What the changes say
- Customer concentration is more quantified: Raytheon, Sikorsky, Lockheed Martin and the Air Force represented 38%, 20%, 11% and 11% of 2025 revenue.
- New risks emphasize backlog reliability, contract-funded working capital, government audits, certifications, supplier dependence and financial controls.
- Prior financing, covenant, going-concern, interest-rate and tax-benefit risks were removed, while geopolitical and ESG risks remain broader.
- Cyber risk now specifically covers ransomware, phishing, nation-state actors, suppliers and customer systems, alongside machine learning and generative AI.
What changed since the prior 10-K
New
- NewRisks Related to Our Business
We depend on a limited number of prime contractors and government customers for a significant portion of our revenue
Dependence on four major customers—Raytheon, Sikorsky, Lockheed Martin and the Air Force—could make production changes materially affect revenue and cash flow.
- NewRisks Related to Our Business
A significant portion of our revenue is derived from a limited number of aerospace and defense programs
Reduced, delayed or canceled aerospace and defense programs could lower revenue when government funding, customer demand, priorities or technical issues change.
- NewRisks Related to Our Business
Our backlog may not be indicative of future revenue and may not result in realized revenue
Backlog may not convert into expected revenue because customers can change production, scope, pricing, delivery schedules or orders.
- NewRisks Related to Our Business
We may experience liquidity constraints if we are unable to finance working capital requirements associated with our contracts
CPI may need to fund materials, labor, engineering and inventory for extended periods before receiving customer payments, creating liquidity pressure.
- NewRisks Related to Our Business
Our contracts with the U.S. Government and prime contractors are subject to audit and oversight, which could adversely affect our business
Government audits could require repayment of unallowable costs or lead to disputes, penalties, suspension or debarment from contracting.
- NewRisks Related to Our Business
We face risks associated with competing for and performing under competitively awarded contracts
Competitive bids may underestimate technology, cost or performance challenges, and substantial proposal spending may produce contracts that are less profitable than expected.
- NewRisks Related to Our Business
We depend on suppliers for materials, and services, and disruptions in our supply chain could adversely affect our ability to fulfill our contracts
Supplier financial problems, labor shortages, transportation delays or material-cost increases could disrupt production and reduce profitability, especially under fixed-price contracts.
- NewRisks Related to Our Business
We also face risks associated with technological change, including the increasing use of machine learning and generative artificial intelligence technologies in business operations. The adoption of new technologies may introduce operational, cybersecurity, intellectual property, regulatory or reputational risks
Machine learning, generative AI, cyberattacks and system disruptions could create operational, cybersecurity, intellectual-property, regulatory or reputational harm.
- NewRisks Related to Our Business
We must maintain certain approvals, qualifications and certifications to manufacture products for our customers
Failure to maintain customer or regulatory approvals, qualifications and certifications could cost existing business or prevent participation in future aerospace programs.
- NewRisks Related to Our Business
Increased scrutiny from investors, regulators, customers and other stakeholders regarding environmental practices, sustainability initiatives and climate-related matters could expose us to additional costs and adversely affect our reputation, operations and stock price
Evolving environmental, sustainability and climate expectations could increase compliance and initiative costs or cause investors and customers to view CPI unfavorably.
- NewRisks Related to Global Events
Geopolitical conflicts, including the current escalation involving Iran, Israel and the United States, as well as terrorism and other global security threats, could adversely affect our business, financial condition and results of operations
Geopolitical conflicts or terrorism could shift defense budgets toward platforms CPI does not support, reducing demand for its products.
- NewRisks Related to Our Internal Controls and Financial Reporting
If we fail to maintain effective internal control over financial reporting, our ability to accurately report our financial results could be adversely affected
Weak internal financial controls could cause inaccurate reporting, delays, regulatory scrutiny, loss of investor confidence or a lower stock price.
