CPI Aerostructures (CVU) 10-Q 8 Aug 16 2016 Q2 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 02, 2016
Document And Entity Information
Entity Registrant Name	CPI AEROSTRUCTURES INC
Entity Central Index Key	889,348
Document Type	10-Q
Trading Symbol	CVU
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		8,623,923
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,016

CONDENSED BALANCE SHEETS (Unaud

CONDENSED BALANCE SHEETS (Unaudited) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Current Assets:
Cash	$ 813,806	$ 1,002,023
Accounts receivable, net of allowance for doubtful accounts of $470,748 as of June 30, 2016 and $75,000 as of December 31, 2015	9,711,238	7,665,837
Costs and estimated earnings in excess of billings on uncompleted contracts	93,990,022	102,622,387
Prepaid expenses and other current assets	1,359,022	1,065,473
Total current assets	105,874,088	112,355,720
Property and equipment, net	2,296,753	2,358,736
Deferred income taxes	6,297,000	1,890,000
Other assets	213,856	108,080
Total Assets	114,681,697	116,712,536
Current Liabilities:
Accounts payable	12,660,863	18,379,469
Accrued expenses	1,119,775	1,057,682
Billings in excess of costs and estimated earnings on uncompleted contracts	378,177	175,438
Current portion of long-term debt	795,554	1,011,491
Contract loss	3,540,060	549,723
Line of credit	22,438,685	23,700,000
Income tax payable	23,971	189,000
Total current liabilities	40,957,085	45,062,803
Long-term debt, net of current portion	9,532,189	483,961
Other liabilities	745,387	633,663
Total Liabilities	51,234,661	46,180,427
Shareholders' Equity:
Common stock - $.001 par value; authorized 50,000,000 shares, 8,610,453 and 8,583,511 shares, respectively, issued and outstanding	8,610	8,584
Additional paid-in capital	52,552,408	52,137,384
Retained earnings	10,959,954	18,389,594
Accumulated other comprehensive loss	(73,936)	(3,453)
Total Shareholders' Equity	63,447,036	70,532,109
Total Liabilities and Shareholders' Equity	$ 114,681,697	$ 116,712,536

CONDENSED BALANCE SHEETS (Unau3

CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 470,748	$ 75,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized	50,000,000	50,000,000
Common stock, issued	8,610,453	8,583,511
Common stock, outstanding	8,610,453	8,583,511

CONDENSED STATEMENTS OF OPERATI

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Revenue	$ 22,280,964	$ 21,944,320	$ 34,950,997	$ 41,820,886
Cost of sales	17,246,963	18,095,951	41,556,100	34,370,446
Gross profit (loss)	5,034,001	3,848,369	(6,605,103)	7,450,440
Selling, general and administrative expenses	1,868,787	2,049,793	4,589,170	4,069,159
Income (loss) from operations	3,165,214	1,798,576	(11,194,273)	3,381,281
Interest expense	323,634	270,468	599,367	485,053
Income (loss) before provision for (benefit from) income taxes	2,841,580	1,528,108	(11,793,640)	2,896,228
Provision for (benefit from) income taxes	1,051,000	538,000	(4,364,000)	978,000
Net income (loss)	1,790,580	990,108	(7,429,640)	1,918,228
Other comprehensive income (loss) net of tax
Change in unrealized loss - interest rate swap	(73,936)	1,637	(70,483)	2,644
Comprehensive income (loss)	$ 1,716,644	$ 991,745	$ (7,500,123)	$ 1,920,872
Income (loss) per common share - basic (in dollars per share)	$ 0.21	$ 0.12	$ (0.86)	$ 0.22
Income (loss) per common share - diluted (in dollars per share)	$ 0.21	$ 0.12	$ (0.86)	$ 0.22
Shares used in computing income (loss) per common share:
Basic (shares)	8,610,453	8,551,578	8,603,495	8,534,395
Diluted (shares)	8,637,393	8,609,693	8,603,495	8,595,848

