CPI AEROSTRUCTURES INC
For the period ended Mar 31, 2026. Filed May 15, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 15, 2026
CVU$4.62+3.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001999371-25-017728
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-15.
0001999371-26-010877
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe 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 94 previous paragraphs and 74 current paragraphs.
26 unchanged; 29 reworded; 19 added; 38 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 6 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 (19)
Current report
The forward-looking statements contained in this Form 10-Q speak only as of the date of this report. Except as required by applicable law, we undertake no obligation to update or revise any forward-looking statements to reflect subsequent events, changed circumstances, or changes in expectations.
Current report
We are engaged in the contract production of structural aircraft assemblies for fixed wing aircraft and helicopters in both the commercial and defense markets. We also participate in the aerosystems sector through our production of reconnaissance pod structures and fuel panel systems. Within the global aerostructures and aerosystems supply chain, we are either a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers. We also are a prime contractor to the U.S. DOD, primarily the USAF. In conjunction with our assembly operations, we provide engineering, program management, supply chain management and kitting, and MRO services.
Current report
Backlog is not necessarily indicative of future revenues or the timing of such revenues. The realization of backlog depends on a number of factors, including program funding, customer requirements, and the continuation of the underlying programs. Backlog may also include amounts associated with options or anticipated orders under existing contracts that are not yet funded or awarded and are subject to change.
Current report
Total Revenue for the three months ended March 31, 2026 was $17,359,940 compared to $15,400,608 for the same period last year, an increase of $1,959,332 or 12.7%. The increase was driven primarily by favorable adjustments on our NGJ – Mid Band Pods and Advanced Tactical Pods program and NGJ – Low Band Pods program, partially offset by unfavorable adjustments to our F-16 RI/DCC’s program and Embraer Phenom-300 Engine Inlet Assemblies program.
Current report
Revenue from military subcontracts was $14,678,977 for the three months ended March 31, 2026 compared to $11,326,608 for the three months ended March 31, 2025, an increase of $3,352,369 or 29.6%. The increase was driven primarily by favorable adjustments on our NGJ – Mid Band Pods and Advanced Tactical Pods program and NGJ – Low Band Pods program.
Current report
Income (loss) before provision for income taxes for the three months ended March 31, 2026 was $1,568,066 compared to $(1,672,893) for the three months ended March 31, 2025, an increase of $3,240,959 or 193.7% for the reasons noted above.
Current report
Provision/(Benefit) for Income Taxes
Current report
Provision for income taxes for the three months ended March 31, 2026 was $331,348 compared to (benefit) for income taxes of $(348,969) for the three months ended March 31, 2025, an increase of $680,317 or 195.0%.
Current report
At March 31, 2026, we had cash of $1,002,548 compared to $899,199 at December 31, 2025, an increase of $103,349 or 11.5%. This increase was primarily the result of positive cash flows from the reduction in accounts receivable during the quarter.
Current report
On December 12, 2025, the Company entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Western Alliance Bank (the “Bank”). The Loan and Security Agreement provides for a revolving line of credit in the maximum principal amount of $10,000,000 (the “Revolving Line”) and a term loan in the original principal amount of $10,000,000 (the “Term Loan” and, together with the Revolving Line, the “Credit Facilities”). WMI and Compac, have guaranteed the Company’s obligations under the Loan and Security Agreement.
Current report
Borrowings under the Credit Facilities bear interest at a variable rate equal to the 1-month Term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin as set forth in the Loan and Security Agreement. During the continuance of an event of default, all outstanding obligations bear interest at a rate equal to 5% above the rate otherwise applicable.
Current report
The Credit Facilities mature on December 12, 2030. The Term Loan was funded in full on the closing date and is repayable in scheduled quarterly installments beginning on April 5, 2026. Maturities on long term debt are as follows:
Current report
Borrowings under the Revolving Line may be made, repaid and reborrowed from time to time before the maturity date, subject to the other conditions set forth in the Loan and Security Agreement. Voluntary prepayments of the Credit Facilities are permitted at any time without premium or penalty, other than customary breakage amounts, and the Loan and Security Agreement requires mandatory prepayments in certain circumstances.
Current report
The Loan and Security Agreement requires the Company to pay an unused commitment fee equal to 0.40% per annum on the unused portion of the Revolving Line and to pay fees and charges in connection with any letters of credit and any cash management services provided by the Bank and to reimburse the Bank’s expenses as provided in the Loan and Security Agreement.
Current report
The Company’s obligations under the Loan and Security Agreement, and the guaranties of WMI and Compac, are secured by a first-priority security interest in substantially all of the personal property assets of the Company and the guarantors, in each case subject to permitted liens and customary exclusions as set forth in the Loan and Security Agreement and related security documents.
