AIR INDUSTRIES GROUP
For the period ended Dec 31, 2025. Filed Mar 27, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 27, 2026
AIRI$2.80+5.3%Stored close · as of Nov 6, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-04-15.
0001213900-25-031944
Item 1A. Risk FactorsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-27.
0001213900-26-035731
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 97 previous paragraphs and 129 current paragraphs.
51 unchanged; 40 reworded; 38 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 1 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (38)
Current report
As a result of our Merger Agreement (see additional risks below), the Current Credit Facility has been amended to extend the Maturity Date of the loans to September 30, 2026. Under the terms of the Current Credit Facility, we are required to maintain certain business and financial covenants. If we fail to maintain compliance with the covenants of the Current Credit Facility, we would have to seek a waiver from our lender, which may not be given. If we fail to maintain compliance with the covenants of the Current Credit Facility and are unable to obtain a waiver, we may have to pay increased interest rates or other compensation to Webster, may be required to immediately pay any outstanding debt or Webster could retain amounts deposited in the Collection Account and refuse to make advances under the revolving portion of the credit facility. An increase in the interest rate would likely have a material adverse impact on our consolidated financial position and results of operations. If we were required to make immediate repayment or Webster were to refuse to make advances under the revolving portion of the credit facility, we may not be able to obtain financing to repay the amounts due or maintain our operations and would become insolvent.
Current report
Consummation of the Merger Agreement with Tenax is subject to conditions, including certain conditions that may not be satisfied on a timely basis, if at all.
Current report
Unless waived by the parties to the Merger Agreement, and subject to applicable law, the consummation of the Merger Agreement is subject to a number of conditions set forth in the Merger Agreement.
Current report
If any of the conditions to the obligation of Tenax to consummate the Merger is not satisfied, Tenax could elect to decline to consummate the Merger or seek to adjust the merger consideration to be received by the Tenax Members.
Current report
We have incurred and we will continue to incur significant transaction and transition costs in connection with the Merger.
Current report
We have incurred and expect to incur significant, non-recurring costs in connection with our efforts to consummate the Merger. Certain transaction costs incurred in connection with the Merger Agreement will only be paid if the Merger is consummated. Nevertheless, there are significant costs, including legal, accounting, consulting, and other fees, expenses and costs, and under certain conditions, breakup fees, that will be paid by the Company even if the Merger is not consummated and which, in the aggregate, may have a material adverse impact on our business, operating results, and financial condition.
Current report
Management has devoted significant time and effort to the negotiation of the Merger Agreement, responding to due diligence requests and seeking to consummate the Merger and will continue to do so until the Merger is consummated or abandoned.
Current report
Our management and other personnel have devoted a substantial amount of time and resources to negotiation and execution of the Merger Agreement and will devote significant time and efforts seeking to consummate the Merger diverting time and attention from revenue generating business activities which could have an adverse impact on our business, operating results, and financial condition.
Current report
Consummation of the Merger requires the consent of our shareholders to certain actions prior to the Merger andthe Merger Agreement may be amended without shareholder approval.
Current report
While our shareholders will not be asked to approve the merger agreement, approval of our shareholders is required for certain actions which must be taken in order to consummate the Merger, including a proposal to increase our authorized stock, a proposal to permit action in lieu of a stockholders meeting by consent only if Majority Ownership (as defined in the Merger Agreement) exists and of the proposal, in compliance with Section 713(b) of the NYSE American Guide, authorizing the issuance of the Merger Consideration to the Tenax members resulting in a “change in control. ”The Merger Agreement contains provisions relating to the issuance of the Company’s shares, the payment of certain obligations of the Company, including the Related Party Notes, a tender offer for a portion of the shares of the Company currently outstanding, and the redemption on the first anniversary of the date on which the Merger is consummated (the “Closing Date”) of all of the shares of the Company outstanding prior to consummation of the Merger. The Merger Agreement may be amended by the parties thereto, without approval of the shareholders of the Company. While the Company does not expect the Company’s Board of Directors to approve any amendment to the Merger Agreement prior to the Merger, it may be possible that the Company’s Board, in exercising its business judgment and subject to its fiduciary duties and any restrictions under the Merger Agreement, chooses to approve one or more amendments to such agreement. Any such amendment may have an adverse effect on the trading price of the Company’s common stock or the prices at which the tender offer is to be conducted and to be paid upon redemption of the shares of the Company outstanding prior to consummation of the Merger or the likelihood that the Merger will be consummated.
Current report
The Directors and Officers of the Company have entered into an agreement with Tenax to vote in favor of the Merger, regardless of how the Company’s other shareholders vote.
Current report
The Directors and Officers of the Company have agreed, among other things, to vote in favor of all proposals to be presented to our shareholders at the meeting which must be held to approve certain actions which must be taken to consummate the Merger (the “Shareholders Meeting”), including proposals to increase the number of shares of common stock we are authorized to issue from 20 million to 200 million, authorize stockholder action by written consent in lieu of a shareholders meeting at any time while Majority Ownership (as defined in the proposed Charter Amendment) exists and in order to comply with Section 713(b) of the NYSE American Company Guide, to approve the issuance of the shares of common stock pursuant to the Merger Agreement to the Tenax Members resulting in a change of control. Accordingly, such proposals, which are a condition to consummation of the Merger, could be approved even if the majority of the votes cast by the public shareholders are against it. Further, the directors and officers have agreed to vote against any Competing Proposal, as defined, and any other action, agreement or transaction involving the Company that is intended, or would reasonably be expected, to impede, interfere with, delay, postpone, adversely affect or prevent the consummation of the Merger.
Current report
The exercise of the Company’s directors’ and executive officers’ discretion in agreeing to the Merger Agreement or changes or waivers in the terms of the Merger Agreement may be impacted by conflicts of interest.
Current report
In the period leading up to the Closing of the Merger, events may occur that, pursuant to the Merger Agreement, would require the Company to agree to amend the Merger Agreement, to consent to certain actions taken by Tenax, or to waive rights to which the Company is entitled to under the Merger Agreement. Such events could arise because of changes in the Company’s business, a request by the Company to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement, or the occurrence of other events that would have a material adverse effect on the Company’s business and which would entitle Tenax to terminate the Merger Agreement. In any of such circumstances, it would be at the Company’s discretion, acting through the Company’s Board, to grant its consent or waive those rights. The existence of financial and personal interests of one or more of the directors in the consummation of the Merger may result in a conflict of interest on the part of such director(s) between what he or they may believe is best for the Company and the Company’s shareholders and what he or they may believe is best for himself or themselves in determining whether or not to take the requested action.
Current report
The announcement of the proposed Merger could disrupt our relationships with our customers, suppliers, business partners and others, as well as our operating results and business generally.
Current report
Whether or not the Merger is ultimately consummated, as a result of uncertainty related to the proposed transaction, risks relating to the impact of the announcement of the Merger on our business include the following:
Current report
If any of the aforementioned risks were to materialize, they could lead to significant costs or impacts on our business which may impact us and could have an adverse impact on our business, operating results, and financial condition.