CONDENSED STATEMENTS OF SHAREHO

CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Total
Balance, beginning at Dec. 31, 2014	$ 8,501	$ 51,440,770	$ 13,373,601	$ (9,716)	$ 64,813,156
Balance, beginning (in shares) at Dec. 31, 2014	8,500,555
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)			1,918,228		1,918,228
Change in unrealized loss from interest rate swap				2,644	2,644
Common stock issued upon exercise of options	$ 26	79,974			80,000
Common stock issued upon exercise of options (in shares)	25,352
Tax benefit of stock option exercise		33,000			33,000
Stock-based compensation expense	$ 25	415,010			415,035
Stock-based compensation expense (in shares)	25,671
Balance, ending at Jun. 30, 2015	$ 8,552	51,968,754	15,291,829	(7,072)	67,262,063
Balance, ending (in shares) at Jun. 30, 2015	8,551,578
Balance, beginning at Dec. 31, 2015	$ 8,584	52,137,384	18,389,594	(3,453)	$ 70,532,109
Balance, beginning (in shares) at Dec. 31, 2015	8,583,511				8,583,511
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)					$ (7,429,640)
Loss on settlement and reclassification into earnings				3,453	3,453
Change in unrealized loss from interest rate swap				(73,936)	(73,936)
Stock-based compensation expense					415,050
Balance, ending at Jun. 30, 2016	$ 8,609	$ 52,552,409	$ 10,959,954	$ (73,936)	$ 63,447,036
Balance, ending (in shares) at Jun. 30, 2016	8,610,453				8,610,453

CONDENSED STATEMENTS OF CASH FL

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net income (loss)	$ (7,429,640)	$ 1,918,228
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	388,311	411,937
Deferred rent	3,432	23,008
Stock-based compensation	415,050	415,035
Bad debt expense	395,749
Deferred income taxes	(4,364,000)	566,956
Tax benefit from stock option plans		(33,000)
Changes in operating assets and liabilities:
Increase in accounts receivable	(2,441,150)	(1,103,771)
(Increase) decrease in costs and estimated earnings in excess of billings on uncompleted contracts	8,632,365	(11,128,117)
Increase in prepaid expenses and other assets	(293,549)	(174,359)
Increase (decrease) in accounts payable and accrued expenses	(5,653,060)	2,103,957
Increase in billings in excess of costs and estimated earnings on uncompleted contracts	202,739	(95,988)
Increase in accrued losses on uncompleted contracts	2,990,337	1,345,336
Taxes refunded		8,133,433
Increase (decrease) in income taxes payable	(173,673)	46,525
Net cash provided by (used in) operating activities	(7,327,089)	2,429,180
Cash used in investing activities - purchase of plant and equipment	(93,753)	(105,442)
Cash flows from financing activities:
Payments on long-term debt	(1,352,204)	(502,954)
Proceeds from long-term debt	10,000,000
Proceeds from line of credit	28,238,685	6,000,000
Payments on line of credit	(29,500,000)	(8,650,000)
Debt issue costs paid	(153,856)
Proceeds from exercise of stock options		80,000
Tax benefit from stock option plans		33,000
Net cash provided by (used in) financing activities	7,232,625	(3,039,954)
Net decrease in cash	(188,217)	(716,216)
Cash at beginning of period	1,002,023	1,504,907
Cash at end of period	813,806	788,691
Noncash investing and financing activities:
Equipment acquired under capital lease	232,575	116,184
Cash paid during the period for:
Interest	411,883	470,871
Income taxes	$ 201,932	$ 29