- NewRisks Related to Our Tax Attributes
Our ability to utilize our net operating loss carryforwards may be limited, which could reduce the value of these tax attributes and adversely affect our financial condition and results of operations
- NewRisks Related to Our Indebtedness
We are subject to financial covenants under the Loan and Security Agreement with Western Alliance Bank and a failure to comply with those covenants could result in a default that could materially adversely affect our liquidity and operations
- NewRisks Related to Our Indebtedness
Our obligations under the Loan and Security Agreement are secured by a first priority security interest in substantially all of our assets, which could limit our financing flexibility and expose our assets to foreclosure in the event of a default
- NewRisks Related to Our Indebtedness
The Loan and Security Agreement contains restrictions on our operations that may limit our business flexibility
- NewRisks Related to Our Indebtedness
Our cost of borrowing under the Loan and Security Agreement is based on a variable interest rate and increases in interest rates could negatively impact our profitability
Dropped
- DroppedRisks Related to Our Business
We have risks associated with competing in the bidding process for contracts
- DroppedRisks Related to Our Business
We depend upon a select base of large prime defense contractors for the majority of our revenue, which subjects us to unique risks which may adversely affect us
- DroppedRisks Related to Our Business
Our working capital requirements may negatively affect our liquidity and capital resources
Competitive bidding could create technology difficulties, cost overruns, proposal costs and unprofitable awarded contracts.
- DroppedRisks Related to Our Business
Our ability to utilize our tax benefits could be substantially limited if we fail to generate sufficient income or if we experience an “ownership change”
- DroppedRisks Related to Our Business
Increased scrutiny from investors, lenders, regulators and other market participants regarding our environmental, social, governance, sustainability or climate responsibilities could expose us to additional costs and adversely impact our liquidity, results of operations, reputation, employee retention, and stock price
Concentration of 2024 revenue among Raytheon, Lockheed Martin and the Air Force.
- DroppedRisks Related to Our Indebtedness and Liquidity
In the past, CPI obtained amendments to and received waivers of and consents to non-compliance with certain covenants under our credit facility with BankUnited and there can be no assurance that we will not fall out of compliance with our covenants in the future
- DroppedRisks Related to Our Indebtedness and Liquidity
Our capital requirements, liquidity and financial condition raise significant risks as to our ability to continue as a going concern
- DroppedRisks Related to Our Indebtedness and Liquidity
Our cost of borrowing under the Credit Agreement is based on the Prime Rate of interest per annum published in the Money Rates section of The Wall Street Journal (the “Prime Rate”) plus the margin charged by our lender, and increases in the Prime Rate negatively impact our profitability
- DroppedRisks Related to Global Events
The conflict between Israel and Hamas, rising tensions between China and Taiwan, the ongoing war between Russia and Ukraine, and terrorist acts and acts of war may seriously harm our business, results of operations and financial condition
- DroppedRisks Related to Global Events
We cannot predict the consequences of future geo-political events on our operations or our profitability
Reworded
- 98% rewrittenRisks Related to Our Business
Cybersecurity incidents, system failures and technological changes, including developments in machine learning and generative artificial intelligence, could adversely affect our business and operations
Cyber risk expanded from general system failures to specific ransomware, phishing, malicious software, nation-state and insider threats affecting CPI, suppliers and customers.
Was: Cyber security attacks, internal system or service failures and technological changes, including the use of machine learning and generative artificial intelligence, may adversely impact our business and operations
- 52% rewrittenRisks Related to Our Business
We depend on government contracts for a significant portion of our revenues
The government-contract risk is substantially unchanged, with wording streamlined and the reference to business prospects removed.
- 41% rewrittenRisks Related to Our Business
We are subject to intense competition for the skilled technicians necessary to manufacture our products
The labor-risk wording now cites continued inflationary pressures rather than a possible period of inflation.
- 34% rewrittenRisks Related to Our Business
We may be subject to fines and disqualification for non-compliance with Federal Aviation Administration regulations
The FAA risk changes aircraft components to aircraft assemblies, without a substantive change in the compliance consequences.
Was: We may be subject to fines and disqualification for non-compliance with Federal Aviation Administration (“FAA”) regulations
- 30% rewrittenRisks Related to Our Business
We use estimates when accounting for contracts. Changes in estimates may affect our profitability and our overall financial position
No substantive change: revenue recognition, ASC 606, contract assets and liabilities, and estimate changes remain described the same way.
- 27% rewrittenRisks Related to Our Business
We incur risks associated with new programs
The customer-obligation wording was shortened slightly, with no material change to the risks of new technologies, costs, suppliers or delays.
- 21% rewrittenRisks Related to Our Business
If our subcontractors or suppliers fail to perform their contractual obligations, our contract performance, and our ability to obtain future business and our profitability could be materially and adversely impacted
No substantive change: subcontractor disputes or failures could still impair contract performance, future business and profitability.
All 32 risk factors
Headings as the filing states them, in filing order.
