UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, DC 20549

                            FORM 10-K

        |X|      Annual report pursuant to Section 13 or 15(d) of the Securities
                 Exchange Act of 1934.

                 For the fiscal year ended December 31, 2003

        |_|      Transition report pursuant to Section 13 or 15(d) of the
                 Securities Exchange Act of 1934.

                 For the transition period from ___________  to ___________.

                 Commission file number  000-24293
                                         ---------


                               LMI AEROSPACE, INC.
- --------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

              Missouri                                  43-1309065
- ------------------------------------            --------------------------------
  (State or Other Jurisdiction of                      (IRS Employer
   Incorporation or Organization)                     Identification No.)

3600 Mueller Road, St. Charles, Missouri                63302-0900
- ----------------------------------------        --------------------------------
(Address of Principal Executive Officer)                (ZIP Code)

                                 (636) 946-6525
              ----------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)

Securities to be registered pursuant to Section 12(b) of the Act:    None
                                                                  ------------

Securities to be registered pursuant to Section 12(g) of the Act:

                     Common stock, $0.02 par value
               --------------------------------------------------
                                (Title of Class)

Indicate by check mark whether 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 if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K [ ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2 of the Act).
    YES      NO  X
        ---     ---

The aggregate  market value of the voting  common equity held by  non-affiliates
computed by reference  to the average bid and asked price of such common  equity
as of the last business day of the registrant's  most recently  completed second
fiscal quarter ended June 30, 2003, was $6,424,386.  The aggregate  market value
of the  voting  common  equity  held by  non-affiliates  as of April 8, 2004 was
$7,051,156.

There were  8,181,786  total shares of common stock  outstanding  as of April 8,
2004.

                       Documents Incorporated by Reference

Part III  incorporates  by  reference  portions of the Proxy  Statement  for the
Registrant's 2004 Annual Meeting.





                                TABLE OF CONTENTS

Item No.                                                                Page
                                     PART I

1    Business                                                              4
2    Properties                                                           17
3    Legal Proceedings                                                    19
4    Submission of Matters to a Vote of Security Holders                  19

                                     PART II

5    Market for Registrant's Common Equity and Related Stockholder        20
     Matters
6    Selected Financial Data                                              22
7    Management's Discussion and Analysis of Financial Condition and
     Results of Operations                                                23
7A   Quantitative and Qualitative Disclosures About Market Risk           37
8    Financial Statements and Supplementary Data                          37
9    Changes in and Disagreements With Accountants on Accounting and
     Financial Disclosure                                                 68
9A   Controls and Procedures                                              68

                                    PART III

10   Directors and Executive Officers                                     70
11   Executive Compensation                                               71
12   Security  Ownership of Certain Beneficial Owners and Management      71
13   Certain Relationships and Related Transactions                       71
14   Principal Accountant Fees and Services                               71

                                     PART IV

15   Exhibits, Financial Statement Schedules, and Reports on Form 8-K     72

Signatures                                                                73

Exhibit Index                                                             74






     The  Private  Securities  Litigation  Reform  Act of 1995  provides a "safe
harbor"  for  forward-looking  statements.  The  Company  makes  forward-looking
statements in this Annual Report on Form 10-K and in the public  documents  that
are incorporated herein by reference, which represent the Company's expectations
or beliefs  about future  events and  financial  performance.  When used in this
report and the documents  incorporated herein by reference,  the words "expect,"
"believe,"  "anticipate," "goal," "plan," "intend," "estimate," "may," "will" or
similar  words  are  intended  to  identify  forward-looking  statements.  These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions, including those referred to under "Risk Factors" in this Annual
Report on Form 10-K and otherwise described in the Company's periodic filings.

     All predictions as to future results contain a measure of uncertainty,  and
accordingly,  actual  results  could differ  materially.  Among the factors that
could cause  actual  results to differ  from those  contemplated,  projected  or
implied  by  the  forward-looking  statements  (the  order  of  which  does  not
necessarily reflect their relative significance) are:

     o    our  losses  from  operations  in  recent  years,  together  with  our
          inability to meet certain  covenants  under our loan  agreement in the
          past, raise substantial doubt about our ability to continue as a going
          concern. For further information,  see Note 1 (Accounting Policies) to
          the  consolidated  financial  statements  included  in  Item 8 of this
          report.

     o    the  financial  well-being  of the Boeing  Company,  Lockheed  Martin,
          Gulfstream  and Cymer,  orders  from which  comprise a majority of the
          Company's consolidated revenues;

     o    the Company's success in restructuring it's outstanding debt;

     o    the effect of terrorism  and other factors that  adversely  affect the
          commercial travel industry;

     o    difficulties with the implementation of the Company's growth strategy,
          such as  acquisition  integration  problems  and  unanticipated  costs
          relating  to the  Company's  manufacture  of new parts for its current
          customers and new customers;

     o    competitive pressures,  such as pricing pressures relating to low-cost
          foreign  labor  and  industry  participation  commitments  made by the
          Company's customers to foreign governments;

     o    changes in the quality,  costs and  availability  of the Company's raw
          materials, principally aluminum;

     o    the Company's ability to stay current with technological changes, such
          as advancements in  semiconductor  and laser component  technology and
          the development of alternative aerospace materials;

     o    difficulties  in plant  operations,  and in  particular,  difficulties
          relating  to the  Company's  manufacturing  facilities  located in St.
          Charles, Missouri;

     o    governmental  funding for those  military  programs  that  utilize the
          Company's products;

     o    asserted and  unasserted  claims,  and in  particular,  the  Company's
          ability to successfully negotiate claims relating to cost over-runs of
          work performed on certain customer contracts;

     o    changes in employee relations;

     o    environmental matters;

     o    changes in accounting principles or new accounting standards;

     o    compliance with laws and regulations;

     o    other unforeseen circumstances; and

     o    the risk  factors  described  in Item 1 of this Annual  Report on Form
          10-K and in the Company's  other periodic  filings with the Securities
          and Exchange Commission.

     In light of these risks, uncertainties and assumptions, the forward-looking
events  discussed  may not occur.  In  addition,  actual  results  could  differ
materially from those suggested by the forward-looking statements.  Accordingly,
investors  are  cautioned  not to place undue  reliance  on the  forward-looking
statements.  Except as required by law, the Company  undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information,  future events or otherwise.  Investors should, however, review
additional  disclosures  made by the Company  from time to time in its  periodic
filings with the Securities and Exchange Commission.

     This Annual  Report on Form 10-K and the documents  incorporated  herein by
reference  should  be read  completely  and  with  the  understanding  that  the
Company's  actual  future  results  may be  materially  different  from what the
Company  expects.  All  forward-looking  statements  made by the Company in this
Annual  Report  on  Form  10-K  and in the  Company's  other  filings  with  the
Securities and Exchange Commission are qualified by these cautionary statements.






                                     PART I

Item 1.  Business

General Overview

LMI  Aerospace,  Inc.  (the  "Company") is a leader in  fabricating,  machining,
finishing and integrating  formed,  close tolerance aluminum and specialty alloy
components  and sheet metal  products for use by the  aerospace,  technology and
commercial  sheet metal  industries.  Aerospace  components  manufactured by the
Company  include  leading edge wing slats,  flaps and lens  assemblies;  cockpit
window frame  assemblies;  fuselage skins and supports;  and passenger and cargo
door frames and supports.  The Company  manufactures  more than 20,000 aerospace
components  for  integration  into a variety of civilian and  military  aircraft
platforms manufactured by leading original equipment  manufacturers ("OEMs") and
prime subcontractors  ("Primes").  In addition,  the Company produces components
and assemblies for laser equipment used by semiconductor  and medical  equipment
manufacturers in the technology industry.  The Company also produces sheet metal
products  for various  companies  in the  commercial  sheet metal  industry.  In
addition to manufacturing quality components, the Company provides its customers
with value-added services related to the design, production and finishing of its
components.

For most of its history,  the Company's  primary focus had been the  manufacture
and sale of  components  to the  commercial  aircraft  market  of the  aerospace
industry.  In recent years,  the Company has expanded its  operations  through a
number of  acquisitions.  In April of 2001,  the Company  acquired the operating
assets of  Tempco  Engineering  Inc.  and its  affiliate,  Hyco  Precision, Inc.
("Tempco").  This acquisition  expanded the Company's aerospace product line and
added  technology  components  used in the  manufacture  of  semiconductors  and
medical  equipment as new product lines.  In May of 2002,  the Company  acquired
Versaform  Corporation and its Canadian affiliates  ("Versaform"),  producers of
large formed metal  components  for the regional jet,  business jet and military
markets of the aerospace  industry.  The Company acquired the metal  fabrication
assets of Stretch Forming  Corporation in June of 2002, an aerospace sheet metal
manufacturer,  which  manufactures  components  for the  military  market of the
aerospace  industry.  Finally,  in October of 2002,  the  Company  acquired  the
operations  and certain  assets of the  aerospace  division of Southern  Stretch
Forming and  Fabrication,  Inc., a manufacturer of aerospace sheet metal for the
corporate and regional markets.

The Company was  organized  as a Missouri  corporation  in 1948.  The  Company's
headquarters are located at 3600 Mueller Road, St. Charles, Missouri 63302.

Recent Development

On March 30, 2004, the Company and Union Planters Bank N.A.  ("Union  Planters")
entered into a Thirteenth Amendment to Loan Agreement ("Thirteenth  Amendment"),
amending the Loan Agreement  dated as of August 15, 1996 (the "Loan  Agreement")
between Leonard's Metal,  Inc., the predecessor in interest to the Company,  and
Magna Bank, National Association, the predecessor in interest to Union Planters.
The primary purposes of the Thirteenth Amendment were to (a) extend the maturity
of the Company's  Revolving  Line of Credit  provided  under the Loan  Agreement
("Revolving Credit Loan") from March 31, 2004 to March 31, 2005, and (b) waive a
default  arising under the Loan  Agreement  providing for the  maintenance  of a
minimum  consolidated EBITDA amount (the "EBITDA Covenant") for the period ended
December 31, 2003.