Current report
The Loan and Security Agreement contains customary affirmative, negative and financial covenants. Among other things, these covenants impose limitations, subject to agreed exceptions, on the ability of the Company and its subsidiaries to incur additional indebtedness, grant liens, make certain investments, dispose of assets, pay dividends and other restricted payments, enter into certain transactions with affiliates and effect certain mergers or other fundamental changes. The Loan and Security Agreement also includes quarterly tested financial covenants, including a minimum Consolidated Fixed Charge Coverage Ratio of 1.25 to 1.00 and a maximum Funded Leverage Ratio that is initially 3.75 to 1.00 through December 31, 2026 and is reduced to 3.50 to 1.00 from January 1, 2027 onward, in each case as defined in and calculated under the Loan and Security Agreement.
Current report
The Loan and Security Agreement includes customary events of default, including payment defaults, covenant defaults, certain cross-defaults, certain events of bankruptcy or insolvency, certain unsatisfied judgments, certain ERISA events and certain change-of-control events. If an event of default occurs and is continuing, the Bank may, subject to the terms of the Loan and Security Agreement, declare all or a portion of the outstanding obligations under the Credit Facilities to be immediately due and payable, terminate the commitments and exercise other rights and remedies available to it, including with respect to the collateral.
Current report
Shelf Registration Statement and At-the-Market Offering Program
Current report
On March 31, 2026, the Company filed a shelf registration statement on Form S-3 registering the potential offer and sale from time to time of up to $30 million of the Company’s securities. In connection with the shelf registration statement, the Company also entered into an At Market Issuance Sales Agreement with Craig-Hallum Capital Group LLC relating to an at-the-market offering program pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering price of up to approximately $17 million from time to time, subject to market conditions and the Company’s capital needs. The registration statement was declared effective by the SEC on April 14, 2026.
Removed paragraphs (38)
Previous report
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 provides engineering, program management, supply chain management, assembly operations and MRO services to this global network of customers. 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 customer base enjoys a unique combination of large-company capabilities, matched with small-company value, responsiveness, and personal customer service.
Previous report
Recent Developments
Previous report
Credit Agreement Waiver
Previous report
On November 13, 2025, CPI Aerostructures, Inc. entered into a Sixteenth Amendment to its Credit Agreement with BankUnited, N.A. and the lenders party thereto. The amendment extended the maturity of the revolving credit facility to November 30, 2026, adjusted borrowing limits for future periods, waived a failure to pay principal, and eliminated a prior contingent payment requirement. For additional information, see “Liquidity and Capital Resources — Bank Credit Facilities” below.
Previous report
Appointment of Interim Chief Financial Officer
Previous report
Effective July 22, 2025, Pamela Levesque, a Company director, was appointed to the positions of Interim Chief Financial Officer and Secretary. Ms. Levesque will also serve as Interim Chief Financial Officer and Secretary of each of the Company’s wholly owned subsidiaries, Welding Metallurgy, Inc. and Compac Development Corporation. Please refer to our Form 8-K filed on July 28, 2025 for additional information.
Previous report
Total Revenue for the three months ended September 30, 2025 was $19,269,102 compared to $19,419,879 for the same period last year, a decrease of $150,777 or 0.8%, driven primarily by the termination of the Boeing A-10 Main Landing Gear Pods program offset by timing of material receipts to our NGJ Mid-Band Pods Programs.
Previous report
Total Revenue for the nine months ended September 30, 2025 was $49,848,818 compared to $59,311,356 for the same period last year, a decrease of $9,462,538 or 16%, driven primarily by the unfavorable adjustment associated with the termination of the Boeing A-10 Main Landing Gear Pods program, timing of material receipts on our MS-110/TACSAR pod program and completion of the F-35 program, offset by higher production volume in our NGJ Mid-Band Pods and MH-60 Seahawk Stabilator MRO programs.
Previous report
Revenue from military subcontracts was $15,522,738 for the three months ended September 30, 2025 compared to $16,986,106 for the three months ended September 30, 2024, a decrease of $1,463,368 or 8.6%, driven primarily associated with the termination of the Boeing A-10 Main Landing Gear Pods program and lower revenue on the Sikorsky CH-53K Welded Tubes program offset by timing of material receipts on our NGJ Mid-Band Pods Programs.
Previous report
Revenue from military subcontracts was $39,115,821 for the nine months ended September 30, 2025 compared to $48,951,748 for the nine months ended September 30, 2024, a decrease of $9,835,927 or 20.1%, driven primarily by the unfavorable adjustment associated with the termination of the Boeing A-10 Main Landing Gear Pods program, timing of material receipts on our MS-110/TACSAR pod program and completion of the F-35 program, offset by higher production volume in our NGJ Mid-Band Pods and MH-60 Seahawk Stabilator MRO programs.
Previous report
Revenue from government military contracts was $6,689,643 for the nine months ended September 30, 2025 compared to $7,056,711 for the nine months ended September 30, 2024, a decrease of $367,068 or 5.2%, driven primarily by timing of material receipts in our USAF T-38 Pacer Classic Structural Modification Kits program.
