UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to __________

Commission File Number: 1-11398

CPI AEROSTRUCTURES, INC.

(Exact name of registrant as specified in its charter)

New York		11-2520310
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

91 Heartland Blvd., Edgewood, NY		11717
(Address of principal executive offices)		(Zip code)

(631) 586-5200

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value per share	CVU	NYSE American

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 12, 2025, the registrant had 13,185,249 shares of common stock, $.001 par value, outstanding

INDEX

Part I - Financial Information		1

Item 1 – Consolidated Financial Statements (Unaudited)		1

Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024		1

Condensed Consolidated Statements of Operations for the Three and Nine months ended September 30, 2025 and 2024 (Unaudited)		2

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine months ended September 30, 2025 and 2024 (Unaudited)		3

Condensed Consolidated Statements of Cash Flows for the Nine months ended September 30, 2025 and 2024 (Unaudited)		4

Notes to Condensed Consolidated Financial Statements (Unaudited)		5

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

Item 3 – Quantitative and Qualitative Disclosures About Market Risk		20

Item 4 – Controls and Procedures		20

Part II - Other Information		22

Item 1 – Legal Proceedings		22

Item 1A – Risk Factors		22

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		22

Item 3 – Defaults Upon Senior Securities		22

Item 4 – Mine Safety Disclosures		22

Item 5 – Other Information		22

Item 6 – Exhibits		22

Signatures		23

Part I - Financial Information

Item 1 - Consolidated Financial

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2025 (Unaudited)			December 31, 2024
ASSETS
Current Assets:
Cash	$	546,591		$	5,490,963
Accounts receivable, net		6,399,594			3,716,378
Contract assets, net		33,695,994			32,832,290
Inventory		593,605			918,288
Prepaid expenses and other current assets		552,585			634,534
Total Current Assets		41,788,369			43,592,453

Operating lease right-of-use assets		9,871,784			2,856,200
Property and equipment, net		565,542			767,904
Deferred tax asset, net		19,918,449			18,837,576
Goodwill		1,784,254			1,784,254
Other assets		127,624			143,615
Total Assets	$	74,056,022		$	67,982,002

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	16,487,974		$	11,097,685
Accrued expenses		4,449,051			7,922,316
Contract liabilities		1,992,910			2,430,663
Loss reserve		95,082			22,832
Current portion of line of credit		1,500,000			2,750,000
Current portion of long-term debt		5,449			26,483
Operating lease liabilities, current		1,400,596			2,162,154
Income taxes payable		21,253			58,209
Total Current Liabilities		25,952,315			26,470,342

Line of credit, net of current portion		14,390,000			14,640,000
Long-term operating lease liabilities		8,724,638			938,418
Total Liabilities		49,066,953			42,048,760

Commitments and Contingencies (see note 11)					—

Shareholders’ Equity:
Common stock - $.001 par value; authorized 50,000,000 shares, 12,988,814 and 12,978,741 shares, respectively, issued and outstanding		12,989			12,979
Additional paid-in capital		75,015,659			74,424,651
Accumulated deficit		(50,039,579	)		(48,504,388	)
Total Shareholders’ Equity		24,989,069			25,933,242
Total Liabilities and Shareholders’ Equity	$	74,056,022		$	67,982,002

See Notes to Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2025			2024			2025			2024
Revenue	$	19,269,102		$	19,419,879		$	49,848,818		$	59,311,356
Cost of sales		14,962,788			15,200,210			43,229,647			46,422,514
Gross profit		4,306,314			4,219,669			6,619,171			12,888,842

Selling, general and administrative expenses		2,551,355			2,742,036			8,041,156			8,231,875
Income (loss) from operations		1,754,959			1,477,633			(1,421,985	)		4,656,967

Other income		—			—			6,980			—
Interest expense		(387,922	)		(573,366	)		(1,163,559	)		(1,793,472	)
Income (loss) before provision for income taxes		1,367,037			904,267			(2,578,564	)		2,863,495

Provision (benefit) provision for income taxes		253,345			154,590			(1,043,373	)		535,634
Net Income (loss)	$	1,113,692		$	749,677		$	(1,535,191	)	$	2,327,861

Income (loss) per common share, basic	$	0.09		$	0.06		$	(0.12	)	$	0.19
Income (loss) per common share, diluted	$	0.09		$	0.06		$	(0.12	)	$	0.18