Current report
Our issuance of shares of common stock in the Merger will dilute your ownership and could adversely affect our stock price.
Current report
Pursuant to the Merger Agreement, based upon our Indebtedness as of December 31, 2025, we will issue approximately 112.5 million shares of our common stock to the Members of Tenax and entities holding warrants to acquire membership interests in Tenax. As a result, the interests of current holders of our common stock will be substantially diluted and they will own in the aggregate, less than 5% of the number of shares of common stock outstanding immediately after consummation of the Merger.
Current report
The number of shares of our common stock to be issued in the Merger is subject to adjustment and likely to increase.
Current report
The number of shares of our common stock to be issued to the members of Tenax is subject to adjustment based upon our operating performance between the date hereof and the end of the month preceding the month in which the Merger is consummated. Specifically, the number of shares to be issued will increase pursuant to the formula set forth in the Merger Agreement if our indebtedness, as defined in the Merger Agreement, increases (“Indebtedness”). Our Indebtedness increased during the year ended December 31, 2025, and likely will increase during the period commencing January 1, 2026, until the Merger is consummated or abandoned.
Current report
There is currently no meaningful information regarding the business, operations and historical financial operating results of Tenax available to prospective purchasers of our common stock in the public markets.
Current report
Tenax is a privately held company and is not obligated to and does not make information regarding its business and financial results available to the public. Although information including historical financial results of Tenax will be made available in the proxy statement (“Proxy”) to be distributed to our shareholders prior to the Shareholders Meeting, the historical financial results of Tenax do not reflect the financial condition, results of operations or cash flows it would have achieved as a public company during the periods presented or those we will achieve in the future. Our financial condition and future results of operations could be materially different from amounts reflected in the historical financial statements of Tenax included in the Proxy. Such information as is currently publicly available regarding Tenax and as may become available, will be limited and may not be sufficient for an investor to make an informed decision regarding the future prospects of our Company if the Merger is consummated.
Current report
In connection with the Merger, our directors and officers agreed that they will not, during the period beginning upon execution of the Merger Agreement and terminating on the date on which the Merger is consummated or the Merger Agreement is terminated, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale, or otherwise dispose of any shares of our common stock, or any options or warrants to purchase any shares of our common stock, or any securities convertible into, exchangeable for, or that represent the right to receive shares of our common stock, or any interest in any of the foregoing.
Current report
Upon consummation of the Merger or termination of the Merger Agreement, shares held by our directors and officers will be eligible for resale, subject to, in the case of stockholders who are our affiliates, volume, manner of sale, and other limitations under Rule 144 promulgated under the Securities Act. In addition, shares of our common stock issuable upon exercise or vesting of incentive awards under our incentive plans are, once issued, eligible for sale in the public market, subject, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144. Furthermore, shares of our common stock reserved for future issuance under our Equity Incentive Plans may become available for sale in future.
Current report
The market price of our common stock could drop significantly if the holders of the shares described above sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of shares of our common stock or other securities.
Current report
Our operating results and financial condition may fluctuate on a quarterly and annual basis.
Current report
Our operating results and financial condition fluctuate from quarter-to-quarter and year-to-year and are likely to continue to vary due to a number of factors, many of which will not be within our control. Fluctuations in our operating results and financial condition may be due to a number of factors, including those set forth in these Risk Factors and in our discussion of our results of operations. Due to the risks discussed in these Risk factors and elsewhere this Report, you should not rely on quarter-over-quarter and year-over-year comparisons of our operating results as an indicator of our future performance.
Current report
We are a “smaller reporting company.” As a smaller reporting company, we may follow reduced disclosure requirements and do not have to make all of the disclosures that are made by public companies that are not smaller reporting companies. For so long as we remain a smaller reporting company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our share price may be more volatile.
Current report
If the NYSE delists the Company’s securities from trading on its exchange and the Company is not able to list its securities on another national securities exchange, the Company’s securities could be quoted on an over-the-counter market. If this were to occur, the Company could face significant material adverse consequences, including:
Current report
The NYSE American may require us to meet the requirements for an initial listing if we consummate the Merger with Tenax
Current report
If we consummate the Merger with Tenax the NYSE American may require us to meet the requirements for an initial listing. The NYSE American has announced it intends to amend its initial listing rules to require, among other criteria, a per share price of at least $4.00 per share and a market capitalization of at least $15,000,000. If we are unable to satisfy such requirements, it may take steps to delist our common stock. There are measures that can be taken to comply with certain of the listing requirements of NYSE American, such as effecting a reverse stock split or selling shares of our common stock. We cannot assure you that the Company will be able to meet those initial listing requirements after the Merger.
Current report
If securities or industry analysts publish inaccurate or unfavorable research or reports about our business, our stock price and trading volume could decline.
Current report
The trading market for our common stock depends, in part, on the research and reports that third-party securities analysts publish about us and the industries in which we operate. Currently, there is limited analyst coverage of our Company. We may be unable or slow to attract research coverage and if one or more analysts cease coverage of us, the price and trading volume of our securities would likely be negatively impacted. If any of the analysts that may cover us change their recommendation regarding our common stock adversely, or provide more favorable relative recommendations about our competitors, the price of our common stock would likely decline. If any analyst that may cover us ceases covering us or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price or trading volume of our common stock to decline. Moreover, if one or more of the analysts who cover us downgrades our common stock, or if our reporting results do not meet their expectations, the market price of our common stock could decline.
Current report
Issuing additional shares of our capital stock, other equity securities, or securities convertible into equity may dilute the economic and voting rights of our existing stockholders, reduce the market price of our common stock, or both. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred stock, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our common stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing, or nature of our future offerings. As a result, holders of our common stock bear the risk that our future offerings may reduce the market price of our common stock and dilute their percentage ownership.
Current report
We are and after completion of the Merger intend to continue to be, subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and any rules promulgated thereunder, as well as the rules of NYSE American. The requirements of these rules and regulations increase our legal and financial compliance costs, make some activities more difficult, time-consuming, or costly, and increase demand on our systems and resources. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls for financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight are required, and, as a result, management’s attention may be diverted from other business concerns. These rules and regulations can also make it more difficult for us to attract and retain qualified independent members of our board of directors. Additionally, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance. We may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. The increased costs of compliance with public company reporting requirements and our potential failure to satisfy these requirements can have a material adverse effect on our operations, business, financial condition, or results of operations.
Removed paragraphs (6)
Previous report
As of December 31, 2024, we had approximately $18,130,000 of indebtedness outstanding pursuant to a loan facility that matures on December 30, 2025 with Webster Bank (“Current Credit Facility”). The average interest rate on this indebtedness during fiscal 2024 was 7.66%. This indebtedness is secured by a lien on substantially all our assets.
Previous report
Additionally, as of December 31, 2024, we had approximately $6,162,000 of subordinated notes payables (“Related Party Notes”) that mature on July 1, 2026 and which are held by two directors Michael N. Taglich and Robert F. Taglich, and their affiliates. The Related Party Notes payable carry interest rate ranging between 7% and 12% per year. Subsequent to December 31, 2024, we repaid approximately $1,291,000 of this debt.
