CPI Aerostructures (CVU) 10-Q 9 Nov 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 02, 2017
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	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		8,860,986
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,017

CONDENSED BALANCE SHEETS (Unaud

CONDENSED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Current Assets:
Cash	$ 711,083	$ 1,039,586
Accounts receivable, net of allowance for doubtful accounts of $150,000 as of September 30, 2017 and $535,514 as of December 31, 2016	4,743,596	8,514,613
Costs and estimated earnings in excess of billings on uncompleted contracts	108,377,905	99,578,526
Prepaid expenses and other current assets	2,470,845	2,155,481
Total current assets	116,303,429	111,288,206
Property and equipment, net	2,016,774	2,298,610
Deferred income taxes, net	2,143,216	3,952,598
Other assets	204,348	252,481
Total Assets	120,667,767	117,791,895
Current Liabilities:
Accounts payable	13,170,829	14,027,457
Accrued expenses	1,347,789	1,386,147
Billings in excess of costs and estimated earnings on uncompleted contracts	413,004	115,337
Current portion of long-term debt	1,863,711	1,341,924
Contract loss	280,622	1,377,171
Line of credit	23,438,685	22,438,685
Income tax payable	6,000	6,000
Total current liabilities	40,520,640	40,692,721
Long-term debt, net of current portion	7,433,937	8,860,724
Other liabilities	607,833	632,744
Total Liabilities	48,562,410	50,186,189
Shareholders' Equity:
Common stock - $.001 par value; authorized 50,000,000 shares, 8,846,817 and 8,739,836 shares, respectively, issued and outstanding	8,847	8,738
Additional paid-in capital	53,612,131	52,824,950
Retained earnings	18,491,479	14,781,018
Accumulated other comprehensive loss	(7,100)	(9,000)
Total Shareholders' Equity	72,105,357	67,605,706
Total Liabilities and Shareholders' Equity	$ 120,667,767	$ 117,791,895

CONDENSED BALANCE SHEETS (Unau3

CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 150,000	$ 535,514
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized	50,000,000	50,000,000
Common stock, issued	8,846,817	8,739,836
Common stock, outstanding	8,846,817	8,739,836

CONDENSED STATEMENTS OF OPERATI

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited)) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Revenue	$ 20,706,460	$ 22,110,829	$ 57,471,112	$ 57,061,826
Cost of sales	15,794,024	17,086,461	44,337,414	58,642,561
Gross profit (loss)	4,912,436	5,024,368	13,133,698	(1,580,735)
Selling, general and administrative expenses	2,044,304	2,014,147	6,210,380	6,603,321
Income (loss) from operations	2,868,132	3,010,221	6,923,318	(8,184,056)
Interest expense	402,619	338,156	1,258,857	937,523
Income (loss) before provision for (benefit from) income taxes	2,465,513	2,672,065	5,664,461	(9,121,579)
Provision for (benefit from) income taxes	770,000	986,000	1,954,000	(3,378,000)
Net income (loss)	1,695,513	1,686,065	3,710,461	(5,743,579)
Other comprehensive income (loss) net of tax - Change in unrealized gain (loss) interest rate swap	(2,300)	25,936	1,900	(44,547)
Comprehensive income (loss)	$ 1,693,213	$ 1,712,001	$ 3,712,361	$ (5,788,126)
Income (loss) per common share - basic (in dollars per share)	$ 0.19	$ 0.19	$ 0.42	$ (0.67)
Income (loss) per common share - diluted (in dollars per share)	$ 0.19	$ 0.19	$ 0.42	$ (0.67)
Shares used in computing income (loss) per common share:
Basic (shares)	8,846,507	8,678,608	8,820,379	8,628,716
Diluted (shares)	8,872,810	8,692,420	8,841,397	8,628,716

