Air Industries (AIRI) 10-Q 12 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 03, 2015
Document And Entity Information
Entity Registrant Name	AIR INDUSTRIES GROUP
Entity Central Index Key	1,009,891
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		7,559,501
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,015

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Current Assets
Cash and Cash Equivalents	$ 1,214,000	$ 1,418,000
Accounts Receivable, Net of Allowance for Doubtful Accounts of $1,002,000 and $1,566,000, respectively	11,749,000	11,916,000
Inventory	33,283,000	28,391,000
Deferred Tax Asset	1,358,000	1,421,000
Prepaid Expenses and Other Current Assets	761,000	875,000
Total Current Assets	48,365,000	44,021,000
Property and Equipment, net	14,494,000	9,557,000
Capitalized Engineering Costs - Net of Accumulated Amortization of $4,405,000 and $4,184,000, respectively	911,000	712,000
Deferred Financing Costs, Net, Deposits and Other Assets	1,153,000	825,000
Intangible Assets, net	3,899,000	4,513,000
Deferred Tax Asset	1,038,000	858,000
Goodwill	8,719,000	5,434,000
TOTAL ASSETS	78,579,000	65,920,000
Current Liabilities
Notes Payable and Capitalized Lease Obligations - Current Portion	34,676,000	19,508,000
Accounts Payable and Accrued Expenses	8,132,000	6,948,000
Lease Impairment - Current	25,000	56,000
Deferred Gain on Sale - Current Portion	38,000	38,000
Deferred Revenue	453,000	158,000
Dividends Payable	1,134,000	1,066,000
Income Taxes Payable	0	71,000
Total Current Liabilities	44,458,000	27,845,000
Long Term Liabilities
Notes Payable and Capitalized Lease Obligations - Net of Current Portion	2,768,000	8,213,000
Lease Impairment - Net of Current Portion	4,000	4,000
Deferred Gain on Sale - Net of Current Portion	390,000	409,000
Deferred Rent	1,194,000	1,177,000
TOTAL LIABILITIES	48,814,000	$ 37,648,000
Commitments and Contingencies
Stockholders' Equity
Common Stock - Par Value $.001 - Authorized 25,000,000 Shares, 7,559,501 and 7,108,677 Shares Issued and Outstanding as of June 30, 2015 and December 31, 2014, respectively	7,000	$ 7,000
Additional Paid-In Capital	44,780,000	42,790,000
Accumulated Deficit	(15,022,000)	(14,525,000)
TOTAL STOCKHOLDERS' EQUITY	29,765,000	28,272,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 78,579,000	$ 65,920,000

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
ASSETS
Allowance for Doubtful Accounts	$ 1,002,000	$ 1,566,000
Accumulated Amortization	$ 4,405,000	$ 4,184,000
Stockholders Equity
Common Stock par value	$ 0.001	$ 0.001
Common Stock Authorized	25,000,000	25,000,000
Common Stock Issued	7,559,501	7,108,677
Common Stock Outstanding	7,559,501	7,108,677

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Statement [Abstract]
Net Sales	$ 19,057,000	$ 13,360,000	$ 35,868,000	$ 28,813,000
Cost of Sales	15,160,000	10,007,000	27,602,000	21,415,000
Gross Profit	3,897,000	3,353,000	8,266,000	7,398,000
Operating Expenses	3,825,000	3,096,000	7,728,000	5,912,000
Income from Operations	72,000	257,000	538,000	1,486,000
Interest and financing costs	(544,000)	(304,000)	(890,000)	(607,000)
Other Income (Expense), Net	54,000	(62,000)	62,000	(63,000)
Income (loss) before provision for income taxes	(418,000)	(109,000)	(290,000)	816,000
Net Income (loss)	$ (601,000)	$ 616,000	$ (497,000)	$ 957,000
Income (loss) per share - basic	$ (0.08)	$ 0.1	$ (0.07)	$ 0.16
Income (loss) per share - diluted	$ (0.08)	$ 0.09	$ (0.07)	$ 0.15
Weighted average shares outstanding - basic	7,557,427	6,276,481	7,397,756	6,071,163
Weighted average shares outstanding - diluted	7,557,427	6,597,804	7,397,756	6,370,588

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$ (497,000)	$ 957,000
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation of property and equipment	1,634,000	1,168,000
Amortization of intangible assets	614,000	582,000
Amortization of capitalized engineering costs	151,000	214,000
Bad debt expense	55,000	189,000
Non-cash compensation expense	54,000	15,000
Amortization of deferred financing costs	83,000	23,000
Gain on sale of real estate	(19,000)	(19,000)
Deferred Income Taxes	(17,000)	(746,000)
(Increase) Decrease in Operating Assets:
Accounts Receivable	1,921,000	(789,000)
Inventory	(4,435,000)	(2,920,000)
Prepaid Expenses and Other Current Assets	70,000	72,000
Deposits and other assets	(45,000)	(24,000)
Increase in Operating Liabilities:
Accounts payable and accrued expenses	(34,000)	659,000
Deferred Rent	17,000	38,000
Income Taxes payable	(71,000)	274,000
Deferred revenue	295,000	(77,000)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(224,000)	(384,000)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for acquisitions	(5,413,000)	(4,190,000)
Cash acquired in acquisitions	588,000	0
Capitalized engineering costs	(350,000)	(128,000)
Purchase of property and equipment	(371,000)	(302,000)
NET CASH USED IN INVESTING ACTIVITIES	(5,546,000)	(4,620,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable - Sellers	(41,000)	(339,000)
Capital lease obligations	(267,000)	(172,000)
Note payable - Revolver	5,329,000	(1,422,000)
Proceeds from note payable - term loans	3,500,000	1,328,000
Payments of note payable - term loans	(903,000)	(664,000)
Deferred financing costs	(322,000)	(25,000)
Payments related to Lease Impairment	(30,000)	(38,000)
Dividends Paid	(2,200,000)	(1,618,000)
Proceeds from capital lease refinance	500,000	0
Proceeds from Registered Offering	0	9,530,000
Costs to raise capital	0	(968,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES	5,566,000	5,612,000
NET INCREASE IN CASH AND CASH EQUIVALENTS	(204,000)	608,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	1,418,000	561,000
CASH AND CASH EQUIVALENTS AT END OF PERIOD	1,214,000	1,169,000
Supplemental cash flow information
Cash paid during the period for interest	727,000	539,000
Cash paid during the period for income taxes	445,000	344,000
Supplemental schedule of non-cash investing and financing activities
Dividends payable	1,134,000	1,064,000
Acquisition of property and equipment financed by capital lease	285,000	0
Purchase of substantially all assets of Sterling and assumption of liabilities in the acquisition as follows:
Fair Value of Tangible Assets acquired	8,281,000	0
Goodwill	3,285,000	0
Cash acquired	588,000	0
Liabilities assumed	(2,538,000)	0
Common Stock issued	(4,203,000)	0
Cash paid for acquisition	5,413,000	0
Purchase of substantially all assets of Woodbine and assumption of liabilities in the acquisition as follows:
Fair Value of tangible assets acquired	0	472,000
Goodwill	0	2,402,000
Liabilities assumed	0	(19,000)
Common stock issued	0	(290,000)
Cash paid for acquisition	0	2,565,000
Purchase of substantially all assets of Eur-pac and assumption of liabilities in the acquisition as follows:
Fair Value of tangible assets acquired	0	409,000
Goodwill	0	1,659,000
Liabilities assumed	0	(170,000)
Due to seller	0	(78,000)
Common stock issued	0	(195,000)
Cash paid for acquisition	$ 0	$ 1,625,000

FORMATION AND BASIS OF PRESENTA

FORMATION AND BASIS OF PRESENTATION	6 Months Ended
	Jun. 30, 2015
Formation And Basis Of Presentation
FORMATION AND BASIS OF PRESENTATION	Organization On August 30, 2013, Air Industries Group, Inc. (“Air Industries Delaware”) changed its state of incorporation from Delaware to Nevada as a result of a merger with and into its recently formed wholly-owned subsidiary, Air Industries Group, a Nevada corporation (“Air Industries Nevada” or “AIRI”) and the surviving entity, pursuant to an Agreement and Plan of Merger. The reincorporation was approved by the stockholders of Air Industries Delaware at its 2013 Annual Meeting of Stockholders. Air Industries Nevada is deemed to be the successor. The accompanying condensed consolidated financial statements presented are those of AIRI, and its wholly-owned subsidiaries; Air Industries Machining Corporation (“AIM”), Welding Metallurgy, Inc. ("WMI" or “Welding”), Miller Stuart, Inc. (“Miller Stuart”), Nassau Tool Works, Inc. (“NTW”), Woodbine Products, Inc. (“Woodbine” or “WPI”) effective April 1, 2014, Eur-Pac Corporation (“Eur-Pac” or “EPC”) effective June 1, 2014, Electronic Connection Corporation (“ECC”), effective September 1, 2014, AMK Welding, Inc. (“AMK”) effective October 1, 2014, and The Sterling Engineering Company (“SEC” or "Sterling"), effective March 1, 2015 (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 six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission.

