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Organization and Basis of Presentation | 9 Months Ended
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Sep. 30, 2025
Organization and Basis of Presentation [Abstract] |
ORGANIZATION AND BASIS OF PRESENTATION | Note 1. ORGANIZATION AND BASIS OF PRESENTATION Organization Air Industries Group is a Nevada corporation (“AIRI”). The accompanying condensed consolidated financial statements presented are those of AIRI, and its wholly-owned subsidiaries; Air Industries Machining Corp. (“AIM”), Nassau Tool Works, Inc. (“NTW”), and the Sterling Engineering Corporation (“Sterling”) (together, the “Company”). Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission on April 15, 2024, from which the accompanying condensed consolidated balance sheet dated December 31, 2024 was derived. Going Concern and Management’s Plan As of September 30, 2025, debt under our Current Credit Facility and Related Party Subordinated Notes approximates $26,827,000. The Current Credit Facility is scheduled to expire on December 30, 2025, and the Related Party Subordinated Notes mature on June 30, 2026. These obligations are classified as current liabilities on the condensed consolidated balance sheet as of September 30, 2025. As a result of the aforementioned and rights that our Current Credit Facility lender could exercise, there is substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the date of filing of these interim condensed consolidated financial statements. The Company is actively engaged in constructive discussions with all lenders regarding potential refinancing or extension of these obligations. While these discussions have been professional and remain ongoing, there can be no assurance that agreements will be reached with existing lenders or through alternative financing sources. To support current operations and strategic initiatives, the Company has raised capital through public market sales of its common stock since December 2024 and believes it can continue to access equity markets in future periods. During the nine months ended September 30, 2025, the Company generated gross proceeds of $4,869,000 through an At The Market (“ATM”) Offering, of which approximately $3,930,000 is restricted for the benefit of the Current Credit Facility lender. In light of ongoing negotiations with all of our lenders, the Company has temporarily paused all equity raising activity while evaluating the most effective capital structure going forward. As of September 30, 2025, the Company was in compliance with its minimum Fixed Coverage Charge ratio (“FCCR”) of 1.25x on a rolling 12-month basis but was in default of the requirement that fixed asset acquisitions not exceed $2,500,000. Additionally, the Company has not yet obtained a waiver with respect to its default of a required minimum FCCR of 1.05x on a rolling 12-month basis, as of June 30, 2025, having only attained a ratio of 0.76x. All other financial and business covenants under the terms its Current Credit Facility were met as of September 30, 2025. The terms of all outstanding indebtedness are discussed further in “Note 5. Debt”. Management remains focused on enhancing profitability and improving cash flows through cost reductions, margin improvements, and long-term revenue growth. In the third quarter of 2025, the Company initiated cost-saving measures—including a workforce reduction—to better align operating expenses with anticipated production volumes. Additional cost-savings measures may be considered. As a result of recent contract awards, as of September 30, 2025, the Company had total unfilled contract values amounting to $269.0 million (including its $131.8 million in backlog plus additional potential funded orders against Long-Term Agreements (“LTAs”) previously awarded to us). These unfilled contract values support a positive outlook for future growth; however, extended lead times for raw material procurement and the complexity of manufacturing processes are expected to delay revenue acceleration until early 2026. The Company generally sources its raw material, principally metal casting or forgings, from domestic sources. As such, the Company is generally not exposed to increased prices on imports but would be subject to increased prices if proposed tariffs or disruptions in supply chains resulting from tariffs or other geopolitical events, cause the general level of prices for its products to increase. One component used by the Company on a key commercial aviation program is sourced from China. The Company’s contract with its customer for the product requires the Company to absorb the first five percent (5%) of any cost increases with further increases absorbed by the customer. A substantial portion of the Company’s products are used in United States military aviation and as such, changes in the US defense budget are more material to demand than to changes in general economic conditions. However, the Company does have significant exposure in commercial aviation; demand for these products may be reduced if general economic conditions deteriorate reducing demand for commercial air travel. The Company is required to maintain a collection account with its lender into which substantially all cash receipts are remitted. Additionally, given its current defaults, the Company’s Current Credit Facility lender could choose to exercise its rights, for example, increasing the rate of interest or refuse to make loans under the revolving portion of the Current Credit Facility and keep the funds remitted to the collection account. If the lender were to raise the rate of interest or exercise other remedies available under the Current Credit Facility, it would adversely impact the Company’s operating results. If the lender were to cease making new loans under the revolving facility or limit availability under the revolving facility, the Company would lack the funds to continue operations or, possibly, expand its operations. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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