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, 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
Net income (loss)			(5,743,579)		(5,743,579)
Loss on settlement and reclassification into earnings				3,453	3,453
Change in unrealized loss from interest rate swap				(48,000)	(48,000)
Stock-based compensation expense	$ 138	564,455			564,593
Stock-based compensation expense (in shares)	139,058
Balance, ending at Sep. 30, 2016	$ 8,722	52,701,839	12,646,015	(48,000)	65,308,576
Balance, ending (in shares) at Sep. 30, 2016	8,722,569
Balance, beginning at Dec. 31, 2016	$ 8,738	52,824,950	14,781,018	(9,000)	$ 67,605,706
Balance, beginning (in shares) at Dec. 31, 2016	8,739,836				8,739,836
Net income (loss)			3,710,461		$ 3,710,461
Change in unrealized loss from interest rate swap				1,900	1,900
Stock-based compensation expense	$ 109	787,181			787,290
Stock-based compensation expense (in shares)	106,981
Balance, ending at Sep. 30, 2017	$ 8,847	$ 53,612,131	$ 18,491,479	$ (7,100)	$ 72,105,357
Balance, ending (in shares) at Sep. 30, 2017	8,846,817				8,846,817

CONDENSED STATEMENTS OF CASH FL

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net income (loss)	$ 3,710,461	$ (5,743,579)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	459,261	555,308
Debt issue costs	48,133
Deferred rent	(22,525)	6,177
Loss on disposal of fixed asset	21,010
Stock-based compensation expense	787,290	564,593
Bad debt expense	150,000	395,748
Deferred income taxes	1,802,128	(3,461,000)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	3,621,017	(1,734,738)
(Increase) decrease in costs and estimated earnings in excess of billings on uncompleted contracts	(8,799,379)	6,878,561
Increase in prepaid expenses and other assets	(299,317)	(1,589,903)
Decrease in accounts payable and accrued expenses	(888,218)	(4,658,005)
Increase in billings in excess of costs and estimated earnings on uncompleted contracts	297,667	655,308
Increase (decrease) in accrued losses on uncompleted contracts	(1,096,549)	1,482,771
Decrease in income taxes payable		(164,124)
Net cash used in operating activities	(209,021)	(6,812,883)
Cash flows from investing activities:
Purchase of plant and equipment	(240,916)	(93,754)
Proceeds from sale of fixed asset	42,480
Net cash used in investing activities	(198,436)	(93,754)
Cash flows from financing activities:
Payment on long-term debt	(921,046)	(1,514,899)
Proceeds from long-term debt		10,000,000
Proceeds from line of credit	3,000,000	28,638,685
Payment on line of credit	(2,000,000)	(30,400,000)
Debt issue costs paid		(153,855)
Net cash provided by financing activities	78,954	6,569,931
Net decrease in cash	(328,503)	(336,706)
Cash at beginning of period	1,039,586	1,002,023
Cash at end of period	711,083	665,317
Noncash investing and financing activities:
Equipment acquired under capital lease		465,472
Cash paid during the period for:
Interest	1,172,964	806,277
Income taxes	$ 144,614	$ 260,027

INTERIM FINANCIAL STATEMENTS

INTERIM FINANCIAL STATEMENTS	9 Months Ended
	Sep. 30, 2017
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 September 30, 2017 and for the three and nine months ended September 30, 2017 and 2016 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, 2016 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 of America 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, 2016. 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 two 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 September 30, 2017, the Company had $514,965 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. During the three months ended March 31, 2016, 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. An increase in the number of ship sets on order would improve the Company’s estimated gross margin on the overall program. 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 believed that it was not probable that there would 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. 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 February of 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). beginning after December 15, 2018. The Company is currently evaluating the effect on its financial statements.

