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CPI Aerostructures (CVU) Risk Analysis
Risk Overview Q2, 2026
Source: the company's latest filing for the period ended Jun 30, 2026, filed Aug 13, 2026
Risk Change Over Time
- Share Price & Shareholder Rights - Risk 1We are currently ineligible to file a registration statement on Form S-3 to register the offer and sale of securities, which could adversely affect our ability to raise future capital.
We did not file our Quarterly Reports for the three months ended March 31, 2021, June 30, 2021, and September 30, 2021, our 2021 Annual Report on Form 10-K, our Quarterly Report on Form 10-Q for the three months ended March 31, 2022 (the "2022 Q1 Form 10-Q"), and our Quarterly Report on Form 10-Q for the three and six months ended June 30, 2022 (the "2022 Q2 Form 10-Q") within the timeframes required by the SEC. We regained status as a current filer when we filed the 2022 Q2 Form 10-Q and have filed subsequent periodic reports on a timely basis. However, we will not be considered a timely filer and will not be eligible to file a short-form registration statement on Form S-3 to register the offer and sale of our securities until September 29, 2023 (twelve full calendar months from the date we regain status as a current filer). If we wish to register the offer and sale of our securities to the public prior to such time, we will be required to use the long-form registration statement, Form S-1, which may increase both our transaction costs and the amount of time required to complete the transaction. This may adversely affect our ability to raise funds if we choose to do so.
- Accounting & Financial Operations - Risk 2We have identified material weaknesses in our internal control over financial reporting which did and could continue to adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner.
As described in Item 9A of this Annual Report on Form 10-K, we identified material weaknesses in our internal control over financial reporting. The occurrence of any future errors, misstatements, or failures in internal control may also cause us to fail to meet reporting obligations, negatively affect investor and customer confidence in our management and the accuracy of our financial statements and disclosures, result in events of default under our banking agreements, or result in adverse publicity and concerns from investors and customers, any of which could have a negative effect on the price of our common stock, subject us to regulatory investigations and penalties or additional stockholder litigation, and have a material adverse impact on our business and financial condition.
Risk Highlights Q2, 2026
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 32
- Accounting & Financial Operations - Risk 1Our backlog may not be indicative of future revenue and may not result in realized revenue.
Our backlog represents the estimated value of expected future sales under existing contracts and purchase orders. However, backlog is not necessarily indicative of future revenue to be realized or the timing of such revenue. Production quantities and delivery schedules under existing programs may change, and customers may modify, delay or cancel orders. In addition, many of our contracts are subject to engineering changes, scope modifications, contract adjustments or requests for equitable adjustment, which may affect program scope, pricing or delivery schedules. As a result, the amounts included in backlog may change over time and may not be realized as revenue in the periods we expect or at all. In addition, a portion of our backlog relates to long-term production programs that may extend over several years. These programs are subject to changes in production rates, program requirements and other factors that may affect the timing and amount of revenue recognized. Backlog amounts may also reflect assumptions regarding production quantities, pricing, contract scope and other factors that may change over time. Changes in program requirements, production schedules, contract terms or customer demand could affect our ability to convert backlog into revenue and could adversely affect our results of operations and financial condition.
- Accounting & Financial Operations - Risk 2We use estimates when accounting for contracts. Changes in estimates may affect our profitability and our overall financial position.
We primarily recognize revenue from our contracts over the contractual period pursuant to ASC 606. Pursuant to ASC 606, revenue and gross profit are recognized as work is performed based on the relationship between actual costs incurred and total estimated costs at the completion of the contract. Recognized revenues that will not be billed under the terms of the contract until a later date are recorded on our consolidated balance sheet as an asset captioned "Contract assets." Contracts where billings to date have exceeded recognized revenues are recorded on our consolidated balance sheet as a liability captioned "Contract liabilities." Changes to the original estimates may be required during the term of the contract. Estimates are reviewed quarterly and the effect of any change in the estimated gross margin percentage for a contract is reflected in the consolidated financial statements for the period the change becomes known. ASC 606 requires the use of considerable estimates in determining revenues and profits and in assigning the amounts to accounting periods. As a result, there can be a significant disparity between earnings as reported and the cash actually received during any reporting period. We continually evaluate all the issues related to the assumptions, risks and uncertainties inherent with the application of ASC 606; however, there is no assurance that our estimates will be accurate. If our estimates are not accurate or a contract is terminated, we will be forced to adjust revenue in later periods. These estimates and adjustments may also affect revenue recognition, contract assets and liabilities and cash receipts under our contracts, which could adversely affect our financial condition and results of operations.
- Accounting & Financial Operations - Risk 3If we fail to maintain effective internal control over financial reporting, our ability to accurately report our financial results could be adversely affected.
Effective internal control over financial reporting is necessary for us to provide reliable financial reports and prepare financial statements in accordance with U.S. GAAP. In prior periods, we identified material weaknesses in our internal control over financial reporting that required remediation. Although management implemented measures designed to remediate those material weaknesses and strengthen the Company's internal control environment, there can be no assurance that those remediation efforts will continue to be effective or that additional control deficiencies or material weaknesses will not be identified in the future. Maintaining effective internal control over financial reporting requires significant resources and ongoing management attention. Our internal controls may not prevent or detect all errors or misstatements, and deficiencies in our internal control over financial reporting could result in inaccurate financial reporting, delays in our reporting processes, regulatory scrutiny, loss of investor confidence or a decline in the market price of our common stock. If we are unable to maintain effective internal control over financial reporting, our business, financial condition and results of operations could be adversely affected.
- Accounting & Financial Operations - Risk 4Our 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.
As of December 31, 2025, we had approximately $68.2 million of federal net operating loss carryforwards ("NOLs") and approximately $18.3 million of post-apportionment NOLs for state tax purposes. These tax attributes could reduce future taxable income and cash tax obligations; however, their value depends on our ability to generate sufficient taxable income in future periods. Approximately $51.6 million of our federal NOLs arose prior to January 1, 2018 and will expire in varying amounts between 2034 and 2037 if not utilized. These NOLs may generally offset 100% of future taxable income for regular federal income tax purposes. Federal NOLs arising in 2018 and later years may generally be carried forward indefinitely but may offset no more than 80% of taxable income in any given year. In addition, under Section 382 of the Internal Revenue Code, our ability to utilize our NOLs could be significantly limited if we experience an "ownership change," generally defined as a cumulative change in ownership of more than 50% by certain shareholders over a three-year period. Future issuances of our common stock, including in connection with equity financings, equity incentive plans or other transactions, as well as shifts in ownership among existing shareholders, could contribute to such an ownership change. If an ownership change were to occur, the amount of taxable income that could be offset by our NOLs in any year could be substantially limited. If we are unable to utilize our NOLs as anticipated, the benefit of these tax attributes could be reduced or eliminated, which could adversely affect our financial condition and results of operations.
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