Previous report
Under the terms of the Current Credit Facility, we are required to maintain certain business and financial covenants. As of December 31, 2024, we were in compliance with the minimum EBITDA (as defined in the Current Credit Facility) which represents net income (or loss) before interest, taxes, depreciation and amortization of $2,800,000 on a rolling twelve-month basis. Beginning in with the fiscal quarter ending March 31, 2025 on a rolling twelve-month basis and continuing for the fiscal quarter ending June 30, 2025 on a rolling twelve-month basis we are required to achieve a Fixed Charge Coverage Ratio (as defined) of 1.05x which is a financial metric that is used to measure our ability to cover fixed charges such as interest and lease expenses as divided by EBITDA. This metric increase for future fiscal quarter on a rolling twelve-month basis to 1.25x. If we were not in compliance with the required covenant we would have to seek a waiver with our lender, but we may not be able to do so.
Previous report
Even if we obtain a waiver for the failure to meet a financial covenant, if we do not achieve our fiscal 2025 plan and successfully execute our business strategy, we may not be able to comply with future quarterly covenant requirements. If we fail to do so and/or are unable to obtain future waivers, we may have to pay increased interest rates or may be required to immediately pay any outstanding debt. An increase in the interest rate would likely have a material adverse impact on our consolidated financial position and results of operations. If we were required to make immediate repayment, we may not be able to obtain financing to do so and would become insolvent.
Previous report
Risks Related to our status as a public company and our common stock
Previous report
As a public company, we incur significant legal, accounting and other expenses under the Sarbanes-Oxley Act of 2002, together with rules implemented by the Securities and Exchange Commission and applicable market regulators. These rules impose various requirements on public companies, including requiring certain corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these requirements. Moreover, if new rules or regulations are adopted in future periods, they will likely increase our compliance costs and will make some activities more time-consuming and costlier.
Reworded paragraphs (40)
Previous wording
The risks below can be characterized into three groups:
Current wording
The risks below can be characterized into four groups:
Previous wording
We have a history of net losses, need to refinance our bank debt and the opinion of our auditor contains an explanatory paragraph as to our ability to continue as a going concern.
Current wording
We have a history of net losses, have recently increased our debt to support ongoing business operations, need to refinance our debt and the opinion of our auditor contains an explanatory paragraph as to our ability to continue as a going concern.
Previous wording
We incurred net losses for the years ended December 31, 2024, 2023 and 2022 of $1,366,000, $2,131,000 and $1,076,000, respectively. As of December 31, 2024, we had approximately $18,130,000 of indebtedness outstanding pursuant to our Current Credit Facility that matures on December 30, 2025 with Webster Bank (“Current Credit Facility”) and approximately $6,162,000 of subordinated notes payables (“Related Party Notes”) that mature on July 1, 2026 and which are held by two directors Michael N. Taglich and Robert F. Taglich, and their affiliates. We must pay or refinance large portions of this indebtedness prior to its respective due dates. Further, as a condition to refinancing our Current Credit Facility prior to December 31, 2025, Webster may require that the holders of our Related Party Notes extend or otherwise modify the subordination agreements they have given in favor of the lender. Since it is not likely that we will be able to pay this debt, we have initiated steps to satisfy portions and refinance the balance. These steps included the sale of shares of our common stock pursuant to our Registration Statement on Form S-3 that was declared effective on December 19, 2024. As of March 31, 2025, we have sold 326,791 shares of our common stock for gross proceeds of $1,412,000 of which $1,291,000 has been used to satisfy portions of the Related Party Notes. Because of the uncertainty regarding our ability to refinance our indebtedness, our auditors have included an explanatory paragraph in their opinion as to our ability to continue as a going concern. Refinancing our indebtedness may require us to pay higher interest rates than we currently pay, agree to more restrictive business or financial covenants or involve the issuance of debt, equity and/or new securities convertible into or exercisable or exchangeable for our common stock. Any failure to refinance our existing debt or obtain additional working capital when required would have a material adverse effect on our business and financial condition.
Current wording
We incurred net losses for the years ended December 31, 2025 and 2024 of $1,305,000 and $1,366,000, respectively. During the year ended December 31, 2025, we used $1,352,000 to support our operations and our total indebtedness grew from $20,121,000 as of December 31, 2024, to $25,233,000 as of December 31, 2025. As of December 31, 2025, we had approximately $23,473,000 of indebtedness outstanding pursuant to our Current Credit Facility that matures on September 30, 2026 with Webster Bank (“Current Credit Facility”) and approximately $4,871,000 of subordinated notes (“Related Party Notes”) that mature on October 1, 2026, which are held by two directors Michael N. Taglich and Robert F. Taglich. We must pay or refinance this indebtedness on or prior to its respective due dates. Further, Webster has indicated that it does not want to renew the Current Credit Facility. Since it is not likely that we will be able to pay this debt, we have initiated steps to satisfy portions and refinance the balance. These steps included the sale of shares of our common stock pursuant to our Registration Statement that was declared effective on December 19, 2024, and the entry into a Merger Agreement with Tenax with respect to a proposed merger that would cause Tenax to become our wholly-owned subsidiary. Our financial statements included in this Report have been prepared on the assumption that we will continue as a going concern. Because of the uncertainty regarding our ability to refinance our indebtedness our auditors have included an explanatory paragraph in their opinion as to our ability to continue as a going concern. Our financial statements included in this Report do not include any adjustments that might result if we were not to continue as a going concern. If we were not to consummate the Merger Agreement with Tenax, refinancing our indebtedness may require us to pay higher interest rates than we currently pay, agree to more restrictive business or financial covenants or involve the issuance of debt, equity or new securities convertible into or exercisable or exchangeable for our common stock. Any failure to refinance our existing debt or obtain additional working capital when required would have a material adverse effect on our business and financial condition.
Previous wording
We may need additional financing to fund investments in new or upgraded property or equipment.
Current wording
We may need additional financing to fund operations and to invest in new or upgraded property or equipment.
Previous wording
We may require additional financing to fund investments in new or upgraded property or equipment, in order to remain competitive. If we do, we may also need to obtain the agreement of holders of portions of our debt to extend or otherwise refinance such debt. In order to gain consent, we may need to offer these holders increases in the rates of interest they receive or otherwise compensate them through payments of cash or issuances of our equity securities. Such additional financing or refinancing may involve the issuance of debt, equity and/or securities convertible into or exercisable or exchangeable for our equity securities and may not be available to us on reasonable terms, if at all. If we are unable to consummate such additional financing or re-financing, the trading price of our common stock could be adversely affected, and the terms of such financing may adversely affect the interests of our existing stockholders. Any failure to fund working capital when required would have a material adverse effect on our business and financial condition and may result in a decline in our stock price. Any issuances of our common stock, preferred stock, or securities such as warrants or notes that are convertible into, exercisable or exchangeable for, our capital stock, would have a dilutive effect on the voting and economic interest of our existing stockholders.