ACQUISITIONS

ACQUISITIONS	6 Months Ended
	Jun. 30, 2015
Business Combinations [Abstract]
ACQUISITIONS	The Company accounts for all business combinations in accordance with FASB ASC 805, “Business Combinations” (“ASC 805”), using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets. The Company expenses all costs as incurred related to an acquisition in the condensed consolidated statements of income. Sterling On March 1, 2015, the Company acquired all of the common stock of Sterling, for $5.4 million in cash and 425,005 shares of the common stock of AIRI. The common stock was valued at $9.89 per share, which was the closing share price on February 27, 2015. The cash consideration is subject to adjustment for working capital changes. The Company has also entered into employment and non-compete agreements for two and three year periods with three of the principals of Sterling. The Company financed the acquisition of Sterling with the proceeds from the issuance of Term Loan D (see Note 6). At the time of acquisition, Sterling had capital lease obligations for equipment with a remaining balance of approximately $1.3 million. On April 21, 2015, the Company refinanced the $1.3 million capital lease obligation with the same financing company. This refinancing generated approximately $500,000 of cash for the Company. The Company is still in the process of finalizing the fair values of the Sterling acquisition transaction and is still in the measurement period as defined under ASC 805. Accordingly, during the three months ended June 30, 2015, the Company had a revision to the previously recorded purchase price allocation, and has increased the fair value of the goodwill acquired by $1.3 million with a corresponding increase in capital lease obligations. At the date of the capital lease refinancing transaction, the Company had approximately $1.8 million due under the refinanced obligation. This capital lease obligation has been accounted for and summarized with the remainder of the Company's capital leases as disclosed in Note 6. Sterling founded in 1941 manufactures components for aircraft and ground turbine engines. The acquisition of Sterling was accounted for under ASC 805. The provisional purchase price allocation is set forth below. Fair value of tangible assets acquired $ 8,281,000 Goodwill 3,285,000 Cash acquired 588,000 Liabilities assumed (2,538,000 ) Total $ 9,616,000 The below table sets forth selected proforma financial information as if AMK and Sterling were owned for the three and six months ended June 30, 2015 and 2014. Three Months Ended June 30, 2015 June 30, 2014 Net Sales $ 19,057,000 $ 16,871,000 Income (loss) from operations $ 72,000 $ 394,000 Six Months Ended June 30, 2015 June 30, 2014 Net Sales $ 37,707,000 $ 25,458,000 Income (loss) from operations $ 685,000 $ (801,000 ) The below table sets forth selected financial information for the 2014 and 2015 acquisitions for the three and six months ended June 30, 2015 and 2014. Three Months Ended June 30, 2015 WPI EPC ECC AMK Sterling Net Sales $ 211,000 $ 834,000 $ 208,000 $ 837,000 $ 2,413,000 Income (loss) from operations $ 65,000 $ (21,000 ) $ 76,000 $ (576,000 ) $ (86,000 ) Three Months Ended June 30, 2014 WPI EPC ECC AMK Sterling Net Sales $ 539,000 $ 277,000 $ - $ - $ - Income (loss) from operations $ 181,000 $ 92,000 $ - $ - $ - Six Months Ended June 30, 2015 WPI EPC ECC AMK Sterling Net Sales $ 356,000 $ 1,905,000 $ 357,000 $ 1,914,000 $ 3,300,000 Income (loss) from operations $ 105,000 $ 105,000 $ 108,000 $ (1,106,000 ) $ (15,000 ) Six Months Ended June 30, 2014 WPI EPC ECC AMK Sterling Net Sales $ 539,000 $ 277,000 $ - $ - $ - Income (loss) from operations $ 181,000 $ 92,000 $ - $ - $ -

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Jun. 30, 2015
Summary Of Significant Accounting Policies
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Principal Business Activity The Company through its AIM subsidiary is primarily engaged in manufacturing aircraft structural parts, and assemblies for prime defense contractors in the aerospace industry in the United States. NTW is a manufacturer of aerospace components, principally landing gear for F-16 and F-18 fighter aircraft. Welding is a specialty welding and products provider whose significant customers include the world's largest aircraft manufacturers, subcontractors, and original equipment manufacturers. Miller Stuart is a manufacturer of aerospace components whose customers include major aircraft manufacturers and the US Military. Miller Stuart specializes in electromechanical systems, harness and cable assemblies, electronic equipment and printed circuit boards. Woodbine is a manufacturer of aerospace components whose customers include major aircraft component suppliers. Woodbine specializes in welded and brazed chassis structures housing electronics in aircraft. Eur-Pac specializes in military packaging and supplies. Eur-Pac’s primary business is “kitting” of supplies for all branches of the United States Defense Department including ordnance parts, hose assemblies, hydraulic, mechanical and electrical assemblies. AMK is a provider of sophisticated welding and machining services for diversified aerospace and industrial customers. Sterling manufactures components for aircraft and ground turbine engines. The Company’s customers consist mainly of publicly traded companies in the aerospace industry. Inventory Valuation Inventory at June 30, 2015 and 2014 was computed using the “gross profit” method. The Company valued inventory at December 31, 2014 at the lower of cost on a first-in-first-out basis or market. Credit and Concentration Risks There were two customers that represented 29.9% and three customers that represented 58.3% of total sales for the three months ended June 30, 2015 and 2014, respectively. This is set forth in the table below. Customer Percentage of Sales 2015 2014 (unaudited) (unaudited) 1 16.7 29.3 2 13.2 18.4 3 * 10.6 * Customer was less than 10% of sales for the three months ended June 30, 2015 There were three customers that represented 45.3% and three customers that represented 55.9% of total sales for the six months ended June 30, 2015 and 2014, respectively. This is set forth in the table below. Customer Percentage of Sales 2015 2014 (unaudited) (unaudited) 1 19.8 30.8 2 15.5 12.8 3 10.0 ** 4 * 12.3 * Customer was less than 10% of sales for the six months ended June 30, 2015 ** Customer was less than 10% of sales for the six months ended June 30, 2014 There were three customers that represented 37.0% of gross accounts receivable and three customers that represented 50.4% of gross accounts receivable at June 30, 2015 and December 31, 2014, respectively. This is set forth in the table below. Customer Percentage of Receivables June December 2015 2014 (unaudited) 1 14.1 10.0 2 12.3 29.0 3 10.6 ** 4 * 11.4 * Customer was less than 10% of Gross Accounts Receivable at June 30, 2015 ** Customer was less than 10% of Gross Accounts Receivable at December 31, 2014 During the six months ended June 30, 2015 and 2014, the Company had occasionally maintained balances in its bank accounts that were in excess of the FDIC limit. The Company has not experienced any losses on these accounts. The Company has several key sole-source suppliers of various parts that are important for one or more of its products. These suppliers are its only source for such parts and, therefore, in the event any of them were to go out of business or be unable to provide parts for any reason, its business could be severely harmed. Earnings per share Basic earnings per share is computed by dividing the net income applicable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Potentially dilutive shares, using the treasury stock method, are included in the diluted per-share calculations for all periods when the effect of their inclusion is dilutive. The following is a reconciliation of the denominators of basic and diluted earnings per share computations: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Weighted average shares outstanding used to compute basic earnings per share 7,557,427 6,276,481 7,397,756 6,071,163 Effect of dilutive stock options and warrants - 321,323 - 299,425 Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share 7,557,427 6,597,804 7,397,756 6,370,588 The following table sets forth options and warrants which were excluded from the diluted per share calculation because the exercise price was greater than the average market price of the common shares: Three and Six Months Ended June 30, June 30, 2015 2014 (Unaudited) (Unaudited) Stock Options 86,891 17,048 Warrants 46,800 46,800 133,691 63,848 The following table sets forth options and warrants which were excluded from the diluted per share calculation even though the exercise price was less than the average market price of the common shares because the effect of including these potential shares was anti-dilutive due to the net losses: Three and Six Months Ended June 30, June 30, 2015 2014 (Unaudited) (Unaudited) Stock Options 494,175 - Warrants 117,785 - 611,960 - Stock-Based Compensation The Company accounts for stock-based compensation in accordance with FASB ASC 718, "Compensation – Stock Compensation." Under the fair value recognition provision of the ASC, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options and warrants granted using the Black-Scholes-Merton option pricing model. Stock based compensation amounted to $17,000 and $12,000 for the three months ended June 30, 2015 and 2014, respectively, and $54,000 and $15,000 for the six months ended June 30, 2015 and 2014, respectively, and was included in operating expenses on the accompanying Condensed Consolidated Statements of Income. Goodwill Goodwill represents the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. The goodwill amount of $8,719,000 relates to the acquisitions of Welding ($291,000), NTW ($162,000), Woodbine ($2,565,000), Eur-PAC ($1,656,000), ECC ($109,000), AMK ($651,000), and Sterling ($3,285,000). Goodwill is not amortized, but is tested at least annually for impairment, or if circumstances occur that more likely than not reduce the fair value of the reporting unit below its carrying amount. The Company has determined that there has been no impairment of goodwill at June 30, 2015 and December 31, 2014. Recently Issued Accounting Pronouncements In January 2015, the Financial Accounting Standards Board (the "FASB") issued ASU 2015-01, “Income Statement – Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items" (“ASU 2015-01”). ASU 2015-01 eliminates the concept of an extraordinary item from accounting principles generally accepted in the United States of America. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 becomes effective for interim and annual periods beginning on or after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the effects of Adopting ASU 2015-01 on its consolidated financial statements but the adoption is not expected to have a significant impact on the Company’s consolidated financial statements. In February 2015, the FASB issued amended guidance to the consolidation standard which updates the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendment modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, among other provisions. This amended guidance will be effective for the Company beginning fiscal year 2016. Early adoption is permitted. The Company is currently assessing the impact the adoption of the amended guidance will have on its consolidated financial statements but the adoption is not expected to have a significant impact on the Company’s consolidated financial statements. In April 2015, the FASB issued amended guidance which requires debt issuance costs to be presented as a direct deduction from the carrying value of the associated debt liability rather than as separate assets on the balance sheet. The recognition and measurement guidance for debt issuance costs are not affected by this amendment. This amended guidance will be effective for the Company beginning fiscal year 2016. Early adoption is permitted, and the new guidance will be applied on a retrospective basis. The Company does not expect the adoption of this amended guidance to have a significant impact on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330) Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 requires an entity to measure inventory at the lower of cost and net realizable value when the FIFO or average cost method is used. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and should be applied prospectively. Earlier adoption is permitted. The Company is currently assessing the impact the adoption of the amended guidance will have on its consolidated financial statements but the adoption is not expected to have a significant impact on the Company’s consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). The amendments in ASU 2014-09 affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in ASC 605, “Revenue Recognition” and most industry-specific guidance and creates ASC 606, “Revenue from Contracts with Customers.” On July 9, 2015, the FASB decided to delay the effective date of the new revenue standard by one year and the amendments are now effective prospectively for reporting periods beginning after December 15, 2017 and early adoption is not permitted. The Company is currently assessing the impact on its consolidated financial statements. The Company does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements. Reclassifications Certain account balances in 2014 have been reclassified to conform to the current period presentation. Subsequent Events Management has evaluated subsequent events through the date of this filing.