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	9 Months Ended
	Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
STOCK-BASED COMPENSATION	2. stock-based compensation The Company accounts for stock-based compensation based on the fair value of the stock or stock-based instrument on the date of grant. In January 2017, the Company granted 59,395 restricted stock units (“RSUs”) to its board of directors as partial compensation for the 2017 year. On January 1, 2016, the Company granted 53,882 RSUs to its board of directors as partial compensation for the 2016 year. RSUs vest quarterly on a straight-line basis over a one-year period. The Company’s net income (loss) for the nine months ended September 30, 2017 and 2016 includes approximately $517,000 and $564,500, respectively, of noncash compensation expense related to the RSU grants to the board of directors. This expense is recorded as a component of selling, general and administrative expenses. In addition, for the nine months ended September 30, 2017, the Company granted 5,550 shares of common stock to various employees and approximately $13,300 of compensation expense is included in selling, general and administrative expenses and approximately $37,500 of compensation expense is included in cost of sales for this grant. In August 2016 and March 2017, the Company granted 98,645 and 73,060 shares of common stock, respectively, to various employees. In the event that any of these employees voluntarily terminates their employment prior to certain dates, portions of the shares may be forfeited. In addition, if certain Company performance criteria are not achieved, portions of these shares may be forfeited. These shares will be expensed during various periods through March 2021 based upon the service and performance thresholds. For the nine months ended September 30, 2017, approximately $208,800 of compensation expense is included in selling, general and administrative expenses and approximately $44,100 of compensation expense is included in cost of sales for this grant. In March 2017, 12,330 of the shares granted in August of 2016 were forfeited because the Company failed to achieve certain performance criteria for the year ended December 31, 2016. In addition, on March 9, 2017, these employees returned 4,525 common shares, valued at approximately $33,000, to pay the employees’ withholding taxes. A summary of the status of the Company’s stock option plans as of September 30, 2017 and changes during the nine months ended September 30, 2017 is as follows: Options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value Outstanding at beginning of period 149,466 $ 10.43 Outstanding and vested at end of period 149,466 $ 10.43 0.83 $ 123,300 During the nine months ended September 30, 2017 and September 30, 2016, no stock options were granted or exercised.

DERIVATIVE INSTRUMENTS AND FAIR

DERIVATIVE INSTRUMENTS AND FAIR VALUE	9 Months Ended
	Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
DERIVATIVE INSTRUMENTS AND FAIR VALUE	3. Derivative Instruments and Fair Value The Company’s use of derivative instruments has been to hedge interest rates. These derivative contracts are entered into with a financial institution. The Company does not use derivative instruments for trading purposes and has 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 the Company’s 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 contact with the cumulative change in the hedged item. No material ineffectiveness was recognized in the quarter ended March 31, 2016. 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 its 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 contact with the cumulative change in the hedged item. As of September 30, 2017, the Company had a net deferred loss associated with the interest rate swap of approximately $10,800, which was included in other liabilities. Fair Value At September 30, 2017 and December 31, 2016, 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. September 30, 2017 Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 32,768,421 $ 32,768,421 December 31, 2016 Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 32,689,467 $ 32,689,467 The Company 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 September 30, 2017 and December 31, 2016: Fair Value Measurements September 30, 2017 Description Total Quoted Prices in Active Markets for Identical assets Significant Other Observable Inputs Significant Unobservable Inputs Interest Rate Swap, net $ 10,765 — $ 10,765 — Total $ 10,765 — $ 10,765 — Fair Value Measurements December 31, 2016 Description Total Quoted Prices in Active Markets for Identical assets Significant Other Observable Inputs Significant Unobservable Inputs Interest Rate Swap, net $ 13,685 — $ 13,685 — Total $ 13,685 — $ 13,685 — 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	9 Months Ended
	Sep. 30, 2017
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 the following: September 30, 2017 U.S. Government Commercial Total Costs incurred on uncompleted contracts $ 368,164,864 $ 171,052,715 $ 539,217,579 Estimated earnings 34,663,617 71,877,761 106,541,378 Sub-total 402,828,481 242,930,476 645,758,957 Less billings to date 357,402,993 180,391,063 537,794,056 Costs and estimated earnings in excess of billings on uncompleted contracts $ 45,425,488 $ 62,539,413 $ 107,964,901 December 31, 2016 U.S. Government Commercial Total Costs incurred on uncompleted contracts $ 341,003,461 $ 153,898,425 $ 494,901,886 Estimated earnings 39,638,231 58,346,518 97,984,749 Sub-total 380,641,692 212,244,943 592,886,635 Less billings to date 331,277,942 162,145,504 493,423,446 Costs and estimated earnings in excess of billings on uncompleted contracts $ 49,363,750 $ 50,099,439 $ 99,463,189 The above amounts are included in the accompanying condensed balance sheets under the following captions at September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 Costs and estimated earnings in excess of billings on uncompleted contracts $ 108,377,905 $ 99,578,526 Billings in excess of costs and estimated earnings on uncompleted contracts (413,004 ) (115,337 ) Totals $ 107,964,901 $ 99,463,189 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 nine months ended September 30, 2017, 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 $1,684,000 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 nine months ended September 30, 2016, the effect of such revisions was a decrease to total gross profit of approximately $1,627,000. 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	9 Months Ended
	Sep. 30, 2017
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 three and nine month periods ended September 30, 2017 and 2016 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 74,168 were used in the calculation of diluted income per common share in the three and nine months ended September 30, 2017. Incremental shares of 89,466 were not used in the calculation of diluted income per common share in the three and nine month periods ended September 30, 2017, 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 48,469 were used in the calculation of diluted income per common share in the three months ended September 30, 2016. Incremental shares of 179,983 were not used in the calculation of diluted income per common share in the three month period ended September 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 nine month period ended September 30, 2016, as the effect of incremental shares would be anti-dilutive.

