UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2011
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT OF 1934
For the transition period from ___________ to ______________
Commission File No. 000-30185
PRECISION AEROSPACE COMPONENTS, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
| Delaware | 20-4763096 | |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) |
2200 Arthur Kill Road
Staten Island, New York 10309-1202
(Address of Principal Executive Offices)
(718)-356-1500
(Issuer’s Telephone Number, including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES ____ NO_____
Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer [ ] | Accelerated Filer [ ] | ||
| Non-Accelerated Filer [ ] (Do not check if a smaller reporting company) | Smaller Reporting Company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. NA
Number of shares outstanding of the registrant’s common stock, as of May 12, 2011: 2,865,079
| TABLE OF CONTENTS |
| Page | |||
PART I FINANCIAL INFORMATION | |||
Item 1. | Financial Statements | ||
Condensed Consolidated Balance Sheets — (Unaudited) | 2 | ||
Condensed Consolidated Statements of Operations — (Unaudited) | 3 | ||
Condensed Consolidated Statements of Cash Flows — (Unaudited) | 4 | ||
Notes to Condensed Consolidated Financial Statements | 5 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 7 | |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 9 | |
Item 4 | Controls and Procedures | 9 | |
PART II OTHER INFORMATION | |||
Item 6. | Exhibits | 10 | |
Signatures | 10 | ||
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| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (UNAUDITED) | ||||||||
| ASSETS | ||||||||
| March 31, | December 31, | |||||||
| 2011 | 2010 | |||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 122,635 | $ | 328,717 | ||||
| Accounts receivable | 779,828 | 720,803 | ||||||
| Inventory, net | 5,143,504 | 5,147,785 | ||||||
| Prepaid expenses | 32,142 | 6,110 | ||||||
| Prepaid income taxes | 62,658 | 63,867 | ||||||
| 6,140,767 | 6,267,282 | |||||||
| PROPERTY AND EQUIPMENT - Net | 65,097 | 80,944 | ||||||
| OTHER ASSETS | ||||||||
| Deposits | 24,700 | 24,700 | ||||||
| Goodwill | 2,221,744 | 2,221,744 | ||||||
| 2,246,444 | 2,246,444 | |||||||
| TOTAL ASSETS | $ | 8,452,308 | $ | 8,594,670 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | 285,133 | $ | 412,885 | ||||
| Line of credit | 2,142,000 | 2,217,000 | ||||||
| 2,427,133 | 2,629,885 | |||||||
| LONG -TERM LIABILITIES | ||||||||
| Deferred tax liability | 15,390 | 14,237 | ||||||
| TOTAL LIABILITIES | 2,442,523 | 2,644,122 | ||||||
| COMMITMENTS AND CONTINGENCIES | - | - | ||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Preferred Stock A $.001 par value; 7,100,000 shares authorized at March 31, 2011 and December 31, | ||||||||
| 2010; 6,462,378 shares issued and outstanding". Aggregate liquidation preference $4,750,000. | 6,462 | 6,462 | ||||||
| Preferred Stock B $.001 par value; 2,900,000 shares authorized | ||||||||
| 0 shares issued and outstanding | - | - | ||||||
| Common stock, $.001 par value; 100,000,000 shares authorized | ||||||||
| at March 31, 2011 and December 31, 2010; 2,865,079 shares issued and outstanding | 2,865 | 2,865 | ||||||
| Additional paid-in capital | 11,191,111 | 11,191,111 | ||||||
| Accumulated deficit | (5,190,653 | ) | (5,249,890 | ) | ||||
| TOTAL STOCKHOLDERS' EQUITY | 6,009,785 | 5,950,548 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 8,452,308 | $ | 8,594,670 | ||||
| The accompanying notes are an integral part of these condensed consolidated financial statements |
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| PRECISION AEROSPACE COMPONENTS, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (UNAUDITED) | ||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, | ||||||||
| 2011 | 2010 | |||||||
| TOTAL NET REVENUE | $ | 2,025,953 | $ | 2,311,010 | ||||
| TOTAL COST OF GOODS SOLD | 1,366,660 | 1,546,679 | ||||||
| GROSS PROFIT | 659,293 | 764,331 | ||||||