Current wording
During fiscal 2025 we used $1,352,000 to fund ongoing business operations and used in excess of $3,000,000 to purchase new equipment to improve our operating efficiencies. As a result, the amount of our indebtedness grew from $20,121,000 as of December 31, 2024, to $25,233,000 as of December 31, 2025. We will require additional financing to fund operations and investments in new or upgraded property or equipment in order to remain competitive and will need to obtain the agreement of holders of portions of our debt to incur new debt or otherwise refinance our existing debt. In order to gain their consent, we may need to offer these holders increases in the rates of interest they receive or otherwise compensate them through payments of cash or issuances of our equity securities. Such additional financing or refinancing may involve the issuance of debt, equity or securities convertible into or exercisable or exchangeable for our equity securities and may not be available to us on reasonable terms, if at all. If we are unable to obtain additional financing or refinance our existing debt, the trading price of our common stock could be adversely affected. If we are able to obtain additional financing or refinance our existing debt, the terms of such financing may adversely affect the interests of our existing stockholders. Any failure to fund working capital when required would have a material adverse effect on our business and financial condition and may result in a decline in our stock price. Additionally, we may need to consider other types of restructuring including seeking protection under U.S. bankruptcy law. Any issuances of our common stock, preferred stock, or securities such as warrants or notes that are convertible into, exercisable or exchangeable for, our capital stock, would have a dilutive effect on the voting and economic interest of our existing stockholders.
Previous wording
The ultimate end-user for most of our products is the U.S. Government, with significant emphasis on military aircraft. In certain instances, our products may be exported to allied foreign governments by the U.S. Government. Although we expect to generate net sales from all of our key aerospace and defense platforms and programs for many years, they are subject to significant risk. Congressional appropriation and presidential approval are required for funding, leaving our platforms and programs vulnerable to potential budget reductions at any point. For instance, a decrease in U.S. government defense spending or a strategy shift to rocket and drone platforms instead of large military aircraft platforms, could curtail demand for our landing gear parts and other components we provide which would likely have a materially adverse effect on our business strategy, revenues, operating results and financial condition.
Current wording
The ultimate end-user for a significant portion of our products is the U.S. Government, with significant emphasis on military aircraft. In certain instances, our products may be exported to allied foreign governments by the U.S. Government. Although we expect to generate sales from all of our key aerospace and defense platforms and programs for many years, they are subject to significant risk. Congressional appropriation and presidential approval are required for funding, leaving our platforms and programs vulnerable to potential budget reductions at any point. For instance, a decrease in U.S. government defense spending or a strategy shift to rocket and drone platforms instead of helicopters and large military aircraft platforms, could curtail demand for landing gear parts and other components we provide which would likely have a materially adverse effect on our business strategy, revenues, operating results and financial condition.
Previous wording
Although we have cultivated long-standing relationships with many of our customers, the aerospace and defense industry is characterized by a smaller number of large and well-known prime customers. We depend on revenues from these relationships and any loss, cancellation, reduction, or interruption in these relationships could harm our business.
Current wording
Although we have cultivated long-standing relationships with many of our customers, the aerospace and defense industry is characterized by a small number of large and well-known prime customers. A majority of our revenue is derived from sales to a limited number of customers and any loss, cancellation, reduction, or interruption in these relationships could harm our business.
Previous wording
Our products are purchased by a relatively small number of large aerospace and defense customers who incorporate them into larger products for ultimate end-use by the U.S. Government, international governments, and commercial global airlines. Consequently, we have a high degree of sales concentration among specific customers making it challenging to diversify our customer base. In fiscal years 2024 and 2023, four customers, accounted for approximately 73.4% and 64.2% of net sales, respectively.
Current wording
Our products are purchased by a relatively small number of large aerospace and defense customers who incorporate them into larger products for ultimate end-use by the U.S. Government, international governments, and commercial global airlines. A majority of our revenue is derived from sales to a limited number of customers. Consequently, we have a high degree of sales concentration among specific customers making it challenging to diversify our customer base. In fiscal years 2025 and 2024, four customers, two of which were part of the same corporate group, accounted for approximately 75.2% and 73.4% of net sales, respectively.
Previous wording
Our future success relies heavily on nurturing expanding and effectively managing these relationships. Nevertheless, we cannot assure retention of these customers or their continuing to purchasing at previous levels. The loss of any key customers, a decline or interruption in sales to them, or our inability to establish relationships with new customers, could significantly impact our business.
Current wording
Our future success relies heavily on nurturing, expanding and effectively managing these relationships. Nevertheless, we cannot assure retention of these customers or their continuing to purchase at previous levels. The loss of any key customer, a decline or interruption in sales to them, or our inability to establish relationships with new customers, could significantly impact our business.
Previous wording
We may lose sales if our suppliers fail to meet our needs or ship raw materials to us on timely.
Current wording
We may lose sales if our suppliers fail to meet our needs or ship raw materials to us on schedule.
Previous wording
We must deliver our products timely with high quality to ensure smooth operation of our customer production lines. In order to do so, we attempt to procure our raw materials, parts and components as well as subcontracted services from various sources and utilize multiple subcontractors. However, certain materials, components and services are exclusively available from a sole or limited number of suppliers and we are reliant upon them. Additionally, material sourced from overseas are susceptible to supply chain disruptions stemming from global events and political decisions. While we believe that, in many cases, alternative supplies, components, assemblies, or subcontractors could be secured, sourcing substitutes may necessitate the development of new suppliers or require product re-engineering and qualification, potentially leading to shipment delays. Any interruptions in raw material shipments or subcontracted service performance could significantly harm our business, our operating results and our financial condition.
Current wording
We must deliver our products timely with high quality to ensure smooth operation of our customers’ production lines. In order to do so, we attempt to procure our raw materials, parts and components as well as subcontracted services from various sources and utilize multiple subcontractors. However, certain materials, components and services are exclusively available from a sole or limited number of suppliers and we are reliant upon them. Additionally, materials sourced from overseas are susceptible to supply chain disruptions stemming from global events and political decisions. While we believe that, in many cases, alternative supplies, components, assemblies, or subcontractors could be secured, sourcing substitutes may necessitate the development of new suppliers or require product re-engineering and qualification, potentially leading to shipment delays. Any interruptions in raw material shipments or subcontracted service performance could significantly harm our business, our operating results and our financial condition.
Previous wording
We obtain many LTA and other contracts through a competitive bidding process. We must devote substantial time and resources to prepare bids and proposals and may not have contracts awarded to us. Even if we win contracts, there can be no assurance that the prices that we bid will be sufficient to allow us to generate a profit from any particular contract. There are significant costs involved with producing a small number of initial units of any new product and it may not be possible to recoup such costs on later production runs.
Current wording
We obtain many LTA and other contracts through a competitive bidding process. We must devote substantial time and resources to prepare bids and proposals which may not result in contract awards to us. Even if we win contracts, there can be no assurance that the prices that we bid will be sufficient to allow us to generate a profit from any particular contract. On occasion, we may submit a bid for an initial contract award that will generate negative or minimal gross margin in anticipation of price increases or operational efficiencies which lead to improved gross margins on subsequent orders. There are significant costs involved with producing a small number of initial units of any new product and it may not be possible to recoup such costs on later production runs.
