We believe that we are in material compliance with

applicable federal, state and local rules and regulations regarding the disposal of these chemicals and associated waste.

We have obtained

a permit from the Town of Islip, New York, Building Division to maintain a paint booth containing flammable liquids.

Aviation Administration Regulation

are subject to regulation by the Federal Aviation Administration (“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.

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.

are subject to regulation by the Federal Aviation Administration (“FAA”) under the provisions of the Federal Aviation Act

of 1958, as amended.

The FAA prescribes standards and licensing requirements for aircraft and aircraft .

We are subject to inspections

by the FAA and may be subjected to fines and other penalties (including orders to cease production) for noncompliance with FAA regulations.

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.

Contract Compliance

government contracts and sub-contracts are subject to the procurement rules and regulations of the U.S.

contract terms are dictated by these rules and regulations.

Specifically, cost-based pricing is determined under the Federal Acquisition

Regulation (“FAR”), which provide guidance on the types of costs that are allowable in establishing prices for goods

and services under U.S.

Many of the contract

terms are dictated by these rules and regulations.

Specifically, cost-based pricing is determined under the Federal Acquisition Regulation

(“FAR”), which provides guidance on the types of costs that are allowable in establishing prices for goods and services under

Government contracts.

For example, costs such as those related to charitable contributions, advertising,

interest expense, and public relations are unallowable, and therefore not recoverable through sales.

During and after the fulfillment

of a government contract, we may be audited in respect of the direct and allocated indirect costs attributed thereto.

may result in adjustments to our contract costs.

For example, costs such as those related to charitable contributions, advertising, interest expense, and public

relations are unallowable, and therefore not recoverable through sales.

During and after the fulfillment of a government contract, we

may be audited in respect of the direct and allocated indirect costs attributed to such contract.

These audits may result in adjustments

to our contract costs.

Additionally, we may be subject to U.S.

Government inquiries and investigations

because of our participation in government procurement.

Any inquiry or investigation can result in fines or limitations on our

ability to continue to bid for government contracts and fulfill existing contracts.

We believe that we are in compliance with

all federal, state, and local laws and regulations governing our operations and have obtained all material licenses and permits

required for the operation of our business.

Government generally has the ability to terminate our contracts, in whole or in part, without prior notice, for convenience

or for default based on performance.

Government contract were to be terminated for convenience, we generally would be

protected by provisions covering reimbursement for costs incurred on the contract and profit on those costs, but not the anticipated

profit that would have been earned had the contract been completed.

Government inquiries and investigations because of our participation in

government procurement.

Any inquiry or investigation can result in fines or limitations on our ability to continue to bid for government

contracts and fulfill existing contracts.

We believe that we are in material compliance with applicable federal, state, and local laws

and regulations governing our operations and that we have obtained all material licenses and permits required for the operation of our

Government generally has the ability to terminate our contracts, in whole or in part, without prior notice, for convenience or for

default based on performance.

Government contract were to be terminated for convenience, we generally would be protected by

provisions covering reimbursement for costs incurred on the contract and profit on those costs, but not the anticipated profit that would

have been earned had the contract been completed.

In the unusual circumstance where a U.S.

Government contract

does not have such termination protection, we attempt to mitigate the termination risk through other means.

Termination resulting

from our default may expose us to liability and could have a material adverse effect on our ability to compete for other contracts.

Government also has the ability to stop work under a contract for a limited period of time for its convenience.

event of a stop work order, we generally would be protected by provisions covering reimbursement for costs incurred on the contract

to date and for costs associated with the temporary stoppage of work on the contract.

However, such temporary stoppages and delays

could introduce inefficiencies for which we may not be able to negotiate full recovery from the U.S.

Government, and could ultimately

result in termination for convenience or reduced future orders on certain contracts.

Additionally, we may be required to continue

to perform for some period of time on certain of our U.S.

Government contracts, even if the U.S.

Government is unable to make

timely payments.

maintain a $2.0 million general liability insurance policy, a $100 million products liability insurance policy, and a $5.0 million

umbrella liability insurance policy.

Additionally, we maintain $10.0 million of director and officers’ liability insurance.

We believe this coverage is adequate for claims that have been and may be brought against us, and for the types of products presently

marketed because of the strict inspection standards imposed on us by our customers before they take possession of our products.