LINE OF CREDIT

LINE OF CREDIT	9 Months Ended
	Sep. 30, 2017
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 and was terminated in March 2016. 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 Facility and the Revolving Facility. The Revolving Loan bears interest at a rate based upon a pricing grid, as defined in the agreement. The term of the Bank United Facility is through March 23, 2019. On May 9, 2016, the Company entered into an amendment (the “Amendment”) to the BankUnited Facility. The Amendment changed the definition of EBITDA for the Leverage Coverage Ratio Covenant for the remainder of 2016 and changed the maximum leverage ratio from 3 to 1 to 3.5 to 1 for the quarters ended 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 September 30, 2017, the Company was in compliance with all of the financial covenants contained in the BankUnited Facility, as amended. As of September 30, 2017, the Company had $23.4 million outstanding under the Revolving Loan bearing interest at 4.75%. The BankUnited Facility is secured by all of the Company’s assets.

LONG-TERM DEBT

LONG-TERM DEBT	9 Months Ended
	Sep. 30, 2017
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 entered into a five year interest rate swap agreement, in the notional amount of $4.5 million. Under the interest rate swap, the Company paid an amount to Santander representing interest on the notional amount at a fixed rate of 4.11% and received an amount from Santander 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). In May 2016, the Company entered into a new interest rate swap with the objective of reducing its 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 paid approximately $254,000 of debt issuance costs in connection with the BankUnited Facility of which approximately $96,000 is included in other current assets and $32,000 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 long-term debt (excluding unamortized debt issuance costs) are as follows: Twelve months ending September 30, 2018 $ 1,863,711 2019 7,314,398 2020 124,273 2021 27,354 Thereafter — $ 9,329,736 In addition to the Term Loan, included in long-term debt are capital leases and notes payable of $454,737, including a current portion of $155,377.

MAJOR CUSTOMERS

MAJOR CUSTOMERS	9 Months Ended
	Sep. 30, 2017
Risks and Uncertainties [Abstract]
MAJOR CUSTOMERS	8. During the nine months ended September 30, 2017, the Company’s four largest commercial customers accounted for 28%, 23%, 11% and 10% of revenue. During the nine months ended September 30, 2016, the Company’s three largest commercial customers accounted for 35%, 30% and 13% of revenue. In addition, during the nine months ended September 30, 2017, 5.2% of revenue was directly from the U.S. Government. At September 30, 2017, 32%, 23%, 11% and 10% of costs and estimated earnings in excess of billings on uncompleted contracts were from the Company’s four largest commercial customers. At December 31, 2016, 33%, 26%, 12% and 11% of costs and estimated earnings in excess of billings on uncompleted contracts were from the Company’s four largest commercial customers. At September 30, 2017 and December 31, 2016, 2% and 1%, respectively, of costs and estimated earnings in excess of billings on uncompleted contracts were directly from the U.S. Government. At September 30, 2017, 20%, 19%, 19%, 12% and 11% of our accounts receivable were from our five largest commercial customers. At December 31, 2016, 35%, 24% and 17% of accounts receivable were from our three largest commercial customers.