Previous wording
The cost estimation process requires significant judgment and expertise. Reasons for cost growth include unavailability and productivity of labor, the nature and complexity of the work to be performed, the effect of change orders, the availability of materials, the effect of delays in performance, availability and timing of funding from the customer, natural disasters, supply chain disruptions and the inability to recover any claims for added services necessary to complete production. A significant change in costs from those on which we based our estimates on one or more programs could have a material effect on our consolidated financial position or results of operations.
Current wording
The cost estimation process requires significant judgment and expertise. Reasons for cost growth include unavailability and productivity of labor, the nature and complexity of the work to be performed, the effect of change orders, the availability of materials, the ability of subcontractors to meet their commitments, the effect of delays in performance, availability and timing of funding from the customer, natural disasters, supply chain disruptions and the inability to recover any claims for added services necessary to complete production. A significant change in costs from those on which we based our estimates on one or more programs could have a material effect on our consolidated financial position or results of operations.
Previous wording
The prices of raw materials used in our manufacturing processes are volatile. Some LTA agreement with customers allow us to increase our prices due to increases in the price of raw materials. However, these LTA agreements generally require that we first absorb all or a portion of the price increases before being able to pass on the increase to the customer. For some LTA agreements, we are at full risk for future price agreements. If the prices of raw materials rise, we may not be able to pass along all of such increases to our customers and this could have an adverse impact on our financial position and results of operations. It is possible that some of the raw materials we use might become subject to new or increased tariffs. Significant increases in the prices of raw materials could adversely impact our customers’ demand for certain products which could lead to a reduction in our revenues and have a material adverse impact on our revenues and on our financial position and results of operations.
Current wording
The prices of raw materials used in our manufacturing processes are volatile. Some LTA agreements with customers allow us to increase our prices due to increases in the price of raw materials. However, these LTA agreements generally require that we first absorb all or a portion of the price increases before being able to pass on the increase to the customer. For some LTA agreements, we are at full risk for future price agreements. If the prices of raw materials rise, we may not be able to pass along all of such increases to our customers and this could have an adverse impact on our financial position and results of operations. It is possible that some of the raw materials we use might become subject to new or increased tariffs. Significant increases in the prices of raw materials could adversely impact our customers’ demand for certain products which could lead to a reduction in our revenues and have a material adverse impact on our revenues and on our financial position and results of operations.
Previous wording
Some of the products we produce require months to produce and we sometimes produce products in excess of the number ordered intending to sell the excess as spares when orders arise. As a result, our inventory turns slowly and ties up our working capital. Our inventory represented approximately 56% of our assets as of December 31, 2024. Any requirement to write down the value of our inventory due to obsolescence, excess and slow moving, or a drop in the price of materials could have a material adverse effect on our consolidated financial position and results of operations.
Current wording
Some of the products we produce require months to produce and we sometimes produce products in excess of the number ordered intending to sell the excess as spares when orders arise. As a result, our inventory turns slowly and ties up our working capital. Our inventory represented approximately 58.7% of our assets as of December 31, 2025. Any requirement to write down the value of our inventory due to obsolescence, excess and slow moving quantities or a drop in the price of materials could have a material adverse effect on our consolidated financial position and results of operations.
Previous wording
Although we develop our internal processes, nearly all the parts and subassemblies we produce are built to customer specifications and the customer owns the intellectual property, if any, related to the product. Consequently, if a customer desires to use another manufacturer to fabricate its part or subassembly, it would be free to do so, which could have a material adverse effect on our business, our operating results and financial condition.
Current wording
Although we develop internal production processes, nearly all the parts and subassemblies we produce are built to customer specifications and the customer owns the intellectual property, if any, related to the product. Consequently, if a customer desires to use another manufacturer to fabricate its part or subassembly, it is free to do so, which could have a material adverse effect on our business, our operating results and financial condition.
Previous wording
From time-to-time in order to reduce our dependence on subcontractors, increase our customers’ reliance upon us or increase our gross margins we offer new services to our customers, such as painting and finishing products we already manufacture for them. There are risks associated with offering new services and even if performed timely and correctly, it is likely that our margins for these new services will be relatively low, or even negative, in the initial phases when volume is low. We may not be successful in achieving positive gross margins for new services or be able to ultimately meet our customer requirements. If we are unsuccessful, it could hurt our relationship with our customers.
Current wording
From time-to-time, to reduce our dependence on subcontractors, increase our customers’ reliance upon us or increase our gross margins we offer new services to our customers, such as painting and finishing products we manufacture. There are risks associated with offering new products and services and even if performed timely and correctly, it is likely that our margins for these new services will be relatively low, or even negative, in the initial phases when volume is low. We may not be successful in achieving positive gross margins for new services or be able to ultimately meet our customer requirements. If we are unsuccessful, it could hurt our relationship with our customers.
Previous wording
We are subject to intense competition for the services of skilled machinists necessary to manufacture our products and those of other companies in the aerospace and defense industry. In recent years, the competition for skilled employees has intensified and we have experienced wage inflation. We have strategically located our operations in the U.S. and many companies are expanding their domestic production. As such, there is currently a shortage of skilled workers in the U.S. In order to maintain and increase production levels, we must hire new employees and machinists for our two state-of-the art manufacturing facilities and we may not be able to do so or the costs to hire and/or train them may significantly exceed our budget. If the U.S. economy continues to experience inflation, our labor costs may further increase which could have a material adverse effect on our business, financial condition and results of operations.
Current wording
We are subject to intense competition for the services of skilled machinists necessary to manufacture our products and those of other companies in the aerospace and defense industry. In recent years, the competition for skilled employees has intensified and we have experienced wage inflation. We have strategically located our operations in the U.S. and many companies are expanding their domestic production. As such, there is currently a shortage of skilled workers in the U.S. In order to increase production levels, we must hire new employees and machinists for our two state-of-the art manufacturing facilities and we may not be able to do so or the costs to hire and/or train them may significantly exceed our budget. If the U.S. economy continues to experience inflation, our labor costs may further increase which could have a material adverse effect on our business, financial condition and results of operations.
Previous wording
Most of our products are used by large aerospace and prime contractors who ultimately provide them to the U.S. Government, foreign governments and commercial airlines. As such, in most cases, we are required to maintain confidential and proprietary information on our information systems. Hackers, whether they be individuals, entities or hostile enemies, may attempt to penetrate our network or those of our third-party hosting and storage providers, to gain access to confidential and proprietary data. If any of this data is hacked or leaked, obtained by others or destroyed without authorization, it could harm our reputation, we could be exposed to civil and criminal liability, which will materially impact our financial results and financial condition. Any system or service disruptions caused by hackers or even those caused by projects to improve our information technology capabilities, if not mitigated, could significantly disrupt our production and assembly could have an immediate material adverse effect on our business. We could also be subject to systems failures, including network, software or hardware failures, whether caused by us or third-party service providers, computer viruses, natural disasters or power shortages.