In addition, under the terms of the Thirteenth Amendment to Loan Agreement:

     o    The  maximum  principal  amount  of  the  Revolving  Credit  Loan  was
          increased from  $9,088,323 to $9,700,000  through  September 30, 2004,
          subject to a borrowing base calculation and further subject to a newly
          established  inventory  reserve  requirement  and a  more  restrictive
          requirement for eligible  receivables,   which,   notwithstanding  the
          increased   borrowing   maximum  amount  provided  by  the  Thirteenth
          Amendment, could reduce the amount of borrowing availability under the
          Revolving Credit Loan.

     o    The interest rate on the Revolving  Credit Loan was changed from LIBOR
          plus 2.50% to Union  Planters'  prime rate plus 1%.  Moreover,  if the
          Company has not  executed and  delivered a letter of intent  regarding
          (i) the sale of the stock or of all or substantially all of the assets
          of certain of its  subsidiaries,  and/or (ii) the  procurement  by the
          Company of debt financing  providing the Company with sufficient funds
          to repay in full the Company's  obligations to Union Planters ("Letter
          of Intent")  on or before  June 30,  2004,  the  interest  rate on the
          Revolving  Credit Loan will be  increased  to prime plus  1-1/2%,  and
          further  increased to prime plus 2.00% if the Company has not paid all
          of its  obligations to Union  Planters in full on or before  September
          30,  2004.  The interest  rate on Term Loan A provided  under the Loan
          Agreement,  which,  as of  March  30,  2004,  had a total  outstanding
          principal  balance  of  $9,160,714,  was  changed  from LIBOR plus 3%,
          subject  to a floor of 7% and a ceiling  of 8.5%,  to Union  Planters'
          prime rate plus 2%,  subject to a floor of 7%.  The  interest  rate on
          Term Loan B provided under the Loan Agreement,  which, as of March 30,
          2004, had a total  outstanding  principal  balance of $8,773,816,  was
          changed  from  LIBOR  plus 3% to Union  Planters'  prime rate plus 2%.
          Moreover,  if the Company has not executed  and  delivered a Letter of
          Intent on or before June 30, 2004,  the interest  rate on Term Loans A
          and B will be  increased  to Union  Planters'  prime  plus  2-1/2% and
          further  increased to Union Planters' prime plus 3% if the Company has
          not  paid all of its  obligations  to the  Buyer in full on or  before
          September 30, 2004.

     o    If, by June 30,  2004,  the  Company  does not enter  into one or more
          Letters of Intent,  a fee of $125,000  will be payable on the earliest
          of March 31, 2005, the date the Company repays all of its  obligations
          to Union Planters or the date on which Union Planters  accelerates all
          of the Company's obligations.

     o    If the Company  fails to pay all of its  obligations  in full to Union
          Planters by September  30, 2004, a fee of $350,000  will be payable to
          Union  Planters  ($100,000  on  October  1, 2004 and  $250,000  on the
          earliest of March 31,  2005,  the date the  Company  repays all of its
          obligations  to Union  Planters  or the date on which  Union  Planters
          accelerates all of the Company's obligations).

     o    If the Company  fails to pay all of its  obligations  in full to Union
          Planters by December 30,  2004,  a fee of $200,000  will be payable to
          Union  Planters  ($100,000  on  December 31, 2004 and  $100,000 on the
          earliest of March 31,  2005,  the date the  Company  repays all of its
          obligations  to Union  Planters  or the date on which  Union  Planters
          accelerates all of the Company's obligations).

Thus,  increased  interest  rates and  additional  fees will  apply  during  the
remaining  term  of  the  Loan  Agreement   (through  March  31,  2005)  if  the
indebtedness under the Loan Agreement is not repaid in full through  alternative
financing and/or a sales of assets by certain  prescribed dates. The Company has
engaged Lincoln Partners LLC, a Chicago, Illinois based investment banking firm,
to assist in these efforts.

Please see Note 8 of the Consolidated  Financial  Statements included as part of
this Annual Report on Form 10-K for more detailed financial information relating
to the Company's debt.

Business Segments

As a result of its acquisition of Tempco,  the Company's business is now divided
into two segments,  the Sheet Metal  segment and the  Machining  and  Technology
segment.  The Sheet Metal  segment,  which is the  Company's  dominant  segment,
services the aerospace and commercial sheet metal industries and is comprised of
all of the  Company's  subsidiaries  other than Tempco.  The Sheet Metal segment
accounted for $62.0 million, or 81.7%, of the Company's net sales in 2003.

The business of the Machining and Technology segment, which utilizes a machining
process  rather  than a forming  process to  manufacture  its product  line,  is
conducted entirely by Tempco and serves the aerospace and technology industries.
More than 50% of Tempco's revenue is derived from the medical and  semiconductor
technology  industries.  The Company  originally  acquired  Tempco to serve as a
supply arm to the Company. However, as the Tempco business evolved, it became an
autonomous unit with regard to virtually all aspects of its business,  which led
the Company to categorize it as a distinct business  segment.  The Machining and
Technology  segment accounted for $13.9 million,  or 18.3%, of the Company's net
sales in 2003.

Please see Note 15 of the Consolidated  Financial Statements included as part of
this Annual Report on Form 10-K for specific financial  information  relating to
the Company's business segments.

Risk Factors

The Company's  business,  financial  condition,  results of operations  and cash
flows can be  impacted by a number of  factors,  including,  but not limited to,
those  factors set forth below and elsewhere in this Annual Report on Form 10-K,
any one of which could cause the  Company's  actual  results to vary  materially
from recent results or from the Company's anticipated future results.

Our  recent  operating  losses  raise  substantial  doubt  about our  ability to
continue as a going concern.

The Company has incurred  operating  losses in recent years due to  difficulties
encountered on certain recent  contracts,  and the prevailing  adverse  economic
environment  in the  commercial  aerospace and  technology  markets,  which have
resulted in depressed markets for the Company's products.

The  continuation  of or further  declines in demand for the Company's  products
will place the Company at risk of further revenue erosion. The Company has begun
restructuring  efforts  to  reduce  its  cost  base  in  an  effort  to  improve
performance.  If the Company is unable to reduce  costs or revenues  continue to
decline, it may not achieve profitability.

Our independent  certified public accountants have modified their opinion to our
audited financial  statements for the year ended December 31, 2003 to include an
emphasis  paragraph,  stating that our continuing losses raise substantial doubt
about our ability to continue as a going concern.  Our  continuation  as a going
concern  will depend upon our ability to generate or obtain  sufficient  cash to
meet our  obligations  on a timely  basis and  ultimately  to attain  profitable
operations.  Our management has developed a plan that includes  restructuring or
possibly  disposing of segments of our  business,  increasing  sales and raising
alternative captital. If we are unsuccessful in accomplishing any of these three
tasks,  our ability to continue to operate as a going concern could be in doubt.
Concern  about our  ability  to  continue  as a going  concern  may make it more
difficult  for us to  obtain  alternative  funding  to meet our  obligations  or
adversely  affect  the terms of any  alternative  funding we are able to obtain.
There can be no assurance that we can or will operate  profitably in the future,
or that we will continue as a going concern.

If the Company is unable to effectively  and  efficiently  implement our plan to
remediate a material  weakness that has been identified in our internal controls
and  procedures,  there  could be a  material  adverse  effect on our  financial
results.

In connection with its 2003 year-end audit,  our  independent  certified  public
accountants  have  identified a material  weakness in our internal  controls and
procedures relating to inventory costing and obsolescence  analysis. The Company
has implemented and is continuing to implement various  initiatives  intended to
materially  improve  our  internal  controls  and  procedures  to  address  this
weakness.  These initiatives address our control  environment,  organization and
staffing, policies,  procedures and documentation  and information systems. The
implementation of these initiatives is one of our highest priorities.  Our Board
of Directors, in coordination with our Audit Committee,  will continually assess
the  progress and  sufficiency  of these  initiatives  and make  adjustments  as
necessary.  However,  no  assurance  can be  given  that  we  will  be  able  to
successfully  implement our revised internal controls and procedures or that our
revised  controls and  procedures  will be  effective in remedying  all of these
identified  deficiencies in the Company's  internal controls and procedures.  In
addition,  the Company may be required  to hire  additional  employees,  and may
experience higher than anticipated capital  expenditures and operating expenses,
during the  implementation  of these changes and  thereafter.  If the Company is
unable to implement these changes  effectively or efficiently,  there could be a
material adverse effect on our financial results. Moreover, the Company could be
subject to additional regulatory oversight and our business and reputation could
be harmed.

Covenant  restrictions in our credit facility and other debt  instruments  could
limit our ability to operate our business.

The Company currently  maintains a credit facility with Union Planters under the
terms of the Loan  Agreement.  This  facility is secured by all of the Company's
domestic  property,   including,   but  not  limited  to,  accounts  receivable,
inventories,   buildings,   and  equipment,  and  includes  certain  restrictive
covenants relating to various financial measures. On March 30, 2004, the Company
and Union Planters entered into the Thirteenth Amendment to Loan Agreement.  The
primary purposes of the Thirteenth  Amendment were to (a) extend the maturity of
the Company's Revolving Credit Loan under the Loan Agreement from March 31, 2004
to March  31,  2005 and (b)  waive a default  arising  under the Loan  Agreement
providing for the  maintenance of a minimum  consolidated  EBITDA amount for the
period ended December 31, 2003.  The Loan  Agreement,  as amended,  provides for
certain restrictive covenants, including the EBITDA Covenant.

In  addition,  the  Company  has  executed a note in favor of a former  owner of
Versaform  Corporation,  now a director of the Company,  in connection  with the
Company's purchase of Versaform.  This note is secured by a pledge of 65% of the
Company's  interest in its Canadian  subsidiary,  and as part of its obligations
under  this  note,  the  Company's  Canadian  subsidiary  is  subject to various
restrictive covenants relating to the its financial performance.

If the  Company  were to fail in the  future  to  comply  with  the  restrictive
covenants  in the  Loan  Agreement  or in the  promissory  note,  the  Company's
operations  could be  negatively  impacted and its ability to take  advantage of
potential business  opportunities as they arise could be limited.  Moreover, the
Company's failure to comply with these restrictive financial and other covenants
could result in an event of default  that,  if not cured or waived,  could cause
the Company to be required to repay its  borrowings  before their due dates.  If
the Company  were unable to make this  repayment or  otherwise  refinance  these
borrowings,  the Company's  creditors could foreclose on the assets securing its
borrowings.  Although in the  Thirteenth  Amendment  Union  Planters  waived the
default arising from a failure of the Company to meet the EBITDA Covenant,  such
waiver was  limited to and valid only for the  specific  purposes  given.  Union
Planters  is not  obligated  solely  by  reason  of such  waiver to agree to any
additional waivers.

Please see Item 1. Business - Recent Developments and Note 8 of the Consolidated
Financial  Statements  included as part of this  Annual  Report on Form 10-K for
more detailed financial information relating to the Company's debt.

The Company's  outstanding  indebtedness may adversely impact the Company's cash
flow and ability to raise necessary capital.