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of stock options plans activity	A summary of the status of the Company’s stock option plans as of September 30, 2017 and changes during the nine months ended September 30, 2017 is as follows: Options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value Outstanding at beginning of period 149,466 $ 10.43 Outstanding and vested at end of period 149,466 $ 10.43 0.83 $ 123,300

DERIVATIVE INSTRUMENTS AND FA16

DERIVATIVE INSTRUMENTS AND FAIR VALUE (Tables)	9 Months Ended
	Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Schedule of fair values	At September 30, 2017 and December 31, 2016, 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. September 30, 2017 Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 32,768,421 $ 32,768,421 December 31, 2016 Carrying Amount Fair Value Debt Short-term borrowings and long-term debt $ 32,689,467 $ 32,689,467
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 September 30, 2017 and December 31, 2016: Fair Value Measurements September 30, 2017 Description Total Quoted Prices in Active Markets for Identical assets Significant Other Observable Inputs Significant Unobservable Inputs Interest Rate Swap, net $ 10,765 — $ 10,765 — Total $ 10,765 — $ 10,765 — Fair Value Measurements December 31, 2016 Description Total Quoted Prices in Active Markets for Identical assets Significant Other Observable Inputs Significant Unobservable Inputs Interest Rate Swap, net $ 13,685 — $ 13,685 — Total $ 13,685 — $ 13,685 —

COSTS AND ESTIMATED EARNINGS 17

COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Tables)	9 Months Ended
	Sep. 30, 2017
Contractors [Abstract]
Schedule of costs and estimated earnings in excess of billings on uncompleted contracts (unbilled)	Costs and estimated earnings in excess of billings on uncompleted contracts consist of the following: September 30, 2017 U.S. Government Commercial Total Costs incurred on uncompleted contracts $ 368,164,864 $ 171,052,715 $ 539,217,579 Estimated earnings 34,663,617 71,877,761 106,541,378 Sub-total 402,828,481 242,930,476 645,758,957 Less billings to date 357,402,993 180,391,063 537,794,056 Costs and estimated earnings in excess of billings on uncompleted contracts $ 45,425,488 $ 62,539,413 $ 107,964,901 December 31, 2016 U.S. Government Commercial Total Costs incurred on uncompleted contracts $ 341,003,461 $ 153,898,425 $ 494,901,886 Estimated earnings 39,638,231 58,346,518 97,984,749 Sub-total 380,641,692 212,244,943 592,886,635 Less billings to date 331,277,942 162,145,504 493,423,446 Costs and estimated earnings in excess of billings on uncompleted contracts $ 49,363,750 $ 50,099,439 $ 99,463,189
Schedule of costs and estimated earnings in excess of billings on uncompleted contracts included in balance sheet	The above amounts are included in the accompanying condensed balance sheets under the following captions at September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 Costs and estimated earnings in excess of billings on uncompleted contracts $ 108,377,905 $ 99,578,526 Billings in excess of costs and estimated earnings on uncompleted contracts (413,004 ) (115,337 ) Totals $ 107,964,901 $ 99,463,189

LONG-TERM DEBT (Tables)

LONG-TERM DEBT (Tables)	9 Months Ended
	Sep. 30, 2017
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 September 30, 2018 $ 1,863,711 2019 7,314,398 2020 124,273 2021 27,354 Thereafter — $ 9,329,736

INTERIM FINANCIAL STATEMENTS (D

INTERIM FINANCIAL STATEMENTS (Details Narrative)	9 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2017USD ($)Number
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash, uninsured amount		$ 514,965
Number of Financial Institutions where cash is maintained | Number		2
Decrease in revenue from contract termination	$ 8,900,000
Estimate of Change in Cost of Sales	4,600,000
Number of A-10 orders | Number		173
Aggregate charge from change in sales contract	$ 13,500,000

STOCK-BASED COMPENSATION (Detai

STOCK-BASED COMPENSATION (Details) - Employee Stock Option [Member]	9 Months Ended
	Sep. 30, 2017USD ($)$ / sharesshares
Options, Outstanding
Outstanding at beginning of period | shares	149,466
Grants during period | shares
Outstanding and Vested at end of period | shares	149,466
Options, Outstanding, Weighted Average Exercise Price
Outstanding at beginning of period | $ / shares	$ 10.43
Grants during period | $ / shares
Outstanding and Vested at end of period | $ / shares	$ 10.43
Options, Weighted Average Remaining Contractual Term
Outstanding and Vested at end of period	9 months 29 days
Options, Aggregate Intrinsic Value
Outstanding and Vested at end of period | $	$ 123,300