Current wording
Most of our products are used by large aerospace and prime contractors who ultimately provide them to the U.S. Government, foreign governments and commercial airlines. As such, in most cases, we are required to maintain confidential and proprietary information on our information systems. Hackers, whether they be individuals, entities or hostile enemies, may attempt to penetrate our network or those of our third-party hosting and storage providers, to gain access to confidential and proprietary data. If any of this data is hacked or leaked, obtained by others or destroyed without authorization, it could harm our reputation, we could be exposed to civil and criminal liability, which will materially impact our financial results and financial condition. Any system or service disruptions caused by hackers or those caused by projects to improve our information technology capabilities, if not mitigated, could significantly disrupt our production and assembly and could have an immediate material adverse effect on our business. We could also be subject to systems failures, including network, software or hardware failures, whether caused by us or third-party service providers, computer viruses, natural disasters or power shortages.
Previous wording
We are subject to an extensive and highly-evolving regulatory landscape, and requirements imposed by our customers to secure our communications, and any adverse changes to, or our failure to comply with, any laws and regulations or requirements of our clients could adversely affect our brand, reputation, business, operating results, and financial condition.
Current wording
We are subject to an extensive and evolving regulatory landscape and requirements imposed by our customers to secure our communications, and any adverse changes to, or our failure to comply with, any laws and regulations or requirements of our clients could adversely affect our brand, reputation, business, operating results, and financial condition.
Previous wording
We subject to extensive laws, rules and regulations directed to those who conduct business over the internet, in addition to security requirements imposed by our clients, including those governing privacy, data governance, data protection and cybersecurity. Many LTAs that we sign with our customers also require us to comply with strict vendor clauses including replications of specific sections of the FAR. These legal and regulatory regimes, including the laws, rules, and regulations thereunder, may be modified, interpreted, and applied in an inconsistent manner. To the extent we have not complied with such laws, rules, and regulations, or requirements imposed by our LTAs, we could be subject to significant fines, limitations the products and services we provide, reputational harm, and other regulatory consequences, each of which may be significant and could adversely affect our business, operating results, and financial condition.
Current wording
We are subject to extensive laws, rules and regulations directed to those who conduct business over the internet, in addition to security requirements imposed by our clients, including those governing privacy, data governance, data protection and cybersecurity. Many LTAs that we sign with our customers require us to comply with strict vendor clauses including replications of specific sections of the FAR. These legal and regulatory regimes, including the laws, rules, and regulations thereunder, may be modified, interpreted, and applied in an inconsistent manner. To the extent we have not complied with such laws, rules, and regulations, or requirements imposed by our LTAs, we could be subject to significant fines, limitations on the products and services we provide, reputational harm, and other regulatory consequences, each of which may be significant and could adversely affect our business, operating results, and financial condition.
Previous wording
Complying with the requirements imposed by the U.S. Government and our customers with respect to privacy, data governance, data protection and cybersecurity is costly and requires a significant amount of attention form management.
Current wording
Complying with the requirements imposed by the U.S. Government and our customers with respect to privacy, data governance, data protection and cybersecurity is costly and requires a significant amount of attention from management.
Previous wording
Conflicts between nations (such as the ongoing Russia-Ukraine conflict), or between nations and terrorist organizations (such as the ongoing conflict between terrorist groups and Israel), as well as terrorist attacks, natural disasters (such as hurricanes, fires, floods and earthquakes), unusually adverse weather conditions, pandemic outbreaks or a banking crisis, the imposition of tariffs, shifts in government alliances, could adversely affect our operations and financial performance. If any of these events affect us or our suppliers, it could result in an inability on our part to manufacture products and/or result in lost sales, materially affecting our operations and financial performance.
Current wording
Conflicts between nations (such as the ongoing Russia-Ukraine conflict or the conflict with Iran), or between nations and terrorist organizations (such as the ongoing conflict between terrorist groups and Israel), as well as terrorist attacks, natural disasters (such as hurricanes, fires, floods and earthquakes), unusually adverse weather conditions, pandemic outbreaks or a banking crisis, the imposition of tariffs, or shifts in government alliances, could adversely affect our operations and financial performance. If any of these events impact us or our suppliers, it could result in an inability on our part to manufacture products and/or result in lost sales, materially affecting our operations and financial performance.
Previous wording
Russia’s ongoing war with Ukraine, the conflict in the Middle East, continued tensions between the US and the European Union with China and Russia, and tension between the US and the European Union with respect to funding Ukraine’s war effort, tariffs and other issues, may alter countries’ willingness to rely on others as the source of certain products and material.
Current wording
Russia’s ongoing war with Ukraine, the conflict in the Middle East (including the ongoing U.S. military operations in Iran), continued tensions between the US and the European Union with China and Russia, and tension between the US and the European Union with respect to funding Ukraine’s war effort, tariffs and other issues, may alter countries’ willingness to rely on others as the source of certain products and material.
Previous wording
Historically, prime contractors and the entire U.S. aerospace and defense supply chain have relied upon parts, components, and raw materials from foreign suppliers including those located in Russia and China. Conversely, many nations chose to rely upon U.S. manufacturers as their primary source for defense products, such as helicopters and fighter aircraft. Geo-political tensions have increased during the past several years and we expect them to continue. Supply chain disruptions resulting from escalating political tensions and the economic disruption resulting from retaliatory measures between any countries could result in production delays and cancellations of programs.
Current wording
Historically, prime contractors and the entire U.S. aerospace and defense supply chain have relied upon parts, components, and raw materials from foreign suppliers including those located in Russia and China. Conversely, many nations chose to rely upon U.S. manufacturers as their primary source for defense products, such as helicopters and fighter aircraft. Geo-political tensions have increased during the past several years and we expect them to continue. Supply chain disruptions resulting from escalating political tensions and the economic disruption resulting from retaliatory measures between countries could result in production delays and cancellations of programs.
Previous wording
As of December 31, 2024, we have total indebtedness of approximately $26,283,000, large portions of which must be redeemed or refinanced prior to December 30, 2025 and July 1, 2026. We may not be able to achieve favorable financing terms in the future or consummate any refinancing of our existing loans prior to their respective maturity dates. Failure to do so would materially impact our business and our stock price.
Current wording
As of December 31, 2025, we have total indebtedness of approximately $30.1million, large portions of which must be paid or refinanced prior to September 30, 2026. We have been advised by Webster Bank, our principal lender, that it will not renew our Current Credit Facility. Although Tenax has agreed in the Merger Agreement that it or an affiliate, will pay or cause us to pay our indebtedness, if the Merger with Tenax is not consummated, we may not be able to refinance our existing loans prior to their respective maturity dates. Failure to do so would materially impact our business and our stock price, and we could be forced to cease or suspend our operations or become insolvent.
Previous wording
In addition to $1,007,000 of finance lease obligations and a $14,000 vehicle loan, we also had $970,000 of borrowings for the solar energy systems installed at our Barkhamsted facility pursuant to a financing agreement (“Solar Facility”) with CT Green Bank. On October 1, 2024, the Solar Facility converted to a 20-year level payment term loan.