INTERIM FINANCIAL STATEMENTS

INTERIM FINANCIAL STATEMENTS	6 Months Ended
	Jun. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
INTERIM FINANCIAL STATEMENTS	1. INTERIM FINANCIAL STATEMENTS The condensed financial statements of CPI Aerostructures, Inc. (the “Company”) as of June 30, 2016 and for the three months and six months ended June 30, 2016 and 2015 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. The condensed balance sheet at December 31, 2015 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. All adjustments that, in the opinion of management, are necessary for a fair presentation for the periods presented have been reflected. Such adjustments are of a normal, recurring nature. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The results of operations for interim periods are not necessarily indicative of the operating results to be expected for the full year or any other interim period. The Company maintains its cash in four financial institutions. The balances are insured by the Federal Deposit Insurance Corporation. From time to time, the Company’s balances may exceed these limits. As of June 30, 2016, the Company had $369,073 of uninsured balances. The Company limits its credit risk by selecting financial institutions considered to be highly creditworthy. The Company predominantly recognizes revenue from contracts over the contractual period under the percentage-of-completion (“POC”) method of accounting. Under the POC method of accounting, sales and gross profit are recognized as work is performed based on the relationship between actual costs incurred and total estimated costs at the completion of the contract. Recognized revenues that will not be billed under the terms of the contract until a later date are recorded as an asset captioned “Costs and estimated earnings in excess of billings on uncompleted contracts.” Contracts where billings to date have exceeded recognized revenues are recorded as a liability captioned “Billings in excess of costs and estimated earnings on uncompleted contracts.” Changes to the original estimates may be required during the life of the contract. Estimates are reviewed monthly and the effect of any change in the estimated gross margin percentage for a contract is reflected in cost of sales in the period the change becomes known. The use of the POC method of accounting involves considerable use of estimates in determining revenues, costs and profits and in assigning the amounts to accounting periods. As a result, there can be a significant disparity between earnings (both for accounting and tax purposes) as reported and actual cash received during any reporting period. The Company continually evaluates all of the issues related to the assumptions, risks and uncertainties inherent with the application of the POC method of accounting; however, it cannot be assured that estimates will be accurate. If estimates are not accurate or a contract is terminated, the Company is required to adjust revenue in later periods. Furthermore, even if estimates are accurate, there may be a shortfall in cash flow and the Company may need to borrow money, or seek access to other forms of liquidity, to fund its work in process or to pay taxes until the reported earnings materialize as actual cash receipts. When changes are required for the estimated total revenue on a contract, these changes are recognized with an inception-to-date effect in the current period. Also, when estimates of total costs to be incurred exceed estimates of total revenue to be earned, a provision for the entire loss on the contract is recorded in the period in which the loss is determined. In June 2014, the Company concluded that the long term future of the A-10 was uncertain when the U.S. Department of Defense released its 2015 Budget Request that called for the retirement of the entire A-10 fleet. In addition, the Company estimated that the A-10 program would be terminated prior to the completion of the Company’s orders, which was through ship set 173 instead of the expected 242 ship sets that the contract initially permitted. At that time the Company recorded a change in estimate which reduced the estimated revenue on the program to about 41% of the original estimate. The adjustment aggregated approximately $47.7 million. From June 2014 through December 2015 the Company revised estimates, based on the best available information each quarter, to properly account for the program. The Company’s estimate in March 2015 assumed that the program would be canceled at approximately 135 ship sets. In addition to revenue earned based on parts shipped, the Company would be entitled to compensation upon early termination of the program (“Termination Liability”) for certain costs incurred. The amount of Termination Liability varies based on exactly when the program is canceled and the amount of costs incurred through the date of termination. In June and September 2015, the Company estimated costs based on the best information available at each period and made adjustments as needed, including deferring certain costs based on the Termination Liability. During the three months ended March 31, 2016, and prior to the filing of the Company’s Form 10-K for the year ended December 31, 2015, the Company had information that the United States Air Force (“USAF”) was intending to increase the number of ship sets on order for the A-10. Because of the expectation that the USAF would increase its orders, the Company projected that its current order of A-l0 parts would not be cancelled before ship set 173. An increase in the number of ship sets on order would improve the Company’s estimated gross margin on the overall program. In the December 31, 2015 financial statements the Company did not adjust gross margin of the program for this potential order, as Company couldn’t determine if the realization of the new order was probable and that the improved margin would be realized. In April 2016, the Company became aware that the USAF had reevaluated its position and as such had deferred any decision regarding increasing the orders on the A-10 program. These changes in position by the USAF were supported by communications from Boeing, the Company’s customer. Based on the above facts, the Company believes that, it is not probable that there will be any future orders on the A-10 beyond the 173 currently on order. As a result of the information that management became aware of in April 2016, for the quarter ended March 31, 2016 the Company estimated that the A-10 program would run through the conclusion of its current purchase order with Boeing at ship set number 173. There is no justification for the deferral of any expenses incurred or expected to be incurred related to the contract under POC or any authoritative guidance in GAAP, nor is there any justification of increasing estimated revenue on the program as the recovery of such amounts is not deemed probable. The change in estimate resulted in a reduction of revenue of approximately $8.9 million and an increase in cost of sales of approximately $4.6 million, for an aggregate charge of approximately $13.5 million. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers (Topic 606) In April 2015, the FASB issued ASU 2015-03, “ Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs In February of 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).”

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	6 Months Ended
	Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
STOCK-BASED COMPENSATION	2. stock-based compensation The Company accounts for compensation expense associated with stock options and restricted stock units (“RSUs”) based on the fair value of the options and units on the date of grant. The Company’s net income (loss) for each of the six months ended June 30, 2016 and 2015 includes approximately $415,000, of non-cash compensation expense related to the Company’s stock compensation grants. On January 1, 2016, the Company granted 53,882 RSUs to its board of directors as partial compensation for the 2016 year. On January 1, 2015, the Company granted 51,349 RSUs to its board of directors as partial compensation for the 2015 year. RSUs vest straight line on a quarterly basis over a one year period. The non-cash compensation expense related to all of the Company’s stock-based compensation arrangements is recorded as a component of selling, general and administrative expenses. The estimated fair value of each RSU granted was determined based on the fair market value of the Company’s common stock on the date of grant. A summary of the status of the Company’s stock option plans as of June 30, 2016 and changes during the six months ended June 30, 2016 is as follows: Options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value Outstanding at beginning of period 269,983 $ 11.29 Forfeited (55,000 ) 15.27 Outstanding and vested at end of period 214,983 $ 10.27 1.59 $ 4 0,049 During the six months ended June 30, 2016, no stock options were granted or exercised. The intrinsic value of all options exercised during the six months ended June 30, 2015 was approximately $230,500.