Previous report
Revenue from commercial subcontracts was $1,185,691 for the three months ended September 30, 2025 compared to $760,290 for the three months ended September 30, 2024, an increase of $425,401 or 56.0%, driven primarily by the commencement in our Embraer Phenom-100 Engine Inlet Assemblies programs.
Previous report
Total Cost of Sales for the nine months ended September 30, 2025 and 2024 was $43,229,647 and $46,422,514, respectively, a decrease of $3,192,867 or 6.9%.
Previous report
Procurement for the three months ended September 30, 2025 was $9,605,276 compared to $9,219,097 for the three months ended September 30, 2024, an increase of $386,179 or 4.2%, driven primarily by increased material receipts for our NGJ Mid-band pod and USAF T-38 Pacer Classic Structural Modification Kits programs offset by the termination of the Boeing A-10 Main Landing Gear Pods program.
Previous report
Labor costs for the nine months ended September 30, 2025 were $4,617,419 compared to $5,460,235 for the nine months ended September 30, 2024, a decrease of $842,816 or 15.4% primarily driven by the termination of the Boeing A-10 Main Landing Gear Pods program and timing of work performed on the F-16 Rudder Island program.
Previous report
Factory overhead for the nine months ended September 30, 2025 was $12,172,384 compared to $12,058,902 for the nine months ended September 30, 2024, an increase of $113,482 or 0.9%.
Previous report
Other cost of sales for the nine months ended September 30, 2025 was $(320,322) compared to $201,219 for the nine months ended September 30, 2024, a decrease in cost of $521,541 or 259.2%. The decrease is primarily driven by benefits realized on programs nearing completion during the three months ended March 31, 2025 partially offset by changes in inventory loss reserve.
Previous report
Gross margin for the nine months ended September 30, 2025 was $6,619,171 and 13.3%, respectively, compared to $12,888,842 and 21.7%, respectively, for the nine months ended September 30, 2024, a decrease of $6,269,671 or 48.6%, and 840 basis points for the reasons noted above.
Previous report
The net adjustment of $8.1 million for the nine months ended September 30, 2025 is driven primarily by an unfavorable adjustment associated with the termination of the Boeing A-10 program and increased labor and material costs on the NGJ Mid-Band Pod, T-38 Classic Structural Modification Kits and Embraer Phenom-300 Engine Inlets Assembly programs.
Previous report
Selling, general and administrative expenses for the nine months ended September 30, 2025 were $8,041,156 compared to $8,231,875 for the nine months ended September 30, 2024, a decrease of $190,719 or 2.3%. The decrease was primarily due to lower salary related costs.
Previous report
Income before provision for income taxes for the three months ended September 30, 2025 was $1,367,037 compared to $904,267 for the three months ended September 30, 2024.
Previous report
(Loss) income before provision for income taxes for the nine months ended September 30, 2025 was ($2,578,564) compared to $2,863,495 for the nine months ended September 30, 2024.
Previous report
(Benefit)/Provision for Income Taxes
Previous report
Provision for income taxes for the three months ended September 30, 2025 was $253,345 compared to provision for income taxes of $154,590 for the three months ended September 30, 2024, an increase of $98,755 or 63.9% is primarily related to the increase in net income.
Previous report
(Benefit)/provision for income taxes for the nine months ended September 30, 2025 was $(1,043,373) compared to a provision for income taxes of $535,634 for the nine months ended September 30, 2024, a benefit increase of $1,579,007 or 294.8% is primarily the result of the change in net income for the period.
Previous report
The effective income tax rate for the nine months ended September 30, 2025 and September 30, 2024 is 40.5% and 18.7%, respectively. The difference between the effective income tax rate for the nine months ended September 30, 2025 and the statutory income tax rate of 21% is primarily due to the estimated R&D credit, state income taxes and permanent tax differences. The difference between the effective income tax rate for the nine months ended September 30, 2024 and the statutory income tax rate of 21% is primarily due to estimated R&D credit, state income taxes and permanent tax differences.
Previous report
Net (loss) income for the nine months ended September 30, 2025 was $(1,535,191) or $(0.12) per basic share using 12,740,097 weighted average basic shares outstanding, compared to net income of $2,327,861 or $0.19 per basic share using 12,559,876 weighted average basic shares outstanding, for the same period last year. Diluted (loss) per share was $(0.12) for the nine months ended September 30, 2025 calculated utilizing 12,740,097 weighted average shares outstanding. Diluted income per share was $0.18 for the nine months ended September 30, 2024 calculated utilizing 12,650,340 weighted average shares outstanding. The decrease in net income was primarily driven by a decrease in gross profit offset by the benefit increase in income taxes.
Previous report
At September 30, 2025, we had cash of $546,591 compared to $5,490,963 at December 31, 2024, a decrease of $4,944,372 or 90%. This decrease was primarily the result of cash flow used in operating activities and repayment of debt.