Current wording
As of December 31, 2025, we had approximately $23,473,000 of indebtedness outstanding pursuant to the Current Credit Facility with Webster Bank, as amended (“Current Credit Facility”), that matures September 30, 2026. This indebtedness is secured by a lien on substantially all our assets. Additionally, as of December 31, 2025, we had approximately $4,871,000 of Related Party Notes that mature October 1, 2026, which are held by two directors, Michael N. Taglich and Robert F. Taglich. In addition to approximately $784,000 of finance lease obligations, at December 31, 2025, we also had $971,000 of borrowings for the solar energy systems installed at our Barkhamsted facility pursuant to a 20-year level payment term loan with CT Green Bank (“Solar Facility”).
Previous wording
If we are unable to pay or refinance our indebtedness when due, our operations may be materially and adversely affected. We must pay or refinance large portions of this indebtedness prior to December 30, 2025, and July 1, 2026. Since it is unlikely that we will be able to pay this debt, we have initiated steps to satisfy portions and refinance the balance. Refinancing may require us to pay higher interest rates than we currently pay, agree to more restrictive business or financial covenants or involve the issuance of debt, equity and/or new securities convertible into or exercisable or exchangeable for our common stock which may adversely affect the trading price of our common stock and the interests of our existing stockholders. Any failure to refinance our existing debt or obtain additional working capital when required would have a material adverse effect on our business and financial condition and may result in a decline in our stock price. Any issuances of our common stock, preferred stock, or securities such as warrants or notes that are convertible into, exercisable or exchangeable for, our capital stock, would have a dilutive effect on the voting and economic interest of our existing stockholders.
Current wording
If we are unable to pay or refinance our indebtedness when due, our operations may be materially and adversely affected. We must pay or refinance large portions of our indebtedness prior to September 30, 2026. Since it is unlikely that we will be able to pay this debt, we have initiated steps to satisfy portions and refinance the balance, including entering into a Merger Agreement with Tenax. If we were not to consummate the Merger Agreement, refinancing our indebtedness may require us to pay higher interest rates than we currently pay, agree to more restrictive business or financial covenants or involve the issuance of debt, equity or new securities convertible into or exercisable or exchangeable for our common stock which may adversely affect the trading price of our common stock and the interests of our existing stockholders. Any failure to refinance our existing debt or obtain additional working capital when required would have a material adverse effect on our business and financial condition and may result in a decline in our stock price. Any issuances of our common stock, preferred stock, or securities such as warrants or notes that are convertible into, exercisable or exchangeable for, our capital stock, would have a dilutive effect on the voting and economic interest of our existing stockholders.
Previous wording
The weighted average interest rate we paid in 2024 on borrowings outstanding on the Current Credit Facility was 7.66% and this interest rate may increase in the future.
Current wording
The weighted average interest rate we paid in 2025 on borrowings outstanding on the Current Credit Facility was 6.72% and this interest rate may increase in the future. Further, we agreed to pay Webster $40,000 as a condition to its agreement to extend the due date of the Current Credit Facility from December 31, 2025, to March 31, 2026, and an additional $175,000 for its agreement to extend the due date to September 30, 2026.
Previous wording
The weighted average interest rate paid during the year-ended December 31, 2024 on borrowings outstanding on the Current Credit Facility was 7.66% as compared to 7.55% for the year-ended December 31, 2023, the increase reflects the increase in the target rates set by the Federal Reserve. Under the terms of our Current Credit Facility, amounts due bear interest at a per annum rate equal to the greater of (i) 3.50% and (ii) a rate per annum equal to the rate per annum published from time to time in the “Money Rates” table of the Wall Street Journal (or such other presentation within The Wall Street Journal as may be adopted hereafter for such information) as the base or prime rate for corporate loans at the nation’s largest commercial bank, less sixty-five hundredths (-0.65%) of one percent per annum. Consequently, we may be susceptible to future increased rates if the Federal Reserve chooses to increase its target rate of interest.
Current wording
The weighted average interest rate paid during the year-ended December 31, 2025 and 2024, on borrowings outstanding on the Current Credit Facility was 6.72% and 7.66%, respectively. Under the terms of our Current Credit Facility, amounts due bear interest at a per annum rate equal to the greater of (i) 3.50% and (ii) a rate per annum equal to the rate per annum published from time to time in the “Money Rates” table of the Wall Street Journal (or such other presentation within The Wall Street Journal as may be adopted hereafter for such information) as the base or prime rate for corporate loans at the nation’s largest commercial bank, less sixty-five hundredths (-0.65%) of one percent per annum. Consequently, we may be susceptible to future rate increases if the Federal Reserve chooses to increase its target rate of interest. Further, Webster Bank has indicated that it will not refinance the Current Credit Facility and advised us to seek a new lender. If we were not to consummate the Merger Agreement with Tenax and seek to refinance our debt, it is likely that the interest rate and other consideration we would have to pay would exceed the rates and amounts payable pursuant to the Current Credit Agreement. In addition, in consideration for its agreement to extend the due date of the Current Credit Facility first from December 31, 2025, to March 31, 2026, and subsequently, to September 30, 2026, we agreed to pay Webster Bank fees of $40,000 and $175,000 respectively. If we are unable to refinance the Current Credit Facility and Webster Bank was to continue to fund us pursuant to the Current Credit Facility, it is likely that the rate of interest and other consideration we pay to Webster Bank would increase.
Previous wording
We currently do not pay dividends and the terms of our Current Credit Facility limit our ability to pay dividends.
Current wording
The terms of our Current Credit Facility limit our ability to pay dividends.
Previous wording
We currently do not pay dividends and have no foreseeable plans to do so. Additionally, the terms and covenants of our Current Credit Facility do not currently allow us to. In the future should we decide to pay dividends, we would need to seek covenant changes or a waiver under our Current Credit Facility. There can be no assurance our lenders would agree to covenant changes or grant a waiver. In addition, we may in the future incur additional indebtedness or otherwise become subject to agreements whose terms restrict our ability to pay dividends in the future.
Current wording
The terms and covenants of our Current Credit Facility do not allow us to pay dividends. In the future, should we decide to pay dividends, we would need covenant changes or a waiver under our Current Credit Facility. There can be no assurance our lender would agree to covenant changes or grant a waiver. In addition, we may in the future incur additional indebtedness or otherwise become subject to agreements whose terms restrict our ability to pay dividends in the future.
Previous wording
Although our common stock is listed on the NYSE American, there is only a limited number of our shares available in the public float and the related market capitalization of such float is relatively small. The trading volume for our common stock has been limited and a more active public market for our common stock may not develop or be sustained over time. The lack of a robust market may impair a stockholder’s ability to sell shares of our common stock. In the absence of a more active trading market, any attempt to sell our shares could result in a decrease in the price of our stock. Specifically, our shareholders may not be able to resell their shares of common stock at or above the price paid for such shares or at all.