DERIVATIVE INSTRUMENTS AND FAIR

DERIVATIVE INSTRUMENTS AND FAIR VALUE	6 Months Ended
	Jun. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
DERIVATIVE INSTRUMENTS AND FAIR VALUE	3. Derivative Instruments and Fair Value Our use of derivative instruments has been to hedge interest rates. These derivative contracts are entered into with a financial institution. We do not use derivative instruments for trading purposes and we have procedures in place to monitor and control their use. We record these derivative financial instruments on the condensed balance sheets at fair value. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Any ineffective portion of the gain or loss on the derivative instrument for a cash flow hedge is recorded in the results of operations immediately. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the results of operations immediately. In March 2012, the Company entered into interest rate swaps with the objective of reducing our exposure to cash flow volatility arising from interest rate fluctuations associated with certain debt. The notional amount, maturity date, and currency of these contracts match those of the underlying debt. The Company has designated these interest rate swap contracts as cash flow hedges. The Company measures ineffectiveness by comparing the cumulative change in the forward contract with the cumulative change in the hedged item. The interest rate swap contract was terminated as of March 24, 2016. The Company paid approximately $4,000 at termination to settle the swap contract. In May 2016, the Company entered into a new interest rate swap with the objective of reducing our exposure to cash flow volatility arising from interest rate fluctuations associated with certain debt. The notional amount, maturity date, and currency of this contract match those of the underlying debt. The Company has designated this interest rate swap contract as a cash flow hedge. The Company measures ineffectiveness by comparing the cumulative change in the forward contract with the cumulative change in the hedged item. As of June 30, 2016, we had a net deferred loss associated with cash flow hedges of approximately $116,900 due to the interest rate swap, which was included in Other Liabilities. As of December 31, 2015, we had a net deferred loss associated with cash flow hedges of approximately $4,500 due to the interest rate swap, which was included in Other Liabilities. Fair Value At June 30, 2016 and December 31, 2015, the fair values of cash, accounts receivable, accounts payable and accrued expenses approximated their carrying values because of the short-term nature of these instruments. June 30, 2016 Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 32,801,687 $ 32,801,687 December 31, 2015 Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 25,195,452 $ 25,195,452 We estimated the fair value of debt using market quotes and calculations based on market rates. The following table presents the fair values of those financial liabilities measured on a recurring basis as of June 30, 2016 and December 31, 2015: Fair Value Measurements June 30, 2016 Description Total Quoted Prices Significant Significant Interest Rate Swap, net $ 116,936 — $ 116,936 — Total $ 116,936 — $ 116,936 — Fair Value Measurements December 31, 2015 Description Total Quoted Prices Significant Significant Interest Rate Swap, net $ 4,453 — $ 4,453 — Total $ 4,453 — $ 4,453 — The fair value of the Company’s interest rate swap was determined by comparing the fixed rate set at the inception of the transaction to the “replacement swap rate,” which represents the market rate for an offsetting interest rate swap with the same notional amounts and final maturity date. The market value is then determined by calculating the present value of the interest differential between the contractual swap and the replacement swap.

COSTS AND ESTIMATED EARNINGS ON

COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS	6 Months Ended
	Jun. 30, 2016
Contractors [Abstract]
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS	4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS Costs and estimated earnings in excess of billings on uncompleted contracts consist of: June 30, 2016 U.S. Government Commercial Total Costs incurred on uncompleted Contracts $ 371,414,845 $ 139,315,072 $ 510,729,917 Estimated earnings 55,185,377 53,583,053 108,768,430 Sub-total 426,600,222 192,898,125 619,498,347 Less billings to date 377,641,991 148,244,511 525,886,502 Costs and estimated earnings in excess of billings on uncompleted contracts $ 48,958,231 $ 44,653,614 $ 93,611,845 December 31, 2015 U.S. Government Commercial Total Costs incurred on uncompleted Contracts $ 349,458,368 $ 123,078,356 $ 472,536,724 Estimated earnings 62,718,792 49,539,299 112,258,091 Sub-total 412,177,160 172,617,655 584,794,815 Less billings to date 353,601,903 128,745,963 482,347,866 Costs and estimated earnings in excess of billings on uncompleted contracts $ 58,575,257 $ 43,871,692 $ 102,446,949 The above amounts are included in the accompanying balance sheets under the following captions at June 30, 2016 and December 31, 2015: June 30, 2016 December 31, 2015 Costs and estimated earnings in excess of billings on $ 93,990,022 $ 102,622,387 Billings in excess of costs and estimated earnings on (378,177 ) (175,438 ) Totals $ 93,611,845 $ 102,446,949 U.S. Government Contracts includes contracts directly with the U.S. Government and Government subcontracts. Revisions in the estimated gross profits on contracts and contract amounts are made in the period in which the circumstances requiring the revisions occur. During the six months ended June 30, 2016, the effect of such revisions in total estimated contract profits resulted in a decrease to the total gross profit to be earned on the contracts of approximately $1,170,000 from that which would have been reported had the revised estimates been used as the basis of recognition of contract profits in prior years, excluding the effect of the A-10 contract. During the six months ended June 30, 2015, the effect of such revisions was a decrease to total gross profit of approximately $170,000. Although management believes it has established adequate procedures for estimating costs to uncompleted open contracts, it is possible that additional significant costs could occur on contracts prior to completion.