Previous report
On March 24, 2016, the Company entered into the Amended and Restated Credit Agreement with the lenders named therein and BankUnited N.A. as Sole Arranger, Agent and Collateral Agent (as amended from time to time, the “Credit Agreement” or the “BankUnited Facility”). The BankUnited Facility originally provided for a revolving credit loan commitment of $30 million (the “Revolving Credit Loans”) and a $10 million term loan (“Term Loan”). The Term Loan has been repaid. The Revolving Loan bears interest at a rate based upon a pricing grid, as defined in the Credit Agreement.
Previous report
On February 20, 2024, the Company entered into a Thirteenth Amendment to the Credit Agreement (the “Thirteenth Amendment”). Under the Thirteenth Amendment, the parties amended the Credit Agreement by (a) extending the maturity date of the Company’s Revolving Credit Loans to August 31, 2025; and (b) setting the aggregate maximum principal amount of all revolving line of credit loans to $19,800,000 from January 1, 2024 through March 31, 2024, $19,080,000 from April 1, 2024 through June 30, 2024, $18,360,000 from July 1, 2024 through September 30, 2024, $17,640,000 from October 1, 2024 through December 31, 2024, $16,920,000 from January 1, 2025 through March 31, 2025, $16,200,000 from April 1, 2025 through June 30, 2025 and $15,480,000 from July 1, 2025 onward, and for payments to be made by the Company to comply therewith (if any such payments are necessary), on the first day of each such period.
Previous report
On November 13, 2024, the Company entered into a Fourteenth Amendment to the Credit Agreement (the “Fourteenth Amendment”). Under the Fourteenth Amendment, the parties amended the Credit Agreement by: (i) extending the maturity date of the Company’s Revolving Credit Loans to August 31, 2026; (ii) reducing the Base Rate Margin (as defined in the Credit Agreement) from 3.50% to 2.0%; (iii) resetting the aggregate maximum principal amount of all Revolving Credit Loans to $16,890,000 from January 1, 2025 through March 31, 2025, $16,140,000 from April 1, 2025 through June 30, 2025, $15,390,000 from July 1, 2025 through September 30, 2025, $14,640,000 from October 1, 2025 through December 31, 2025, $13,890,000 from January 1, 2026 through March 31, 2026, $13,140,000 from April 1, 2026 through June 30, 2026, and $12,390,000 from July 1, 2026 onward and for payments to be made by the Company to comply therewith (if any such payments are necessary), on the first day of each such period; and (iv) requiring the Company, if it does not deliver to BankUnited, N.A. by December 31, 2025, a commitment letter with banks and terms and conditions reasonably acceptable to the Lenders for refinancing the obligations under the Credit Agreement, to make a payment by January 31, 2026, equal to 2% of the aggregate outstanding principal amount of the Revolving Credit Loans as of December 31, 2025, with 50% of such payment applied to reduce the aggregate outstanding principal and the remaining 50% retained by the Lenders as an amendment fee with respect to the Fourteenth Amendment (the “Additional Payment Obligation”).
Previous report
As of March 31, 2025, the Company was not in compliance with the Credit Agreement’s minimum debt service coverage ratio, minimum fiscal quarter net income after taxes, and minimum quarterly adjusted EBITDA financial covenants and the Company obtained a written waiver from the Lenders waiving the specified covenant non-compliance for the fiscal quarter ended March 31, 2025.
Previous report
As of June 30, 2025, the Company was not in compliance with all the Credit Agreement’s financial covenants. In addition, the Company did not satisfy the July 1, 2025 mandatory repayment requirement under the Credit Agreement (the “July 2025 Payment Obligation”). On August 14, 2025, the Company obtained a written waiver from the Lenders pursuant to which the Lenders (i) waived the financial covenant non-compliance for the fiscal quarter ended June 30, 2025 and (ii) temporarily waived non-compliance with the July 2025 Payment Obligation until September 30, 2025.
Previous report
On August 19, 2025, the Company executed a Fifteenth Amendment to the Credit Agreement (the “Fifteenth Amendment”). The amendment revised certain financial covenants to reflect specified adjustments for the quarters ended March 31, 2025 and June 30, 2025. These covenant-based adjustments were designed to offset the effect of the termination of the Company’s Boeing A-10 Program on covenant compliance.
Previous report
As of September 30, 2025, the Company was not in compliance with the aggregate principal amount of all Revolving Credit Loans and the Company obtained a Waiver and Sixteenth Amendment to the Credit Agreement (the “Sixteenth Amendment”). The Sixteenth Amendment reset the aggregate maximum principal amount of all Revolving Credit Loans to $15,890,000 from July 1, 2025 through March 31, 2026, $15,140,000 from April 1, 2026 through June 30, 2026, $14,390,000 from July 1, 2026 through September 30, 2026, and $13,640,000 onward, and for payments to be made by the Company to comply therewith (if any such payments are necessary), on the first day of each such period, and waived the Company’s failure to make the July 2025 Payment Obligation on September 30, 2025. The Sixteenth Amendment also extended the maturity date of the Revolving Credit Loans to November 30, 2026, and waived the Additional Payment Obligation. A copy of the Waiver and Sixteenth Amendment to the Credit Agreement is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q.
