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Item 1. Business

2026-04-07 compared with 2021-11-24 · 546 added, 492 removed, 25 unchanged (98% of the section changed)

CPI Aerostructures, Inc.,

including its wholly owned subsidiaries (“CPI Aero”, the “Company”, “us” or “we”)

is a manufacturer of structural assemblies, integrated systems, and kitted components for the international aerospace and defense

(“A&D”) markets.

Our products are generally used by customers in the production of fixed wing aircraft, helicopters,

electronic warfare (“EW”) systems, intelligence, surveillance, and reconnaissance (“ISR”) systems, missiles,

and other sophisticated A&D products.

We are 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 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 end markets.

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

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

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-35 Joint Strike Fighter and an international variant of the F-16 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©, CH-53E, and a special purpose helicopter;

● Raytheon Technologies Corporation - we provide products to three business divisions

of Raytheon Technologies Corporation (“Raytheon”):

Intelligence and Space (the Next Generation Jammer – Mid-Band

pod), Missile Systems (wing), and Integrated Defense Systems (Evolved Sea Sparrow missile launcher controller);

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

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

● Northrop 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,

and welded fluid tanks for a classified program.

80% and 72% of our revenue in 2020 and

2019, respectively, were generated by subcontracts with defense prime contractors.

We 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.

Our success as a subcontractor to defense prime contractors has provided us with opportunities

to 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.

Our OEM customers in

the civil aviation market include:

● Embraer Executive Jets – we provide engine inlet assemblies for the Phenom

300 business jet;

● Gulfstream Aircraft Company – we provide a critical structure used to produce

the wing of Gulfstream Aircraft Company’s flagship G650 large business jet and derivative models such as the G650ER.

10% and 21% of our revenue in 2020 and

2019, respectively, were 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”).

10% and 7% of our revenue in 2020 and 2019, respectively, were generated by direct government sales.

CPI Aero has over 40

years of experience as a contractor.

Our team possesses extensive technical expertise and program 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 Report on Form 10-K and Form 10-K/A, our Quarterly

Reports on Form 10-Q and Forms 10-Q/A, 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 Comprehensive Form 10-K/A.

Significant Contracts

Some of our significant contracts are as

Military Aircraft – Subcontracts

with Prime Contractors

NGC E-2D “Advanced

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

turboprop aircraft was designed and developed in the 1950s by the Grumman Aircraft Company for the United States Navy.

States 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.

the cumulative orders we have received on this program through December 31, 2020 exceed $207 million.

In addition, in 2015

we won an award to supply structural components and kits for the Wet Outer Wing Panel (“WOWP”) on the E-2D Advanced

Hawkeye airborne early warning and control (“AEW&C”) aircraft that will be manufactured for Japan.

We are responsible

for component source selection, supply chain management, delivery of kits, and are providing manufacturing engineering services

to NGC during the integration of the components into the WOWP.

In late 2019, CPI Aero received additional WOWP kit requirements

increasing the total expected value of the WOWP program for Japan to be in excess of $37 million.

In February 2020, the

Company’s WMI subsidiary received from NGC approximately $4 million in purchase orders to provide numerous welded structure

and tubes for the E-2D Advanced Hawkeye.

Under the terms of the purchase orders, WMI will manufacture more than 140 different items

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

The period of performance is expected to be through 2022.

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.

Navy plans to install these pods on 138 EA-18G Growlers during the production phase.

are two pods per aircraft.

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”).

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

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”)

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.

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.

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/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

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

Cables, Harness, and 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 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.

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 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 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 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.

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.

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.

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

$5.8 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:

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 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 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:

Aircraft – Subcontracts with Prime Contractors

Advanced Hawkeye:

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

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 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

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 air management system components for the System Demonstration and

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

All SDTA pods and AMS components are expected to ship during 2021.

CPI Aero estimates the value of the NGJ-MB program through the SDTA phase to be approximately $60 million.

On November 16, 2021

the Company announced it was authorized by Raytheon to start the production phase of the program.

We believe that the total value

of the NGJ-MB program through production will be in excess of $210 million through 2030.

A-10 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 bombs.

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 an 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.

The USAF ordered 27 wing sets immediately at contract award.