Shares used in computing income per common share:
Basic		12,763,486			12,647,023			12,740,097			12,559,876
Diluted		12,818,191			12,717,128			12,740,097			12,650,340

See Notes to Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

	Common Stock Shares			Common Stock Amount			Additional Paid-in Capital		Accumulated Deficit			Total Shareholders’ Equity
Balance at January 1, 2025		12,978,741		$	12,979		$	74,424,651	$	(48,504,388	)	$	25,933,242
Net loss		—			—			—		(1,323,924	)		(1,323,924	)
Issuance of common stock upon settlement of restricted stock, net		30,553			30			—		—			30
Stock-based compensation expense		—			—			320,199		—			320,199
Balance at March 31, 2025		13,009,294		$	13,009		$	74,744,850	$	(49,828,312	)	$	24,929,547
Net loss		—			—			—		(1,324,959	)		(1,324,959	)
Issuance of common stock upon settlement of restricted stock, net		(31,035	)		(31	)		—		—			(31	)
Stock-based compensation expense		—			—			168,614		—			168,614
Balance at June 30, 2025		12,978,259		$	12,978		$	74,913,464	$	(51,153,271	)	$	23,773,171
Net income		—			—			—		1,113,692			1,113,692
Issuance of common stock upon settlement of restricted stock, net		10,555			11			—		—			11
Stock-based compensation expense		—			—			102,195		—			102,195
Balance at September 30, 2025		12,988,814		$	12,989		$	75,015,659	$	(50,039,579	)	$	24,989,069

Balance at January 1, 2024		12,771,434		$	12,771		$	73,872,679	$	(51,803,722	)	$	22,081,728
Net income		—			—			—		168,238			168,238
Issuance of common stock upon settlement of restricted stock, net		13,334			13			—		—			13
Stock-based compensation expense		—			—			281,510		—			281,510
Balance at March 31, 2024		12,784,768		$	12,784		$	74,154,189	$	(51,635,484	)	$	22,531,489
Net income		—			—			—		1,409,946			1,409,946
Issuance of common stock upon settlement of restricted stock, net		178,095			179			—		—			179
Stock-based compensation expense		—			—			175,356		—			175,356
Balance at June 30, 2024		12,962,863		$	12,963		$	74,329,545	$	(50,225,538	)	$	24,116,970
Net income		—			—			—		749,677			749,677
Issuance of common stock upon settlement of restricted stock, net		(29,455	)		(30	)		—		—			(30	)
Stock-based compensation expense		—			—			72,743		—			72,743
Balance at September 30, 2024		12,933,408		$	12,933		$	74,402,288	$	(49,475,861	)	$	24,939,360

See Notes to Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	For the Nine Months ended September 30,
	2025			2024
Cash flows from operating activities:
Net (loss) income	$	(1,535,191	)	$	2,327,861
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization		266,262			305,260
Amortization of debt issuance cost		15,991			38,697
Stock-based compensation		591,018			529,771
Deferred income taxes		(1,080,873	)		512,717
Provision for credit losses		(86,814	)		144,565
Amortization of operating lease right-of-use assets		1,175,052			1,405,201
Changes in operating assets and liabilities:
Increase in accounts receivable		(2,596,402	)		(2,367,222	)
(Increase) decrease in contract assets		(863,704	)		1,693,097
Decrease in inventory		324,683			384,361
Decrease in prepaid expenses and other assets		81,949			300,168
Increase in accounts payable and accrued expenses		2,170,637			236,130
Decrease in contract liabilities		(437,753	)		(4,547,502	)
Decrease in operating lease liabilities		(1,165,974	)		(1,486,359	)
Increase (decrease) in loss reserve		72,250			(312,463	)
Decrease in income taxes payable		(36,956	)		(1,359	)
Net cash used in operating activities		(3,105,825	)		(837,077	)

Cash flows from investing activities:
Purchase of property and equipment		(63,900	)		(330,282	)
Net cash used in investing activities		(63,900	)		(330,282	)

Cash flows from financing activities:
Principal payments on line of credit		(1,500,000	)		(1,920,000	)
Principal payments on long-term debt		(21,034	)		(36,917	)
Repayments of insurance financing obligation		(253,613	)		(261,531	)
Net cash used in financing activities		(1,774,647	)		(2,218,448	)