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT	6 Months Ended
	Jun. 30, 2015
Property And Equipment
PROPERTY AND EQUIPMENT	The components of property and equipment at June 30, 2015 and December 31, 2014 consisted of the following: June 30, December 31, 2015 2014 (unaudited) Land $ 500,000 $ 200,000 Buildings and Improvements 3,353,000 1,680,000 31.5 years Machinery and Equipment 14,450,000 12,514,000 5 - 8 years Capital Lease Machinery and Equipment 3,886,000 1,800,000 5 - 8 years Tools and Instruments 6,012,000 5,566,000 1.5 - 7 years Automotive Equipment 192,000 162,000 5 years Furniture and Fixtures 289,000 275,000 5 - 8 years Leasehold Improvements 687,000 646,000 Term of Lease Computers and Software 402,000 372,000 4-6 years Total Property and Equipment 29,771,000 23,215,000 Less: Accumulated Depreciation (15,277,000 ) (13,658,000 ) Property and Equipment, net $ 14,494,000 $ 9,557,000 Depreciation expense for the three months ended June 30, 2015 and 2014 was approximately $915,000 and $616,000, respectively. Depreciation expense for the six months ended June 30, 2015 and 2014 was approximately $1,634,000 and $1,168,000, respectively.

INTANGIBLE ASSETS

INTANGIBLE ASSETS	6 Months Ended
	Jun. 30, 2015
Intangible Assets
INTANGIBLE ASSETS	The components of intangibles assets consisted of the following: June 30, December 31, 2015 2014 (unaudited) Customer Relationships $ 6,255,000 $ 6,255,000 5 to 14 years Trade Names 1,280,000 1,280,000 20 years Technical Know-how 660,000 660,000 10 years Non-Compete 50,000 50,000 5 years Professional Certifications 15,000 15,000 .25 to 2 years Total Intangible Assets 8,260,000 8,260,000 Less: Accumulated Amortization (4,361,000 ) (3,747,000 ) Intangible Assets, net $ 3,899,000 $ 4,513,000 Amortization expense for the three months ended June 30, 2015 and 2014 was approximately $307,000 and $291,000, respectively. Amortization expense for the six months ended June 30, 2015 and 2014 was approximately $614,000 and $582,000, respectively.

NOTES PAYABLE AND CAPITAL LEASE

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS	6 Months Ended
	Jun. 30, 2015
Notes Payable And Capital Lease Obligations
NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS	Notes payable and capital lease obligations consist of the following: June 30, December 31, 2015 2014 (unaudited) Revolving credit note payable to PNC Bank N.A. ("PNC") $ 23,000,000 $ 17,672,000 Term loans, PNC 10,960,000 8,363,000 Capital lease obligations 3,484,000 1,645,000 Notes payable to sellers of WMI - 41,000 Subtotal 37,444,000 27,721,000 Less: Current portion of notes and capital lease obligations (34,676,000 ) (19,508,000 ) Notes payable and capital lease obligations, net of current portion $ 2,768,000 $ 8,213,000 PNC Bank N.A. ("PNC") The Company has a credit facility with PNC (the "Loan Facility") secured by substantially all of its assets. The Loan Facility has been amended many times during its term. The Company entered into the latest amendment to the Loan Facility in March 2015 and paid an amendment fee of $25,000. The Loan Facility now provides for maximum borrowings of approximately $34,000,000 consisting of the following at June 30, 2015: (i) a $23,000,000 revolving loan (includes inventory sub-limit of $15,000,000) and (ii) Four term loans (Term Loan A, Term Loan B, Term Loan C and Term Loan D). Under the terms of the Loan Facility the revolving credit note now bears interest at (a) the sum of the Alternate Base Rate plus three quarters of one percent (0.75%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and one half of one percent (2.50%) with respect to LIBOR Rate Loans. Prior to the amendment the revolving credit note bore interest at the sum of the Alternate Base Rate plus three quarters of one percent (0.75%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and three quarters of one percent (2.75%) with respect to Eurodollar Rate Loans. The revolving credit note had an interest rate of 4.00% per annum at June 30, 2015 and December 31, 2014, and an outstanding balance of $23,000,000 and $17,672,000, respectively. The maturity date of the revolving credit note is November 30, 2016. Each day, the Company's cash collections are swept directly by the bank to reduce the revolving loans and we then borrow according to a borrowing base. Because the revolving loans contain a subjective acceleration clause which could permit PNC to require repayment prior to maturity, the loans are classified with the current portion of notes and capital lease obligations. The repayment terms of Term Loan A were amended in 2014. On April 1, 2014, the Company borrowed an additional $1,328,000 to partially fund the acquisition of Woodbine. The repayment terms of Term Loan A now consists of thirty-two consecutive monthly principal installments, the first thirty-one of which shall be in the amount of $31,859 commencing on the first business day of May 2014, and continuing on the first business day of each month thereafter, with a thirty-second and final payment of any unpaid balance of principal and interest on the last business day of November 2016. Term Loans A and B bear interest at (a) the sum of the Alternate Base Rate plus one and three quarters of one percent (1.75%) with respect to Domestic Rate Loans and (b) the sum of the LIBOR Rate plus three percent (3.00%) with respect to LIBOR Rate Loans. At June 30, 2015 and December 31, 2014, the balance due under Term Loan A was $2,230,000 and $2,421,000, respectively. On October 1, 2014, the Company borrowed $3,500,000 under Term Loan B for the acquisition of AMK. The repayment of Term Loan B consists of sixty consecutive monthly principal installments, the first fifty-nine of which shall be in the amount of $58,333 commencing on the first business day of December 2014, and continuing on the first business day of each month thereafter, with a sixtieth and final payment of any unpaid balance of principal and interest on the last business day of November 2019. At June 30, 2015 and December 31, 2014, the balance due under Term Loan B was $3,092,000 and $3,442,000, respectively. On December 31, 2014, the Company borrowed $2,500,000 under Term Loan C to refinance the Seller Note and Mortgage of $2,500,000 issued as part of the acquisition of AMK. The maturity date of Term Loan C is the first business day of January 2021, and it is to be paid in seventy two consecutive monthly principal installments, which commenced on the first business day of February 2015, and continue on the first business day of each month thereafter. The first seventy-one of the installments shall be in the amount of $34,722 with a seventy second and final payment of any unpaid principal and interest on the first business day of January 2021. Term Loan C bears interest at (a) the sum of the Alternate Base Rate plus two percent (2.00%) with respect to Domestic Rate Loans and (b) the sum of the LIBOR Rate plus three and one-quarter percent (3.25%) with respect to LIBOR Rate Loans. At June 30, 2015 and December 31, 2014, the balance due under Term Loan C was $2,326,000 and $2,500,000, respectively. On March 9, 2015, the Company borrowed $3,500,000 under Term Loan D for the acquisition of Sterling. The repayment of Term Loan D consists of twenty consecutive monthly principal installments, the first nineteen of which shall be in the amount of $62,847 commencing on the first business day of April 2015, and continuing on the first business day of each month thereafter, with a twentieth and final payment of any unpaid balance of principal and interest on the last business day of November 2016. Term Loan D bears interest at (a) the sum of the Alternate Base Rate plus two and one quarter percent (2.25%) with respect to Domestic Rate Loans and (b) the sum of the LIBOR Rate plus three and one-half percent (3.50%) with respect to LIBOR Rate Loans. At June 30, 2015, the balance due under Term Loan D was $3,312,000. To the extent that the Company disposes of collateral used to secure the Loan Facility, other than inventory, the Company must promptly repay the draws on the credit facility in the amount equal to the net proceeds of such sale. The terms of the Loan Facility require that, among other things, the Company maintain a specified Fixed Charge Coverage Ratio. In addition, the Company is limited in the amount of Capital Expenditures it can make. The Company is also limited to the amount of Dividends it can pay its shareholders as defined in the Loan Facility. As of June 30, 2015, the Company was not in compliance with the Fixed Charge Coverage Ratio covenant. On August 10, 2015, PNC granted the Company a waiver of this covenant for the six months ended June 30, 2015. Since the waiver is for a term of less than one year, all of the Company's debt outstanding with PNC has been classified as current in the accompanying condensed consolidated balance sheet. At June 30, 2015, the Company was in compliance with all other terms of the Loan Facility. As of December 31, 2014, the Company was in compliance with all terms of the Loan Facility. The Company's receivables are payable directly into a lockbox controlled by PNC (subject to the terms of the Loan Facility). PNC may use some elements of subjective business judgment in determining whether a material adverse change has occurred in the Company's condition, results of operations, assets, business, properties or prospects allowing it to demand repayment of the Loan Facility. As of June 30, 2015, the scheduled future minimum principal payments for the term loans are as follows, however as discussed above, the balance of the term loans have been classified as current: For the twelve months ending Amount June 30, 2016 $ 2,253,000 June 30, 2017 5,522,000 June 30, 2018 1,117,000 June 30, 2019 1,117,000 June 30, 2020 708,000 Thereafter 243,000 PNC Term Loans payable 10,960,000 Less: Current portion (10,960,000 ) Long-term portion $ - Interest expense related to these credit facilities amounted to approximately $375,000 and $225,000 for the three months ended June 30, 2015 and 2014, respectively, and $660,000 and $411,000 for the six months ended June 30, 2015 and 2014, respectively. Capital Leases Payable – Equipment The Company is committed under several capital leases for manufacturing and computer equipment. Each lease has a bargain purchase option exercisable at the termination of the lease. Capital lease obligations totaled $3,484,000 and $1,645,000 as of June 30, 2015 and December 31, 2014, respectively, with various interest rates ranging from approximately 4% to 7%. As of June 30, 2015, the aggregate future minimum lease payments, including imputed interest, with remaining terms of greater than one year are as follows: For the twelve months ending Amount June 30, 2016 $ 891,000 June 30, 2017 891,000 June 30, 2018 891,000 June 30, 2019 762,000 June 30, 2020 502,000 Thereafter 1,000 Total future minimum lease payments 3,938,000 Less: imputed interest (454,000 ) Less: current portion (716,000 ) Total Long Term Portion $ 2,768,000 Notes Payable - Sellers In connection with the acquisition of Welding on August 24, 2007, the Company incurred a note payable (the “Note”) to the former stockholders of Welding. At December 31, 2014, the balance owed under the Note was $41,000. On January 5, 2015 the remaining balance of $41,000 was paid and the obligation was extinguished. Interest expense related to the Note was $0 and $9,000 for the three months ended June 30, 2015 and 2014, respectively, and $0 and $21,000 for the six months ended June 30, 2015 and 2014, respectively. Junior Subordinated Notes In 2008 and 2009, the Company sold in a series of private placements to accredited investors $5,990,000 of principal amount in Junior Subordinated Notes. The notes bear interest at the rate of 1% per month (or 12% per annum). In connection with the offering of the Company's Junior Subordinated Notes, the Company issued to Taglich Brothers, Inc. ("Taglich Brothers"), as placement agent, a Junior Subordinated Note in the principal amount of $510,000. The terms of the note issued to Taglich Brothers are identical to the notes. In connection with the amounts raised in 2009, the Company issued to Taglich Brothers a Junior Subordinated Note on the same terms as the Junior Subordinated Notes referred to above for commission of $44,500. In conjunction with the Private Placement of our common stock to raise money for the NTW Acquisition, the Company solicited the holders of our Junior Subordinated Notes to convert their notes to Common Stock at a price of $6.00 per share. On June 29, 2012, the Company issued 867,461 shares of its Common Stock in exchange for approximately $5,204,000 of its Junior Subordinated Notes. On July 26, 2012, the Company repaid $115,000 of its Junior Subordinated Notes along with the accrued interest thereon of approximately $1,000. The due dates of the remaining Junior Subordinated Notes were extended from November 18, 2013 to mature on November 30, 2016 and are subordinated to the Company's obligations to PNC. The Junior Subordinated Notes were satisfied in June 2014. Interest expense on the Junior Subordinated Notes amounted to $0 and $31,000 for the three months ended June 30, 2015 and 2014, respectively, and $0 and $61,000 for the three months ended June 30, 2015 and 2014, respectively.