As of December 31, 2003,  the Company had a total of  $27,814,000 in outstanding
long-term debt, of which  $21,583,000  matures in 2005. The Company is dependent
on borrowings under the Revolving Credit Loan to fund its working capital needs.
The existence of indebtedness at the current level will require that significant
portions of the  Company's  cash flow from its  business  operations  be used to
service outstanding debt. If the Company is unable to obtain necessary financing
in the future and a substantial  portion of the  Company's  cash flow is used to
service  debt  obligations,  the Company may have limited  ability to fund:  (i)
working capital  requirements;  (ii) future  acquisitions that would benefit the
Company's  growth  strategy;  (iii)  capital  expenditures;  (iv)  debt  service
requirements; and (v) other general business requirements.

The Thirteenth  Amendment  provides for an increased interest rate on borrowings
thereunder and imposes  certain fees and  additional  interest rate increases if
the  indebtedness  under  the  Loan  Agreement  is not  repaid  in full  through
alternative  financing  and/or sales of certain of its business  operations by
certain  prescribed  dates.  The  Company has engaged  Lincoln  Partners  LLC, a
Chicago, Illinois based investment banking firm, to assist in these efforts.

Please see Item 1. Business - Recent Developments and Note 8 of the Consolidated
Financial  Statements  included as part of this  Annual  Report on Form 10-K for
more detailed financial information relating to the Company's debt.

The  Company  will  need to repay  in full its  outstanding  bank  debt  through
refinancing or sale(s) of assets.

As  discussed  above,  the  Thirteenth  Amendment   contemplates  the  Company's
repayment in full of all  indebtedness and other payment  obligations  under the
Loan  Agreement  by March 31,  2005 or sooner  through  the  refinancing  of its
indebtedness  to Union  Planters  and/or  the sale of  certain  of its  business
operations.

No  assurance  can be  given  that  the  Company  will be able  to  effect  such
refinancing  and/or  sale(s)  of assets to meet its  obligations  under the Loan
Agreement.  The  Company's  failure to do so in a timely  manner  will result in
increased interest rates and fees during the term of the Loan Agreement,  and if
the Company is unable to repay in full its indebtedness to Union Planters at the
maturity  of the  Loan  Agreement,  Union  Planters  will  have the  ability  to
foreclose on its collateral,  consisting of substantially all of the U.S. assets
of the Company and to pursue any or all of the other  remedies  available to it.
In such  case,  no  assurance  can be  given  that the  Company  will be able to
continue its operations.

Please see Item 1. Business - Recent  Development and Note 8 of the Consolidated
Financial  Statements  included as part of this  Annual  Report on Form 10-K for
more detailed financial information relating to the Company's debt.

The Company's business is dependent on only a few customers.

In 2003, 55.0% of the Company's  aggregate sales were dependent on relationships
with  four  major  customers:   Boeing  Company,  Lockheed  Martin  Corporation,
Gulfstream  Aerospace  Corporation  and Cymer,  Inc.  Although a majority of the
Company's  sales are made pursuant to multi-year  contracts,  such contracts are
generally  terminable  upon 30 days notice by the customer and  typically do not
require the customer to purchase any specific quantity of products. Accordingly,
there  can be no  assurance  that  sales  to  customers  that  have in the  past
accounted for significant sales individually or as a group will continue,  or if
continued,  will reach or exceed  historical  levels in any future periods.  The
loss of any one of these customers,  or a significant reduction in the amount of
orders  received  from any one of these  customers,  could  cause a  significant
decrease in the Company's net sales and profitability.  The Company  anticipates
that a small number of large  customers  will continue to dominate its sales for
the foreseeable future.

The Company's  business is dependent on the aerospace  industry and is therefore
susceptible  to factors that affect that  industry such as acts of terrorism and
general economic factors.

The Company derives approximately 89% of its sales and operating income from the
services  and  components  sold to the  aerospace  industry.  As a result of the
events of September 11, 2001,  the  commercial  airline  industry has suffered a
significant   decline  in  operational   efficiency  and  financial   condition.
Consequently,  the Company  experienced a decrease in orders for new  commercial
aircraft and replacement  components.  The Company is unable to predict when the
financial outlook of the airline industry might rebound,  or when orders for new
aircraft and replacement components might increase. And, while in some instances
since September 11, 2001 the Company has seen an increase in orders from certain
customers,  particularly  producers  of  military  and  corporate  and  regional
aircraft,  the overall effect of a prolonged  downturn in the commercial airline
industry  will be a  potentially  severe  reduction in demand for the  Company's
aerospace products.  Additional acts of sabotage or terrorism or adverse results
to the U.S. in its  military  conflicts,  such as the current  conflict in Iraq,
would likely lead to even further reduced demand for the Company's  products and
services.

In  addition,   the   Company's   business  is  directly   affected  by  certain
characteristics  and trends of the aerospace industry that affect its customers,
such as (i)  fluctuations  in the  aerospace  industry's  business  cycle,  (ii)
varying fuel and labor costs,  (iii) intense price  competition  and  regulatory
scrutiny,  (iv)  certain  trends, including  a  possible  decrease  in  aviation
activity, a decrease in outsourcing by aircraft  manufacturers or the failure of
projected market growth to materialize or continue,  and (v) changes in military
budgeting and procurement for certain military aircraft. In the event that these
characteristics and trends adversely affect customers in the aerospace industry,
they would reduce the overall  demand for the  Company's  products and services,
thereby decreasing the Company's sales and operating income.

The Company may experience cost over-runs related to orders for new products and
changes to existing products.

The Company  generally  sells its products  under firm,  fixed-priced  contracts
providing for a fixed price for the products sold by the Company,  regardless of
the production costs incurred by the Company.  As a result,  inaccurate pricing,
manufacturing  inefficiencies,  start-up  costs and other  factors may result in
cost  over-runs  and losses on  contracts.  The cost of  production  also may be
adversely affected by increases in the cost of labor, materials and overhead and
changing  product  standards.  In many cases, the Company makes multi-year firm,
fixed-price  commitments to its customers,  without assurance that the Company's
anticipated  production costs will be achieved.  In some instances,  the Company
has been  successful  in  obtaining  the  agreement  of a customer  to reprice a
particular  product and recoup  previous  losses,  primarily when  incomplete or
inaccurate engineering data or out-of-tolerance tooling has contributed to these
cost over-runs. However, with respect to future claims there can be no assurance
that the Company will be successful  in obtaining  the  necessary  re-pricing in
order to make a particular product profitable to the Company.

Risks  associated  with  acquisitions   could  result  in  increased  costs  and
production inefficiencies.

A key element of the Company's  growth  strategy has been expansion  through the
acquisition of complementary  businesses  involved in the aerospace industry and
strategic  acquisitions  that  would  provide  the  Company  with  access to new
industries.  The Company's ability to expand by acquisition is dependent on, and
may be limited by, the availability of suitable  acquisition  candidates and the
Company's  capital   resources.   Acquisition  risks  include   difficulties  in
assimilating  the operations and personnel of acquired  companies,  difficulties
associated  with new product  lines and meeting new tolerance  requirements,  an
inability to accurately price new products,  the potential loss of key employees
of  the  acquired   companies,   the  incurrence  of   substantial,   additional
indebtedness in funding such acquisitions, and goodwill impairment. Furthermore,
although the Company will  investigate  the  business  operations  and assets of
entities that it acquires, there may be liabilities that the Company fails or is
unable to discover and for which the Company,  as a successor owner or operator,
may be liable.  The Company  evaluates  acquisition  opportunities  from time to
time,  but there can be no assurance that the Company will be able to consummate
acquisitions on satisfactory  terms, or at all, or that it will be successful in
integrating any such  acquisitions  into its operations.  However,  as indicated
above, the Company's limited capital  resources will  signficantly  restrict its
ability to effect strategic acquisitions.

The Company's industries are characterized by intense competition.

The  Company's  competitors  in  the  aerospace  industry  consist  of  a  large
fragmented group of companies, including certain business units or affiliates of
the Company's  customers.  However, the Company is unaware of any single company
in the  aerospace  industry  with  which  it  competes  in all of the  Company's
processes.  The Company believes that competition  within the aerospace industry
will increase  substantially as a result of industry  consolidations  and trends
toward  favoring  greater  outsourcing  of components and reducing the number of
preferred   suppliers.   The  Company  also  believes  that  foreign   aerospace
manufacturers  will become an increasing  source of competition,  due largely to
foreign  manufacturers' access to low-cost labor and the increased prevalence of
industry participation  commitments,  pursuant to which domestic OEMs and Primes
agree to award production work to manufacturers  from a foreign country in order
to obtain orders from that country. In contrast to the aerospace  industry,  the
Machining and Technology  segment has only a few competitors for the products it
produces.  Certain of the Company's  competitors in all of its industries,  have
substantially  greater  financial,  production  and  other  resources  than  the
Company.  These  competitors  may have (i) the ability to adapt more  quickly to
changes in  customer  requirements  and  industry  conditions  or  trends,  (ii)
stronger  relationships  with  customers and  suppliers,  and (iii) greater name
recognition  than  the  Company.  There  can be no  assurance  that  competitive
pressures  will not  materially  and adversely  affect the  Company's  business,
financial condition or results of operation.

Decreases in the  availability,  or increases in the cost,  of the Company's raw
materials would increase the Company's operating costs.

Most of the Company's  components are manufactured from aluminum products.  From
time to time, the Company, and the aerospace components industry as a whole, has
experienced  shortages in the  availability of aerospace  quality  aluminum.  In
addition,  the Company's  Machining and Technology  segment  utilizes  materials
that,  in some  cases,  may be provided by a limited  number of  suppliers.  Raw
material  shortages could inhibit the Company's  ability to deliver  products to
its customers on a timely  basis.  However,  there can be no assurance  that the
Company will be able to purchase  sufficient  quantities of aluminum products or
other  materials to meet its  production  needs in the future or that  necessary
materials will be available on satisfactory  terms or at reasonable  prices. Any
such  material  shortage  or  price  escalation  would  increase  the  Company's
operating costs, which would likely reduce profits.

The  Company's  long-term  success  and  growth  strategy  depend on its  senior
management and the Company's ability to attract and retain qualified personnel.

The Company is currently  renegotiating  written employment  agreements with its
senior  management,  which expired December 31, 2003. The Company also maintains
key man life  insurance  policies  on the lives of  certain  of such  personnel.
However,  the loss of service of one or more of the Company's senior  management
personnel  could result in a loss of leadership and an inability to successfully
pursue the Company's long-term success and growth strategy.

The Company's  success and future growth also depend on management's  ability to
attract,  hire, train,  integrate and retain qualified personnel in all areas of
its  business.  Competition  for such  personnel is intense,  and the  Company's
inability to adequately  staff its operations  with such personnel  could render
the Company less efficient, thereby slowing its rate of production. In addition,
rising costs associated with certain employee benefits, in particular the rising
costs  associated  with  providing  employee  health  coverage,  could limit the
ability of the Company to provide certain employee  benefits in the future.  The
Company's  inability to provide a competitive  employee  benefits  package could
limit the ability of the Company to recruit and retain qualified personnel.