INCOME (LOSS) PER COMMON SHARE

INCOME (LOSS) PER COMMON SHARE	6 Months Ended
	Jun. 30, 2016
Earnings Per Share [Abstract]
INCOME (LOSS) PER COMMON SHARE	5. income (Loss) PER COMMON SHARE Basic income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted income (loss) per common share for the six month periods ended June 30, 2016 and 2015 is computed using the weighted-average number of common shares outstanding adjusted for the incremental shares attributed to outstanding options to purchase common stock, as well as unvested RSUs. Incremental shares of 26,940 were used in the calculation of diluted income per common share in the three months ended June 30, 2016. Incremental shares of 214,983 were not used in the calculation of diluted income per common share in the three month period ended June 30, 2016, as their exercise price was in excess of the Company’s average stock price for the respective period and, accordingly, these shares are not assumed to be exercised for the diluted earnings per share calculation, as they would be anti-dilutive. No incremental shares were used in the calculation of diluted income per common share in the six month period ended June 30, 2016, as the effect of incremental shares would be anti-dilutive. Incremental shares of 157,080 were used in the calculation of diluted income per common share in the three months ended June 30, 2015. Incremental share of 163,580 were not used in the calculation of diluted income per common share in the three month period ended June 30, 2015, as their exercise price was in excess of the Company’s average stock price for the respective period and, accordingly, these shares are not assumed to be exercised for the diluted earnings per share calculation, as they would be anti-dilutive. Incremental shares of 157,080 were used in the calculation of diluted income per common share in the six months ended June 30, 2015. Incremental shares of 163,580 were not used in the calculation of diluted income per common share in the six month period ended June 30, 2015, as their exercise price was in excess of the Company’s average stock price for the respective period and, accordingly, these shares are not assumed to be exercised for the diluted earnings per share calculation, as they would be anti-dilutive.

LINE OF CREDIT

LINE OF CREDIT	6 Months Ended
	Jun. 30, 2016
Line of Credit Facility [Abstract]
LINE OF CREDIT	6. Line of credit On December 5, 2012, the Company entered into an Amended and Restated Credit Agreement (“Restated Agreement”) with Sovereign Bank, now called Santander Bank, N.A. (“Santander”), as the sole arranger, administrative agent and collateral agent and Valley National Bank. The Restated Agreement provided for a revolving credit loan (“Revolving Facility”) commitment of $35 million. On March 24, 2016, the Company entered into a Credit Agreement with Bank United, N.A. as the sole arranger, administrative agent and collateral agent and Citzens Bank N.A. (the “BankUnited Facility”). The BankUnited Facility provides for a revolving credit loan commitment of $30 million (the “Revolving Loan”) and a $10 million term loan (“Term Loan”). The proceeds of the BankUnited Facility were used to pay off all amounts outstanding under the Santander Term Loan and the Revolving Facility. The Revolving Loan bears interest at a rate based upon a pricing grid, as defined in the agreement. On May 9, 2016 the Company entered into an amendment (the “Amendment”) to the BankUnited Facility. The Amendment changes the definition of EBITDA for the Leverage Coverage Ratio Covenant for the remainder of 2016 and changes the maximum leverage ratio from 3 to 1 to 3.5 to 1 for the quarters ending June 30, 2016 and September 30, 2016. Also, the Amendment increased the interest rate on the BankUnited Facility by 50 basis points and requires the repayment of a portion of the Term Loan if and to the extent that the Company receives any contract reimbursement payments from its current Request for Equitable Adjustment with Boeing on the A-10 program. As of June 30, 2016, the Company was in compliance with all of the covenants contained in the Restated Agreement, as amended. As of June 30, 2016, the Company had $22.4 million outstanding under the Restated Agreement bearing interest at 4.25%. The BankUnited Revolving Facility is secured by all of our assets.