| OPERATING EXPENSES | ||||||||
| General and administrative expenses | 466,660 | 464,126 | ||||||
| Professional and consulting fees | 74,083 | 75,012 | ||||||
| Depreciation | 15,847 | 20,826 | ||||||
| Total Operating Expenses | 556,590 | 559,964 | ||||||
| INCOME BEFORE OTHER INCOME (EXPENSE) | 102,703 | 204,367 | ||||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest expense | (23,104 | ) | (31,489 | ) | ||||
| (23,104 | ) | (31,489 | ) | |||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 79,599 | 172,878 | ||||||
| Provision for income taxes | 20,362 | 48,572 | ||||||
| NET INCOME APPLICABLE TO COMMON SHARES | $ | 59,237 | $ | 124,306 | ||||
| NET INCOME PER BASIC SHARES | $ | 0.02 | $ | 0.07 | ||||
| NET INCOME PER DILUTED SHARES | $ | 0.00 | $ | 0.01 | ||||
| WEIGHTED AVERAGE NUMBER OF BASIC COMMON | ||||||||
| SHARES OUTSTANDING | 2,865,079 | 1,809,797 | ||||||
| WEIGHTED AVERAGE NUMBER OF FULLY DILUTED | ||||||||
| COMMON SHARES OUTSTANDING | 12,907,617 | 12,608,330 | ||||||
| The accompanying notes are an integral part of these condensed consolidated financial statements |
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PRECISION AEROSPACE COMPONENTS, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (UNAUDITED) | ||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, | ||||||||
| 2011 | 2010 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 59,237 | $ | 124,306 | ||||
| Adjustments to reconcile net income to net cash | ||||||||
| provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 15,847 | 20,826 | ||||||
| Inventory writedown | 26,972 | - | ||||||
| Deferred income taxes | 1,153 | - | ||||||
| Changes in assets and liabilities: | ||||||||
| Decrease (increase) in assets | ||||||||
| Decrease (increase) in accounts receivable | (59,025 | ) | (160,305 | ) | ||||
| Decrease (increase) in inventory | (22,691 | ) | 328,607 | |||||
| Decrease (increase) in prepaid expenses | (26,032 | ) | (26,741 | ) | ||||
| Decrease (increase) in prepaid income taxes | 1,209 | 48,572 | ||||||
| Increase (decrease) in liabilities | ||||||||
| Increase (decrease) in accounts payable and accrued expenses | (127,752 | ) | (79,152 | ) | ||||
| Net cash provided by (used in) operating activities | (131,082 | ) | 256,113 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Net cash provided by (used in) investing activities | - | - | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from (payment on) line of credit | (75,000 | ) | (165,000 | ) | ||||
| Net cash provided by (used in) financing activities | (75,000 | ) | (165,000 | ) | ||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (206,082 | ) | 91,113 | |||||
| CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 328,717 | 198,971 | ||||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 122,635 | $ | 290,084 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest paid | $ | 23,405 | $ | 31,489 | ||||
| Income taxes paid | $ | 18,000 | $ | - | ||||
| SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITY: | ||||||||
| Conversion of preferred stock into common stock | $ | - | $ | 25 | ||||
| The accompanying notes are an integral part of these condensed consolidated financial statements |
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PRECISION AEROSPACE COMPONENTS, INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2011 (UNAUDITED) |
1. BASIS OF PRESENTATION
The accompanying condensed consolidated unaudited interim financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The condensed financial statements and notes are presented as permitted on Form 10-Q and do not contain information included in the Company's annual statements and notes. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the December 31, 2010 audited financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these condensed financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year. These results are not necessarily indicative of the results to be expected for the full year.