Previous report
The Credit Agreement, as amended, requires us to maintain the following financial covenants: (a) minimum debt service coverage ratio of no less than 1.5 to 1.0 for trailing four fiscal quarter periods; (b) maximum leverage ratio of no less than 4.0 to 1.0 for trailing four fiscal quarter periods; (c) minimum net income after taxes as of the end of each fiscal quarter being no less than $1.00; and (d) a minimum adjusted EBITDA at the end of each fiscal quarter of no less than $1.0 million (collectively, the “Financial Covenants”). In accordance with ASC 470, the Company has determined that it is reasonably possible it will meet its covenants within the next 12 months.
Previous report
Although waivers and Credit Agreement amendments cured the events of defaults described above, the Company’s failure to comply with the financial covenants in future periods or make mandatory repayments could result in additional events of default, and unless further waivers or amendments are obtained, of which there is no assurance, future non-compliance could permit the Lenders to accelerate the Company’s outstanding obligations under the Credit Agreement and exercise other remedies available under the loan documents. The Company continues to monitor its financial performance and covenant compliance and may seek further waivers or amendments, if necessary.
Previous report
There is currently no availability for borrowings under the Revolving Credit Loans and the Company finances its operations from internally generated cash flow.
Reworded paragraphs (29)
Previous wording
When used in this Form 10-Q and in future filings by us with the Securities and Exchange Commission (the “SEC”), the words or phrases “will likely result,” “management expects” or “we expect,” “will continue,” “is anticipated,” “estimated” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on any such forward-looking statements, each of which speaks only as of the date made. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The risks are included in Part I, Item 1A – Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024 (the “Form 10-K”). We have no obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.
Current wording
This Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this Form 10-Q and in future filings by us with the Securities and Exchange Commission (“SEC”), the words or phrases “believe”, “expect,” “anticipate,” “intend”, “plan”, “may,” “will”, “should,” “could”, “estimate,” or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties. There can be no assurance that future developments will be those that have been anticipated. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements. Further, such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The risks are included in Part I, Item 1A – Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2025 (the “Form 10-K”).
Previous wording
We produce complex custom structural assemblies pursuant to long-term contracts and customer purchase orders. Funded backlog consists of aggregate funded values under such contracts and purchase orders, excluding the portion previously included in operating revenues pursuant to Accounting Standards Codification Topic 606 (“ASC 606”). Unfunded backlog is the estimated amount of future orders under the expected duration of the programs. 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.
Current wording
We produce custom assemblies pursuant to long-term contracts and customer purchase orders. Funded backlog consists of the aggregate funded value of remaining performance obligations under such contracts and purchase orders, excluding the portion previously included in operating revenues pursuant to Accounting Standards Codification Topic 606 (“ASC 606”). Unfunded backlog is the estimated amount of future orders under the expected duration of the program. Substantially all of our unfunded backlog is subject to termination at will and rescheduling, without significant penalty. Funds are often appropriated for programs or contracts on a yearly or quarterly basis, even though the contract may call for performance that is expected to take a number of years. Therefore, our funded backlog does not include the full value of our contracts.
Previous wording
The total backlog at September 30, 2025 is primarily comprised of long-term programs with Raytheon (NGJ Mid-Band Pods and Advanced Tactical Pods), L3Harris (NGJ Low-Band Pods), Lockheed Martin (F-16 RI/DCC’s), Raytheon (B-52 Radar Racks), Sikorsky (MH-60 Seahawk Stabilator MRO).
Current wording
The total backlog at March 31, 2026 is primarily comprised of long-term programs with Raytheon (Next Generation Jammer-Mid Band Pods and Advanced Tactical Pods), L3Harris (Next Generation Jammer-Low Band Pods), Lockheed Martin (F-16 RI/DCC’s), Raytheon (B-52 Radar Racks), Sikorsky (UH-60 BLACKHAWK Stabilator MRO) and USAF (T-38 Classic Structural Modification Kits).
Previous wording
We make a number of significant estimates, assumptions and judgments in the preparation of our financial statements. SeeManagement’s Discussion and Analysis of Financial Condition and Results of Operations in the Form 10-K, for a discussion of our critical accounting estimates. There have been no significant changes to the application of our critical accounting estimates during the nine months ended September 30, 2025.
Current wording
We make a number of significant estimates, assumptions and judgments in the preparation of our financial statements. SeeManagement’s Discussion and Analysis of Financial Condition and Results of Operations in the Form 10-K, for a discussion of our critical accounting estimates. There have been no significant changes to the application of our critical accounting estimates during the quarter ended March 31, 2026.
Previous wording
Revenue from government military contracts was $2,560,673 for the three months ended September 30, 2025 compared to $1,673,483 for the three months ended September 30, 2024, an increase of $887,190 or 53.0%, driven primarily by timing of material receipts in our USAF T-38 Pacer Classic Structural Modification Kits program.