Net decrease in cash		(4,944,372	)		(3,385,807	)
Cash at beginning of period		5,490,963			5,094,794
Cash at end of period	$	546,591		$	1,708,987

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	1,258,054		$	1,795,495
Income Taxes	$	75,933		$	36,457

Supplemental disclosure Non-Cash item:
Increase to operating right-of-use asset and operating lease liability from lease amendment	$	8,190,636		$	—

See Notes to Condensed Consolidated Financial Statements

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

INTERIM FINANCIAL STATEMENTS

Basis of Presentation

The Company consists of CPI Aerostructures, Inc. (“CPI Aero”), Welding Metallurgy, Inc. (“WMI”), a wholly owned subsidiary of CPI Aero, and Compac Development Corporation, a wholly owned subsidiary of WMI (collectively, the “Company”, “we”, “us”, or “our”).

The condensed consolidated interim financial statements of the Company as of September 30, 2025 and for the three and nine months ended September 30, 2025 and 2024 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and notes normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to those rules and regulations. The consolidated balance sheet at December 31, 2024 has been derived from audited consolidated financial statements, but does not include all of the information and notes required by U.S. GAAP. The Company believes that the disclosures are adequate to make the information presented not misleading.

All adjustments that, in the opinion of the management, are necessary for a fair presentation for the periods presented have been reflected. Such adjustments are of a normal, recurring nature. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Form 10-K”). The results of operations for interim periods are not necessarily indicative of the operating results to be expected for the full year or any other interim period.

An operating segment, in part, is a component of an enterprise whose operating results are regularly reviewed by the chief operating decision maker (the “CODM”) to make decisions about resources to be allocated to the segment and assess its performance. Operating segments may be aggregated only to a limited extent. The Company’s CODM, the Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. The Company has determined that it has a single operating and reportable segment.

The Company maintains its cash in multiple financial institutions. The balances are insured by the Federal Deposit Insurance Corporation. From time to time, the Company’s balances may exceed insurance limits. As of September 30, 2025, the Company had $334,493 of uninsured balances. The Company limits its credit risk by selecting financial institutions considered to be highly creditworthy.

Recently Issued Accounting Standards – Adopted

In 2025, the Company adopted ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. The updated accounting guidance requires expanded income tax disclosures, including the disaggregation of existing disclosures related to the effective tax rate reconciliation and income taxes paid. The guidance is effective for fiscal years beginning after December 15, 2024. An entity may apply the amendments in this ASU prospectively, but an election to treat this retrospectively is permitted. The Company has adopted this ASU, which is expected to impact the annual disclosure in its 10-K.

Recently Issued Accounting Standards – Not Adopted

In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (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 reporting periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. Entities may apply the guidance using a prospective, modified transition or retrospective approach. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the preferred transition approach and assessing the impact of the ASU on our disclosures and financial statements, including the timing of adoption.

In July 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets, (“ASU 2025-05”) which provides a practical expedient to measure credit losses on accounts receivable and contract assets. ASU 2025-05 is effective for annual periods beginning after December 15, 2025, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the timing of the adoption and the impact of ASU 2025-05 on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. In January 2025, the FASB issued ASU 2025-01, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date,” which clarifies that all public business entities should initially adopt the disclosure requirements in the final annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The new guidance is effective for fiscal years beginning after December 15, 2026, which is our annual period beginning January 1, 2027, and interim reporting periods beginning after December 15, 2027, which will be our interim period beginning January 1, 2028. Early adoption of ASU 2024-03 is permitted. We are evaluating the impact of ASU 2025-01 in conjunction with ASU 2024-03.