LONG-TERM DEBT

LONG-TERM DEBT	6 Months Ended
	Jun. 30, 2016
Debt Disclosure [Abstract]
LONG-TERM DEBT	7. LONG-TERM DEBT On March 9, 2012, the Company obtained a $4.5 million term loan from Santander to be amortized over five years (the “Santander Term Facility”). The Santander Term Facility was used to purchase tooling and equipment for new programs. Additionally, the Company and Santander Bank entered into a five year interest rate swap agreement, in the notional amount of $4.5 million. Under the interest rate swap, the Company pays an amount to Santander Bank representing interest on the notional amount at a fixed rate of 4.11% and receives an amount from Santander Bank representing interest on the notional amount of a rate equal to the one-month LIBOR plus 3%. The effect of this interest rate swap was the Company paying a fixed interest rate of 4.11% over the term of the Santander Term Facility. The Santander interest swap agreement was terminated and the Santander Term Facility was paid off on March 24, 2016 using the proceeds of the BankUnited Facility (see Note 6). The Company paid approximately $154,000 of debt issuance costs of which approximately $106,000 is included in other current assets and $35,000 is a reduction of long-term debt. The Term Loan had an initial amount of $10 million, payable in monthly installments, as defined in the agreement, which matures on March 31, 2019. The maturities of the Term Loan are included in the maturities of long-term debt. The maturities of long-term debt (excluding unamortized debt issuance costs) are as follows: Twelve months ending June 30, 2017 $ 795,554 2018 1,690,738 2019 7,760,691 2020 79,751 2021 36,268 $ 10,363,002 In addition to the Term Loan, included in long-term debt are capital leases and notes payable of $446,336, including a current portion of $128,888.

MAJOR CUSTOMERS

MAJOR CUSTOMERS	6 Months Ended
	Jun. 30, 2016
Risks and Uncertainties [Abstract]
MAJOR CUSTOMERS	8. MAJOR CUSTOMERS During the six months ended June 30, 2016, the Company’s three largest commercial customers accounted for 39%, 30% and 14% of revenue, respectively. During the six months ended June 30, 2015, the Company’s three largest commercial customers accounted for 24%, 19% and 14% of revenue, respectively. In addition, during the six months ended June 30, 2016 and 2015, 0.95% and 0.76%, respectively, of revenue was directly from the U.S. Government. At June 30, 2016, 28%, 28%, 13% and 10%, respectively, of Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts were from the Company’s four largest commercial customers. At December 31, 2015, 26%, 23%, 13% and 11%, respectively of Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts were from the Company’s four largest commercial customers. At June 30, 2016 and December 31, 2015, 1.6% and 1.0%, respectively, of Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts were directly from the U.S. Government. At June 30, 2016, 31%, 22% and 13%, respectively of our accounts receivable were from our three largest commercial customers. At December 31, 2015, 30%, 18% and 16%, respectively, of accounts receivable were from our three largest commercial customers.

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	6 Months Ended
	Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of stock options plans	A summary of the status of the Company’s stock option plans as of June 30, 2016 and changes during the six months ended June 30, 2016 is as follows: Options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value Outstanding at beginning of period 269,983 $ 11.29 Forfeited (55,000 ) 15.27 Outstanding and vested at end of period 214,983 $ 10.27 1.59 $ 4 0,049

DERIVATIVE INSTRUMENTS AND FA16

DERIVATIVE INSTRUMENTS AND FAIR VALUE (Tables)	6 Months Ended
	Jun. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Schedule of fair values	At June 30, 2016 and December 31, 2015, the fair values of cash, accounts receivable, accounts payable and accrued expenses approximated their carrying values because of the short-term nature of these instruments. June 30, 2016 Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 32,801,687 $ 32,801,687 December 31, 2015 Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 25,195,452 $ 25,195,452
Schedule of liabilities measured on recurring basis	The following table presents the fair values of those financial liabilities measured on a recurring basis as of June 30, 2016 and December 31, 2015: Fair Value Measurements June 30, 2016 Description Total Quoted Prices Significant Significant Interest Rate Swap, net $ 116,936 — $ 116,936 — Total $ 116,936 — $ 116,936 — Fair Value Measurements December 31, 2015 Description Total Quoted Prices Significant Significant Interest Rate Swap, net $ 4,453 — $ 4,453 — Total $ 4,453 — $ 4,453 —