Compliance with and changes in  environmental,  health and safety laws and other
laws that regulate the operation of the Company's  business  could  increase the
cost of production and expose the Company to regulatory claims.

The  Company's  operations  are subject to  extensive  and  frequently  changing
federal, state and local laws and substantial regulation by government agencies,
including the United States Environmental  Protection Agency ("EPA"), the United
States  Occupational Safety and Health  Administration  ("OSHA") and the Federal
Aviation  Administration  ("FAA").  Among other matters,  these agencies  impose
requirements that regulate the operation, handling,  transportation and disposal
of hazardous materials generated or used by the Company during the normal course
of its operations,  govern the health and safety of the Company's  employees and
require the Company to meet certain  standards  and licensing  requirements  for
aerospace  components.  This extensive  regulatory framework imposes significant
compliance  burdens and risks on the Company and, as a result, may substantially
affect its operational costs. In addition, the Company may become liable for the
costs of removal or remediation of certain hazardous  substances  released on or
in its  facilities  without  regard to  whether or not the  Company  knew of, or
caused,  the  release  of  such  substances.  The  Company  believes  that it is
currently in material compliance with applicable laws and regulations and is not
aware of any material  environmental  violations at any of its current or former
facilities.  There can be no assurance,  however,  that its prior activities did
not create a material  environmental  situation  for which the Company  could be
responsible or that future uses or conditions  (including,  without  limitation,
changes in applicable environmental laws and regulations,  or an increase in the
amount of hazardous  substances  generated or used by the Company's  operations)
will not result in any material environmental liability to the Company or result
in a material adverse effect to the Company's  financial condition or results of
operations.

The  operations  of the  end-users  of the  product  platforms  into  which  the
Company's  components  are  integrated  could  expose  the  Company  to  product
liability claims.

Although the Company  assists its customers in the design of a limited number of
parts,  components  and  sub-assemblies,  the  Company's  business  may still be
exposed to possible claims of personal injury, death or property damage that may
result  from  the  failure  or  malfunction  of  any  component  or  subassembly
fabricated by the Company.  The Company currently has in place aviation products
liability and premises  insurance,  which the Company believes provides coverage
in amounts and on terms that are generally  consistent  with industry  practice.
The Company has not  experienced  any product  liability  claims  related to its
products.  However, the Company may be subject to a material loss, to the extent
that a claim is made against the Company that is not covered in whole or in part
by  insurance,  which  could have a  material  adverse  effect on the  Company's
business,  financial condition or results of operations.  In addition, there can
be no assurance  that  insurance  coverages can be maintained in the future at a
cost acceptable to the Company.

The  Company's  facilities  are  located in regions  that  suffer  from  natural
disasters.

Several  of the  Company's  facilities  are  located  in  regions  that  have an
increased risk of earthquake  activity,  and one of the Company's facilities has
experienced  damage due to floods in the past.  Although  the Company  maintains
earthquake  and  standard  blanket  flood loss  insurance  where  necessary,  an
earthquake, flood or other natural disaster could have a material adverse effect
on the Company's business or its operating results.

The market price of the Company's common stock may be volatile.

The  market  price  of the  Company's  common  stock  could be  subject  to wide
fluctuations in response to quarterly  variations in operating results,  changes
in financial  estimates by security  analysts,  a failure of the Company to meet
such  estimates and other events or factors.  In addition,  the stock market has
experienced  volatility  that has  affected  the  market  prices  of the  equity
securities of many  companies.  The resulting  changes in such market prices are
often not  directly  related to the  operating  performance  of such  companies.
Accordingly,  market  volatility  could adversely affect the market price of the
Company's common stock.

Certain  provisions  in the Company's  charter  documents may have the effect of
delaying, deterring, or preventing certain potential acquisitions or a change in
control of the Company.

The Company's Restated Articles of Incorporation and Amended and Restated Bylaws
contain certain provisions that reduce the probability of a change of control or
acquisition of the Company.  These provisions  include,  but are not limited to,
(i) the ability of the Board of  Directors  to issue  preferred  stock in one or
more  series  with such  rights,  obligations  and  preferences  as the Board of
Directors may determine, without any further vote or action by the shareholders,
(ii) advance  notice  procedures  for  shareholders  to nominate  candidates for
election as directors of the Company and for  shareholders  to submit  proposals
for  consideration at shareholders'  meetings,  (iii) the staggered  election of
directors,  and (iv) restrictions on the ability of shareholders to call special
meetings of shareholders.  In addition, the Company is subject to Section 459 of
the General and Business  Corporation  Law of  Missouri,  which,  under  certain
circumstances,  may  prohibit a business  combination  between the Company and a
shareholder owning 20% or more of the outstanding voting power of the Company.

Customers and Products

Customers

The  Company's  principal  customers  serviced  by the Sheet  Metal  segment are
Boeing,  Lockheed  Martin  and  Gulfstream,  leading  OEMs  and  Primes  in  the
commercial,  corporate  and  regional  and  military  aircraft  markets  of  the
aerospace industry. During 2003, direct sales to these customers accounted for a
total of approximately 55% of the segment's sales.

Typically,  the Company  conducts its aerospace  business  under  contracts that
provide for: (i) payment on a net 30 day basis; (ii) termination for convenience
upon 30 days notice;  (iii) reasonable  manufacturing  lead time for delivery of
components;  (iv) limitations on and  specifications for the scope of work to be
performed; and (v) pricing of components by quotes. In addition, these contracts
are typically  "requirements"  contracts  under which the  purchaser  commits to
purchase all of its  requirements  of a particular  component  from the Company.
Specific orders are placed with the Company on a periodic basis.

The  Machining  and  Technology  segment's  principal  customers  are  Cymer,  a
manufacturer of semi-conductor equipment in the technology industry, and Alliant
Techsystems  (ATK),  a  defense  contractor.  During  2003,  Cymer  and  Alliant
Techsystems accounted for 68.5% of the Machining and Technology segment sales.

Products.

The Company fabricates, machines and integrates formed, close tolerance aluminum
and  specialty  alloy  components  for  use by  the  aerospace,  technology  and
commercial  sheet metal  industries.  All components are fabricated from designs
and specifications prepared and furnished by its customers.  Because the Company
manufactures   thousands  of  components,   no  one  component  accounts  for  a
significant  portion of the Company's  sales. The following table describes some
of the principal products manufactured by each of the Company's segments and the
models into which they are integrated:


                       Product                    Models
                       -------                    ------
    Sheet Metal Segment
    -------------------
                                            

    Wing leading edge skins, flapskins, winglets  737 NG, G-400 and Citation X

    Detail interior components                    Boeing 737 Classic, 737 NG,
                                                  727, 747, 757, 767, 777 and
                                                  C-130

    Wing panels and floorbeams                    747

    Door assembly structural details              737 Classic, 737 NG, 747 and
                                                  757, Challenger 604, Regional
                                                  Jet, F-16, C-130 and Business
                                                  jet

    Thrust reversers and engine                   G-400, CL415, 737 Classic,
    nacelles/cowlings                             777 and B-52

    Cockpit window frames and landing light       737 NG, 747, 767, 777,
    lens assembly                                 Citation III, VII and Excel,
                                                  MD-80, KC-10 and F-16

    Product                                       Models
    -------                                       ------

    Fuselage and wing skin                        Models 45 and 60, Dash-8, 717
                                                  737 Classic, 737 NG, 747, 757,
                                                  767, 777, C-130, F-16,
                                                  Sovereign, Citation, G-300,
                                                  G-400 and G-500


    Structural sheet metal & extruded             Boeing 737 Classic, 737 NG,
    components                                    727, 747, 757, 767, 777 and
                                                  C-130, F-16, Gulfstream G400
                                                  and G500

    Auxiliary power units                         Embraer, Regional Jet and V-22
                                                  Osprey

    Machining and Technology Segment
    --------------------------------

    Fans, heat exchangers, and various assemblies ELS 7000, ELS 6010, and XLA
    and components                                100 components

    Housings and assemblies for gun turret        AH-64 Apache Helicopter

    Various components and assemblies             IntraLase FS Laser

Please see Item 7. Management's  Discussion and Analysis of Financial  Condition
and Results of  Operations  - Overview for detailed  information  regarding  the
revenues contributed by classes of products.

Manufacturing Process

The  manufacturing  facilities  are  organized  by work  centers  focusing  on a
particular  manufacturing  process.  Depending  on the  component,  the  Company
utilizes  either a forming process or a machining  process.  Each work center is
staffed by a team of operators who are supported by a supervisor, lead operators
and quality inspectors. Throughout each stage of the manufacturing and finishing
processes,  the  Company  collects,  maintains  and  evaluates  data,  including
customer  design  inputs,   process  scheduling,   material  inventory,   labor,
inspection results and completion and delivery dates. The Company's  information
systems employ this data to provide accurate pricing and scheduling  information
to its customers as well as to establish  production  standards  used to measure
internal performance.

In manufacturing  some components for the Sheet Metal segment,  the Company uses
several forming processes to shape or "form" a "work piece" (aluminum, stainless
steel or  titanium  sheet  metal and  extrusion)  into  components  by  applying
pressure through impact, stretching or pressing the raw material (sheet metal or
extrusion) to cause conformance to a die. The shapes may be simple with a single
angle,  bend or curve, or may be complex with compound  contours having multiple
bends and angles.  Some processes  incorporate heat to soften the metal prior to
or during forming.  Forming processes  include:  drop hammer,  fluid cell press,
sheet metal and extrusion stretch, skin stretch, stretch draw, hot joggle, brake
forming, roll forming and radial draw.

Additionally,  certain  products  manufactured  by the Sheet Metal  segments and
virtually  all of the  Machining and  Technology  segment  products are produced
using close tolerance  machining methods.  Various metals are machined,  such as
stainless, aluminum, monel, kevlar, and numerous varieties of steel and castings
for  small  to  medium  sized  parts,  in  heat  treated  and  non-heat  treated
conditions.  Parts are processed  through  conventional  and computer  numerical
control machining  methods,  also known as CNC, from raw material or castings up
to and through assembly  processes.  In addition,  complex machining of parts is
accomplished  through experience in engineering set-ups to produce intricate and
close  tolerances  with very  restricted  finish  requirements.  Each  machining
facility is also set up to complete turnkey,  research and development  projects
to better support engineering changes from customers.

