Financial Analysis

15. COMMITMENTS AND CONTINGENCIES On May 7, 2025, the Company submitted to The Boeing Company a Request for Equitable Pricing Adjustment on the Boeing A-10 program addressing higher manufacturing costs on its 2019 firm fixed price contract. Subsequently, on July 14, 2025, the Company received a Termination Notice from The Boeing Company with respect to the Boeing A-10 program directing the Company to scrap and return materials and tooling to the Air Force prior to August 15, 2025 when funding would no longer be available, as well as a claim for damages incurred by Boeing as a result of the alleged contract default. The Company continues to have correspondence with the Boeing Company over the termination of the Boeing A10 program. In light of these events, and in conjunction with the Air Forces decision to accelerate the retirement of the Boeing A-10 fleet, the Company evaluated the situation and recognized an adjustment to its contract revenues and costs to address the contract termination during the quarter ended June 30, 2025. The Company will continue to evaluate the customers claim and will recognize any contingent losses, if required, in the period in which additional losses become both probable, and reasonably estimable. The Company may be involved in various claims, suits, assessments, investigations, and legal proceedings that arise from time to time in the ordinary course of its business. The Company accrues a liability when it is both probable a liability has been i …

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The following table presents the Companys revenue disaggregated by contract type and revenue recognition method : Year Ended December 31, 2025 December 31, 2024 Government subcontracts $ 55,547,679 $ 64,704,370 Prime government contracts 7,415,434 11,677,152 Commercial contracts 6,299,011 4,697,342 Total $ 69,262,124 $ 81,078,864 Year Ended December 31, 2025 December 31, 2024 Revenue recognized using over time revenue recognition model $ 68,638,307 $ 80,123,031 Revenue recognized using point in time revenue recognition model 623,817 955,833 Total $ 69,262,124 $ 81,078,864 …

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12. STOCK-BASED COMPENSATION In 2009, the Company adopted the Performance Equity Plan 2009 (the 2009 Plan). The 2009 Plan reserved 500,000 common shares for issuance. The 2009 Plan provides for the issuance of either incentive stock options or nonqualified stock options to employees, consultants or others who provide services to the Company. The Company has 2,364 shares available for grant under the 2009 Plan as of December 31, 2025. In 2016, the Company adopted the 2016 Long Term Incentive Plan (the 2016 Plan). The 2016 Plan reserved 600,000 common shares for issuance, provided that, no more than 200,000 common shares be granted as incentive stock options. Awards may be made or granted to employees, officers, directors and consultants in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. Any shares of common stock granted in connection with awards other than stock options and stock appreciation rights are counted against the number of shares reserved for issuance under the 2016 Plan as one and one-half shares of common stock for every one share of common stock granted in connection with such award. Any shares of common stock granted in connection with stock options and stock appreciation rights are counted against the number of shares reserved for issuance under the 2016 Plan as one share for every one share of common stock issuable upon the exercise of such stock …

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7. GOODWILL The Company acquired WMI on December 20, 2018. The acquisition was accounted for as a business combination in accordance with ASC Topic 805. Accordingly, the Company recorded the fair value of the assets and liabilities assumed at the date of acquisition. As a result of the acquisition of WMI on December 30, 2018, the Company recorded goodwill of $ 1,784,254 .

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10. INCOME TAXES We account for income taxes in accordance with ASC 740 Income Taxes. ASC 740 is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected tax consequences or events that have been recognized in our consolidated financial statements or tax returns. ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in the consolidated financial statements. The interpretation prescribes a recognition threshold and measurement attribute for the consolidated financial statements recognition and measurement of a tax position taken, or expected to be taken, in a tax return. The Company files income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. The Company generally is no longer subject to U.S. or state examinations by tax authorities for taxable years prior to 2021. However, net operating losses utilized from prior years in subsequent years tax returns are subject to examination until three years after the filing of subsequent years tax returns. The provision (benefit) for income taxes consists of the following: Year ended December 31, 2025 2024 Current: State $ 156,360 $ 42,906 Deferred: Federal (792,252) 624,509 State (264,969) 476,039 Total $ (900,861) $ 1,143,454 The difference between the income tax provision (benefit) computed at the federal statutory rate and the actual tax benefit for 2025 after the adoption of ASU 2023-09 is as follows: Year ended De …