These condensed consolidated unaudited financial statements reflect all adjustments, including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the operations and cash flows for the periods presented.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
There have been no material changes during 2011 in the Company’s significant accounting policies to those previously disclosed in the 2010 Form 10-K.
3. LONG-TERM DEBT AND LINE OF CREDIT
Long-term debt
The Company had no long term debt as of March 31, 2011 and December 31, 2010.
Revolving funding facility
The Company has a revolving funding facility pursuant to which it can draw up to $2,800,000 against eligible assets. The facility allows for draws against up to eighty (80) per-cent of eligible accounts receivable and forty (40) per-cent of eligible inventory, up to a maximum inventory advance amount of two million five hundred thousand dollars ($2,500,000). Eligible accounts receivable are those domestic accounts not outstanding for more than one hundred twenty (120) days and eligible inventory is inventory as determined by the bank, presently that which has had sales within the preceding sixty (60) months. The daily rate on the outstanding balance will be, at the Company’s option, the prime rate plus one (1.0) per cent. The balance is secured by a first lien position on all of the Company’s assets. The facility is due July 31, 2011. The Company expects that the facility will be renewed. As of March 31, 2011, $2,142,000 was outstanding, the interest rate was 4.25%, and $477,139 was available to draw. As of December 31, 2010, $2,217,000 was outstanding, the interest rate was 4.25%, and $371,891 was available to draw.
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PRECISION AEROSPACE COMPONENTS, INC. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2011 (UNAUDITED) |
4. COMMITMENTS AND CONTINGENCIES
The Company leases office space for its operations under a triple net lease which expires July 20, 2013. The lease has an option for renewal for five years at the Company's option. The rental rate is $13,498 per month. The lease has a yearly 4% escalation clause. The Company can terminate the lease upon six months’ notice.
The Company has guaranteed the Freundlich revolving funding facility as more completely described in Note 3.
During 2010, the Company entered into an employment agreement with its President and Chief Executive Officer. In the event of the termination of the agreement under certain circumstances the Company could be liable for up to twelve months’ salary
5. OPTION PLAN
The Precision Aerospace Components, Inc. 2011 Omnibus Incentive Plan, as amended (the “2011 Plan”), approved as of April 10, made the greater of 550,000 shares or twenty percent of the highest total number of the Company’s common shares at any time outstanding available for future equity awards. Under the 2011 Plan, the term of the Option shall be specified in the applicable Award Agreement which shall not exceed ten years from the date of grant. The price at which shares of Stock may be purchased under an Option (the “Option Price”) shall not be less than one hundred percent (100%) of the Fair Market Value of the shares of Stock on the date the Option is granted.
No awards have been made pursuant to the 2011 Plan.
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains "forward-looking statements" relating to Precision Aerospace Components, Inc. (the "Company") which represent the Company's current expectations or beliefs including, but not limited to, statements concerning the Company's operations, performance, financial condition and growth. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such as "may", "anticipate", "intend", "could", "estimate" or "continue" or the negative or other comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, such as credit losses, dependence on management and key personnel, variability of quarterly results, and the ability of the Company to continue its growth strategy and the Company’s competition, certain of which are beyond the Company's control. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, or any of the other risks set out under the caption “Risk Factors” in our 10-K report for the year ended 2010 occur, actual outcomes and results could differ materially from those indicated in the forward-looking statements.
Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
General
The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements, and the notes thereto, included herein. The information contained below includes statements of the Company's or management's beliefs, expectations, hopes, goals and plans that, if not historical, are forward-looking statements subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. For a discussion of forward-looking statements, see the information set forth in the Introductory Note to this Quarterly Report under the caption "Forward Looking Statements" which information is incorporated herein by reference.
The condensed consolidated interim financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The condensed consolidated financial statements and notes are presented as permitted on Form 10-Q and do not contain information included in the Company’s annual consolidated statements and notes. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The results for the three months ended March 2011 may not be indicative of the results for the entire year.