Additionally, the FAR generally provide that we will not be held liable for any loss of or damage to property of the U.S.

that occurs after the U.S.

Government accepts delivery of our products and that results from any defects or deficiencies in our

products unless the liability results from willful misconduct or lack of good faith on the part of our managerial personnel.

of our current assembly processes or products is protected by patents.

Government contract does not have such termination

protection, we attempt to mitigate the termination risk through other means.

Termination resulting from our default may expose us to

liability and could have a material adverse effect on our ability to compete for other contracts.

Government also has the ability

to stop work under a contract for a limited period of time for its convenience.

In the event of a stop work order, we generally would

be protected by provisions covering reimbursement for costs incurred on the contract to date and for costs associated with the temporary

stoppage of work on the contract.

However, such temporary stoppages and delays could introduce inefficiencies for which we may not be

able to negotiate full recovery from the U.S.

Government and could ultimately result in termination for convenience or reduced future

orders on certain contracts.

Additionally, we may be required to continue to perform for some period of time on certain of our U.S.

contracts, even if the U.S.

Government is unable to make timely payments.

maintain general liability insurance coverage of $2.0 million, products liability insurance coverage of $100 million, and umbrella liability

insurance coverage of $5.0 million.

Additionally, we maintain $15.0 million of directors’ and officers’ liability insurance

We believe this coverage is adequate for the types of claims that have been and may be brought against us, and for the types

of products presently marketed, particularly in light of the strict inspection standards imposed on us by our customers before they take

possession of our products.

Additionally, the FAR generally provides that we will not be held liable for any loss of or damage to property

Government that occurs after the U.S.

Government accepts delivery of our products and that results from any defects or deficiencies

in our products unless the liability results from willful misconduct or lack of good faith on the part of our managerial personnel.

there can be no assurance that our insurance coverage will be sufficient to cover all claims that may arise.

has two programs that include Proprietary Designs:

1) The Aux Tanks for Northrop Grumman;

and 2) The CH-53K Titanium and Aluminum Tubes/Ducts

for Sikorsky.

Both of these products were developed as Design and Build-to-Specification.

All other Company programs are Build-to-Print

utilizing design and technical data developed and provided by our customers.

We rely on proprietary know-how and information and employ

various methods to protect the processes, concepts, ideas, and documentation associated with our products.

These methods, however,

may not afford complete protection and there can be no assurance that others will not independently develop such processes, concepts,

ideas, and documentation.

These methods, however, may

not afford complete protection and there can be no assurance that others will not independently develop similar processes, concepts,

ideas, or documentation.

Aero® is a registered trademark of the Company.

Capital Management

ability to attract, develop and retain top talent across all of our business functions, and particularly in highly technical areas,

has a significant impact on organizational success.

ability to attract, develop and retain top talent across all of our business functions, and particularly in highly technical areas, is

important to the operation and development of our business.

Accordingly, our human capital management strategy places a significant focus

on both attracting a diverse, highly skilled workforce and engaging and developing talent from within by creating a work environment

that promotes inclusion and equitability.

By providing our valued employees the opportunity to enhance their skillsets, develop

their careers and pursue excellence through numerous training and development opportunities, we consistently emphasize the importance

of innovation and continuous improvement throughout our organization.

We continue to pursue opportunities that enable us to build

our talent pipeline, particularly for skilled labor, including running an apprentice training program several times over the course

of the year and forging relationships with local high school and trade schools.

on both attracting a, highly skilled workforce and engaging and developing talent from within by creating a work environment that promotes

equitable treatment.

We provide employees opportunities to enhance their skills and develop their careers through training and development

programs and emphasize innovation and continuous improvement throughout our organization.

We continue to pursue opportunities that enable

us to build our talent pipeline, particularly for skilled manufacturing labor, including running an apprentice training program several

times over the course of the year and forging relationships with local high school and trade schools.

attract and compensate our employees by offering a competitive total rewards package which includes benefits, resources, and programs

that support health, physical, mental, and financial wellness.

The benefits package we offer, coupled with employee recognition

opportunities and employee engagement activities help create a comprehensive employee experience.

We periodically benchmark our

benefits programs and associated costs to remain competitive.

The benefits package we offer, together with employee recognition opportunities

and employee engagement activities helps create a comprehensive employee experience.

