CPI AEROSTRUCTURES INC 10-K

Item 1. BUSINESS General CPI Aerostructures, Inc., including its wholly owned subsidiary Welding Metallurgy, Inc. (“WMI”) and Compac Development Corporation, a wholly owned subsidiary of WMI (collectively, “CPI Aero”, the “Company”, “us”, or “we”) manufactures structural assemblies, integrated systems, and kitting services for the domestic and international aerospace and defense (“A&D”) markets. Our products are generally used by customers in the production and refurbishment of fixed wing aircraft, helicopters, electronic warfare (“EW”) systems, intelligence, surveillance, and reconnaissance (“ISR”) systems, missiles, autonomous systems, and other sophisticated A&D products. CPI Aero is a prime contractor to the U.S. 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”) services. CPI Aero has over 45 years of experience as a contractor. Our team possesses extensive technical expertise, program and supply chain management, and integration capabilities. Our competitive advantage lies in our ability to offer large contractor capabilities with the flexibility and responsiveness of a small company, while staying competitive in cost and delivering superior quality products. We maintain a website located at www.cpiaero.com . 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 on Form 10-K. History CPI 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. Government. 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. Government contracts continued to represent a significant portion of the Company’s business, while the Company also increased its participation in the commercial aerospace market and expanded its relationships with original equipment manufacturers. 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. 1 Products and Services CPI 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. Our products are described in the following categories: ● Aerostructures: New Production and Repair/Overhaul of Fielded Wing Structures and other Control Surfaces, Rudder Island/Drag Chute Canisters, Engine Inlets/Nacelles, Engine Exhaust Manifolds, Aircraft Doors and Windows, Aircraft Steps and Racks, and other Aircraft Secondary Structures ● Aerosystems: Airborne Pod Structures and Integration of Internal Systems, Radar Housing Structures and Integrated Radar Housing Rack Systems ● Small-to-Large Diameter Tube Bending: Complex Ducts and Tubes in Steel, Aluminum, Titanium, and Nickel Alloys, from ¼” to 5” diameter via fully automated NC Tube bending equipment ● Complex Specialty Welding: Fusion Welded Fluid Tanks, Aerial Refueling Probes, Plenums, Tubes and Ducts and Resistance Welding (Spot and Seam) of fairings and complex metallic assemblies ● Electrical Cables, Harness, and Enclosures: Wire Harnesses, Power Control Systems, Fuel Management Systems, Power Distribution Systems, Fully Integrated Electrical Control Systems, and RF enclosures Engineering Services and Capabilities As a build-to-print structural assemblies manufacturer, CPI Aero’s engineering focus is on executing customer contracts through product realization, and to support collaborative design development using design for manufacturing and assembly (“DFMA”), geometric dimensioning & tolerancing (“GD&T”), and tooling concept support. CPI Aero has experience with various types of detail part manufacturing that allows us to provide detailed design for manufacturing input during the design refinement process. We have significant experience working in a full model-based definition environment, both CATIA and NX, due to our long sustainment support on older airframes. CPI Aero also possesses the capability to work with traditional blueprints, mylars and loft. The Company has executed several projects where older engineering data sets were “rehabilitated” to fully model-based datasets per customers’ requests. CPI 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 response. Understanding customers’ product performance requirements and incorporating product GD&T layouts and final tooling definitions and requirements supports product realization. CPI Aero’s engineering team supports customer programs through engineering and manufacturing activities associated with the production and assembly of aerostructures and aerosystems. 2 Business Strategy CPI 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. We 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 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. Another 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. The final element of CPI Aero’s business development strategy is to build upon the Company’s existing customer relationships and to develop relationships with new customers. We intend to increase customer engagements by deploying our business development personnel to solidify existing customer relationships which have developed over many years and multiple programs. We have also added additional resources to our business development function to cultivate new relationships with new customers. The Company seeks to support customer programs through the delivery of aerostructures and aerosystems in accordance with customer specifications and program schedules. The Market CPI 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. Over time, our Company has expanded its capabilities and operations, including its operational, global supply chain management, program management, and engineering capabilities, as well as its manufacturing facilities and equipment base. 