Current wording
Although our common stock is listed on the NYSE American, there is only a limited number of our common shares available in the public float and the related market capitalization of our float is relatively small. Further, the proportion of our shares in the float will represent a very minor portion of our outstanding shares immediately following consummation of the Merger. The trading volume for our common stock has been limited and a more active public market for our common stock may not develop or be sustained over time. The lack of a robust market may impair a stockholder’s ability to sell shares of our common stock. In the absence of a more active trading market, any attempt to sell our shares could result in a decrease in the price of our stock. Specifically, our shareholders may not be able to resell their shares of common stock at or above the price paid for such shares or at all.
Previous wording
Two of our directors, Michael N. Taglich and Robert F. Taglich, and their affiliates own a significant portion of our outstanding shares of common stock. They also hold $4,871,000 of Related Party Notes as of March 31, 2025, some of which are convertible into our common stock. Although the Related Party Notes are subordinate to the $18,130,000 of debt outstanding pursuant to the Current Credit Facility, we may require additional concessions from the holders of the Related Party Notes when we seek to refinance the Current Credit Facility. These related parties have significant influence over the outcome of corporate actions, including those requiring stockholder approval. The interests of these related parties may be different from the interests of other stockholders on these and other matters. Additionally, this concentration of ownership could also have the effect of delaying or preventing a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which in turn could reduce the price of our common stock.
Current wording
Two of our directors, Michael N. Taglich and Robert F. Taglich, and their affiliates own a significant portion of our outstanding shares of common stock. They also held $4,871,000 of Related Party Notes as of December 31, 2025, some of which are convertible into our common stock. Although the Related Party Notes are subordinate to our debt pursuant to the Current Credit Facility, we may require additional concessions from the holders of the Related Party Notes and Tenax if we seek to refinance the Current Credit Facility or issue new debt. These related parties have significant influence over the outcome of corporate actions, including those actions requiring stockholder approval to permit the Merger to be consummated. The interests of these related parties may be different from the interests of other stockholders on these and other matters. Additionally, this concentration of ownership could also have the effect of delaying or preventing a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which in turn could reduce the price of our common stock.
Previous wording
Moreover, sales of our common stock in the public market, or the perception that such sales could occur, could negatively impact the price of our common stock. As a result, our shareholders may not be able to sell your shares of our common stock in short time periods, or possibly at all, and the price per share of our common stock may fluctuate significantly.
Current wording
The sale of substantial amounts of shares of our common stock in the public market or the perception that such sales could occur, could negatively impact the market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us or our shareholders to sell equity securities in the future at a time and at a price that we or they deem appropriate.
Previous wording
The market price of our common stock is likely to be highly volatile, which could result in substantial losses to investors.
Current wording
The market price of our common stock is highly volatile, which could result in substantial losses to investors.
Previous wording
The market price of our common stock has historically been volatile and is likely to continue to be volatile. The market price of our common stock could fluctuate widely due to factors relating to our operations as well as those beyond our control. Because our common stock is thinly traded, the trading price may be volatile due to factors concerning our operations, such as variations in our operating results, failure to meet the covenants under the Current Credit Facility, news regarding the loss of a major customer or termination or a reduction in funding for a program we are on, the loss of management personnel, the outcome or perception of the potential outcome of any litigation, general industry conditions and significant industry developments. In addition, the market price of our common stock may be affected by factors unrelated to our operations, such as general economic factors, government budgeting decisions affecting our industry and developments in the financial markets and availability of credit.
Current wording
The market price of our common stock has historically been volatile and is likely to continue to be volatile. The market price of our common stock could fluctuate widely due to factors relating to our operations, the terms of our Merger Agreement with Tenax, as well as those beyond our control, including public perception of the business prospects of Tenax and the likelihood of consummation of the Merger with Tenax. Because our common stock is thinly traded, the trading price may be volatile due to factors concerning our operations, such as variations in our operating results, failure to meet the covenants under the Current Credit Facility, news regarding the loss of a major customer or termination or a reduction in funding for a program we are on, the loss of management personnel, the outcome or perception of the potential outcome of any litigation, public perception of the business prospects of Tenax and the likelihood of consummation of the Merger with Tenax, general industry conditions and significant industry developments. In addition, the market price of our common stock may be affected by factors unrelated to our operations, such as general economic factors, government budgeting decisions affecting our industry and developments in the financial markets and availability of credit.
Previous wording
Future sales or issuances of our common stock, including upon conversion of our outstanding convertible notes, upon exercise of our outstanding warrants and options, or as part of future financings or acquisitions, would be substantially dilutive to the outstanding shares of common stock. Any dilution or potential dilution may cause our stockholders to sell their shares, which would contribute to a downward movement in the price of common stock.
Current wording
Future sales or issuances of our common stock, including upon conversion of our outstanding convertible notes, upon exercise of our outstanding warrants and options, or as part of the Merger and other future financings or acquisitions, would be substantially dilutive to the outstanding shares of common stock. Any dilution or potential dilution may cause our stockholders to sell their shares, which would contribute to a downward movement in the price of common stock.
Previous wording
We incur significant costs as a result of operating as a public company, and our management is required to devote substantial effort to compliance requirements, including establishing and maintaining internal controls over financial reporting, and we may be exposed to potential risks if we are unable to comply with these requirements. Costs to comply may increase in the future.
Current wording
We incur significant costs as a result of operating as a public company, and our management is required to devote substantial effort to compliance requirements, including establishing and maintaining internal controls over financial reporting, and we may be exposed to potential risks if we are unable to comply with these requirements. Costs to comply may increase in the future. The requirements of being a public company affect our ability to attract and retain qualified board members.
Previous wording
Our management determined that as of December 31, 2024, our disclosure controls and procedures and internal control over financial reporting were not effective due to a material weakness regarding appropriate segregation of duties with respect to and validation of data produced by certain modules of our financial IT systems. We first determined this weakness in fiscal 2022. Although new controls have been implemented during fiscal 2023 and 2024, we will need to enhance and further formalize these controls during fiscal 2025. We expect to conclude our testing of effectiveness in fiscal 2025 but we may find that fiscal 2023 and 2024 remediations were not effective and have to incur additional costs to adopt new controls. A significant increase in costs in 2025 or any failure to maintain our controls or operation of these controls, could harm our operations, decrease the reliability of our financial reporting, and cause us to fail to meet our financial reporting obligations, which could adversely affect our business and reduce our stock price.
Current wording
Our management determined that as of December 31, 2025, our disclosure controls and procedures and internal control over financial reporting were not effective due to a material weakness regarding appropriate segregation of duties with respect to and validation of data produced by certain modules of our financial IT systems. We first determined this weakness in fiscal 2022 and have not been able to address these weaknesses without incurring significant costs and/or process changes. Although improved controls have been implemented during fiscal 2023, 2024, and 2025, we will need to enhance and further formalize these controls during fiscal 2026. We expect to conclude our testing of effectiveness in fiscal 2026 but we may find that the remediations implemented were not effective and have to incur additional costs to adopt new controls. A significant increase in costs in 2026 or any failure to maintain our controls or operation of these controls, could harm our operations, decrease the reliability of our financial reporting, and cause us to fail to meet our financial reporting obligations, which could adversely affect our business and reduce our stock price.