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY	6 Months Ended
	Jun. 30, 2015
Stockholders' Equity
STOCKHOLDERS' EQUITY	Common Stock Issuances During the six months ended June 30, 2015, the Company issued 25,819 shares of its common stock pursuant to the cashless exercise of Stock Options. On March 1, 2015, in connection with the acquisition of Sterling, the Company issued 425,005 shares of its common stock to the former stockholders of Sterling. Dividends On July 17, 2015, the Board of Directors approved a quarterly dividend of $0.15 per common share or $1,134,000 to be paid on August 12, 2015 to all shareholders of record as of the close of business on August 3, 2015. On April 24, 2015 the Company paid a dividend equal to $0.15 per common share or $1,134,000 to all shareholders of record as of April 13, 2015. On January 15, 2015 the Company paid a dividend equal to $0.15 per common share or $1,066,000 to all shareholders of record as of January 2, 2015. Stock Options On March 30, 2015, the Board of Directors adopted the Company’s 2015 Equity Incentive Plan (“2015 Plan”). The 2015 Plan is virtually identical to, and is intended to replace, the Company’s 2013 Equity Incentive Plan. The proposal to accept the 2015 Plan was approved by affirmative vote of the Company’s stockholders on June 25, 2015.

INCOME TAXES

INCOME TAXES	6 Months Ended
	Jun. 30, 2015
Income Taxes
INCOME TAXES	The provision for income taxes at June 30, 2015 and 2014 is set forth below: 2015 2014 (unaudited) (unaudited) Current Federal $ 186,000 $ 871,000 State 4,000 14,000 Total Current Expense 190,000 885,000 Adjustment for prior year over (under) accruals Federal - 10,000 State - (290,000) 190,000 605,000 Deferred Tax Benefit 17,000 (746,000) Provision for (Benefit from) Income Taxes $ 207,000 $ (141,000) The components of net deferred tax assets as of June 30, 2015 and December 31, 2014 are set forth below: June 30, December 31, 2015 2014 (unaudited) Deferred tax assets: Current: Bad debts $ 410,000 $ 650,000 Inventory - 263A adjustment 939,000 762,000 Account payable, accrued expenses and reserves 9,000 9,000 Total current deferred tax asset before valuation allowance 1,358,000 1,421,000 Valuation allowance - - Total current deferred tax asset after valuation allowance $ 1,358,000 $ 1,421,000 Non-Current: Capital loss carry forwards $ 1,088,000 $ 1,088,000 Section 1231 loss carry forward 4,000 4,000 Stock based compensation - options and restricted stock 549,000 527,000 Capitalized engineering costs 374,000 522,000 Deferred rent 478,000 483,000 Amortization - NTW Transaction 796,000 663,000 Lease impairment 10,000 22,000 Deferred gain on sale of real estate 171,000 179,000 Other 100,000 - Total deferred tax assets before valuation allowance 3,570,000 3,488,000 Valuation allowance (1,092,000 ) (1,092,000 ) Total deferred tax assets after valuation allowance $ 2,478,000 $ 2,396,000 Deferred tax liabilities: Property and equipment $ (1,007,000 ) $ (1,082,000 ) Goodwill - NTW Transaction (13,000 ) (11,000) Goodwill - AMK Transaction (13,000) (4,000) Amortization - Welding Transaction (407,000 ) (441,000 ) Total Deferred Tax Liability (1,440,000 ) (1,538,000 ) Net non-current deferred tax asset $ 1,038,000 $ 858,000 During the six months ended June 30, 2015 and 2014, the Company provided a valuation allowance on the deferred tax assets related to capital loss and section 1231 loss carryforwards. The valuation allowance at both June 30, 2015 and December 31, 2014 amounted to $1,092,000. Management believes that the remainder of the net deferred tax assets are more likely than not to be realized. The Company has a capital loss carry forward from the sale of Sigma Metals, Inc., a former subsidiary of the Company, of $2,719,000 which will expire in fiscal 2015.

SEGMENT REPORTING

SEGMENT REPORTING	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
SEGMENT REPORTING	In accordance with FASB ASC 280, “Segment Reporting” ("ASC 280"), the Company discloses financial and descriptive information about its reportable operating segments. Operating segments are components of an enterprise about which separate financial information is available and regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company follows ASC 280, which establishes standards for reporting information about operating segments in annual and interim financial statements, and requires that companies report financial and descriptive information about their reportable segments based on a management approach. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company currently divides its operations into three operating segments: Complex Machining which consists of AIM and NTW; Aerostructures and Electronics which consists of WMI, WPI, Miller Stuart, Eur-Pac and ECC; and Turbine Engine Components which consists of AMK and Sterling. The accounting policies of each segment are the same as those described in the Summary of Significant Accounting Policies. The Company evaluates performance based on revenue, gross profit contribution and assets employed. Effective January 1, 2015, all operating costs are allocated to the Company’s operating segments. Prior to January 1, 2015 certain operating costs that were not directly attributable to a particular segment were included in corporate and presented as an independent segment. Results for the three and six months ended June 30, 2014 have been reclassified to conform to the current period presentation. Financial information about the Company’s operating segments for the three and six months ended June 30, 2015 and 2014 are as follows: Three Months Ended June 30, 2015 2014 (unaudited) (unaudited) COMPLEX MACHINING Net Sales $ 9,530,000 $ 9,320,000 Gross Profit 2,229,000 2,104,000 Pre Tax Income (Loss) 363,000 22,000 Assets 65,137,000 33,840,000 AEROSTRUCTURES AND ELECTRONICS Net Sales 6,277,000 4,040,000 Gross Profit 1,396,000 1,249,000 Pre Tax Income (Loss) (46,000) (131,000) Assets 17,375,000 20,627,000 TURBINE ENGINE COMPONENTS Net Sales 3,250,000 - Gross Profit 272,000 - Pre Tax Income (Loss) (735,000) - Assets 18,272,000 - CORPORATE Net Sales - - Gross Profit - - Pre Tax Income (Loss) - - Assets 24,806,000 17,254,000 CONSOLIDATED Net Sales 19,057,000 13,360,000 Gross Profit 3,897,000 3,353,000 Pre Tax Income (Loss) (418,000) (109,000) (Provision for) Benefit from Income Taxes (183,000) 725,000 Net Income (Loss) (601,000) 616,000 Elimination of Assets (47,011,000 ) (13,314,000 ) Assets $ 78,579,000 $ 58,407,000 Six Months Ended June 30, 2015 2014 (unaudited) (unaudited) COMPLEX MACHINING Net Sales $ 18,595,000 $ 21,460,000 Gross Profit 4,318,000 5,312,000 Pre Tax Income (Loss) 184,000 1,301,000 Assets 65,137,000 33,840,000 AEROSTRUCTURES AND ELECTRONICS Net Sales 12,059,000 7,353,000 Gross Profit 3,559,000 2,086,000 Pre Tax Income (Loss) 724,000 (485,000) Assets 17,375,000 20,627,000 TURBINE ENGINE COMPONENTS Net Sales 5,214,000 - Gross Profit 389,000 - Pre Tax Income (Loss) (1,198,000) - Assets 18,272,000 - CORPORATE Net Sales - - Gross Profit - - Pre Tax Income (Loss) - - Assets 24,806,000 17,254,000 CONSOLIDATED Net Sales 35,868,000 28,813,000 Gross Profit 8,266,000 7,398,000 Pre Tax Income (Loss) (290,000) 816,000 (Provision for) Benefit from Income Taxes (207,000) 141,000 Net Income (Loss) (497,000) 957,000 Elimination of Assets (47,011,000 ) (13,314,000 ) Assets $ 78,579,000 $ 58,407,000