Value-Added Services

In addition to the products the Company sells, each segment offers its customers
various  value-added  services that are intended to result in both cost and time
savings. These services may include the production of tooling, heat treating and
aging of components, computer inspection and engineering of components, chemical
milling,  metal  finishing,  polishing and painting,  assembly,  prototyping and
warehousing, distribution and kitting.

Backlog

The  Company's  backlog for each of its  business  segments is  displayed in the
following table:


                                                 As of December 31,
                                                   (in millions)
                                                      

                                           2001        2002        2003
Sheet Metal Segment                       ------      ------      ------
- -------------------
Total                                     $ 46.8      $ 59.2      $ 42.7

Portion deliverable within 12 months      $ 31.8      $ 44.7      $ 36.4

Machining and Technology Segment (1)
- --------------------------------
Total                                     $ 11.9      $ 12.9      $ 11.2

Portion deliverable within 12 months      $ 10.5      $ 12.5      $ 11.0

- ----------------------
     (1)  The Company acquired Tempco Engineering, which comprises the Machining
          and Technology segment, in April of 2001.

The  Company's  customers  often modify  purchase  orders to accelerate or delay
delivery  dates.  The level of unfilled orders at any given time during the year
will be materially affected by the timing of the Company's receipt of orders and
the speed with which those orders are filled.  Moreover, sales during any period
may  include  sales  which are not part of the  backlog  at the end of the prior
period.

Raw Materials and Procurement Practices

Most of the Company's  aerospace  components  are  manufactured  from  aerospace
quality aluminum sheet metal and extrusion.  From time to time the Company,  and
the aerospace  components industry as a whole, has experienced  shortages in the
availability  of aerospace  quality  aluminum  sheet metal and  extrusion.  Such
shortages  could  inhibit  the  Company's  ability  to deliver  products  to its
customers on a timely basis.

A strategy  adopted by the commercial  division of Boeing,  requires that Boeing
subcontractors  purchase aluminum sheet,  aluminum  extrusion and titanium sheet
from TMX Aerospace (a  Boeing-designated  raw material service  provider).  This
supply  chain  approach is intended to control raw  material  pricing and assure
adequate  levels of inventory  for both Boeing and its supply  base.  Additional
designated  material  source  strategies  are used by several  of the  Company's
customers. Like the Boeing arrangement, these customers provide the Company with
access to an assured supply of materials at competitive pricing.

The  Company  obtains  its raw  materials  for  the  technology  portion  of its
Machining and Technology segment from a variety of vendors and distributors.

The Company believes its sources of raw materials and its relationships with its
suppliers  are  satisfactory.  While the loss of any one  supplier  could have a
material adverse effect on the Company until  alternative  suppliers are located
and  have  commenced  providing  products,   alternative   suppliers  exist  for
substantially all of the products and services purchased by the Company.

Quality Assurance and Control

The  Company  continually  seeks  to  maintain  high  quality  standards  in the
fabrication and processing of its products.  Accordingly, the Company employs 65
full-time quality control and assurance personnel. Each work order introduced to
the Company's  manufacturing  facilities  contains an inspection plan specifying
required inspection points.  Quality inspectors are assigned to each work center
and are trained in the testing  required in  connection  with  products  passing
through the assigned work center.  Although a large  percentage of the Company's
products are 100% inspected immediately prior to shipment by a customer employee
or a  customer  designated  Company  employee,  Boeing  has  approved a sampling
inspection program for certain components using statistical process control data
maintained by the Company.

The Company's  Quality Systems are  continuously  reviewed and updated to comply
with the  requirements  of  ISO9001-2000,  AS9100  Revision A and Nadcap quality
standards.  Through this continuous  improvement  process we have maintained our
approval by Boeing to D6-82479 as well as other  customer's  quality  standards.
This  updating   process  has  allowed  certain   facilities  with  third  party
registrations  for  ISO9001-2000,  AS9100  Rev. A and Nadcap to  maintain  those
certifications  for 2004.  During 2004 the Company  will  continue to review all
procedures to ensure they meet the latest revisions to the ISO and AS standards.
The Company will continue with its ongoing employee  training program and use of
lean manufacturing  techniques to assist employees in becoming familiar with any
changes in the  Company's  procedures.  The Company has  continued  to develop a
robust internal  auditing  program for each of the facilities to ensure that the
training is effective  and to ensure  ongoing  compliance  to customer  required
standards.

Sales and Marketing

The Company has realigned its sales and marketing  organization into four market
sectors:  Commercial Aerospace,  Military Aircraft,  Business/Regional  Jets and
Non-Aerospace (which includes sales to the technology and commercial sheet metal
industries).  Within these sectors, one Sales and Marketing Director, two Market
Sector Directors and five Program Managers support the Company and its customers
in the  conduct  of  business.  At each of the  Company's  facilities,  customer
service   representatives   establish   and  maintain  an   associate   business
relationship  between  customers and the Company's  production  and  fabrication
business  units  with  a  focus  on  customer  satisfaction.  Additionally,  two
independent sales representatives conduct business on behalf of the Company.


A majority of the  Company's  sales to  existing  customers  are  awarded  after
receipt of a request for quotation ("RFQ"). On receipt, the RFQ is preliminarily
reviewed by a team consisting of members of the Company's senior  management,  a
program manager,  an estimator and the plant manager.  If the Company determines
the  program  is  adequately  compatible  with the  Company's  capabilities  and
objectives, a formal response is prepared by a member of the Company's estimator
group.  Although  a  substantial   percentage  of  programs  are  awarded  on  a
competitive  bid basis,  the  Company has  recognized  a recent  trend  favoring
reverse auctions for simple aerospace components.

Competition

Components  for  customers  in the  aerospace  industry  are provided by a large
fragmented group of companies, including certain business units or affiliates of
the Company's  customers.  The Company  believes  participants  in the aerospace
industry compete primarily with respect to delivery,  price and quality.  To the
contrary, the Company believes that there are only a few producers of components
similar to the principal  technology  components  manufactured  by the Company's
Machining  and  Technology  segment.   The  Company  believes  that  engineering
capability,  responsiveness  and price are key  aspects  of  competition  in the
technology industry. In all industries in which the Company competes, certain of
the  Company's  competitors,   including  business  units  affiliated  with  the
Company's customers, have substantially greater financial,  production and other
resources than the Company.  The Company has also  recognized a trend by certain
of its customers to outsource  production to foreign countries where labor costs
are significantly  lower. This trend has been exacerbated by the expanded use of
industry participation arrangements,  pursuant to which OEMs and Primes agree to
outsource certain manufacturing contract work to a foreign country in return for
orders for new aircraft.

Governmental Regulations; Environmental Compliance

The  Company's  operations  are subject to  extensive  and  frequently  changing
federal, state and local laws and substantial regulation by government agencies,
including the United States Environmental  Protection Agency ("EPA"), the United
States  Occupational Safety and Health  Administration  ("OSHA") and the Federal
Aviation  Administration  ("FAA").  Among other matters,  these agencies  impose
requirements  that  regulate  the  handling,   transportation  and  disposal  of
hazardous materials generated or used by the Company during the normal course of
its  operations,  govern the health and safety of the  Company's  employees  and
require the Company to meet certain  standards  and licensing  requirements  for
aerospace  components.  This extensive  regulatory framework imposes significant
compliance  burdens and risks on the Company and, as a result, may substantially
affect its operational costs.

In  addition,  the  Company  may  become  liable  for the  costs of  removal  or
remediation  of certain  hazardous  substances  released on or in its facilities
without regard to whether or not the Company knew of, or caused,  the release of
such  substances.  The Company  believes it currently is in material  compliance
with  applicable  laws  and  regulations  and  is  not  aware  of  any  material
environmental  violations at any of its current or former facilities.  There can
be no assurance,  however,  that its prior  activities did not create a material
environmental  situation  for which the  Company  could be  responsible  or that
future uses or conditions (including,  without limitation, changes in applicable
environmental  laws and  regulation,  or an increase in the amount of  hazardous
substances generated or used by the Company's operations) will not result in any
material environmental  liability to the Company or result in a material adverse
effect to the Company's financial condition or results of operations.

Employees

As of December 31, 2003,  the Company had 738  permanent  employees,  of whom 19
were  engaged  in  executive  positions,  100  were  engaged  in  administrative
positions  and  619  were  engaged  in  manufacturing  operations.  None  of the
Company's employees are subject to a collective  bargaining  agreement,  and the
Company has not  experienced any material  business  interruption as a result of
labor  disputes  since it was formed.  The Company  believes it has an excellent
relationship with its employees.

The Company  strives to  continuously  train and educate its employees,  thereby
enhancing  the skill  and  flexibility  of its work  force.  Through  the use of
internally  developed  programs,  which include formal classroom and on-the-job,
hands-on training,  independently developed programs, and certain Company funded
tuition reimbursement programs, the Company seeks to attract, develop and retain
the  personnel  necessary  to achieve  the  Company's  growth and  profitability
objectives.

In order to increase its customer focus, the Company  initiated  several changes
in its organizational  structure.  The Company divided its manufacturing  plants
into a West Coast Region and Central Region and named  Regional Vice  Presidents
to oversee these operations.  Within the manufacturing plants,  customer focused
operating units were developed which expanded our expertise in customer  quality
requirements  and  manufacturing  methods.  At the corporate  level, the Company
created four market sectors;  Military,  Commercial,  Regional/Business Jet, and
Non-Aerospace.  The Company  also  appointed a Market  Sector  Director for each
market  sector to serve as  industry  experts  to  increase  work  volume  while
continuing strategic diversification.  The Company also began transitioning to a
matrix  organizational  structure  with  several  dual  reporting  relationships
between  corporate  and  plant  positions  in  order  to  enhance  company  wide
communications, provide consistency in approach, and strengthen our operation as
one company.

The Company does not generally  experience any seasonality in the demand for its
products.

Item 2.  Properties.