COSTS AND ESTIMATED EARNINGS 17

COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Tables)	6 Months Ended
	Jun. 30, 2016
Contractors [Abstract]
Schedule of costs and estimated earnings in excess of billings on uncompleted contracts	Costs and estimated earnings in excess of billings on uncompleted contracts consist of: June 30, 2016 U.S. Government Commercial Total Costs incurred on uncompleted Contracts $ 371,414,845 $ 139,315,072 $ 510,729,917 Estimated earnings 55,185,377 53,583,053 108,768,430 Sub-total 426,600,222 192,898,125 619,498,347 Less billings to date 377,641,991 148,244,511 525,886,502 Costs and estimated earnings in excess of billings on uncompleted contracts $ 48,958,231 $ 44,653,614 $ 93,611,845 December 31, 2015 U.S. Government Commercial Total Costs incurred on uncompleted Contracts $ 349,458,368 $ 123,078,356 $ 472,536,724 Estimated earnings 62,718,792 49,539,299 112,258,091 Sub-total 412,177,160 172,617,655 584,794,815 Less billings to date 353,601,903 128,745,963 482,347,866 Costs and estimated earnings in excess of billings on uncompleted contracts $ 58,575,257 $ 43,871,692 $ 102,446,949 The above amounts are included in the accompanying balance sheets under the following captions at June 30, 2016 and December 31, 2015: June 30, 2016 December 31, 2015 Costs and estimated earnings in excess of billings on $ 93,990,022 $ 102,622,387 Billings in excess of costs and estimated earnings on (378,177 ) (175,438 ) Totals $ 93,611,845 $ 102,446,949

LONG-TERM DEBT (Tables)

LONG-TERM DEBT (Tables)	6 Months Ended
	Jun. 30, 2016
Debt Disclosure [Abstract]
Schedule of maturities of long-term debt	The maturities of long-term debt (excluding unamortized debt issuance costs) are as follows: Twelve months ending June 30, 2017 $ 795,554 2018 1,690,738 2019 7,760,691 2020 79,751 2021 36,268 $ 10,363,002

INTERIM FINANCIAL STATEMENTS (D

INTERIM FINANCIAL STATEMENTS (Details Narrative)	6 Months Ended	19 Months Ended
	Jun. 30, 2016USD ($)N	Dec. 31, 2015USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of financial institutions | N	4
Cash, uninsured amount	$ 369,073
Estimated revenue as compared to original (percentage)	41.00%
Aggregate charge from change in sales contract	$ 13,500,000	$ 47,700,000
Reduction in revenue	8,900,000
Change in cost of sales	$ 4,600,000

STOCK-BASED COMPENSATION (Detai

STOCK-BASED COMPENSATION (Details Narrative) - USD ($)	Jan. 02, 2016	Jan. 02, 2015	Jun. 30, 2016	Jun. 30, 2015
Stock-based compensation			$ 415,050	$ 415,035
Stock option exercise intrinsic value				$ 230,500
Restricted Stock Units (RSUs) [Member] | Director [Member]
Restricted stock units granted	53,882	51,349
Vesting period		1 year

STOCK-BASED COMPENSATION (Det21

STOCK-BASED COMPENSATION (Details)	6 Months Ended
	Jun. 30, 2016USD ($)$ / sharesshares
Options, Outstanding [Roll Forward]
Outstanding at beginning | shares	269,983
Forfeited | shares	(55,000)
Outstanding and vested at end | shares	214,983
Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding at beginning | $ / shares	$ 11.29
Forfeited | $ / shares	15.27
Outstanding and vested at end | $ / shares	$ 10.27
Options, Weighted Average Remaining Contractual Term [Roll Forward]
Outstanding and vested at end	1 year 7 months 2 days
Options, Aggregate Intrinsic Value [Roll Forward]
Outstanding and vested at end | $	$ 40,049

DERIVATIVE INSTRUMENTS AND FA22

DERIVATIVE INSTRUMENTS AND FAIR VALUE (Details Narrative) - Interest Rate Swap [Member] - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015	Mar. 24, 2016
Derivative contract termination amount paid			$ 4,000
Other Liabilities [Member]
Cash flow hedges deferred loss, net	$ 116,900	$ 4,500

DERIVATIVE INSTRUMENTS AND FA23

DERIVATIVE INSTRUMENTS AND FAIR VALUE (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Carrying Amount [Member]
Short-term borrowings and long-term debt	$ 32,801,687	$ 25,195,452
Fair Value [Member]
Short-term borrowings and long-term debt	$ 32,801,687	$ 25,195,452

DERIVATIVE INSTRUMENTS AND FA24

DERIVATIVE INSTRUMENTS AND FAIR VALUE (Details 1) - Recurring Basis [Member] - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Interest Rate Swap, net	$ 116,936	$ 4,453
Total	116,936	4,453
Significant Other Observable Inputs (Level 2) [Member]
Interest Rate Swap, net	116,936	4,453
Total	$ 116,936	$ 4,453

COSTS AND ESTIMATED EARNINGS 25

COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Contractors [Abstract]
Decrease in gross profits due to change in contract estimates	$ 1,170,000	$ 170,000