Current wording
Revenue from prime government military contracts was $1,764,056 for the three months ended March 31, 2025 compared to $2,793,612 for the three months ended March 31, 2025, a decrease of $1,029,556 or 36.9%. The decrease was driven primarily by a decrease in our USAF T-38 Pacer Classic Structural Modification Kits program due to timing of material receipts.
Previous wording
Revenue from commercial subcontracts was $4,043,354 for the nine months ended September 30, 2025 compared to $3,302,897 for the nine months ended September 30, 2024, an increase of $740,457 or 22.4%, primarily driven by the commencement in our Embraer Phenom-100 Engine Inlet Assemblies and Collins Compac Enclosures programs.
Current wording
Revenue from commercial subcontracts was $916,907 for the three months ended March 31, 2026 compared to $1,280,388 for the three months ended March 31, 2025, a decrease of $363,481 or 28.4%. The decrease was driven primarily by a decrease in our Embraer Phenom-300 Engine Inlet Assemblies program, partially offset by thecommencement of production on our Embraer Phenom-100 Engine Inlet Assemblies and Collins Compac Enclosures programs.
Previous wording
Total Cost of Sales for the three months ended September 30, 2025 and 2024 was $14,962,788 and $15,200,210, respectively, a decrease of $237,422 or 1.6%.
Current wording
Total Cost of Sales for the three months ended March 31, 2026 and 2025 was $12,880,049 and $13,751,133, respectively, a decrease of $871,084 or 6.3%.
Previous wording
Procurement for the nine months ended September 30, 2025 was $26,760,166 compared to $28,702,158 for the nine months ended September 30, 2024, a decrease of $1,941,992 or 6.8%, driven primarily by the termination of the Boeing A-10 Main Landing Gear Pods program and lower material receipts on the Collins MS-110 program, offset by increased material receipts on our NGJ POD program.
Current wording
Procurement for the three months ended March 31, 2026 was $7,509,709 compared to $8,294,588 for the three months ended March 31, 2025, a decrease of $784,879 or 9.5%, driven primarily by lower material receipts for Embraer Phenom-300 Engine Inlet Assemblies program and the Collins MS-110 program.
Previous wording
Labor costs for the three months ended September 30, 2025 were $1,470,358 compared to $1,861,505 for the three months ended September 30, 2024, a decrease of $391,147 or 21.0% primarily driven by the termination of the Boeing A-10 Main Landing Gear Pods program.
Current wording
Labor costs for the three months ended March 31, 2026 were $1,316,157 compared to $1,642,586 for the three months ended March 31, 2025, a decrease of $326,429 or 19.9% primarily driven by decreased work performed on the A-10 Main Landing Gear Pods program due to termination.
Previous wording
Factory overhead for the three months ended September 30, 2025 was $4,101,453 compared to $4,021,411 for the three months ended September 30, 2024, an increase of $80,042 or 2.0%.
Current wording
Factory overhead for the three months ended March 31, 2026 was $3,937,186 compared to $4,118,581 for the three months ended March 31, 2025, a decrease of $181,395 or 4.4%.
Previous wording
Other cost of sales relates to items that can increase or decrease cost of sales such as changes in inventory reserves, changes in loss contract provisions, absorption variances and direct charges to cost of sales. Other cost of sales for the three months ended September 30, 2025 was $(214,299) compared to a $98,197 for the three months ended September 30, 2024, a decrease of $312,496 or 318.2%. The decrease is primarily the benefits realized on programs nearing completion.
Current wording
Other cost of sales relates to items that can increase or decrease cost of sales such as changes in inventory reserves, changes in loss contract provisions, absorption variances and direct charges to cost of sales. Other cost of sales for the three months ended March 31, 2026 was $116,997 compared to a $(304,622) for the three months ended March 31, 2025, an increase of $421,619 or 138.4%. The increase is primarily the result less benefits realized on programs nearing completion and higher loss reserve requirements during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.
Previous wording
Gross profit and gross profit percentage (“gross margin”) for the three months ended September 30, 2025 and September 30, 2024 was $4,306,314 and 22.3% compared to $4,219,669 and 21.7% respectively, an increase of $86,645 or 2.1%, and 60 basis points for the reasons noted above.
Current wording
Gross profit and gross profit percentage (“gross margin”) for the three months ended March 31, 2026 and March 31, 2025 was $4,479,891 and 25.8% compared to $1,649,475 and 10.7%, respectively, an increase of $2,830,416, or 171.6%, for the reasons noted above associated with the A-10 program.
Previous wording
During the three and nine months ended September 30, 2025 and 2024, circumstances required that we make changes in estimates to various contracts. Such changes in estimates resulted in changes in total gross profit as follows:
Current wording
During the three months ended March 31, 2025 and 2024, circumstances required that we make changes in estimates to various contracts. Such changes in estimates resulted in changes in total gross profit as follows:
Previous wording
The net adjustment of $1.0 million for the three months ended September 30, 2025 is driven primarily by an unfavorable adjustment associated with the F-16 Rudder Island program, and increased labor and material costs on the NGJ Mid-Band Pod, and Embraer Phenom-300 Engine Inlets Assembly programs.