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	6 Months Ended
	Jun. 30, 2015
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	On August 10, 2015, the Company entered into an amendment to the PNC Loan Facility and paid an amendment fee of $40,000. The Amended Loan Facility provides for maximum borrowings of approximately $38,000,000, including a $28,000,000 revolving loan and Term Loans A, B, C and D. On August 12, 2015, the Company announced that it had reached an agreement in principle to acquire Compac Development Corporation (“Compac”). The transaction is scheduled to close shortly. Compac is located in Bay Shore, New York and specializes in the manufacture of RFI/EMI (Radio Frequency Interference-Electro-Magnetic Interference) shielded enclosures for electronic components.

SUMMARY OF SIGNIFICANT ACCOUN16

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Jun. 30, 2015
Summary Of Significant Accounting Policies Policies
Principal Business Activity	The Company through its AIM subsidiary is primarily engaged in manufacturing aircraft structural parts, and assemblies for prime defense contractors in the aerospace industry in the United States. NTW is a manufacturer of aerospace components, principally landing gear for F-16 and F-18 fighter aircraft. Welding is a specialty welding and products provider whose significant customers include the world's largest aircraft manufacturers, subcontractors, and original equipment manufacturers. Miller Stuart is a manufacturer of aerospace components whose customers include major aircraft manufacturers and the US Military. Miller Stuart specializes in electromechanical systems, harness and cable assemblies, electronic equipment and printed circuit boards. Woodbine is a manufacturer of aerospace components whose customers include major aircraft component suppliers. Woodbine specializes in welded and brazed chassis structures housing electronics in aircraft. Eur-Pac specializes in military packaging and supplies. Eur-Pac’s primary business is “kitting” of supplies for all branches of the United States Defense Department including ordnance parts, hose assemblies, hydraulic, mechanical and electrical assemblies. AMK is a provider of sophisticated welding and machining services for diversified aerospace and industrial customers. Sterling manufactures components for aircraft and ground turbine engines. The Company’s customers consist mainly of publicly traded companies in the aerospace industry.
Inventory Valuation	Inventory at June 30, 2015 and 2014 was computed using the “gross profit” method. The Company valued inventory at December 31, 2014 at the lower of cost on a first-in-first-out basis or market.
Credit and Concentration Risks	There were two customers that represented 29.9% and three customers that represented 58.3% of total sales for the three months ended June 30, 2015 and 2014, respectively. This is set forth in the table below. Customer Percentage of Sales 2015 2014 (unaudited) (unaudited) 1 16.7 29.3 2 13.2 18.4 3 * 10.6 * Customer was less than 10% of sales for the three months ended June 30, 2015 There were three customers that represented 45.3% and three customers that represented 55.9% of total sales for the six months ended June 30, 2015 and 2014, respectively. This is set forth in the table below. Customer Percentage of Sales 2015 2014 (unaudited) (unaudited) 1 19.8 30.8 2 15.5 12.8 3 10.0 ** 4 * 12.3 * Customer was less than 10% of sales for the six months ended June 30, 2015 ** Customer was less than 10% of sales for the six months ended June 30, 2014 There were three customers that represented 37.0% of gross accounts receivable and three customers that represented 50.4% of gross accounts receivable at June 30, 2015 and December 31, 2014, respectively. This is set forth in the table below. Customer Percentage of Receivables June December 2015 2014 (unaudited) 1 14.1 10.0 2 12.3 29.0 3 10.6 ** 4 * 11.4 * Customer was less than 10% of Gross Accounts Receivable at June 30, 2015 ** Customer was less than 10% of Gross Accounts Receivable at December 31, 2014 During the six months ended June 30, 2015 and 2014, the Company had occasionally maintained balances in its bank accounts that were in excess of the FDIC limit. The Company has not experienced any losses on these accounts. The Company has several key sole-source suppliers of various parts that are important for one or more of its products. These suppliers are its only source for such parts and, therefore, in the event any of them were to go out of business or be unable to provide parts for any reason, its business could be severely harmed.
Earnings per share	Basic earnings per share is computed by dividing the net income applicable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Potentially dilutive shares, using the treasury stock method, are included in the diluted per-share calculations for all periods when the effect of their inclusion is dilutive. The following is a reconciliation of the denominators of basic and diluted earnings per share computations: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Weighted average shares outstanding used to compute basic earnings per share 7,557,427 6,276,481 7,397,756 6,071,163 Effect of dilutive stock options and warrants - 321,323 - 299,425 Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share 7,557,427 6,597,804 7,397,756 6,370,588 The following table sets forth options and warrants which were excluded from the diluted per share calculation because the exercise price was greater than the average market price of the common shares: Three and Six Months Ended June 30, June 30, 2015 2014 (Unaudited) (Unaudited) Stock Options 86,891 17,048 Warrants 46,800 46,800 133,691 63,848 The following table sets forth options and warrants which were excluded from the diluted per share calculation even though the exercise price was less than the average market price of the common shares because the effect of including these potential shares was anti-dilutive due to the net losses: Three and Six Months Ended June 30, June 30, 2015 2014 (Unaudited) (Unaudited) Stock Options 494,175 - Warrants 117,785 - 611,960 -
Stock-Based Compensation	The Company accounts for stock-based compensation in accordance with FASB ASC 718, "Compensation – Stock Compensation." Under the fair value recognition provision of the ASC, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options and warrants granted using the Black-Scholes-Merton option pricing model. Stock based compensation amounted to $17,000 and $12,000 for the three months ended June 30, 2015 and 2014, respectively, and $54,000 and $15,000 for the six months ended June 30, 2015 and 2014, respectively, and was included in operating expenses on the accompanying Condensed Consolidated Statements of Income.
Goodwill	Goodwill represents the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. The goodwill amount of $8,719,000 relates to the acquisitions of Welding ($291,000), NTW ($162,000), Woodbine ($2,565,000), Eur-PAC ($1,656,000), ECC ($109,000), AMK ($651,000), and Sterling ($3,285,000). Goodwill is not amortized, but is tested at least annually for impairment, or if circumstances occur that more likely than not reduce the fair value of the reporting unit below its carrying amount. The Company has determined that there has been no impairment of goodwill at June 30, 2015 and December 31, 2014.
Recently Issued Accounting Pronouncements	In January 2015, the Financial Accounting Standards Board (the "FASB") issued ASU 2015-01, “Income Statement – Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items" (“ASU 2015-01”). ASU 2015-01 eliminates the concept of an extraordinary item from accounting principles generally accepted in the United States of America. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 becomes effective for interim and annual periods beginning on or after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the effects of Adopting ASU 2015-01 on its consolidated financial statements but the adoption is not expected to have a significant impact on the Company’s consolidated financial statements. In February 2015, the FASB issued amended guidance to the consolidation standard which updates the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendment modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, among other provisions. This amended guidance will be effective for the Company beginning fiscal year 2016. Early adoption is permitted. The Company is currently assessing the impact the adoption of the amended guidance will have on its consolidated financial statements but the adoption is not expected to have a significant impact on the Company’s consolidated financial statements. In April 2015, the FASB issued amended guidance which requires debt issuance costs to be presented as a direct deduction from the carrying value of the associated debt liability rather than as separate assets on the balance sheet. The recognition and measurement guidance for debt issuance costs are not affected by this amendment. This amended guidance will be effective for the Company beginning fiscal year 2016. Early adoption is permitted, and the new guidance will be applied on a retrospective basis. The Company does not expect the adoption of this amended guidance to have a significant impact on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330) Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 requires an entity to measure inventory at the lower of cost and net realizable value when the FIFO or average cost method is used. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and should be applied prospectively. Earlier adoption is permitted. The Company is currently assessing the impact the adoption of the amended guidance will have on its consolidated financial statements but the adoption is not expected to have a significant impact on the Company’s consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). The amendments in ASU 2014-09 affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in ASC 605, “Revenue Recognition” and most industry-specific guidance and creates ASC 606, “Revenue from Contracts with Customers.” On July 9, 2015, the FASB decided to delay the effective date of the new revenue standard by one year and the amendments are now effective prospectively for reporting periods beginning after December 15, 2017 and early adoption is not permitted. The Company is currently assessing the impact on its consolidated financial statements. The Company does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements.
Reclassifications	Certain account balances in 2014 have been reclassified to conform to the current period presentation.
Subsequent Events	Management has evaluated subsequent events through the date of this filing.