Facilities

The following table provides  certain  information with respect to the Company's
headquarters and manufacturing centers:

Sheet Metal Segment


     Location                         Principal Use                   Square Footage    Interest
     --------                         -------------                   --------------    --------
                                                                            
3600 Mueller Road              Executive and Administrative               62,585          Owned
St. Charles, Missouri          Offices and Manufacturing Center

3030-3050 N. Hwy 94            Manufacturing Center and Storage           92,736          Owned
St. Charles, Missouri

3000-3010 N. Hwy 94            Assembly and Storage                       30,074         Leased(1)
St. Charles, Missouri

101 Western Ave. So.           Manufacturing Center                       79,120         Leased(2)
Auburn, Washington

2629-2635 Esthner Ct.          Manufacturing Center                       31,000          Owned
Wichita, Kansas

2621 W. Esthner Ct.            Administrative Offices and Storage         39,883         Leased(3)
Wichita, Kansas

2104 N. 170th St. E. Ave.      Finishing and Manufacturing Facility       75,000          Owned
Tulsa, Oklahoma

1120 Main Parkway              Distribution Center                        40,000         Leased(4)
Catoosa, OK

2205 and 2215 River Hill Rd    Machining Facility                          8,400         Leased(5)
Irving, Texas

6221 202nd Street #6           Office and Manufacturing                   10,835         Leased(6)
Langley, British Columbia
Canada

1377 Speciality Drive          Office and Manufacturing                   73,554         Leased (7)
Vista, California

1315 S. Cleveland Street       Office and Manufacturing                   19,000         Leased (8)
Oceanside, California

101 Coleman Blvd               Distribution                               38,400         Leased (9)
Pooler, Georgia

Machining and Technology Segment

     Location                         Principal Use                   Square Footage    Interest
     --------                         -------------                   --------------    --------

8866 Laurel Canyon Blvd.       Office and Manufacturing                   26,200         Leased (10)
Sun Valley, California

11011-11021 Olinda Street      Office, Manufacturing and Storage          20,320         Leased (11)
Sun Valley, California
- ----------------------------------------------

     (1)  Subject to a yearly rental amount of $120,266, expired on February 28,
          2004 and is continuing on a monthly basis.

     (2)  Subject to graduated  yearly  payments of $353,640 to $418,800  during
          the life of the  lease.  The lease  expires in 2005,  but the  Company
          retains  the option to extend the lease  through  June 30, 2008 at the
          monthly rate of $39,090.

     (3)  Subject to graduated  yearly  payments of $134,196 to $148,620  during
          the life of the  lease.  The lease  expires in 2009,  but the  Company
          retains an option to extend the lease term for an additional 5 years.

     (4)  Subject to yearly payments of $109,596 expiring on August 31, 2004.

     (5)  Month to month  lease of $3,750  subject to a  six-month  cancellation
          notice.

     (6)  Subject to yearly payments of $92,168 (Canadian $), expiring September
          30, 2004.

     (7)  Subject to graduated  yearly  payments of $334,340 to $572,304  during
          the life of the  lease.  The lease  expires  on  September  30,  2013,
          subject to the Company's option to extend the lease for two additional
          five year terms. The Company shall be entitled to occupy an additional
          11,450 square feet of this property on October 1, 2004.

     (8)  Subject to yearly  payment of $86,400,  expiring on January 31,  2005.
          This  facility is leased  from  Edward D.  Geary,  the father of Brian
          Geary, a director of the Company.

     (9)  Subject to yearly payments of $165,120, expiring on August 31, 2006.

     (10) Subject to yearly  payments of $172,920,  expiring  March 31, 2006 The
          landlord for this property is Starwood Company, a company beneficially
          owned in part by Ernest L.  Star,  the  father of Ernest R.  Star,  an
          officer of the Company.

     (11) Subject to yearly  payments of $155,347,  expiring March 31, 2006. One
          of the  landlords  for this  property  is a trust for the  benefit  of
          Ernest L.  Star,  the  father of Ernest R.  Star,  an  officer  of the
          Company. Ernest R. Star is a co-trustee of this trust.


Item 3.  Legal Proceedings.

On  February  6, 2004,  Versaform,  a  wholly-owned  subsidiary  of the  Company
acquired on May 16, 2002 was served a subpoena by the federal government.

The Subpoena relates to the time period January 1, 1999 through February 6, 2004
and was  issued  in  connection  with an  investigation  by  certain  government
agencies  including  the  Department  of Defense,  Office of Inspector  General,
Defense Criminal Investigative Service, and the Federal Bureau of Investigation.
The subpoena refers to structural  components Versaform  manufactured for Nordam
Corporation  for B-52 engine  cowlings,  components  for  auxiliary  power units
Versaform  manufactured for Hamilton Sundstrand a United  Technologies  Company,
and certain tools Versaform manufactured for Lockheed Martin Corporation.

The Company has not been  served  with any notice of any  pending  legal  action
filed by any government agency. Accordingly, the Company has no knowledge of any
specific   allegations  of  wrongdoing   against  Versaform  by  any  regulatory
authority.

The Company intends to cooperate fully with the federal government in connection
with any investigation of this matter.

Other than noted  above,  the  Company is not a party to any legal  proceedings,
other than  routine  claims and lawsuits  arising in the ordinary  course of its
business. The Company does not believe such claims and lawsuits, individually or
in the aggregate, will have a material adverse effect on the Company's business.

Item 4.  Submission of Matters to a Vote of Security Holders.

None.

                                     PART II

Item 5.  Market  for the  Registrant's  Common  Equity and  Related  Stockholder
Matters.

Market Information.  The Company's common stock is traded on the NASDAQ National
Market under the symbol "LMIA." The following table sets forth the range of high
and low bid prices for the common  stock for the  periods  indicated  during the
Company's past two fiscal years:




                   Period         High             Low
                   ------         ----             ---
                Fiscal 2002
                -----------
                                          
                1st quarter       4.73             3.90
                2nd quarter       6.18             4.24
                3rd quarter       4.44             2.20
                4th quarter       2.52             1.82




                Fiscal 2003
                -----------
                                          
                1st quarter       3.50             1.91
                2nd quarter       2.57             1.65
                3rd quarter       2.45             1.72
                4th quarter       2.33             1.61

The foregoing quotations reflect  inter-dealer  prices,  without retail mark-up,
mark-down or commission, and may not necessarily represent actual transactions.

Holders.  As of April 2, 2004,  the  reported  closing  price for the  Company's
common stock was $1.77. As of April 2, 2004, there were approximately 65 holders
of record of the Company's common stock.

Dividends.  The Company has not declared or paid cash  dividends on any class of
its  common  stock  during the past two fiscal  years,  and does not  anticipate
paying any cash dividends in the foreseeable future. The credit facility between
the Company and Union  Planters  prohibits the Company from declaring a dividend
with respect to its common stock without the financial  institution's  approval.
The Company currently intends to retain its earnings,  if any, and reinvest them
in the development of its business.

Securities   Authorized  for  Issuance  Under  Equity  Compensation  Plans.  The
Company's  only  compensation  plan under which the  Company's  common  stock is
authorized for issuance to employees or directors in exchange for  consideration
in the form of goods and services, the Amended and Restated LMI Aerospace,  Inc.
1998 Stock Option Plan, was approved by the Company's shareholders.




The following table summarizes information about our equity compensation plan as
of December 31, 2003. All outstanding awards relate to the Company's common
stock.



                               Equity Compensation Plan Information

- ------------------------- ------------------------- ----------------------- --------------------------
     Plan category        Number of securities to     Weighted-average       Number of securities
                           be issued upon exercise    exercise price of      remaining available for
                           of outstanding options,    outstanding options,   future issuance under
                             warrants and rights      warrants and rights     equity compensation
                                                                               plans (excluding
                                                                             securities reflected in
                                                                                   column (a))
- ------------------------- ------------------------- ----------------------- --------------------------
                                    (a)                       (b)                       (c)
- ------------------------- ------------------------- ----------------------- --------------------------
                                                                

  Equity compensation
   plans approved by              396,568                    $3.28                      503,432
   security holders
- ------------------------- ------------------------- ----------------------- --------------------------
  Equity compensation
 plans not approved by               0                         0                           0
  security holders
- ------------------------- ------------------------- ----------------------- --------------------------
       Total                      396,568                    $3.28                      503,432
- ------------------------- ------------------------- ----------------------- --------------------------






Item 6.  Selected Financial Data.

(Dollar amounts in thousands, except per share data)



                                              1999        2000      2001 (1)      2002 (2)     2003
                                             ------      ------    ----------    ---------    ------
Statement of Operations Data:
                                                                             

Net sales                                  $50,054     $55,658     $70,823       $81,349       $75,855
Cost of sales                               41,586      48,255      54,809        69,185        67,485
Gross profit                                 8,468       7,403      16,014        12,164         8,370
Selling, general &
   administrative expenses                   8,517       9,135      10,194        12,931        13,423
Goodwill impairment charges                      -           -           -         5,104             -
                                          ----------- ---------- ------------ ------------- -------------
Income (loss) from operations                  (49)     (1,732)      5,820        (5,871)       (5,053)
Interest expense                              (195)       (169)       (843)       (1,495)       (1,645)
Other (expense) income, net                    435         179        (247)         (525)          306
                                          ----------- ---------- ------------ ------------- -------------
Income (loss) before income taxes              191      (1,722)      4,730        (7,891)       (6,392)
Provision for (benefit of) income taxes        (40)       (603)      1,764          (691)       (2,411)
                                          ----------- ---------- ------------ ------------- -------------
Income (loss) before cumulative change
  in accounting principle                      231      (1,119)      2,966        (7,200)       (3,981)
Cumulative effect of change in
  accounting principle, net of tax               -        (164)          -        (1,104)            -
                                          =========== ========== ============ ============= =============
Net income (loss)                            $ 231     $(1,283)    $ 2,966       $(8,304)      $(3,981)
                                          =========== ========== ============ ============= =============

Amounts per common share:
  Income (loss) before cumulative
  effect of change in accounting
  principle                                   $0.03      $(0.14)     $0.37        $(0.89)       $ (.49)
  Cumulative effect of change in
  accounting principle, net of tax                -       (0.02)         -         (0.14)            -
                                          ----------- ---------- ------------ ------------- -------------
  Net income (loss)                           $0.03      $(0.16)     $0.37        $(1.03)       $ (.49)
                                          =========== ========== ============ ============= =============
  Net income (loss) - assuming dilution       $0.03      $(0.16)     $0.36        $(1.03)       $ (.49)
                                          =========== ========== ============ ============= =============
Weighted average shares
     outstanding                          8,201,805   8,190,525    8,059,682    8,077,293    8,181,786

Other Financial Data:
  Capital expenditures                       $4,622      $2,776       $3,387       $2,293       $1,001
  Cash flow from operating activities           112       1,905        6,985       (2,042)       1,011
  Cash flows from investing activities       (4,972)     (3,249)     (18,205)     (13,991)        (371)
  Cash flows from financing activities       (1,177)     (2,888)      14,189       12,587       (1,412)
  Gross profit margin                          16.9%       13.3%        22.6%        15.0%        11.0%

Balance Sheet Data
   Cash and equivalents                      $5,908     $ 1,676      $ 4,645      $ 1,182        $ 441
   Working capital                           21,417      20,752       27,751       28,054       25,919
   Total assets                              54,669      49,680       68,002       77,865       70,519
   Total long-term debt,
   excluding current portion                    134         121       12,621       24,621       21,756
   Stockholders' equity                      44,486      42,678       45,649       37,736       33,792

- ---------------------------




Item 6.  Selected Financial Data. (cont)

     (1) Includes the operating results of Tempco Engineering  subsequent to the
     acquisition on April 1, 2001.