Current wording
The net adjustment of $0.7 million for the three months ended March 31, 2026 is driven primarily by an unfavorable adjustment on our Embraer Phenom-300 Engine Inlet Assemblies program.
Previous wording
Selling, general and administrative expenses for the three months ended September 30, 2025 were $2,551,355 compared to $2,742,036 for the three months ended September 30, 2024, a decrease of $190,681 or 7.0%. The decrease was primarily due to lower salary related costs.
Current wording
Selling, general and administrative expenses for the three months ended March 31, 2026 were $2,650,263 compared to $2,835,777 for the three months ended March 31, 2025, a decrease of $185,514 or 6.5%. The decrease was primarily thedue to lower salary related costs.
Previous wording
Interest expense for the three months ended September 30, 2025 was $387,922, compared to $573,366 for the three months ended September 30, 2024, a decrease of $185,444 or 32.3%. The decrease was primarily the result of lower year-over-year interest rates charged on our outstanding debt under the Credit Agreement, combined with a year-over-year decrease in the amount of our outstanding debt under the Credit Agreement.
Current wording
Interest expense for the three months ended March 31, 2026 was $291,935, compared to $488,091 for the three months ended March 31, 2025, a decrease of $196,156 or 40.2%. The decrease was the result of lower year-over-year interest rates charged on our outstanding debt under the Loan and Security Agreement.
Previous wording
The effective income tax rate for the three months ended September 30, 2025 and September 30, 2024 is 18.5% and 17.1%, respectively. The difference between the effective income tax rate for the three months ended September 30, 2025 and the statutory income tax rate of 21% is primarily due to the estimated R&D credit, state income taxes and permanent tax differences. The difference between the effective income tax rate for the three months ended September 30, 2024 and the statutory income tax rate of 21% is primarily due to estimated R&D credit, state income taxes and permanent tax differences.
Current wording
The effective income tax rate for the three months ended March 31, 2026 and 2025 approximated the statutory rate of approximately 21%.
Previous wording
Net Income/(Loss) and Earnings per Share
Current wording
Net (Loss)/Income and Earnings per Share
Previous wording
Net income for the three months ended September 30, 2025 was $1,113,692 or $0.09 per basic share using 12,763,486 weighted average basic shares outstanding, compared to net income of $749,677 or $0.06 per basic share using 12,647,023 weighted average basic shares outstanding, for the same period last year. Diluted income per share was $0.09 for the three months ended September 30, 2025 calculated utilizing 12,818,191 weighted average shares outstanding. Diluted income per share was $0.06 for the three months ended September 30, 2024 calculated utilizing 12,717,128 weighted average shares outstanding. The increase in net income was primarily driven by decreases in selling, general and administrative expenses and interest expense.
Current wording
Net income (loss) for the three months ended March 31, 2026 was $1,236,718 or $0.10 per basic share, compared to net loss of $(1,323,924) or $(0.10) per basic share, for the same period last year. Diluted income per share was $0.09 for the three months ended March 31, 2026 calculated utilizing 13,040,998 weighted average shares outstanding. Diluted (loss) per share was $(0.10) for the three months ended March 31, 2025 calculated utilizing 12,720,148 weighted average shares outstanding. The increase in net income was primarily driven by an increase in gross profit.
Previous wording
At September 30, 2025, we had working capital of $15,836,054 compared to $17,122,111 at December 31, 2024, a decrease of $1,286,057 or 7.5%. The decrease was driven primarily by a decrease in cash and accrued liabilities offset by increases in accounts payable, accounts receivable, contract assets and current portion of line of credit.
Current wording
At March 31, 2026, we had working capital of $22,725,875 compared to $20,388,755 at December 31, 2025, an increase of $2,337,120 or 11.5%. The increase was driven primarily by an increase in cash and contract assets partly offset by a decrease in accounts receivable.
Previous wording
A large portion of our cash flow is used to pay for materials and processing costs associated with contracts that are in process and which do not provide for progress payments. Costs and related earnings for which we do not bill on a progress basis, and which, as a result, we bill upon shipment of products, are components of contract assets on our consolidated balance sheets and represent the aggregate costs and related earnings for uncompleted contracts for which the customer has not yet been billed. These costs and earnings are recovered upon shipment of products and presentation of billings in accordance with contract terms.
Current wording
A large portion of our cash is used to pay for materials and processing costs associated with contracts that are in process and which do not provide for progress payments. Costs for which we are not able to bill on a progress basis are made up of contract assets on our consolidated balance sheet and represent the aggregate costs and related earnings for uncompleted contracts for which the customer has not yet been billed. These costs and earnings are recovered upon shipment of products and presentation of billings in accordance with contract terms.