ACQUISITION (Tables)

ACQUISITION (Tables)	6 Months Ended
	Jun. 30, 2015
Proforma results	The Company accounts for all business combinations in accordance with FASB ASC 805, “Business Combinations” (“ASC 805”), using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets. The Company expenses all costs as incurred related to an acquisition in the condensed consolidated statements of income. Sterling On March 1, 2015, the Company acquired all of the common stock of Sterling, for $5.4 million in cash and 425,005 shares of the common stock of AIRI. The common stock was valued at $9.89 per share, which was the closing share price on February 27, 2015. The cash consideration is subject to adjustment for working capital changes. The Company has also entered into employment and non-compete agreements for two and three year periods with three of the principals of Sterling. The Company financed the acquisition of Sterling with the proceeds from the issuance of Term Loan D (see Note 6). At the time of acquisition, Sterling had capital lease obligations for equipment with a remaining balance of approximately $1.3 million. On April 21, 2015, the Company refinanced the $1.3 million capital lease obligation with the same financing company. This refinancing generated approximately $500,000 of cash for the Company. The Company is still in the process of finalizing the fair values of the Sterling acquisition transaction and is still in the measurement period as defined under ASC 805. Accordingly, during the three months ended June 30, 2015, the Company had a revision to the previously recorded purchase price allocation, and has increased the fair value of the goodwill acquired by $1.3 million with a corresponding increase in capital lease obligations. At the date of the capital lease refinancing transaction, the Company had approximately $1.8 million due under the refinanced obligation. This capital lease obligation has been accounted for and summarized with the remainder of the Company's capital leases as disclosed in Note 6. Sterling founded in 1941 manufactures components for aircraft and ground turbine engines. The acquisition of Sterling was accounted for under ASC 805. The provisional purchase price allocation is set forth below. Fair value of tangible assets acquired $ 8,281,000 Goodwill 3,285,000 Cash acquired 588,000 Liabilities assumed (2,538,000 ) Total $ 9,616,000 The below table sets forth selected proforma financial information as if AMK and Sterling were owned for the three and six months ended June 30, 2015 and 2014. Three Months Ended June 30, 2015 June 30, 2014 Net Sales $ 19,057,000 $ 16,871,000 Income (loss) from operations $ 72,000 $ 394,000 Six Months Ended June 30, 2015 June 30, 2014 Net Sales $ 37,707,000 $ 25,458,000 Income (loss) from operations $ 685,000 $ (801,000 ) The below table sets forth selected financial information for the 2014 and 2015 acquisitions for the three and six months ended June 30, 2015 and 2014. Three Months Ended June 30, 2015 WPI EPC ECC AMK Sterling Net Sales $ 211,000 $ 834,000 $ 208,000 $ 837,000 $ 2,413,000 Income (loss) from operations $ 65,000 $ (21,000 ) $ 76,000 $ (576,000 ) $ (86,000 ) Three Months Ended June 30, 2014 WPI EPC ECC AMK Sterling Net Sales $ 539,000 $ 277,000 $ - $ - $ - Income (loss) from operations $ 181,000 $ 92,000 $ - $ - $ - Six Months Ended June 30, 2015 WPI EPC ECC AMK Sterling Net Sales $ 356,000 $ 1,905,000 $ 357,000 $ 1,914,000 $ 3,300,000 Income (loss) from operations $ 105,000 $ 105,000 $ 108,000 $ (1,106,000 ) $ (15,000 ) Six Months Ended June 30, 2014 WPI EPC ECC AMK Sterling Net Sales $ 539,000 $ 277,000 $ - $ - $ - Income (loss) from operations $ 181,000 $ 92,000 $ - $ - $ -
Sterling
Purchase price allocation	Fair value of tangible assets acquired $ 8,281,000 Goodwill 3,285,000 Cash acquired 588,000 Liabilities assumed (2,538,000 ) Total $ 9,616,000
Proforma results	Three Months Ended June 30, 2015 June 30, 2014 Net Sales $ 19,057,000 $ 16,871,000 Income (loss) from operations $ 72,000 $ 394,000 Six Months Ended June 30, 2015 June 30, 2014 Net Sales $ 37,707,000 $ 25,458,000 Income (loss) from operations $ 685,000 $ (801,000 )
Selected financial information	Three Months Ended June 30, 2015 WPI EPC ECC AMK Sterling Net Sales $ 211,000 $ 834,000 $ 208,000 $ 837,000 $ 2,413,000 Income (loss) from operations $ 65,000 $ (21,000 ) $ 76,000 $ (576,000 ) $ (86,000 ) Three Months Ended June 30, 2014 WPI EPC ECC AMK Sterling Net Sales $ 539,000 $ 277,000 $ - $ - $ - Income (loss) from operations $ 181,000 $ 92,000 $ - $ - $ - Six Months Ended June 30, 2015 WPI EPC ECC AMK Sterling Net Sales $ 356,000 $ 1,905,000 $ 357,000 $ 1,914,000 $ 3,300,000 Income (loss) from operations $ 105,000 $ 105,000 $ 108,000 $ (1,106,000 ) $ (15,000 ) Six Months Ended June 30, 2014 WPI EPC ECC AMK Sterling Net Sales $ 539,000 $ 277,000 $ - $ - $ - Income (loss) from operations $ 181,000 $ 92,000 $ - $ - $ -

SUMMARY OF SIGNIFICANT ACCOUN18

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	6 Months Ended
	Jun. 30, 2015
Summary Of Significant Accounting Policies Tables
Credit and Concentration Risks	There were two customers that represented 29.9% and three customers that represented 58.3% of total sales for the three months ended June 30, 2015 and 2014, respectively. This is set forth in the table below. Customer Percentage of Sales 2015 2014 (unaudited) (unaudited) 1 16.7 29.3 2 13.2 18.4 3 * 10.6 * Customer was less than 10% of sales for the three months ended June 30, 2015 There were three customers that represented 45.3% and three customers that represented 55.9% of total sales for the six months ended June 30, 2015 and 2014, respectively. This is set forth in the table below. Customer Percentage of Sales 2015 2014 (unaudited) (unaudited) 1 19.8 30.8 2 15.5 12.8 3 10.0 ** 4 * 12.3 * Customer was less than 10% of sales for the six months ended June 30, 2015 ** Customer was less than 10% of sales for the six months ended June 30, 2014 There were three customers that represented 37.0% of gross accounts receivable and three customers that represented 50.4% of gross accounts receivable at June 30, 2015 and December 31, 2014, respectively. This is set forth in the table below. Customer Percentage of Receivables June December 2015 2014 (unaudited) 1 14.1 10.0 2 12.3 29.0 3 10.6 ** 4 * 11.4 * Customer was less than 10% of Gross Accounts Receivable at June 30, 2015 ** Customer was less than 10% of Gross Accounts Receivable at December 31, 2014
Earnings per share	The following is a reconciliation of the denominators of basic and diluted earnings per share computations: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Weighted average shares outstanding used to compute basic earnings per share 7,557,427 6,276,481 7,397,756 6,071,163 Effect of dilutive stock options and warrants - 321,323 - 299,425 Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share 7,557,427 6,597,804 7,397,756 6,370,588 The following table sets forth options and warrants which were excluded from the diluted per share calculation because the exercise price was greater than the average market price of the common shares: Three and Six Months Ended June 30, June 30, 2015 2014 (Unaudited) (Unaudited) Stock Options 86,891 17,048 Warrants 46,800 46,800 133,691 63,848 The following table sets forth options and warrants which were excluded from the diluted per share calculation even though the exercise price was less than the average market price of the common shares because the effect of including these potential shares was anti-dilutive due to the net losses: Three and Six Months Ended June 30, June 30, 2015 2014 (Unaudited) (Unaudited) Stock Options 494,175 - Warrants 117,785 - 611,960 -

PROPERTY AND EQUIPMENT (Tables)

PROPERTY AND EQUIPMENT (Tables)	6 Months Ended
	Jun. 30, 2015
Property And Equipment Tables
Property and equipment	June 30, December 31, 2015 2014 (unaudited) Land $ 500,000 $ 200,000 Buildings and Improvements 3,353,000 1,680,000 31.5 years Machinery and Equipment 14,450,000 12,514,000 5 - 8 years Capital Lease Machinery and Equipment 3,886,000 1,800,000 5 - 8 years Tools and Instruments 6,012,000 5,566,000 1.5 - 7 years Automotive Equipment 192,000 162,000 5 years Furniture and Fixtures 289,000 275,000 5 - 8 years Leasehold Improvements 687,000 646,000 Term of Lease Computers and Software 402,000 372,000 4-6 years Total Property and Equipment 29,771,000 23,215,000 Less: Accumulated Depreciation (15,277,000 ) (13,658,000 ) Property and Equipment, net $ 14,494,000 $ 9,557,000

INTANGIBLE ASSETS (Tables)

INTANGIBLE ASSETS (Tables)	6 Months Ended
	Jun. 30, 2015
Intangible Assets Tables
Intangible assets	June 30, December 31, 2015 2014 (unaudited) Customer Relationships $ 6,255,000 $ 6,255,000 5 to 14 years Trade Names 1,280,000 1,280,000 20 years Technical Know-how 660,000 660,000 10 years Non-Compete 50,000 50,000 5 years Professional Certifications 15,000 15,000 .25 to 2 years Total Intangible Assets 8,260,000 8,260,000 Less: Accumulated Amortization (4,361,000 ) (3,747,000 ) Intangible Assets, net $ 3,899,000 $ 4,513,000