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9. LEASES The Company leases manufacturing and office space under an agreement classified as an operating lease. The company entered into an amendment to the lease agreement for its operating facility on April 15, 2025 that extends the term of the lease until April 30, 2031 . The lease agreement does not include any renewal options. The agreement provides for an initial monthly base amount plus annual escalations through the term of the lease. In addition to the monthly base amounts in the lease agreement, the Company is required to pay real estate taxes and operating expenses during the lease terms. The result of the lease amendment was an increase of ROU assets and lease liabilities of $ 8,190,636 . The Company also leases office equipment in agreements classified as operating leases. For the years ended December 31, 2025 and 2024, the Companys operating lease expense was $ 2,379,916 and $ 2,137,830 , respectively. Future minimum lease payments under non-cancellable operating leases as of December 31, 2025 were as follows: Year ending December 31, 2026 $2,304,533 2027 $2,336,077 2028 $2,300,990 2029 $2,360,515 2030 $2,431,331 Thereafter $ 818,389 Total undiscounted operating lease payments $12,551,835 Less imputed interest (2,764,330) Present value of operating lease payments $ $9,787,505 The following table sets forth the ROU assets and operating lease liabilities as of December 31, 2025 and 2024: 2025 2024 Assets ROU assets, net $ 9,515,207 $ 2,856,200 Liabilities Current …

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8. LINE OF CREDIT AND LONG-TERM DEBT Western Alliance Bank Loan and Security Agreement 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 Companys obligations under the Loan and Security Agreement. 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. The SOFR Rate was 3.9 % as of December 31, 2025 and as such, the Companys interest rate on the Revolving Loan and Term Loan was 6.4 % as of December 31, 2025. 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: Period Year Ended December 31, 2026 $ 187,500 2027 $ 250,000 2028 $ 437,500 2029 $ 687,500 2030 $ 8,437,500 Total $ 10,000,000 Borro …

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Recently Issued Accounting Standards Adopted In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 for the year ended December 31, 2025, and applied the new disclosure requirements prospectively while disclosures for the year ended December 31, 2024 remain presented on a pre-adoption basis. Recently Issued Accounting Standards Not Adopted In September 2025, the FASB issued ASU No. 2025-06, Intangibles Goodwill and Other Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06). This guidance removes all references to prospective and sequential stages (referred to as project stages) throughout ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. Under ASU 2025-06, cost capitalization should only commence when both management has authorized and committed to funding a software project and it is probable the project will be completed and the software will be used to perform the function intended. ASU 2025-06 is effective for annual …

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13. EMPLOYEE BENEFIT PLAN On September 11, 1996, the Companys board of directors instituted a defined contribution plan under Section 401(k) of the Internal Revenue Code (the Code). On October 1, 1998, the Company amended and standardized its plan as required by the Code. Pursuant to the amended plan, qualified employees may contribute a percentage of their pretax eligible compensation to the Plan and the Company will match a percentage of each employees contribution. Additionally, the Company has a profit-sharing plan covering all eligible employees. Contributions by the Company are at the discretion of management. The amount of contributions recorded by the Company during the years ended December 31, 2025 and 2024 amounted to $ 302,912 and $ 305,934 , respectively. …

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2. REVENUE Disaggregation of Revenue The following table presents the Companys revenue disaggregated by contract type and revenue recognition method : Year Ended December 31, 2025 December 31, 2024 Government subcontracts $ 55,547,679 $ 64,704,370 Prime government contracts 7,415,434 11,677,152 Commercial contracts 6,299,011 4,697,342 Total $ 69,262,124 $ 81,078,864 Year Ended December 31, 2025 December 31, 2024 Revenue recognized using over time revenue recognition model $ 68,638,307 $ 80,123,031 Revenue recognized using point in time revenue recognition model 623,817 955,833 Total $ 69,262,124 $ 81,078,864 Favorable/(Unfavorable) Adjustments to Gross Profit We review our Estimates at Completion (EAC) at least quarterly. Due to the nature of the work required to be performed on many of the Companys performance obligations, the estimation of total revenue and cost at completion is complex, subject to many inputs, and requires significant judgment by management on a contract-by-contract basis. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities, and the related changes in estimates of revenues and costs. The risks and opportunities relate to managements judgment about the ability and cost to achieve the schedule, consideration of customer-directed delays or reductions in scheduled deliveries, technical require …

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16. Segment reporting We manage our business activities on a consolidated basis and operate as a single operating segment. We primarily derive our revenue in the United States by supplying aircraft parts, complex aerostructure assemblies, aerosystems, MRO and kitting contracts for fixed wing aircraft and helicopters in both the commercial and defense markets. The accounting policies are the same as those described in Note 1 Principal Business Activity and Summary of Significant Accounting Policies. Our CODM is our Chief Executive Officer, Dorith Hakim. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions including the allocation of resources and assessing financial performance. As the Company has only one operating segment and is managed on a consolidated basis, the measure of profit or loss is consolidated net income or loss, which include all significant expenses and assets as presented in the consolidated financial statements which is consistent with the information provided to the CODM. Refer to the Consolidated Balance Sheet and the Consolidated Statements of Operations for the financial information with respect to the Companys single operating segment for the years ended December 31, 2025 and 2024. …

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