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. Competition We 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 compete with these larger companies by delivering products with comparable levels of quality and performance while maintaining competitive pricing for our customers. With respect to aerosystems products, such as our portfolio of EW and ISR integrated pod structures, we generally encounter fewer competitors and are not aware of competition from any of the aerostructures companies mentioned above. In these cases, we typically compete with the internal manufacturing arm of our customers. Our experience related to integrated pod structures, combined with our cost structure, supports our ability to compete for aerosystems contracts. For certain unrestricted contracts for the U.S. Government, we may compete against well-established prime contractors, including Northrop Grumman, Lockheed Martin, and Boeing. 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. 3 While larger prime contractors compete for significant modification awards, they generally do not compete for awards in smaller modifications, spares and replacement parts, even for aircraft for which they are the original manufacturer. In 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. Our Customers Approximately $5.8 million and $5.1 million of our revenue for the years ended December 31, 2025 and 2024, respectively, were from customers outside the U.S. All other revenue for the years ended December 31, 2025 and 2024 has been attributable to customers within the U.S. We have no assets outside the U.S. We 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. Our OEM customers in the defense sector include leading prime defense contractors such as: ● Lockheed Martin Corporation - we provide products used in the production of Lockheed Martin Corporation’s (“Lockheed Martin”) F-16 Fighting Falcon. We also provide structural assemblies to Sikorsky, a Lockheed Martin company (“Sikorsky”), for many of their military helicopter platforms including the UH-60 BLACK HAWK©, MH-60 Seahawk, CH-53E and CH-53K King Stallion, and a special purpose helicopter. ● RTX Corporation, formerly Raytheon Technologies – we provide products to multiple business divisions of RTX Corporation (“Raytheon”): Raytheon (Next Generation Jammer – Mid-Band Pod, Advanced Tactical Pods, Intelligence, Surveillance and Airborne Reconnaissance Pods, Missile Wings, and Radar Racks) and Collins Aerospace (RF Enclosures). ● Northrop Grumman Corporation – we provide structural assemblies and kitting services for the Northrop Grumman Corporation (“NGC”) E-2D Advanced Hawkeye, various integrated radar and laser pod structures, welded tubes and aerial refueling probes, and welded fluid tanks for a classified program. 80% of our revenue in 2025 and 2024, was generated by subcontracts with defense prime contractors. Our OEM customers in the civil aviation market include: ● Embraer S.A. Executive Jets – we provide engine inlet assemblies for Embraer S.A.’s (“Embraer”) Phenom 300 business jet and were subsequently awarded a contract to manufacture engine inlets for the Phenom 100 business jet. 9% and 6% of our revenue in 2025 and 2024, respectively, was generated by commercial contract sales. CPI Aero also is a prime contractor to the DOD, primarily through contracts directly with the USAF and the Defense Logistics Agency (“DLA”), providing supply chain management, assembly & integration, and kitting services for the T-38 program. 11% and 14% of our revenue in 2025 and 2024, respectively, were generated by direct government sales. 4 Significant Contracts Our most significant contracts are described below: Military Aircraft – Subcontracts with Prime Contractors E-2D Advanced Hawkeye: The NGC E-2D Advanced Hawkeye is an all-weather, carrier-based tactical Airborne Early Warning aircraft. The twin turboprop aircraft was designed and developed in the 1950s by the Grumman Aircraft Company for the U.S. Navy. The U.S. Navy aircraft has been progressively updated with the latest variant, the E-2D, first flying in 2007. In 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. In February 2020, the Company’s subsidiary WMI received approximately $4 million in purchase orders from NGC to produce numerous welded structures and tubes for the E-2D Advanced Hawkeye. 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. ALQ-249 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 the U.S. Navy’s EA-6B Growler carrier-based electronic warfare aircraft. The U.S. Navy plans to install these pods on 139 EA-18G Growlers during the production phase. There are two pods per aircraft. There are also 11 EA-18Gs operated by the Royal Australian Air Force. Raytheon received an approximate $1.0 billion sole source contract from the U.S. 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. On November 16, 2021 the Company announced it was authorized by Raytheon to start the production phase of the program. The Company was awarded low rate production (“LRIP”) I and II orders valued at approximately $18.5 million. 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. In December 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. The Company estimates that the total value of the NGJ-MB program through production will be in excess of $254.4 million through 2030. UH-60 “BLACK HAWK”: The Sikorsky UH-60 BLACK HAWK helicopter is a multi-mission rotary wing aircraft used by the U.S. military and other military operators. Among the mission configurations it serves are troop transport, medical evacuation, electronic warfare, attack, assault support, and special operations. More than 4,000 BLACK HAWK helicopters are in use today. 