These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained herein.
Plan of Operation and Discussion of Operations
The Company's operations are presently carried out through its wholly-owned Freundlich Supply Company, Inc. (“Freundlich”) subsidiary.
Freundlich and, through it, the Company is a stocking distributor of aerospace quality, internally-threaded fasteners. Freundlich distributes high-quality, domestically-manufactured nut products that are used primarily for aerospace and military applications and for industrial/commercial applications that require a high level of certified and assured quality. The Company’s products are manufactured, by others, to exacting specifications or are made from raw material that provides strength and reliability required for aerospace applications.
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Freundlich is a niche player in the North American aerospace fastener industry. The fastener distribution industry is highly fragmented with no single company holding a dominant position. Freundlich currently focuses on the distribution of aerospace quality nut products, serving as an authorized stocking distributor for the premier nut manufacturers in the United States. Freundlich competes with numerous distributors who serve as authorized stocking distributors for the fastener manufacturers in its supplier base.
Freundlich is a one-stop source for standard, self-locking, semi-special and special nuts manufactured to several military, aerospace and equivalent specifications. Freundlich maintains an inventory of approximately 6,100 SKUs comprised of more than 20 million parts of premium quality, brand name nut products.
Freundlich sells its products to original equipment manufacturers, repair facilities, and other distributors in the aerospace industry and directly to the United States Department of Defense. Freundlich sells its products pursuant to written purchase orders from its customers. All products are shipped from Freundlich’s warehouse in Staten Island, New York via common carrier. During this quarter, sales to the Department of Defense represented approximately 32%, of our total sales, last year for the quarter our sales to the Department of Defense represented approximately 53% percent of our total sales. No other customer accounts or accounted for more than 10% of our sales.
The Company’s sales and gross profit for this quarter were below the comparable period last year –Total operating expenses have remained approximately constant. The result is a reduced operating income for the year to date. With the further reduction in the need for outstanding financing, our balance sheet position has continued to improve. New purchase orders from customers have not exhibited any consistency, they were below the similar period last year, but were above the last quarter of last year, even though February was an exceptionally poor bookings month. Pricing and product availability have generally stabilized.
The Company’s consolidated revenues decreased over 12% in the quarter to $2,025,953 from $2,311,010 in the comparable period last year. This was due to a substantial reduction in government purchasing activity of the Company’s product line during the period. Even though Government order activity for the quarter was down from the prior year, the Company believes it won a greater percentage of available opportunities based on an analysis of bids won versus bids submitted. Non-government sales were down only slightly. The Company believes that government sales will pick up as the year progresses.
The Company’s gross profit of $659,293 is about 14% less than the gross profit of $764,331 for the same 3 month period last year, due to the lower revenues for the period. This gross profit as a percentage of revenues is approximately 33% percent of revenues for the three month period, essentially the same as last year.
Total operating expenses remained essentially constant in comparison to the period last year; $556,590 this year, $559,964 last year.
The Company’s accounts receivable have increased by nearly $60,000 to $779,828 from $720,803 at the end of last year; this minimal difference is due to normal deviations in customer payments. The Company’s inventory at the end of the quarter, $5,143,504 was substantially unchanged from the $5,147,785 at the end of last year.
The Company has paid down its bank loan by $75,000 to $2,142,000 from $2,217,000 at the end of last year. Accounts payable were reduced by over $125,000, to $277,246 from $404,698 at the end of last year; the Company's accounts payable are a function of both the receipts and the payment terms. The Company has used available cash above its desired safety level to take advantage of discounts with certain of its suppliers. The Company is usually in a position to take advantage of the discounts offered. The Company continues to evaluate and apply its resources where it believes it will achieve the best overall benefit
The Company’s net assets (total assets less total liabilities) at the end of the period, increased by nearly $60,000; to $6,009,785 from $5,950,548 at the end of last year. This continues the Company’s growth in net assets which reflect the continued operations of the Company, even during a period of difficult market conditions.