NOTES PAYABLE AND CAPITAL LEA21

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Tables)	6 Months Ended
	Jun. 30, 2015
Notes Payable And Capital Lease Obligations Tables
Notes payable and capital lease obligations	June 30, December 31, 2015 2014 (unaudited) Revolving credit note payable to PNC Bank N.A. ("PNC") $ 23,000,000 $ 17,672,000 Term loans, PNC 10,960,000 8,363,000 Capital lease obligations 3,484,000 1,645,000 Notes payable to sellers of WMI - 41,000 Subtotal 37,444,000 27,721,000 Less: Current portion of notes and capital lease obligations (34,676,000 ) (19,508,000 ) Notes payable and capital lease obligations, net of current portion $ 2,768,000 $ 8,213,000
Future minimum principal payments for term loan	For the twelve months ending Amount June 30, 2016 $ 2,253,000 June 30, 2017 5,522,000 June 30, 2018 1,117,000 June 30, 2019 1,117,000 June 30, 2020 708,000 Thereafter 243,000 PNC Term Loans payable 10,960,000 Less: Current portion (10,960,000 ) Long-term portion $ -
Future minimum lease payments, including imputed interest	For the twelve months ending Amount June 30, 2016 $ 891,000 June 30, 2017 891,000 June 30, 2018 891,000 June 30, 2019 762,000 June 30, 2020 502,000 Thereafter 1,000 Total future minimum lease payments 3,938,000 Less: imputed interest (454,000 ) Less: current portion (716,000 ) Total Long Term Portion $ 2,768,000

INCOME TAXES (Tables)

INCOME TAXES (Tables)	6 Months Ended
	Jun. 30, 2015
Income Taxes Tables
Provision for income	2015 2014 (unaudited) (unaudited) Current Federal $ 186,000 $ 871,000 State 4,000 14,000 Total Current Expense 190,000 885,000 Adjustment for prior year over (under) accruals Federal - 10,000 State - (290,000) 190,000 605,000 Deferred Tax Benefit 17,000 (746,000) Provision for (Benefit from) Income Taxes $ 207,000 $ (141,000)
Deferred tax assets	June 30, December 31, 2015 2014 (unaudited) Deferred tax assets: Current: Bad debts $ 410,000 $ 650,000 Inventory - 263A adjustment 939,000 762,000 Account payable, accrued expenses and reserves 9,000 9,000 Total current deferred tax asset before valuation allowance 1,358,000 1,421,000 Valuation allowance - - Total current deferred tax asset after valuation allowance $ 1,358,000 $ 1,421,000 Non-Current: Capital loss carry forwards $ 1,088,000 $ 1,088,000 Section 1231 loss carry forward 4,000 4,000 Stock based compensation - options and restricted stock 549,000 527,000 Capitalized engineering costs 374,000 522,000 Deferred rent 478,000 483,000 Amortization - NTW Transaction 796,000 663,000 Lease impairment 10,000 22,000 Deferred gain on sale of real estate 171,000 179,000 Other 100,000 - Total deferred tax assets before valuation allowance 3,570,000 3,488,000 Valuation allowance (1,092,000 ) (1,092,000 ) Total deferred tax assets after valuation allowance $ 2,478,000 $ 2,396,000 Deferred tax liabilities: Property and equipment $ (1,007,000 ) $ (1,082,000 ) Goodwill - NTW Transaction (13,000 ) (11,000) Goodwill - AMK Transaction (13,000) (4,000) Amortization - Welding Transaction (407,000 ) (441,000 ) Total Deferred Tax Liability (1,440,000 ) (1,538,000 ) Net non-current deferred tax asset $ 1,038,000 $ 858,000

SEGMENT REPORTING (Tables)

SEGMENT REPORTING (Tables)	6 Months Ended
	Jun. 30, 2015
Segment Reporting Tables
Operating segments	Three Months Ended June 30, 2015 2014 (unaudited) (unaudited) COMPLEX MACHINING Net Sales $ 9,530,000 $ 9,320,000 Gross Profit 2,229,000 2,104,000 Pre Tax Income (Loss) 363,000 22,000 Assets 65,137,000 33,840,000 AEROSTRUCTURES AND ELECTRONICS Net Sales 6,277,000 4,040,000 Gross Profit 1,396,000 1,249,000 Pre Tax Income (Loss) (46,000) (131,000) Assets 17,375,000 20,627,000 TURBINE ENGINE COMPONENTS Net Sales 3,250,000 - Gross Profit 272,000 - Pre Tax Income (Loss) (735,000) - Assets 18,272,000 - CORPORATE Net Sales - - Gross Profit - - Pre Tax Income (Loss) - - Assets 24,806,000 17,254,000 CONSOLIDATED Net Sales 19,057,000 13,360,000 Gross Profit 3,897,000 3,353,000 Pre Tax Income (Loss) (418,000) (109,000) (Provision for) Benefit from Income Taxes (183,000) 725,000 Net Income (Loss) (601,000) 616,000 Elimination of Assets (47,011,000 ) (13,314,000 ) Assets $ 78,579,000 $ 58,407,000 Six Months Ended June 30, 2015 2014 (unaudited) (unaudited) COMPLEX MACHINING Net Sales $ 18,595,000 $ 21,460,000 Gross Profit 4,318,000 5,312,000 Pre Tax Income (Loss) 184,000 1,301,000 Assets 65,137,000 33,840,000 AEROSTRUCTURES AND ELECTRONICS Net Sales 12,059,000 7,353,000 Gross Profit 3,559,000 2,086,000 Pre Tax Income (Loss) 724,000 (485,000) Assets 17,375,000 20,627,000 TURBINE ENGINE COMPONENTS Net Sales 5,214,000 - Gross Profit 389,000 - Pre Tax Income (Loss) (1,198,000) - Assets 18,272,000 - CORPORATE Net Sales - - Gross Profit - - Pre Tax Income (Loss) - - Assets 24,806,000 17,254,000 CONSOLIDATED Net Sales 35,868,000 28,813,000 Gross Profit 8,266,000 7,398,000 Pre Tax Income (Loss) (290,000) 816,000 (Provision for) Benefit from Income Taxes (207,000) 141,000 Net Income (Loss) (497,000) 957,000 Elimination of Assets (47,011,000 ) (13,314,000 ) Assets $ 78,579,000 $ 58,407,000

ACQUISITIONS (Details)

ACQUISITIONS (Details) - Sterling	6 Months Ended
	Jun. 30, 2015USD ($)
Fair Value of Tangible Assets acquired	$ 8,281,000
Goodwill	3,285,000
Cash Acquired	588,000
Liabilities assumed	(2,538,000)
Total	$ 9,616,000

ACQUISITIONS (Details 1)

ACQUISITIONS (Details 1) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
WPI
Net Sales	$ 211,000	$ 539,000	$ 356,000	$ 539,000
Income (loss) from operations	65,000	181,000	105,000	181,000
EPC
Net Sales	834,000	277,000	1,905,000	277,000
Income (loss) from operations	(21,000)	92,000	105,000	92,000
ECC
Net Sales	208,000	0	357,000	0
Income (loss) from operations	76,000	0	108,000	0
AMK
Net Sales	837,000	0	1,914,000	0
Income (loss) from operations	(576,000)	0	(1,106,000)	0
Sterling
Net Sales	2,413,000	0	3,300,000	0
Income (loss) from operations	$ (86,000)	$ 0	$ (15,000)	$ 0

SUMMARY OF SIGNIFICANT ACCOUN26

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (Unaudited)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Summary Of Significant Accounting Policies Details
Customer 1	16.70%	29.30%	19.80%	30.80%
Customer 2	13.20%	18.40%	15.50%	12.80%
Customer 3		10.60%	10.00%
Customer 4				12.30%

SUMMARY OF SIGNIFICANT ACCOUN27

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2)	Jun. 30, 2015	Dec. 31, 2014
Summary Of Significant Accounting Policies Details 2
Customer 1	14.10%	10.00%
Customer 2	12.30%	29.00%
Customer 3	10.60%
Customer 4		11.40%

SUMMARY OF SIGNIFICANT ACCOUN28

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (Unaudited) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Summary Of Significant Accounting Policies Details 3
Weighted average shares outstanding used to compute basic earnings per share	7,557,427	6,276,481	7,397,756	6,071,163
Effect of dilutive stock options and warrants	0	321,323	0	299,425
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share	7,557,427	6,597,804	7,397,756	6,370,588

SUMMARY OF SIGNIFICANT ACCOUN29

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) (Unaudited) - USD ($)	Jun. 30, 2015	Jun. 30, 2014
Stock Options	86,891	17,048
Warrants	46,800	46,800
Total	$ 133,691	$ 63,848
Anti Dilutive
Stock Options	494,175	0
Warrants	117,785	0
Total	$ 611,960	$ 0

SUMMARY OF SIGNIFICANT ACCOUN30

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)	3 Months Ended		6 Months Ended
	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)	Dec. 31, 2014
Summary Of Significant Accounting Policies Details Narrative
Customer Sales	29.90%	58.30%	45.30%	55.90%
Customers gross accounts receivables	37.00%		37.00%		50.40%
Number of Customers represented percentage of total sales	2	3	3	3
Customers represented percentage of gross accounts receivable	3		3		3
Stock-based compensation	$ 17,000	$ 12,000	$ 54,000	$ 15,000
Impairment of goodwill		$ 0		$ 0