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. A third five-year long-term agreement was awarded in January 2022, also for gunner window assemblies, estimated at $13.6 million with a period of performance from 2023-2027. In October 2024, CPI Aero received multiple purchase orders totaling $2.3 million for hover infrared suppression system (“HIRSS”) module assemblies for use as spares on older variants of the BLACK HAWK. 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. In 2025, CPI received orders totaling $4.1 million. 5 F-16V Fighting Falcon: The Lockheed Martin F-16 multirole fighter aircraft widely used by military forces around the world. Approximately 3,000 operational F-16s are in service today in 25 countries. The F-16V is a newer variant sold to international air forces. 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. 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 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. This order will see deliveries out in 2029 and 2030 worth approximately $15 million. CH-53K King Stallion: The CH-53K is a heavy-lift helicopter produced by Sikorsky for the U.S. Marine Corps. 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. Airborne Pod Structure: In 2019, the Company received an initial purchase order from Raytheon to manufacture pod structures for an undisclosed application. The value of the order was approximately $2.3 million for manufacturing engineering services, development of assembly tooling, and the production of the prototypes. The undisclosed pod structure is currently under development. In October 2021, the Company announced that Raytheon awarded the Company an approximately $6.1 million contract modification that changes the scope of work the Company would perform and increases the quantity of pods to be produced. 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. Undisclosed Vehicle: In 2018, the Company started production of a welded tank for NGC for an undisclosed application on an undisclosed platform. The total value of orders received as of December 31, 2025 is $3.9 million. NGC awarded a new spares order in November 2025 with deliveries in 2026. B-52 Radar Rack: In late 2021, the Company received an initial purchase order from Raytheon to manufacture radar rack structures for the B-52 Radar Modernization Program. 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. Hypersonic Missile Wings: In March 2025, CPI received an order from Raytheon for wings for an undisclosed hypersonic missile program. This initial contract is worth approximately $3.8 million. Raytheon also requested proposals for the next two lots of missiles. Next 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 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. The balance of funding, $7.1 million, for this development phase of the program is anticipated in 2026. MS-110 & 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. The MS-110 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. 6 Military Aircraft – Prime Contracts with U.S. Government T-38 Pacer Classic III, Phase 2: 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. 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. T-38 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. 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. Commercial Aircraft – Subcontracts with Prime Contractors Embraer Phenom 300: The Phenom 300 is a twin-engine, executive jet produced by Brazilian aircraft company Embraer that can carry between six and ten passengers and a crew of two. It is a widely used light business jet. We have been producing engine inlet assemblies for Embraer under a Life-of-Program agreement we entered into in 2012. In January 2024, we delivered the 800th shipset of inlets. In 2025, we received funded orders totaling $2.4 million. Embraer Phenom 100: The Phenom 100 is a light executive business jet twin-engine, produced by Brazilian aircraft company Embraer that can carry up to six passengers and a crew of two. Embraer 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. Backlog We produce custom assemblies pursuant to long-term contracts and customer purchase orders. Funded backlog consists of the aggregate funded value of remaining performance obligations under such contracts and purchase orders, excluding the portion previously included in operating revenues pursuant to Accounting Standards Codification Topic 606 (“ASC 606”). 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. Backlog 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. Our total backlog as of December 31, 2025 and 2024 was as follows: Backlog (Total) December 31, 2025 December 31, 2024 Funded $ 91,818,000 $ 85,039,000 Unfunded 412,704,000 425,232,000 Total $ 504,522,000 $ 510,271,000 7 Approximately 96% and 95% of the total amount of our backlog at December 31, 2025 and 2024 was attributable to government contracts. Our backlog attributable to government contracts at December 31, 2025 and 2024 was as follows: Backlog (Government) December 31, 2025 December 31, 2024 Funded $ 89,067,000 $ 82,262,000 Unfunded 393,530,000 404,256,000 Total $ 482,597,000 $ 486,518,000 Our backlog attributable to commercial contracts at December 31, 2025 and 2024 was as follows: Backlog (Commercial) December 31, 2025 December 31, 2024 Funded $ 2,751,000 $ 2,777,000 Unfunded 19,174,000 20,976,000 Total $ 21,925,000 $ 23,753,000 Material and Parts We subcontract the production of substantially all the detail parts incorporated into our products to third-party manufacturers under firm fixed-price orders. 