STOCK-BASED COMPENSATION (Det21

STOCK-BASED COMPENSATION (Details Narrative) - USD ($)	Jan. 02, 2016	Sep. 30, 2017	Jan. 31, 2017	Aug. 31, 2016	Sep. 30, 2017	Sep. 30, 2016
Stock-based compensation - RSUs					$ 517,000	$ 564,500
Stock awards forfeited (shares)					12,330
Number of shares returned for employee's withholding taxes (shares)					4,525
Value of shares returned for employee's withholding taxes					$ 33,000
Selling, General and Administrative Expenses [Member]
Stock-based compensation					13,300
Cost of Sales [Member]
Stock-based compensation					37,500
Restricted Stock Units (RSUs) [Member] | Director [Member]
Restricted stock units granted	53,882		59,395
Vesting period	1 year		1 year
Stock Awards [Member] | Selling, General and Administrative Expenses [Member]
Stock-based compensation					208,800
Stock Awards [Member] | Cost of Sales [Member]
Stock-based compensation					$ 44,100
Stock Awards [Member] | Employees [Member]
Number of common shares granted		73,060		98,645	5,550
Stock awards forfeited (shares)		12,330
Number of shares returned for employee's withholding taxes (shares)		4,525
Value of shares returned for employee's withholding taxes		$ 33,000

DERIVATIVE INSTRUMENTS AND FA22

DERIVATIVE INSTRUMENTS AND FAIR VALUE (Details Narrative) - Interest Rate Swap [Member] - USD ($)	Mar. 24, 2016	Sep. 30, 2017
Amount paid at swap contract settlement and termination	$ 4,000
Other Liabilities [Member]
Ddeferred loss - cash flow hedge		$ 10,800

DERIVATIVE INSTRUMENTS AND FA23

DERIVATIVE INSTRUMENTS AND FAIR VALUE (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Carrying Amount [Member]
Short-term borrowings and long-term debt	$ 32,768,421	$ 32,689,467
Fair Value [Member]
Short-term borrowings and long-term debt	$ 32,768,421	$ 32,689,467

DERIVATIVE INSTRUMENTS AND FA24

DERIVATIVE INSTRUMENTS AND FAIR VALUE (Details 1) - Recurring Basis [Member] - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Interest Rate Swap	$ 10,765	$ 13,685
Total	10,765	13,685
Significant Other Observable Inputs (Level 2) [Member]
Interest Rate Swap	10,765	13,685
Total	$ 10,765	$ 13,685

COSTS AND ESTIMATED EARNINGS 25

COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Contractors [Abstract]
Decrease in gross profits due to change in contract estimates	$ 1,684,000	$ 1,627,000

COSTS AND ESTIMATED EARNINGS 26

COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Costs incurred on uncompleted Contracts	$ 539,217,579	$ 494,901,886
Estimated earnings	106,541,378	97,984,749
Sub-total	645,758,957	592,886,635
Less billings to date	537,794,056	493,423,446
Totals	107,964,901	99,463,189
US Government [Member]
Costs incurred on uncompleted Contracts	368,164,864	341,003,461
Estimated earnings	34,663,617	39,638,231
Sub-total	402,828,481	380,641,692
Less billings to date	357,402,993	331,277,942
Totals	45,425,488	49,363,750
Commercial [Member]
Costs incurred on uncompleted Contracts	171,052,715	153,898,425
Estimated earnings	71,877,761	58,346,518
Sub-total	242,930,476	212,244,943
Less billings to date	180,391,063	162,145,504
Totals	$ 62,539,413	$ 50,099,439

COSTS AND ESTIMATED EARNINGS 27

COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Details 1) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Contractors [Abstract]
Costs and estimated earnings in excess of billings on uncompleted contracts	$ 108,377,905	$ 99,578,526
Billings in excess of costs and estimated earnings on uncompleted contracts	(413,004)	(115,337)
Totals	$ 107,964,901	$ 99,463,189

INCOME (LOSS) PER COMMON SHARE

INCOME (LOSS) PER COMMON SHARE (Details Narrative) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017
Earnings Per Share [Abstract]
Incremental common shares attributable to dilutive effect of share-based payment arrangements (shares)	74,168	48,469	74,168
Antidilutive securities excluded from computation of earnings per share (shares)	89,466	179,983	89,466