2.	REVENUE

Disaggregation of Revenue

The following tables present the Company’s revenue disaggregated by contract type and revenue recognition method:

	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Government subcontracts	$	15,522,738	$	16,986,106	$	39,115,821	$	48,951,748
Prime government contracts		2,560,673		1,673,483		6,689,643		7,056,711
Commercial contracts		1,185,691		760,290		4,043,354		3,302,897
	$	19,269,102	$	19,419,879	$	49,848,818	$	59,311,356

	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Revenue recognized using over time revenue recognition model	$	19,087,180	$	19,092,000	$	49,412,696	$	58,558,552
Revenue recognized using point in time revenue recognition model		181,922		327,879		436,122		752,804
	$	19,269,102	$	19,419,879	$	49,848,818	$	59,311,356

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 Company’s 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 management’s judgment about the ability and cost to achieve the schedule, consideration of customer-directed delays or reductions in scheduled deliveries, technical requirements, customer activity levels, and related variable consideration. Management must make assumptions and estimates regarding contract revenue and costs, including estimates of labor productivity and availability, the complexity and scope of the work to be performed, the availability and cost of materials including any impact from changing costs or inflation, the length of time to complete the performance obligation, the availability and timing of funding from our customer, and overhead cost rates, among others.

Changes in estimates of net sales, cost of sales, and the related impact to operating profit on contracts recognized over time are recognized on a cumulative catch-up basis, which recognizes the cumulative effect of the profit changes on current and prior periods based on a performance obligation’s percentage-of-completion in the current period. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. Our EAC adjustments also include the establishment of, and changes to, loss provisions for our contracts accounted for on a percentage-of-completion basis.

Net EAC adjustments had the following impact on our gross profit during the three and nine months ended September 30, 2025 and 2024:

	Three months ended September 30,						Nine months ended September 30,
	2025			2024			2025			2024
Net Adjustment	$	(1,014,387	)	$	(865,493	)	$	(8,109,975	)	$	(2,223,671	)

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.

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.

Transaction Price Allocated to Remaining Performance Obligations

As of September 30, 2025, the aggregate amount of transaction price allocated to the remaining performance obligations was approximately $100.1 million. This represents the amount of revenue the Company expects to recognize in the future on contracts with unsatisfied or partially satisfied performance obligations as of September 30, 2025.

3.	CONTRACT ASSETS AND LIABILITIES

Contract assets represent revenue recognized on contracts in excess of amounts invoiced to the customers and the Company’s right to consideration is conditional on something other than the passage of time. Amounts may not exceed their net realizable value. Under the typical payment terms of our government as well as military contractor contracts, the customer retains a portion of the contract price until completion of the contract, as a measure of protection for the customer. Our government and military contract or contracts therefore typically result in revenue recognized in excess of billings, which we present as contract assets. Contract assets are classified as current assets. The Company’s contract liabilities represent customer payments received or due from the customer in excess of revenue recognized. Contract liabilities are classified as current liabilities.

September 30,

2025

December 31,

2024

December 31,

2023

Contract assets

33,695,994

32,832,290

35,312,068

Contract liabilities

1,992,910

2,430,663

5,937,629

Revenue recognized for the nine months ended September 30, 2025 and 2024 that was included in the contract liabilities balance as of January 1, 2025 and 2024, was approximately $1.6 million and $5.0 million, respectively.

4.	INVENTORY

The components of inventory consisted of the following:

	September 30, 2025		December 31, 2024
Raw materials	$	275,888	$	414,806
Work in progress		7,166		60,719
Finished goods		310,551		442,763
Inventory	$	593,605	$	918,288

5.	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 September 30, 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 option or stock appreciation right awarded. In the fourth quarter of 2020, the Company added 800,000 shares to the 2016 Plan, which increased the number of shares reserved for issuance under the 2016 Plan to 1,400,000 shares. In the second quarter of 2023, the Company added an additional 800,000 shares to the 2016 Plan, which increased the number of shares for reserved for issuance under the 2016 Plan to 2,200,000 shares. The Company has 292,985 shares available for grant under the 2016 Plan as of September 30, 2025.

On June 24, 2025, the shareholders of the Company approved the 2025 Long-Term Incentive Plan (the “2025 Plan”) at the Company’s 2025 annual meeting of shareholders. The 2025 Plan had previously been approved by the Company’s Board of Directors (the “Board”) on April 28, 2025, upon the recommendation of the Company’s Compensation and Human Resources Committee, subject to shareholder approval. The 2025 Plan is intended to advance the Company’s interests by providing equity-based incentives to attract, retain, and motivate employees, officers, directors, and consultants. The plan authorizes the issuance of up to 800,000 shares of the Company’s common stock and allows for a variety of award types, including stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, and other stock-based awards. The 2025 Plan is administered by the Company’s Compensation and Human Resources Committee, which has broad authority to determine the terms of individual awards, including eligibility, size, vesting conditions, performance criteria, and other terms. Awards may generally not be transferred and are subject to forfeiture under certain conditions. As of September 30, 2025, the Company had not issued any shares from the 2025 Plan.