CPI Aero announced the receipt of an Indefinite Delivery/Indefinite Quantity (IDIQ) contract with a maximum ceiling value of $48

million from Boeing for structural assemblies for the A-10.

Under the terms of the IDIQ contract, CPI Aero will manufacture major

structural subassemblies of the A-10 aircraft’s wing.

The Company also announced that it has 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

F-35 Lightning

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

designed to perform ground attack, aerial reconnaissance, and air defense missions.

The DOD plans to acquire over 2,400 F-35's

by 2034 and 11 other countries also have plans to acquire the aircraft.

The Company has two significant contracts for products

used on the F-35.

In 2015, CPI Aero was awarded a multi-year contract to supply four different lock assemblies for the arresting

gear door on the F-35A CTOL.

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

In 2018, the Company received a

new long-term agreement value at approximately $8 million for lock assemblies to be delivered between 2020 and 2024.

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 aircraft.

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

Among the mission configurations

its serves are troop transport, medical evacuation, electronic warfare, attack, assault support and special operations.

3,000 BLACK HAWK helicopters are in use today, operating in 29 countries.

CPI Aero and its WMI subsidiary manufacture several different

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

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 for ultimate use 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.

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.

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 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, continuing work it has performed since 2010.

More recently, 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 UH-60 BLACK HAWK helicopter.

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 UH-60 Black Hawk by reducing the opportunity for an infrared-seeking threat system

to acquire, lock onto, track, and destroy the helicopter.

In May 2021, the Company announced receiving a multi-year contract valued

at up to $17.2 million for the overhaul

and repair (O&R) of outboard stabilator assemblies in support of the Sikorsky MH-60 SEAHAWK .

F-16V Fighting

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

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.

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 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.

Deliveries are expected to

begin during late 2020 and continue through 2024.

In June 2020, the Company announced that it had been awarded a follow-on order

from Lockheed Martin to manufacture structural assemblies for new production F-16 Block 70/72 aircraft.

The total value of the

RI/DCC program is approximately $21 million and we have received more than $8.7 million in orders through December 31, 2020.

CH-53K King Stallion:

The CH-53K is a heavy-lift helicopter being developed by Sikorsky for the United States Marine Corps.

Flight testing began in 2018.

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

Through December 31, 2020, we have received orders for development and test valued at more than $2.5 million, including

a $1.1 million order for rack with delivery requirements commencing in mid-2020 through 2021.

Undisclosed Vehicle:

In 2018 the Company received an initial purchase order from Raytheon Missile Systems Company, a subsidiary of Raytheon, to manufacture

structural assemblies on an undisclosed vehicle.

In 2019, CPI Aero completed the initial order and in January 2021, CPI Aero announced

a subsequent purchase order to manufacture additional units.

The undisclosed vehicle is currently under development.

order will not be disclosed.

Undisclosed Pod

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

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

tooling and the production of the prototypes.

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 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

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

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.

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 Raytheon awarded an approximate $6 million contract modification that changes the scope of work the Company would

perform and increases the quantity of pods to be produced.

Military Aircraft – Prime Contracts

F-16 “Fighting

Since 2014, we have been a prime contractor to the DLA to provide structural wing components and logistical

support for global F-16 aircraft MRO operations.

Through December 31, 2020 we have received almost $15 million in orders on this

T-38 Pacer Classic

III, Phase 2:

For more than 50 years, the Northrop 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”) programs are expected to increase the structural service life of the T-38 beyond

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

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

Through December 2020,

we have received $23.8 million in orders on this 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.

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.

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 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 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

1 unchanged sentence

Through December 31, 2020,

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

the Company announced it had received three separate orders for additional requirements valued at $16.2 million, bringing total

orders under this long term contract to approximately $31.5 million.

Commercial Aircraft

– Subcontracts with Prime Contractors

G650/G650ER :

The Gulfstream

G650 is a twin-engine business jet airplane produced

by Gulfstream Aerospace that can be configured to carry from 11 to 18 passengers.

began the G650 program in 2005 and revealed it to the public in 2008.

The G650 is Gulfstream’s largest and fastest business

The G650ER is an extended range version of the aircraft.

In 2020, Gulfstream announced the launch of a new derivative the

In March 2008, Spirit AeroSystems, Inc.

awarded us a contract to provide fixed leading edges (FLE) for the Gulfstream G650

business jet, and derivative models, a commercial program that Spirit was supporting.