The Company does not presently anticipate any material additional capital expenditures on plant and equipment for existing operations during 2011 and the present cash flow from the activities of Freundlich and its financing facility is sufficient to meet the Company’s cash requirements, assuming it receives inventory in orderly fashion as has been the case; however, additional financing will be necessary to more rapidly increase operations and expand operations.
The Company believes it can expand its business with its present staff numbers until acquisitions warrant additional personnel. Freundlich does not presently anticipate making further hires; however, it is possible that it may make an additional hire to improve business operations. Presently many Company level activities are either outsourced or handled at the Freundlich level.
Critical Accounting Policies
There have been no changes to our critical accounting policies in the three months ended March 31, 2011. Critical accounting policies and the significant estimates made in accordance with them are discussed under “Critical Accounting Policies” in our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2010.
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ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This item is not required for smaller reporting companies, and, if it were required, is not applicable to the Company’s present operations.
ITEM 4 CONTROLS AND PROCEDURES
(A) Disclosure Controls and Procedures
The Company carried out an evaluation, under the supervision and with the participation of the Company's Principal Executive Officer/Principal Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of March 31, 2011 on or about April 19, 2011. The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended the ("Exchange Act"). This term refers to the controls and procedures of a company that are designed to ensure that the information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the required time periods. The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of achieving the Company's disclosure control objectives. The Company's Principal Executive Officer/Principal Financial Officer has concluded that the Company's disclosure controls and procedures are effective at this reasonable assurance level as of the period covered by this Form 10-Q. Due to the size of the Company and as a result of the implementation of the Company’s integrated financial reporting system, items of note are appropriately brought to the attention of the Company’s CEO for appropriate disclosure.
(B) Internal Controls Over Financial Reporting
The Company's Principal Executive Officer/Principal Financial Officer evaluated all changes in the Company’s internal controls over financial reporting that have occurred during the Company’s last fiscal quarter (which is the period covered by this Form 10-Q) and there have been no changes in its internal controls during the Company's last fiscal quarter, or from the date of their last prior evaluation, on or about February 3, 2011, that have materially affected, or are reasonably likely to materially affect, those internal controls over financial reporting. The term "internal control over financial reporting" is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. This term refers to the process designed by management and effected by the issuer’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles that (1) pertain to maintenance of records; (2) provide reasonable assurance that transactions are recorded as necessary, including that receipts and expenditures of the issuer are being made in accordance with authorizations of management and directors of the issuer; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the Company’s financial statements. The Company assessed its internal control system as of March 31, 2011 in relation to criteria for effective internal control over financial reporting described in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's internal control over financial reporting is designed to provide a reasonable level of assurance of achieving the Company's disclosure control objectives. The Company's Principal Executive Officer/Principal Financial Officer has concluded that the Company's internal control over financial reporting is effective at this reasonable level of assurance.
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PART II
OTHER INFORMATION
ITEM 6. Exhibits.
The following exhibits are included herein:
| Exhibit No. | Exhibit | ||
31.1 | Certification of Chief Executive Officer of the Company required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended | ||
31.2 | Certification of Chief Financial Officer of the Company required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended | ||
32.1 | Certification of Chief Executive Officer and Chief Financial Officer of the Company required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended | ||
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Dated: May 12, 2011 | PRECISION AEROSPACE | ||
| COMPONENTS, INC. | |||
/s/ Andrew S. Prince | |||
| Andrew S. Prince | |||
| President and Chief Executive Officer | |||
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EXHIBIT INDEX
| Exhibit Number | Description | ||
31.1 | Certification of Chief Executive Officer of the Company required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended | ||
31.2 | Certification of Chief Financial Officer of the Company required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended | ||
32.1 | Certification of Chief Executive Officer and Chief Financial Officer of the Company required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended | ||
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