We periodically benchmark our benefits programs

and associated costs to remain competitive.

of December 31, 2025, we had 192 full-time employees as compared to 212 full-time employees as of December 31, 2024.

1 unchanged sentence

basis, we employ temporary personnel with specialized disciplines to fill staffing gaps.

We do not have any employees represented

by a union, and we believe that our relations with our employees are good.

We provide our team members with ongoing opportunities

to share thoughts and perspectives on company and employment-related matters through surveys, all-hands meetings, and management

open door policies.

Our management, with oversight from the Compensation and Human Resources Committee of our board of directors,

monitors the hiring, retention, and management of our employees and regularly conducts succession planning to ensure that we continue

to cultivate the pipeline of talent needed to operate our business.

and Inclusion

value diversity and inclusion in our workforce as we understand that diversity of background, thought, and experience leads to

greater innovation and improved business results.

We are committed to increasing and retaining diversity at all levels of our

workforce, and focus on diversity and inclusion throughout our recruitment, hiring, and

onboarding processes.

Diversity within our board of directors is 29%, and our executive management team is comprised of 50% diverse

our total employee population and based on employees who self-identify, as of December 31, 2024, approximately 20% of our workforce

are female, 36% are multicultural and 4% are veterans.

We do not have any employees represented by

a union, and we believe that we maintain good relations with our employees.

We provide our team members with ongoing opportunities to

share thoughts and perspectives on company and employment-related matters through surveys, all-hands meetings, and management open door

Our management, with oversight from the Compensation and Human Resources Committee of our board of directors, monitors the

hiring, retention, and workforce management and regularly conducts succession planning to ensure that we continue to cultivate the pipeline

of talent needed to operate our business.

the safety and well-being of our employees is a top priority.

The goal of our safety program is to increase safety knowledge and

awareness throughout the organization to ensure occupational health, reduce risk, and prevent incidents.

We regularly benchmark

our safety performance, self-audit our safety compliance, and provide our employees with safety-related training.

We conduct an

investigation, including root cause analysis and corrective action, any time a safety incident or a near miss occurs.

Safety Committee is comprised of employees from various disciplines throughout the organization who meet on a regular basis to

execute continuous improvement strategies, develop methods to increase ownership of safety throughout the organization, establish

new safety initiatives, and assess safety performance.

The goal of our safety program is to increase safety knowledge and awareness

throughout the organization to ensure occupational health, reduce risk, and prevent incidents.

We regularly benchmark our safety performance,

self-audit our safety compliance, and provide our employees with safety-related training.

We conduct an investigation, including root

cause analysis and corrective action, when a safety incident or a near miss occurs.

Safety Committee is comprised of employees from various disciplines throughout the organization who meet on a regular basis to execute

continuous improvement strategies, develop methods to increase ownership of safety throughout the organization, establish new safety

initiatives, and assess safety performance.

monitor the effectiveness of our safety program by comparing recordable incidents and incident severity year over year.

the number of safety incidents with the total recordable incident rate (“TRIR”) metric and the severity of incidents

with the days away restricted and transferred (“DART”) metric.

The table below represents our result from the two

most recent calendar years:

We measure the

number of safety incidents with the total recordable incident rate (“TRIR”) metric and the severity of incidents with the

days away restricted and transferred (“DART”) metric.

The table below represents our result from the two most recent calendar

= total number of recordable cases x 200,000 / total hours worked

1 unchanged sentence

a positive impact on the community around us is one of our most important values.

We donate to local charitable organizations,

such as United Way of Long Island, through both monetary contributions, as well as “drives” to collect and deliver

employee donated food and school supplies.

We actively engage and educate local high school students from surrounding districts

about the manufacturing and engineering industry and career trajectory.

This includes, hosting educational experiences and shop

tours with high school and trade school classes.

Members of our leadership team participate on the boards of trade associations

that support and advance the interests of the local community.

We donate to local charitable organizations, such as

United Way of Long Island, through both monetary contributions, as well as “drives” to collect and deliver employee donated

food and school supplies.

We actively engage and educate local high school students from surrounding districts about the manufacturing

and engineering industry and career trajectory.

This includes hosting educational experiences and shop tours with high school and trade

school classes.

Members of our leadership team participate on the boards of trade associations that support and advance the interests

of the local community.

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