     (2)  Includes  the  operating  results  of  Versaform   subsequent  to  the
     acquisition  on  May  16,  2002,  the  results  of  SFC  subsequent  to the
     acquisition  on June 12,  2002 and the  results of SSFF  subsequent  to the
     acquisition date, September 30, 2002.

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.


Overview

The  Company  manufactures  formed  and  machined  components  for  use  in  the
aerospace,  technology  and  commercial  sheet  metal  industries.  The  Company
primarily sells its product to the commercial aircraft,  military, corporate and
regional  aircraft  markets,  and  technology  markets  within the aerospace and
technology  industries.  Historically,  the  Company's  business  was  primarily
dependent  on the  commercial  aircraft  market,  with  Boeing as the  Company's
principal  customer.  In order to diversify its product and customer  base,  the
Company  implemented  an acquisition  and marketing  strategy in the late 1990's
that has  broadened  the number of  industries  to which the  Company  sells its
components,  and,  within the aerospace  industry,  has diversified its customer
base  to  reduce  the  Company's  dependence  on  Boeing.  The  following  table
illustrates  the Company's  sales  percentages  over the last three years to its
primary industries and markets.








Market                                 2001            2002             2003
                                  --------------- ---------------- -------------
                                                           
Commercial aircraft                    51.5%           28.5%           28.7%
Corporate and regional aircraft        15.4            24.8             24.6
Military products                      16.9            22.7             29.1
Technology products                     7.1            14.2             10.9
Other (1)                               9.1             9.8              6.7
                                  --------------- ---------------- -------------
                                  --------------- ---------------- -------------

Total                                   100%           100%             100%
- ---------------------------------------------

(1) Includes commercial sheet metal and various aerospace products.

Beginning in 2001,  the Company  began an aggressive  acquisition  campaign that
resulted in the consummation of four  transactions  through 2002. In April 2001,
the Company  acquired  Tempco  Engineering  Inc.  ("Tempco") and its affiliates,
which expanded the Company's  aerospace  product line and introduced the Company
to the technology industry.  In 2002, the Company acquired Versaform Corporation
("Versaform") and its affiliates, as well as Stretch Forming Corporation ("SFC")
and Southern  Stretch  Forming and  Fabrication,  Inc.  ("SSFF").  The Versaform
acquisition  significantly increased the Company's presence in the corporate and
regional  aircraft market,  while adding some military products to the Company's
product line. The SFC acquisition  further  supplemented the Company's  military
product line. Finally, the Company's acquisition of SSFF increased the Company's
business in the corporate and regional market.

As a result of the development of Tempco's business, the Company determined that
Tempco should operate and be managed as an autonomous unit, and accordingly as a
business  segment  separate  from the  Company's  other  businesses.  The Tempco
business,  which sells machined  components to both the aerospace and technology
industries,  is referred to in this  discussion as the Machining and  Technology
segment and the Company's  other  businesses  are referred to as the Sheet Metal
segment.

Year Ended December 31, 2003 compared to year ended December 31, 2002

The following table provides the comparative  data for 2002 and 2003 for each of
the Company's segments.



                                                2002                                    2003
                                 ----------------------------------     -------------------------------------
                                   Sheet     Machining &    Total         Sheet       Machining &     Total
                                   Metal     Technology                   Metal       TechnologY
                                 --------- -------------- ---------     ----------- --------------- ---------
                                                                                 
Net Sales                          $61.3       $20.0        $81.3         $ 62.0        $13.9         $75.9
Cost of Sales                       54.3        14.9         69.2           56.0         11.5          67.5
                                 --------- -------------- ---------     ----------- --------------- ---------
Gross Profit                         7.0         5.1         12.1            6.0          2.4           8.4
S, G & A                            11.3         1.6         12.9           11.8          1.7          13.5
Goodwill Impairment                  5.1           -          5.1              -            -             -
                                 --------- -------------- ---------     ----------- --------------- ---------
                                 --------- -------------- ---------     ----------- --------------- ---------
Income (loss) from operations      $(9.4)       $3.5        $(5.9)        $ (5.8)        $ .7         $(5.1)
                                 ========= ============== =========     =========== =============== =========

The Sheet Metal Segment

Net Sales. Net sales for the Sheet Metal segment were $62.0 million in 2003, up
0.8% from $61.3 million in 2002. Net sales were augmented in 2003 by inclusion
of a full year of revenue from the acquisitions of Versaform in May 2002, SFC in
June 2002, and SSFF in September 2002 which were partly offset by lower
Commercial, Corporate and Regional Aircraft Sales. The following table
summarizes the sales of the Sheet Metal segment by the market served:








Market                                      2002      2003     Difference
                                       ----------------------------------
                                                     

Commercial Aircraft                        $23.0     $21.7       $(1.3)
Corporate & Regional Aircraft               20.0      18.7        (1.3)
Military                                    12.0      17.9         5.9
Other                                        6.3       3.7        (2.6)
                                       ---------- ---------- ------------
Total                                      $61.3     $62.0       $ 0.7
                                       ========== ========== ============

Net sales for use on Boeing commercial  aircraft were $21.7 million in 2003. The
decline  in net sales of  components  for  Boeing  commercial  aircraft  of $1.3
million is  principally  due to reduced  volume on the 757 and 767 models  which
generated  less than 5% of the  segments  net sales.  Net sales for the 737 were
$11.2 million in 2003 and $11.8 million in 2002. The segment generated net sales
for the 747 model of $6.1 million in 2003, up from $5.0 million in 2002.  Boeing
has announced plans to end production of the 757 model,  which only  contributed
$0.5  million  of net sales to the  segment in 2003,  down from $1.3  million in
2002. The 767 model, currently produced at historically low rates, is threatened
with  cancellation  if the United  States  Air Force does not  purchase a tanker
version of the 767. The segment  generated net sales for the 767 of $1.4 million
in 2003, down from $2.7 million in 2002.

Net sales for the corporate and regional  aircraft markets were $18.7 million in
2003,  down $1.3 million from 2002.  This  reduction  resulted from a decline in
volume for  Gulfstream  product as they accounted for $10.7 million in net sales
in 2003  compared  to $14.2  million  in 2002.  In the  third  quarter  of 2003,
Gulfstream  ceased  production  of  aircraft  for 28  days  and  cut  production
schedules,  thereby reducing its demand for the segment's product.  In September
2003,  the segment  opened a distribution  facility in Savannah,  Georgia,  near
Gulfstream's  production  facility and began supplying kits comprised of product
both  produced  by the  segment  and  purchased  from other  suppliers.  The new
facility  generated  only $0.2  million in net sales  during 2003 as  deliveries
began in November. Net sales were negatively impacted by $0.3 million due to the
start up of the distribution facility as product previously sold to the customer
was  provided  to the  distribution  facility.  Offsetting  this  decline was an
increase in net sales for the  Bombardier  family of aircraft to $4.8 million in
2003 from $3.7 million in 2002. The increase in Bombardier  demand was primarily
driven by the Canadair Regional Jet.

Net sales of military product were $17.9 million in 2003, up $5.9 million.  This
increase  is  primarily   attributable  to  shipments  of  product  for  a  B-52
refurbishment program of $3.9 million in 2003, up from $0.7 million in 2002; net
sales on Lockheed Martin aircraft, principally F-16 and C-130, of $10.6 million,
up from  $9.3  million  in 2002;  and a new  program  with GKN  Aerospace  which
generated net sales of $0.8 million in 2003.

Gross  Profit.  The Sheet Metal segment had a gross profit of $6.0 million (9.7%
of sales) in 2003,  compared to $7.0 million  (11.4% of net sales) in 2002.  The
decline in gross  profit was due to a $1.2  million  increase  in the  Company's
inventory  obsolescence  and slow moving  reserve in the fourth quarter based on
management's evaluation of the current aerospace industry, customer requirements
and inventory quantities. This reserve offset a favorable gross profit impact.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses  ("SGA")  were  $11.8  million  in 2003,  up from $11.3
million in 2002. The increase  primarily reflects the inclusion of the Versaform
acquisition  for a full year.  Also included in SGA are  restructuring  costs of
$0.5  million in 2003.  These  costs were  incurred  as the  segment  executed a
downsizing of the St. Charles plant. The costs incurred included  severance pay,
costs of moving and  rearrangement  and  professional  fees.  See the  financial
statements for further discussion.

Goodwill Impairment.  In 2002, the segment recorded an impairment charge of $5.1
million to reflect the write off of goodwill as  determined  under SFAS No. 142.
See Note 6 of the  Consolidated  Financial  Statements  included as part of this
Annual Report on Form 10-K and "Critical  Accounting  Estimates" set forth later
in this  discussion for more  information on the testing process and assumptions
made by the Company. The impairment charge in 2002 removed all goodwill from the
segment.

Interest Expense.  Interest expense for the segment was $0.5 million in 2003, up
from $0.4 million in 2002. Interest expense for the segment is predominantly due
to a term note issued in  connection  with the  acquisition  of Versaform in May
2002.  This note was issued with a three year  maturity  and is  amortized  on a
seven year schedule. The balance due at the end of three years is due to be paid
or payment  renegotiated.  The note accrues  interest at LIBOR plus 3.0% and the
effective rate was 4.2% at December 31, 2003.  The increase in interest  expense
is due to twelve months of interest in 2003 compared to eight months of interest
in 2002.  Please see Liquidity and Capital Resources, below.

The Machining and Technology Segment

Net Sales. Net sales for the Machining and Technology Segment were $13.9 million
in 2003,  down 30.5% from $20.0  million in 2002.  Declines  in  components  for
lasers and military programs contributed to the reduction in net sales.

Net sales of products used in laser  equipment  were $8.2 million in 2003,  down
28.1% from $11.4 million in 2002.  The segments  largest  customer  supplies the
semiconductor  industry and  experienced  a decline in demand which  resulted in
lower demand for the Company's products.  This decline was moderated by a slight
increase in sales of products for medical lasers used in lasik eye surgery.

Net sales of military components were $4.0 million in 2003, down 36.5% from $6.3
million  in  2002.  These  components  are  primarily  used on  Boeing's  Apache
helicopter and in guidance systems for various military  applications.  The sale
in 2002 of Boeing's Weapon and Armament Division to Alliant Tech Systems ("ATK")
disrupted  normal sales  volumes in 2003 as sales to the combined  entities were
$3.1 million in 2003,  down from $4.4 million in 2002. This decline was due to a
surge of orders in 2002 during the Afghanistan  invasion,  inventory adjustments
at Boeing and ATK,  and the  competitive  loss of certain  components  after the
sale.