LINE OF CREDIT (Details Narrati

LINE OF CREDIT (Details Narrative)	May 09, 2016	Mar. 24, 2016USD ($)	Sep. 30, 2017USD ($)	Dec. 31, 2016USD ($)	Dec. 05, 2012USD ($)
Oustanding loans			$ 23,438,685	$ 22,438,685
Bank United N.A. [Member] | Term Loan [Member]
Debt instrument, face amount		$ 10,000,000
Revolving Credit Facility [Member] | Bank United [Member]
Line of credit facility, maximum borrowing capacity		$ 30,000,000
Debt covenant, maximum leverage ratio		3
Revolving Credit Facility [Member] | Amendment - Bank United [Member]
Debt covenant, maximum leverage ratio	3.5
Debt Instrument, interest rate, increase	0.50%
Oustanding loans			$ 23,400,000
Line of credit facility, interest rate at period end			4.75%
Revolving Credit Facility [Member] | Restated Agreement [Member]
Line of credit facility, maximum borrowing capacity					$ 35,000,000

LONG-TERM DEBT (Details Narrati

LONG-TERM DEBT (Details Narrative) - USD ($)	Mar. 24, 2016	Mar. 09, 2012	Sep. 30, 2016	Sep. 30, 2017	Dec. 31, 2016
Payments of debt issuance costs			$ 153,855
Debt issuance costs, net				$ 96,000
Capital lease and notes payable				454,737
Long-term debt and capital lease obligations, current				$ 155,377
Santander Bank Term Facility [Member] | Interest Rate Swap [Member]
Derivative, remaining maturity		5 years
Derivative liability, notional amount		$ 4,500,000
Derivative, fixed interest rate		4.11%
Derivative, interest rate description		interest on the notional amount at a rate equal to the one month Libor plus 3%
Derivative, basis spread on variable rate		3.00%
Term Loan [Member] | Santander Bank Term Facility [Member]
Debt instrument, face amount		$ 4,500,000
Period of amortization		5 years
Original Term Loan [Member] | Santander Bank Term Facility [Member]
Debt instrument, face amount					$ 10,000,000
Bank United N.A. [Member] | Term Loan [Member]
Debt instrument, face amount	$ 10,000,000
Payments of debt issuance costs	254,000
Debt issuance costs, reduction of long-term debt	$ 32,000

LONG-TERM DEBT (Details)

LONG-TERM DEBT (Details)	Sep. 30, 2017USD ($)
Twelve months ending September 30,
2,018	$ 1,863,711
2,019	7,314,398
2,020	124,273
2,021	27,357
Thereafter
Total maturities	$ 9,329,736

MAJOR CUSTOMERS (Details Narrat

MAJOR CUSTOMERS (Details Narrative) - Number	9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Concentration Risk [Line Items]
Number of large customers contributing to revenue of entity	4	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	5		3
Costs and Estimated Earnings in Excess of Billing - Customer #1 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	32.00%		33.00%
Costs and Estimated Earnings in Excess of Billing - Customer #2 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	23.00%		26.00%
Costs and Estimated Earnings in Excess of Billing - Customer #3 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	11.00%		12.00%
Costs and Estimated Earnings in Excess of Billing - Customer #4 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	10.00%		11.00%
Costs and Estimated Earnings in Excess of Billing - US Government [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	2.00%
Costs and Estimated Earnings in Excess of Billing - US Government [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			1.00%
Accounts Receivable Customer #1 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	20.00%		35.00%
Accounts Receivable Customer #2 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	19.00%		24.00%
Accounts Receivable Customer #3 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	19.00%		17.00%
Accounts Receivable Customer #4 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	12.00%
Accounts Receivable Customer #5 [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	11.00%
Customer #1 Concentration Risk [Member] | Revenue [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	28.00%	35.00%
Customer #2 Concentration Risk [Member] | Revenue [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	23.00%	30.00%
Customer #3 Concentration Risk [Member] | Revenue [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	11.00%	13.00%
Customer #4 Concentration Risk [Member] | Revenue [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	10.00%
US Government Concentration Risk [Member] | Revenue [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	5.20%