Previous wording
Because ASC 606 requires us to use estimates in determining revenue, costs and profits and in assigning the amounts to accounting periods, there can be a significant disparity between earnings as reported and actual cash that we receive during any reporting period. Accordingly, it is possible that we may have a shortfall in our cash flow and may need to borrow money or take steps to defer cash outflows until the reported earnings materialize into actual cash receipts.
Current wording
Because ASC 606 requires us to use estimates in determining revenues, costs and profits and in assigning those amounts to accounting periods, there can be a significant disparity between earnings as reported and the actual cash we receive during any reporting period. Accordingly, it is possible that we experience shortfalls in our cash flow and may need to borrow money or take steps to delay certain cash outflows until the reported earnings materialize into actual cash receipts.
Previous wording
Some of our programs require us to expend up-front costs that may have to be amortized over a portion of production units. In the case of significant program delays and/or program cancellations, we could experience margin degradation, which may be material for costs that are not recoverable. Such charges and the loss of up-front costs could have a material impact on our liquidity and results of operations.
Current wording
Several of our programs require us to expend up-front costs that may have to be amortized over a portion of production units. In the case of significant program delays and/or program cancellations, we could experience margin degradation, which may be material for costs that are not recoverable. Such charges and the loss of up-front costs could have a material impact on our liquidity and results of operations.
Previous wording
We continuously work to improve our payment terms from our customers, including accelerated progress payment arrangements, as well as exploring alternate funding sources.
Current wording
We continue to work to obtain better payment terms with our customers, including accelerated progress payment arrangements, as well as exploring alternative funding sources.
Previous wording
The BankUnited Facility is secured by all the Company’s assets and the Revolving Credit Loans bore interest at the Prime Rate + 2.0%. The Prime Rate was 7.25% as of September 30, 2025 and as such, the Company’s interest rate on the Revolving Credit Loans was 9.5% as of September 30, 2025.
Current wording
The SOFR Rate was 3.7% as of March 31, 2026 and as such, the Company’s interest rate on the Revolving Loan and Term Loan was 6.2% as of March 31, 2026.
Previous wording
As of September 30, 2025 and December 31, 2024, the Company had $15,890,000 and $17,390,000 outstanding under the Revolving Credit Loans, respectively.
Current wording
As of March 31, 2026 and December 31, 2025, the Company had $19,173,672 and $18,373,672 outstanding under the Loan and Security Agreement, respectively.
Previous wording
We believe that our existing resources as of September 30, 2025 will be sufficient to meet our current working capital needs for at least the next 12 months from the date of issuance of our consolidated financial statements. However, our working capital requirements can vary significantly, depending in part on the timing of new program awards and the payment terms with our customers and suppliers. If our working capital needs exceed our cash flows from operations, we would look to our cash balances and availability for borrowings under our borrowing arrangement to satisfy those needs, as well as potential sources of additional capital, which may not be available on satisfactory terms and in adequate amounts, if at all.
Current wording
We believe that our existing liquidity resources as of March 31, 2026 will be sufficient to meet our current working capital needs for at least the next 12 months from the date of issuance of our consolidated financial statements. However, our working capital requirements can vary significantly, depending in part on the timing of new program awards and the payment terms with our customers and suppliers. To the extent additional liquidity is required, we may utilize our cash balances, availability for borrowings under our credit facilities and other potential sources of liquidity, including our existing shelf registration statement and at-the-market offering program, although such additional liquidity may not be available on satisfactory terms and in adequate amounts, if at all.
Previous wording
For information concerning our contractual obligations, seeContractual Obligations under Item 7 of Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Form 10-K.
Current wording
For information concerning our contractual obligations, seeContractual Obligations under Item 7 of Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Form 10-K.
Previous wording
Inflation historically has not had a material effect on our operations, although the current inflationary environment in the U.S., and its impact on interest rates, supply chain, labor markets and general economic conditions, are factors that the Company actively monitors in an attempt to mitigate and manage potential negative impacts on and risks faced by the Company. The majority of the Company’s long-term contracts with its customers and suppliers reflect fixed pricing. When bidding for work, the Company takes inflation risk and supply side pricing risk into account in its proposals.
Current wording
Inflation historically has not had a material effect on our operations, although the current inflationary environment in the U.S., and its impact on interest rates, supply chain, labor markets and general economic conditions, are factors that the Company actively monitors in an effort to mitigate and manage potential negative impacts and risks faced by the Company. The majority of the Company’s long-term contracts with its customers and suppliers reflect fixed pricing. When bidding for work, the Company takes inflation risk and supply-side pricing risk into account in its proposals.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Interest expense for the nine months ended September 30, 2025 was $1,163,559, compared to $1,793,472 for the nine months ended September 30, 2024, a decrease of $629,913 or 35.1%. The decrease was the result of lower year-over-year interest rates charged on our outstanding debt under the Credit Agreement, combined with a year-over-year decrease in the amount of our outstanding debt under the Credit Agreement.