COSTS AND ESTIMATED EARNINGS 26

COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Costs incurred on uncompleted Contracts	$ 510,729,917	$ 472,536,724
Estimated earnings	108,768,430	112,258,091
Sub-total	619,498,347	584,794,815
Less billings to date	525,886,502	482,347,866
Totals	93,611,845	102,446,949
US Government [Member]
Costs incurred on uncompleted Contracts	371,414,845	349,458,368
Estimated earnings	55,185,377	62,718,792
Sub-total	426,600,222	412,177,160
Less billings to date	377,641,991	353,601,903
Totals	48,958,231	58,575,257
Commercial [Member]
Costs incurred on uncompleted Contracts	139,315,072	123,078,356
Estimated earnings	53,583,053	49,539,299
Sub-total	192,898,125	172,617,655
Less billings to date	148,244,511	128,745,963
Totals	$ 44,653,614	$ 43,871,692

COSTS AND ESTIMATED EARNINGS 27

COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Details 1) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Contractors [Abstract]
Costs and estimated earnings in excess of billings on uncompleted contracts	$ 93,990,022	$ 102,622,387
Billings in excess of costs and estimated earnings on uncompleted contracts	(378,177)	(175,438)
Totals	$ 93,611,845	$ 102,446,949

INCOME (LOSS) PER COMMON SHARE

INCOME (LOSS) PER COMMON SHARE (Details Narrative) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share [Abstract]
Incremental common shares attributable to dilutive effect of share-based payment arrangements	26,940	157,080	0	157,080
Antidilutive securities excluded from computation of earnings per share, amount	214,983	163,580		163,580

LINE OF CREDIT (Details Narrati

LINE OF CREDIT (Details Narrative)	May 09, 2016	Mar. 24, 2016USD ($)	Jun. 30, 2016USD ($)	Dec. 31, 2015USD ($)	Dec. 05, 2012USD ($)
Oustanding loans			$ 22,438,685	$ 23,700,000
Bank United N.A. [Member] | Term Loan [Member]
Debt instrument, face amount		$ 10,000,000
Revolving Credit Facility [Member] | Restated Agreement [Member]
Line of credit facility, maximum borrowing capacity					$ 35,000,000
Revolving Credit Facility [Member] | Bank United [Member]
Line of credit facility, maximum borrowing capacity		$ 30,000,000
Debt covenant, maximum leverage ratio	3.5	3
Debt Instrument, interest rate, increase	0.50%
Oustanding loans			$ 22,400,000
Line of credit facility, interest rate at period end			4.25%

LONG-TERM DEBT (Details Textual

LONG-TERM DEBT (Details Textual) - USD ($)	Mar. 09, 2012	Jun. 30, 2016
Payments of debt issuance costs		$ 153,856
Debt issuance costs, current, net		106,000
Debt issuance costs, reduction of long-term debt		35,000
Capital lease and notes payable		446,336
Long-term debt and capital lease obligations, current		$ 128,888
Satander Bank Term Facility [Member] | Term Loan [Member]
Debt instrument, face amount	$ 4,500,000
Period of amortization	5 years
Satander Bank Term Facility [Member] | Interest Rate Swap [Member]
Derivative, remaining maturity	5 years
Derivative liability, notional amount	$ 4,500,000
Derivative, swaption interest rate	4.11%
Derivative, basis spread on variable rate	3.00%

LONG-TERM DEBT (Details)

LONG-TERM DEBT (Details)	Jun. 30, 2016USD ($)
Twelve months ending June 30,
2,017	$ 795,554
2,018	1,690,738
2,019	7,760,691
2,020	79,751
2,021	36,268
Total maturities	$ 10,363,002

MAJOR CUSTOMERS (Details Narrat

MAJOR CUSTOMERS (Details Narrative) - N	6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Concentration Risk [Line Items]
Number of large customers contributed to revenue of entity	3	3
Number of large commercial customers accounted for major share in costs and estimated earnings in excess of billings on uncompleted contracts	4		4
Number of large customers included in accounts receivable of entity	3		3
Costs and Estimated Earnings in Excess of Billing - US Government [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	1.60%
Costs and Estimated Earnings in Excess of Billing - US Government [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			1.00%
Costs and Estimated Earnings in Excess of Billing - Customer #1 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	28.00%		26.00%
Costs and Estimated Earnings in Excess of Billing - Customer #2 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	28.00%		23.00%
Costs and Estimated Earnings in Excess of Billing - Customer #3 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	13.00%		13.00%
Costs and Estimated Earnings in Excess of Billing - Customer #4 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	10.00%		11.00%
Accounts Receivable Customer #1 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	31.00%		30.00%
Accounts Receivable Customer #2 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	22.00%		18.00%
Accounts Receivable Customer #3 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	13.00%		16.00%
US Government Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	0.95%	0.76%
Customer #1 Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	39.00%	24.00%
Customer #2 Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	30.00%	19.00%
Customer # 3 Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	14.00%	14.00%