Stock-based compensation expense for restricted stock in the consolidated statements of operations is summarized as follows:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024
Cost of sales	$	—	$	14,430	$	—	$	3,675
Selling, general and administrative		102,206		58,283		591,018		526,096
Total stock-based compensation expense	$	102,206	$	72,713	$	591,018	$	529,771

The Company grants restricted stock units (“RSUs”) to directors as partial compensation. These RSUs vest quarterly on a straight-line basis over a one-year period and will fully vest on October 1, 2025.

The following table summarizes activity related to outstanding RSUs for the nine months ended September 30, 2025:

	RSUs			Weighted Average Grant Date Fair Value of RSUs
Non-vested – January 1, 2025		—		$	—
Granted		122,224		$	4.29
Vested		(91,665	)	$	4.29
Forfeited		(3,704	)	$	4.29
Non-vested – September 30, 2025		26,855		$	4.29

The Company grants shares of common stock (“Restricted Stock Awards” or “RSAs”) to select employees. These shares have various vesting dates, ranging from vesting on the grant date to as late as four years from the date of grant. In the event that the employee’s employment is voluntarily terminated prior to certain vesting dates, portions of the shares may be forfeited. At September 30, 2025, the weighted average remaining amortization period was 1.9 years.

The following table summarizes activity related to outstanding Restricted Stock Awards for the nine months ended September 30, 2025:

	Restricted Stock Awards			Weighted Average Grant Date Fair Value of Restricted Stock Awards
Non-vested – January 1, 2025		152,875		$	2.86
Granted		—		$	—
Vested		(44,075	)	$	2.98
Forfeited		(20,000	)	$	2.65
Non-vested – September 30, 2025		88,800		$	2.85

The Company grants shares of common stock (“Performance Restricted Stock Awards” or “PRSAs”) to select officers as part of our long-term incentive program that will result in that number of PRSAs being paid out if the target performance metric is achieved. The award vesting is based on specific performance metrics related to accounts payable delinquency, debt, and net income during the performance period. The PRSAs vest at 0% or 100% and all three metrics must be met to vest at 100%. The PRSAs granted under this program will vest on the fourth anniversary of the grant date, subject to the aforementioned performance criteria. At September 30, 2025, weighted average remaining amortization period was 0.5 years.

The following table summarizes activity related to outstanding PRSAs for the nine months ended September 30, 2025:

	PRSAs			Weighted Average Grant Date Fair Value of PRSAs
Non-vested – January 1, 2025		44,076		$	2.98
Granted		42,572		$	2.94
Vested		—		$	—
Forfeited		(44,076	)	$	2.98
Non-vested – September 30, 2025		42,572		$	2.94

The fair value of all RSUs, PRSAs and RSAs is based on the closing price of our common stock on the grant date. All RSUs, PRSAs, and Restricted Stock Awards vest and settle in common stock (on a one-for-one basis).

As of September 30, 2025, unamortized stock-based compensation costs related to restricted share arrangements was $114,831.

6.	NET INCOME (LOSS) PER SHARE

Basic loss per common share is computed using the weighted average number of common shares outstanding. Diluted income per common share is adjusted for the incremental shares attributed to unvested RSUs and RSAs. Incremental shares of 54,706 were used in the calculation of diluted income per common share for the three months ended September 30, 2025. Diluted loss per common share for the nine months ended September 30, 2025 is computed using the weighted-average number of common shares outstanding adjusted for the securities attributed to unvested RSUs and unvested RSAs. Securities that could potentially dilute basic earnings per share in the future, but that were excluded from the computation of diluted earnings per share because they were antidilutive for the nine months ended September 30, 2025 include 26,855 RSU and 88,800 RSA. Incremental shares of 70,105 and 90,463 were used in the calculation of diluted income per common share for the three and nine months ended September 30, 2024, respectively.

7.	LINE OF CREDIT AND LONG-TERM DEBT

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 Credit Loans bear interest at a rate based upon a pricing grid, as defined in the Credit Agreement.

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.

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

SEC Form 10-Q filed by CPI Aerostructures Inc.