In December 2014, Spirit transferred its

work-scope on this program to Triumph Group.

Due to the impact of the COVID-19 pandemic, in May 2020, Triumph Group cancelled nearly

all open orders with the Company.

On May 27, 2020, Triumph Group announced it had reached an agreement in principle to sell the

G650 wing program to Gulfstream Aerospace, and on June 12, 2020, we received a joint communication from Gulfstream Aerospace and

Triumph Group that stated Gulfstream’s intention at the conclusion of the transaction is to continue to purchase G650 wing

components from the Company.

In December 2020, we received purchase orders directly from Gulfstream for wing components for use

on the G650, G650ER and/or G700 aircraft.

The Phenom 300

is a twin-engine, executive jet produced by Brazilian aircraft company Embraer, S.A.

that can carry between 6 and 10 passengers

and a crew of 2.

We have been producing engine inlet assemblies for Embraer under a long-term agreement we entered into in 2012.

We have received approximately $36 million in orders on this program through December 31 2020.

We estimate the potential value

of the program to be in excess of $52 million.

Sales and Marketing

We are recognized within the aerospace

industry as a Tier 1 or Tier 2 supplier to major aircraft suppliers.

Additionally, we may bid for military contracts set aside

specifically for small businesses.

We are generally awarded

initial contracts for our products and services through the process of competitive bidding.

This process begins when we first learn,

formally or otherwise, of a potential contract from a prospective customer and concludes after all negotiations are completed upon

When preparing our response to a prospective customer for a potential contract, we evaluate the contract requirements and

determine and outline the services and products we can provide to fulfill the contract at a competitive price.

Many times for our defense

programs, after the initial contract, subsequent follow-on contracts are awarded on a sole-source basis, subject to cost-justification

and direct negotiation with our customer and in some cases, the federal government.

Our average sales cycle,

which generally commences at the time a prospective customer issues a request for proposal and ends upon delivery of the final

product to the customer, varies widely.

Because of the complexities

inherent in the aerospace industry, the time from the initial request for proposal to award ranges from as little as a few weeks

to several years.

Additionally, our contracts have ranged from six months to as long as 10 years.

Also, repeat and follow-on jobs

for current contracts frequently provide additional opportunities with minimal start-up costs and rapid rates to production.

We have positioned our 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 act

as a subcontractor to prime contractors in the production of commercial aircraft structures, which also reduced our exposure to

government spending decisions.

Over time, our Company has expanded in

both size and capabilities, with growth in our operational and global supply chain program management.

These expansions have allowed

us the ability to supply more complex aerostructure assemblies and aerosystems and structures 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 acquire MRO and kitting contracts.

Approximately $2.9 million

and $3.3 million of our revenue for the years ended December 31, 2020 and 2019, respectively, were from customers outside the U.S.

All other revenue for the years ended December 31, 2020 and 2019 has been attributable to customers within the U.S.

assets outside the U.S.

Government-based contracts

are subject to national defense budget and procurement funding decisions that, accordingly, drive demand for our business in that

Government spending and budgeting for procurement, operations and maintenance are affected not only by military action,

but also the related fiscal consequences of these actions, as well as the political process.

We 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

Unfunded backlog is the estimated amount of future orders under the expected duration of the program.

Substantially

all of our 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.

The total backlog at December 31, 2020

is primarily comprised of long-term programs with Raytheon (NGJ-MB), Northrop Grumman (E-2D),

USAF (T-38), Boeing (A-10), and Embraer (Phenom 300).

Funded backlog is primarily from purchase orders under long-term contracts

with Northrop Grumman (E-2D), Sikorsky (BLACK HAWK), Lockheed Martin (F-16V), and the USAF (T-38).

Approximately 54% of the funded

backlog at December 31, 2020 is expected to be recognized as revenue during 2021.

Our total backlog as of December 31, 2020

and 2019 was as follows:

$ 169,567,000

$ 147,647,000

$ 476,185,000

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

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 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

Approximately 96% of

the total amount of our backlog at December 31, 2020 was attributable to government contracts, compared to 88% at December 31,

Our backlog attributable to government contracts at December 31, 2020 and 2019 was as follows:

$ 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.