Risks Related to Our Business
- 01We depend on government contracts for a significant portion of our revenues52% rewritten
- 02We depend on a limited number of prime contractors and government customers for a significant portion of our revenueNew
- 03A significant portion of our revenue is derived from a limited number of aerospace and defense programsNew
- 04Our backlog may not be indicative of future revenue and may not result in realized revenueNew
- 05We may experience liquidity constraints if we are unable to finance working capital requirements associated with our contractsNew
- 06Our contracts with the U.S. Government and prime contractors are subject to audit and oversight, which could adversely affect our businessNew
- 07We face risks relating to government contracts
- 08We face risks associated with competing for and performing under competitively awarded contractsNew
- 09Further consolidation in the aerospace industry could adversely affect our business and financial results
- 10Due to fixed contract pricing, increasing contract costs exposes us to reduced profitability and the potential loss of future business
- 11We use estimates when accounting for contracts. Changes in estimates may affect our profitability and our overall financial position30% rewritten
- 12We incur risks associated with new programs27% rewritten
- 13We depend on suppliers for materials, and services, and disruptions in our supply chain could adversely affect our ability to fulfill our contractsNew
- 14If our subcontractors or suppliers fail to perform their contractual obligations, our contract performance, and our ability to obtain future business and our profitability could be materially and adversely impacted21% rewritten
- 15We are subject to intense competition for the skilled technicians necessary to manufacture our products41% rewritten
- 16We may be unable to attract and retain personnel who are key to our operations
- 17Cybersecurity incidents, system failures and technological changes, including developments in machine learning and generative artificial intelligence, could adversely affect our business and operations98% rewritten
- 18We also face risks associated with technological change, including the increasing use of machine learning and generative artificial intelligence technologies in business operations. The adoption of new technologies may introduce operational, cybersecurity, intellectual property, regulatory or reputational risksNew
- 19Product liability claims in excess of insurance could adversely affect our financial results and financial condition
- 20We are subject to strict governmental regulations relating to the environment, which could result in fines and remediation expenses in the event of non-compliance
- 21We must maintain certain approvals, qualifications and certifications to manufacture products for our customersNew
- 22We may be subject to fines and disqualification for non-compliance with Federal Aviation Administration regulations34% rewritten
- 23We are presently classified as a small business and the loss of our small business status may adversely affect our ability to compete for government contracts
- 24We are subject to the cyclical nature of the commercial aerospace industry, and any future downturn in the commercial aerospace industry or general economic conditions, including inflation could adversely impact the demand for our products
- 25Increased scrutiny from investors, regulators, customers and other stakeholders regarding environmental practices, sustainability initiatives and climate-related matters could expose us to additional costs and adversely affect our reputation, operations and stock priceNew
Risks Related to Global Events
- 26Geopolitical conflicts, including the current escalation involving Iran, Israel and the United States, as well as terrorism and other global security threats, could adversely affect our business, financial condition and results of operations New
Risks Related to Our Internal Controls and Financial Reporting
- 27If we fail to maintain effective internal control over financial reporting, our ability to accurately report our financial results could be adversely affectedNew
Risks Related to Our Tax Attributes
- 28Our ability to utilize our net operating loss carryforwards may be limited, which could reduce the value of these tax attributes and adversely affect our financial condition and results of operationsNew
Risks Related to Our Indebtedness
- 29We are subject to financial covenants under the Loan and Security Agreement with Western Alliance Bank and a failure to comply with those covenants could result in a default that could materially adversely affect our liquidity and operationsNew
- 30Our obligations under the Loan and Security Agreement are secured by a first priority security interest in substantially all of our assets, which could limit our financing flexibility and expose our assets to foreclosure in the event of a defaultNew
- 31The Loan and Security Agreement contains restrictions on our operations that may limit our business flexibilityNew
- 32Our cost of borrowing under the Loan and Security Agreement is based on a variable interest rate and increases in interest rates could negatively impact our profitabilityNew
Other Cpi Aerostructures 10-Ks
- FY2024 10-K risk factors25 risks
The risk section is dominated by intense customer concentration with Raytheon, Lockheed Martin, and the U.S. Air Force. Severe liquidity constraints, going concern doubts, and credit facility covenant risks threaten operations. Government contract dependence, FAA regulations, and fixed-price bidding pressures create constant margin risks.
Filed Mar 31, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.