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. We obtain our raw materials from several commercial sources. Although certain items are available only from limited sources of supply, we believe that alternative sources generally are available and that the loss of any single supplier would not have a material adverse effect on our business. Government Regulation Environmental Regulation We are subject to regulations administered by the U.S. Environmental Protection Agency, the U.S. Occupational Safety and Health Administration, 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 substances. 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. The 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 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. Our operations require the use of a limited amount of chemicals and other materials for painting and cleaning, including solvents and thinners, which are classified under applicable laws as hazardous chemicals and substances. We believe that we are in material compliance with applicable federal, state and local rules and regulations regarding the disposal of these chemicals and associated waste. We have obtained a permit from the Town of Islip, New York, Building Division to maintain a paint booth containing flammable liquids. 8 Federal Aviation Administration Regulation We are subject to regulation by the Federal Aviation Administration (“FAA”) under the provisions of the Federal Aviation Act of 1958, as amended. 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. Government Contract Compliance Our government contracts and sub-contracts are subject to the procurement rules and regulations of the U.S. Government. Many of the contract terms are dictated by these rules and regulations. Specifically, cost-based pricing is determined under the Federal Acquisition Regulation (“FAR”), which provides guidance on the types of costs that are allowable in establishing prices for goods and services under U.S. Government contracts. 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 material compliance with applicable federal, state, and local laws and regulations governing our operations and that we have obtained all material licenses and permits required for the operation of our business. The U.S. 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. If a U.S. 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. The U.S. 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. Government contracts, even if the U.S. Government is unable to make timely payments. Insurance We maintain general liability insurance coverage of $2.0 million, products liability insurance coverage of $100 million, and umbrella liability insurance coverage of $5.0 million. Additionally, we maintain $15.0 million of directors’ and officers’ liability insurance coverage. 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 of the U.S. 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. However, there can be no assurance that our insurance coverage will be sufficient to cover all claims that may arise. Proprietary Information WMI 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 similar processes, concepts, ideas, or documentation. CPI Aero® is a registered trademark of the Company. 9 Human Capital Management Our ability to attract, develop and retain top talent across all of our business functions, and particularly in highly technical areas, is important to the operation and development of our business. Accordingly, our human capital management strategy places a significant focus on both attracting a, highly skilled workforce and engaging and developing talent from within by creating a work environment that promotes equitable treatment. We provide employees opportunities to enhance their skills and develop their careers through training and development programs and emphasize innovation and continuous improvement throughout our organization. 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. We attract and compensate our employees by offering a competitive total rewards package which includes benefits, resources, and programs that support health, physical, mental, and financial wellness. The benefits package we offer, together with employee recognition opportunities and employee engagement activities helps create a comprehensive employee experience. We periodically benchmark our benefits programs and associated costs to remain competitive. As of December 31, 2025, we had 192 full-time employees as compared to 212 full-time employees as of December 31, 2024. On an as-needed basis, we employ temporary personnel with specialized disciplines to fill staffing gaps. We do not have any employees represented by a union, and we believe that we maintain good relations with our employees. 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 workforce management and regularly conducts succession planning to ensure that we continue to cultivate the pipeline of talent needed to operate our business. Safety Ensuring the safety and well-being of our employees is a top priority. 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. Our 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. We monitor the effectiveness of our safety program by comparing recordable incidents and incident severity year over year. 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 years: Safety Metric 2025 2024 TRIR 4.6 4.8 DART 2.3 2.7 TRIR = total number of recordable cases x 200,000 / total hours worked DART = number of cases with days away from work x 200,000 / total hours worked by all employees Community Involvement Having a positive impact on the community around us is one of our most important values. 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. 10