PROPERTY AND EQUIPMENT (Details

PROPERTY AND EQUIPMENT (Details) - USD ($)	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Total Property and Equipment	$ 29,771,000	$ 23,215,000
Less: Accumulated Depreciation	(15,277,000)	(13,658,000)
Property and Equipment, net	14,494,000	9,557,000
Land [Member]
Total Property and Equipment	500,000	200,000
Building and Improvements [Member]
Total Property and Equipment	$ 3,353,000	1,680,000
Property Plant And Equipment Useful Life	31 years 6 months
Machinery and Equipment
Total Property and Equipment	$ 14,450,000	12,514,000
Capital Lease Machinery and Equipment
Total Property and Equipment	3,886,000	1,800,000
Tools and Instruments
Total Property and Equipment	6,012,000	5,566,000
Automotive Equipment
Total Property and Equipment	$ 192,000	162,000
Property Plant And Equipment Useful Life	5 years
Furniture and Fixtures
Total Property and Equipment	$ 289,000	275,000
Leasehold Improvements
Total Property and Equipment	$ 687,000	646,000
Property Plant And Equipment Useful Life	Terms of Lease
Computers and Software
Total Property and Equipment	$ 402,000	$ 372,000
Machinery and Equipment Min
Property Plant And Equipment Useful Life	5 years
Machinery and Equipment Max
Property Plant And Equipment Useful Life	8 years
Capital Lease Machinery and Equipment Min
Property Plant And Equipment Useful Life	5 years
Capital Lease Machinery and Equipment Max
Property Plant And Equipment Useful Life	8 years
Tools and Instruments Min
Property Plant And Equipment Useful Life	1 year 6 months
Tools and Instruments Max
Property Plant And Equipment Useful Life	7 years
Furniture and Fixtures Min
Property Plant And Equipment Useful Life	5 years
Furniture and Fixtures Max
Property Plant And Equipment Useful Life	8 years
Computers and Software Min
Property Plant And Equipment Useful Life	4 years
Computers and Software Max
Property Plant And Equipment Useful Life	6 years

PROPERTY AND EQUIPMENT (Detai32

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 915,000	$ 616,000	$ 1,634,000	$ 1,168,000

INTANGIBLE ASSETS (Details)

INTANGIBLE ASSETS (Details) - USD ($)	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Customer Relationships	$ 6,255,000	$ 6,255,000
Trade Names	1,280,000	1,280,000
Technical Know-how	660,000	660,000
Non-Compete	50,000	50,000
Professional Certifications	15,000	15,000
Total Intangible Assets	8,260,000	8,260,000
Less: Accumulated Amortization	(4,361,000)	(3,747,000)
Intangible Assets, net	$ 3,899,000	$ 4,513,000
Customer Relationships [Member] | Minimum
Intangible Assets Useful Life	5 years
Customer Relationships [Member] | Maximum [Member]
Intangible Assets Useful Life	14 years
Trade Names [Member]
Intangible Assets Useful Life	20 years
Technical Know How [Member]
Intangible Assets Useful Life	10 years
Non Compete [Member]
Intangible Assets Useful Life	5 years
Professional Certifications [Member] | Minimum
Intangible Assets Useful Life	3 months
Professional Certifications [Member] | Maximum [Member]
Intangible Assets Useful Life	2 years

INTANGIBLE ASSETS (Details Narr

INTANGIBLE ASSETS (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Notes to Financial Statements
Amortization of the intangibles	$ 307,000	$ 291,000	$ 614,000	$ 582,000

NOTES PAYABLE AND CAPITAL LEA35

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Notes Payable And Capital Lease Obligations Details
Revolving credit note payable to PNC Bank N.A. ("PNC")	$ 23,000,000	$ 17,672,000
Term loans, PNC	10,960,000	8,363,000
Capital lease obligations	3,484,000	1,645,000
Notes payable to sellers of WMI	0	41,000
Subtotal	37,444,000	27,721,000
Less: Current portion of notes and capital obligations	(34,676,000)	(19,508,000)
Notes payable and capital lease obligations, net of current portion	$ 2,768,000	$ 8,213,000

NOTES PAYABLE AND CAPITAL LEA36

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details 1)	Jun. 30, 2015USD ($)
Notes Payable And Capital Lease Obligations Details 1
June 30, 2016	$ 2,253,000
June 30, 2017	5,522,000
June 30, 2018	1,117,000
June 30, 2019	1,117,000
June 30, 2020	708,000
Thereafter	243,000
PNC Term Loan Payable	10,960,000
Less: Current portion	(10,960,000)
Long-term portion	$ 0

NOTES PAYABLE AND CAPITAL LEA37

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details 2)	Jun. 30, 2015USD ($)
Notes Payable And Capital Lease Obligations Details 2
June 30, 2016	$ 891,000
June 30, 2017	891,000
June 30, 2018	891,000
June 30, 2019	762,000
June 30, 2020	502,000
Thereafter	1,000
Total future minimum lease payments	3,938,000
Less: Imputed interest	(454,000)
Less: Current portion	(716,000)
Total Long Term Portion	$ 2,768,000

NOTES PAYABLE AND CAPITAL LEA38

NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Notes to Financial Statements
Revolving loan interest rate	4.00%		4.00%		4.00%
Balance due under revolving loan	$ 23,000,000		$ 23,000,000		$ 17,672,000
Balance due under the term loan A	2,230,000		2,230,000		2,421,000
Balance due under the term loan B	3,092,000		3,092,000		3,442,000
Balance due under the term loan C	2,326,000		2,326,000		2,500,000
Balance due under the term loan D	3,312,000		3,312,000
Interest expense related to credit facilities	375,000	$ 225,000	660,000	$ 411,000
Capital lease obligations	3,484,000		3,484,000		1,645,000
Interest rate minimum				4.00%
Interest rate maximum				7.00%
Balance owed under note					$ 41,000
Interest expense related to notes payable	0	9,000	0	$ 21,000
Interest expense On Junior Subordinated Notes	$ 0	$ 31,000	$ 0	$ 61,000

STOCKHOLDERS' EQUITY (Details N

STOCKHOLDERS' EQUITY (Details Narrative)	6 Months Ended
	Jun. 30, 2015shares
Stock Options [Member]
Common stock shares issued	25,819

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Current
Federal	$ 186,000	$ 871,000
State	4,000	14,000
Total Expense	190,000	885,000
Adjustment for prior year over (under) accruals
Federal	0	10,000
State	0	(290,000)
Total	190,000	605,000
Deferred Tax Benefit	17,000	(746,000)
Provision for (Benefit from) Income Taxes	$ 207,000	$ (141,000)

INCOME TAXES (Details 1)

INCOME TAXES (Details 1) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Current:
Bad debts	$ 410,000	$ 650,000
Inventory - 263A adjustment	939,000	762,000
Account payable, accrued expenses and reserves	9,000	9,000
Total current deferred tax asset before valuation allowance	1,358,000	1,421,000
Valuation Allowance	0	0
Total current deferred tax asset after valuation allowance	1,358,000	1,421,000
Non- Current:
Capital loss carry forwards	1,088,000	1,088,000
Section 1231 loss carry forward	4,000	4,000
Stock based compensation - options and restricted stock	549,000	527,000
Capitalized engineering costs	374,000	522,000
Deferred rent	478,000	483,000
Amortization - NTW Transaction	796,000	663,000
Lease Impairment	10,000	22,000
Deferred gain on sale of real estate	171,000	179,000
Other	100,000	0
Total deferred tax assets before valuation allowance	3,570,000	3,488,000
Valuation allowance	(1,092,000)	(1,092,000)
Total deferred tax assets after valuation allowance	2,478,000	2,396,000
Deferred tax liabilities:
Property and equipment	(1,007,000)	(1,082,000)
Goodwill - NTW Transaction	(13,000)	(11,000)
Goodwill - AMK Transaction	(13,000)	(4,000)
Amortization - Welding Transaction	(407,000)	(441,000)
Total Deferred Tax Liability	(1,440,000)	(1,538,000)
Net non-current deferred tax asset	$ 1,038,000	$ 858,000

INCOME TAXES (Details Narrative

INCOME TAXES (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Valuation allowance	$ 1,092,000	$ 1,092,000
Capital Loss Carry forward
Capital loss carry forward	$ 2,719,000
Capital loss carry forward expiry year	2,015

SEGMENT REPORTING (Details) (Un

SEGMENT REPORTING (Details) (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Gross Profit	$ 3,897,000	$ 3,353,000	$ 8,266,000	$ 7,398,000
Assets	78,579,000		78,579,000		$ 65,920,000
COMPLEX MACHINING
Net Sales	9,530,000	9,320,000	18,595,000	21,460,000
Gross Profit	2,229,000	2,104,000	4,318,000	5,312,000
Pre Tax (Loss) Income	363,000	22,000	184,000	1,301,000
Assets	65,137,000	33,840,000	65,137,000	33,840,000
AEROSTRUCTURES AND ELECTRONICS
Net Sales	6,277,000	4,040,000	12,059,000	7,353,000
Gross Profit	1,396,000	1,249,000	3,559,000	2,086,000
Pre Tax (Loss) Income	(46,000)	(131,000)	724,000	(485,000)
Assets	17,375,000	20,627,000	17,375,000	20,627,000
TURBINE ENGINE COMPONENTS
Net Sales	3,250,000	0	5,214,000	0
Gross Profit	272,000	0	389,000	0
Pre Tax (Loss) Income	(735,000)	0	(1,198,000)	0
Assets	18,272,000	0	18,272,000	0
Corporate
Net Sales	0	0	0	0
Gross Profit	0	0	0	0
Pre Tax (Loss) Income	0	0	0	0
Assets	24,806,000	17,254,000	24,806,000	17,254,000
Consolidated
Net Sales	19,057,000	13,360,000	35,868,000	28,813,000
Gross Profit	3,897,000	3,353,000	8,266,000	7,398,000
Pre Tax (Loss) Income	(418,000)	(109,000)	(290,000)	816,000
Provision for Taxes	(183,000)	725,000	(207,000)	141,000
Net Income	(601,000)	616,000	(497,000)	957,000
Elimination of Assets	(47,011,000)	(13,314,000)	(47,011,000)	(13,314,000)
Assets	$ 78,579,000	$ 58,407,000	$ 78,579,000	$ 58,407,000