Our backlog attributable

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

$ 482,597,000

$ 486,518,000

Our backlog attributable to commercial contracts

at December 31, 2020 and 2019 was as follows:

Material and Parts

We subcontract production

of substantially all parts incorporated into our products to third-party manufacturers under firm fixed price orders.

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.

We 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.

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.

Within our aerostructures capability, we often compete against much larger Tier 1 suppliers, such as Triumph

Group, Spirit AeroSystems, Kaman Aerospace, GKN, 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.

Within our aerosystems capability, such as our portfolio of EW and ISR integrated pod structures, we find more limited competition

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 customer.

We believe our unique skills related to integrated pod structures combined

with a very efficient and generally much lower cost structure creates a competitive advantage for bidding on aerosystems contracts.

For certain unrestricted

contracts for the U.S.

Government, we may compete against well-established prime contractors, including NGC, Lockheed Martin, and

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.

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

some of these major prime contractors.

Further, in some cases these companies 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 smaller competitors generally do not have the expertise we have in responding to requests for proposals for

government contracts, nor will they typically have the more than 40 years of past performance in conducting thousands of contracts

COVID-19 Coronavirus Pandemic Impact

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

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 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.

The outbreak of

the COVID-19 coronavirus was declared a pandemic by the World Health Organization during our first quarter of 2020.

latter part of our first quarter and subsequent to our quarter end, the COVID-19 pandemic grew, causing non-essential businesses

to shut down and many people to observe the shelter-in-place directive from our state government.

Our business and operations and

the industries in which we operate have been impacted by public and private sector policies and initiatives in the U.S.

the transmission of COVID-19, such as the imposition of travel restrictions and the adoption of remote work.

The COVID-19 pandemic

has contributed to a general slowdown in the global economy, has adversely impacted the businesses of certain of our customers

and suppliers, and, if it continues for an extended period of time, it could adversely impact our results of operations and financial

In response to the COVID-19 impact on our business, we have been and continue to actively mitigate costs.

been taking actions to preserve capital and protect the long-term needs of our businesses, including negotiating progress payments

with our customers and reducing discretionary spending.

For more information on the current and potential impact of the COVID-19

pandemic on our business, see Risk Factors included in Part I, Item 1A of this Comprehensive Form 10-K/A.

Government Regulation

Environmental Regulation

We are subject to regulations

administered by the U.S.

Environmental

are subject to regulations administered by the U.S.

Environmental Protection Agency, the U.S.

Occupational Safety and Health Administration, various state

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

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 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

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

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.

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 have obtained a permit from the Town of Islip, New

York, Building Division in order to maintain a paint booth containing flammable liquids.

Federal Aviation Administration

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 components.

We are subject to inspections by

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

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 .

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.

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 provide guidance on the types of costs that are allowable in establishing prices for goods and services under U.S.

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.

These audits may result in adjustments to

our contract costs.

Contract Compliance

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

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 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.

Government contracts, even if the U.S.

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.

We maintain a $2 million

general liability insurance policy, a $100 million products liability insurance policy, and a $5 million umbrella liability insurance

Additionally, we maintain $15 million of director and officers’ 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.

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.

Proprietary Information

None of our current assembly

processes or products is protected by patents.

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.

CPI Aero® is a registered

trademark of the Company.

Human Capital Management

As of December 31, 2020, we had 267 full-time

We employ temporary personnel with specialized disciplines on an as-needed basis.

We depend on a highly educated and

skilled workforce.

We seek to advance a diverse, equitable and inclusive work environment for all employees.

Our ability to attract,

develop and retain the best talent, particularly those with technical, engineering and science backgrounds or experience, is critical

for us to execute our strategy and grow our businesses.

Our management, with oversight from the Compensation & 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.

In addition, we have taken measures to

protect our workforce in response to the COVID-19 pandemic, including allowing employees to work from home when possible and implementing

safety protocols to support our essential employees required to work onsite, such as making changes to shift work to promote social

distancing among our manufacturing personnel, and providing masks and hand sanitizer.

None of our employees is a member of a

We believe that our relations with our employees are good.

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 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, 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.

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.

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

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, 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.

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

= number of cases with days away from work x 200,000 / total hours worked by all employees

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.

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/A

Item 1. Business