Gross Profit.  The Machining and Technology  segment generated a gross profit of
$2.4 million (17.2% of net sales) in 2003 compared to $5.1 million (25.5% of net
sales) in 2002.  The rapid  decline  in net sales  early in 2003 was  managed by
manufacturing  certain work  previously  performed at suppliers,  resulting in a
decrease in purchased  subcontract  services to $1.3 million (9.3% of net sales)
in  2003  from  $2.5  million  (12.5%  of  net  sales)  in  2002.  Additionally,
manufacturing salaries, wages and fringes reduced in total dollars but increased
as a percentage  of net sales to $5.9 million  (42.4% of net sales) in 2003 from
$6.7  million  (33.5% of net  sales) in 2002.  The  decline  in labor and fringe
dollars is indicative  of  management's  attempt to reduce hours and  employment
levels during periods of lower sales.  However,  these  reductions did not match
the rate of decline  in net sales,  resulting  in lower  productivity  and gross
margins.  The lower  revenue base also  provided less benefit to cover the fixed
costs  related to the  operations.  In the fourth  quarter of 2003,  the Company
recorded an  additional  $0.3 million  reserve for  components  determined to be
obsolete or slow moving.

Selling, General and Administrative Expenses. The segment's selling, general and
administrative  expenses  ("SGA") are comprised  principally  of  administrative
salaries and wages,  professional services and fees for corporate services.  SGA
for 2003 were $1.7 million  (12.2% of net sales),  up slightly from $1.6 million
(8.0%  of net  sales)  in 2002.  This  increase  is  primarily  attributable  to
increased payroll related to accounting support.

Interest Expense.  Interest expense for the Machining and Technology  segment is
related to the term note  executed to fund the  purchase of Tempco  Engineering.
The interest rate was ninety day LIBOR plus 3.0%, subject to a floor of 7.0% and
a ceiling of 8.5%.  The note had been  reduced  using a seven year  amortization
schedule  and was  issued  with a  maturity  date of three  and  one-half  years
(September   30,   2004),   at  which  time  the  balance  would  be  repaid  or
re-negotiated.  Interest on this note was $0.8  million in 2003,  down from $0.9
million in 2002 due entirely to principal  reductions  as the interest  rate has
been at the floor rate of 7.0% for the two year  period.  This note was included
in and is now governed by the  Thirteenth  Amendment.  Please see  Liquidity and
Capital Resources, below.

Consolidated Operations

Non-Operating Expenses:

Other Expense.  The Company generated  non-operating income of $0.3 million from
the sale of certain  available for sale securities in 2003 compared to a loss of
$0.6 million in 2002.

Interest  Expense.  Interest  expense from the  revolving  line of credit is not
assigned to a segment as cash for the company is assigned to one account and was
$0.3 million in 2003,  up from $0.2  million in 2002 due to higher  borrowing in
the revolving line of credit.

Income  Taxes.  The income tax  benefit in 2003 was $2.4  million  compared to a
benefit of $0.7 million in 2002, both due to operating losses.  During 2003, the
Company's  effective tax rate was 37.7%  compared to 8.7% in 2002. The effective
tax  rate in 2002  was  unusually  low due to the  nondeductible  impairment  of
goodwill  recorded in that  period.  See note 11 to the  Consolidated  Financial
Statements  included  as  part of this  Annual  Report  Form  10-K  for  further
information on the Company's effective tax rate.

Year Ended December 31, 2002 compared to year ended December 31, 2001

The following table provides the comparative data for 2001 and 2002 for each of
the Company's segments.


                                                 2001                                 2002
                                  ---------------------------------    ----------------------------------
                                    Sheet     Machining &    Total       Sheet     Machining &     Total
                                    Metal     Technology                 Metal     Technology
                                  --------- -------------- --------    --------- --------------- --------
                                                                             

Net Sales                          $ 60.5       $ 10.3      $ 70.8      $ 61.3      $ 20.0        $ 81.3
Cost of Sales                        46.6          8.2        54.8        54.3        14.9          69.2
                                  --------- -------------- --------    --------- --------------- --------
Gross Profit                         13.9          2.1        16.0         7.0         5.1          12.1
S, G & A                              9.2          1.0        10.2        11.3         1.6          12.9
Goodwill Impairment                     -            -           -         5.1           -           5.1
                                  --------- -------------- --------    --------- --------------- --------
Income (loss) from operations       $ 4.7        $ 1.1       $ 5.8       $(9.4)      $ 3.5         $(5.9)
                                  ========= ============== ========    ========= =============== ========

The Sheet Metal Segment

Net Sales.  Net sales for the Sheet  Metal  segment  were $61.3  million in 2002
compared to $60.5  million in 2001, an increase of 1.3%.  The increase  resulted
from the Company's three acquisitions in 2002,  significantly  offset by reduced
sales to the commercial aircraft market. The Company's  acquisition of Versaform
contributed  $9.4 million in net sales,  primarily in the corporate and regional
aircraft market. Additionally,  the acquisition of SSFF contributed $1.1 million
of net sales to the corporate and regional  markets in 2002. The  acquisition of
SFC added $0.7 million to net sales, primarily in the military market. Excluding
acquisitions,  the Sheet Metal segment experienced a 17.2% decrease in net sales
to $50.1  million  in 2002 from  $60.5  million  in 2001.  The  following  table
summarizes  the Company's  Sheet Metal  segment's net sales by market,  with and
without 2002 acquisitions:


Market                               2002 with  2002 without     2001
                                  Acquisitions  Acquisitions
                                  ------------- ------------- ----------
                                                    
Commercial Aircraft                  $ 23.0        $ 22.9       $ 36.6
Corporate & Regional Aircraft          20.0          12.8         11.0
Military                               12.0          10.0          8.5
Other                                   6.3           4.4          4.4
                                  ------------- ------------- ----------
Total                                $ 61.3        $ 50.1       $ 60.5
                                  ============= ============= ==========



Because  substantially  all of the segment's net sales are  attributable  to the
aerospace  industry  markets,  the Sheet Metal segment is heavily  influenced by
various  factors that influence the demand  patterns of the Company's  aerospace
customers.

The events of September 11, 2001,  influenced  the  commercial  aircraft  market
significantly  and is primarily  responsible for the segment's decline in sales.
Shortly after September 11, 2001, Boeing, the Company's dominant customer in the
commercial  aircraft  market,  scaled  back its  production  rates on all of its
models. As a result,  sales of products used on Boeing aircraft dropped 37.4% to
$22.9 million,  excluding acquisitions,  in 2002 from $36.6 million in 2001. Net
sales on the 737  aircraft  were $11.8  million  in 2002,  down 34.8% from $18.1
million in 2001 resulting from production rate declines and inventory management
by Boeing and its  subcontractors.  Additionally,  net sales on the 747 aircraft
declined by 41.2% to $5.0  million in 2002 from $8.5 million in 2001 for similar
reasons.  The Sheet Metal segment  experienced  similar  percentage  declines on
Boeing's 757, 767 and 777 aircraft. Versaform added $0.1 million in sales to the
commercial aircraft market.

The  Company's  net  sales  for  corporate  and  regional  aircraft,   excluding
acquisitions,  increased  16.4% to $12.8  million in 2002 from $11.0  million in
2001. This increase was primarily  attributable  to new orders from  Gulfstream,
resulting  from  the  closing  of a  Gulfstream  in-house  production  facility.
Excluding acquisitions,  net sales for products used on Gulfstream aircraft were
$10.3  million in 2002,  an  increase  of 56.1% from $6.6  million in 2001.  The
increase in Gulfstream  sales was partially  offset by a decline in net sales to
Learjet due to production rate cutbacks.  Net sales to Learjet were $0.5 million
in 2002, down from $2.0 million in 2001. Versaform  contributed net sales to the
corporate and regional  aircraft market of $6.1 million.  Net sales for products
used on  Gulfstream  aircraft  were $4.4  million  and $1.0  million  from SSFF.
Additionally, Versaform's net sales to Cessna were $1.2 million.

Excluding  acquisitions,  net sales on military  programs  were up 14.1% to $9.7
million in 2002 from $8.5  million in 2001.  This  increase is  attributable  to
sales to Lockheed Martin for new work on the C-130 aircraft and a combination of
production  rate  increases and new work on the F-16.  Versaform's  net sales on
military  programs  were $1.3 million,  predominantly  derived from a program to
refurbish nacelles on B-52 bombers.

Gross Profit. The Sheet Metal segment experienced a gross profit of $7.0 million
(11.4% of net sales) in 2002 compared to $13.9  million  (22.9% of net sales) in
2001.  Versaform's  gross  profit was at $2.5 million  (26.6% of  Versaform  net
sales) Excluding Versaform,  the Sheet Metal segment generated a gross profit of
$4.5  million  (8.7%  of the net  sales of the  Sheet  Metal  segment  excluding
Versaform).

The decline in gross profit was caused by cost over-runs on certain new programs
during 2002. The Company encountered significant difficulties with a new package
of components from a military customer.  Additional production difficulties were
encountered on military components obtained in the Company's  acquisition of SFC
in June 2002. The utilization of furnished tooling on both programs created high
levels of scrap and large  amounts  of  inefficient  labor,  which,  along  with
inadequate  pricing,  resulted  in  accrued  losses in the  production  of these
components  of $1.1  million on  components  not yet  completed at year end. The
Company  has  presented  this  customer  with a claim for certain of these costs
incurred and has requested re-pricing of several of the components to provide an
adequate return on future deliveries.  However, because management believes that
the  collection of this claim is not yet probable,  no benefit of this claim has
been recorded in 2002 (or 2003). If the Company cannot come to an agreement with
this  customer that is  reasonably  acceptable to the Company,  the Company will
take other  measures to avoid  future  losses  including  the return of the work
statement to its customer.

Additionally, the Sheet Metal segment experienced production difficulties with a
new  corporate  and  regional   aircraft   program  it  received  in  2002.  The
difficulties  resulted  primarily from  excessive  amounts of scrap and problems
with a  subcontractor  critical to the  production  of these  components.  These
difficulties resulted in losses on completed product and expected losses of $0.2
million of accrued  losses on components  in process at year end.  Subsequent to
year end the  Company  notified  the  customer  of its  intention  to no  longer
manufacture these  components.  The Company may agree to provide certain forming
services for these components at prices acceptable to the Company.

Selling,  General and Administrative  Expenses. The Sheet Metal segment incurred
selling,  general, and administrative expenses ("SGA") of $11.3 million in 2002,
an increase  from $9.2 million in 2001.  The  acquisition  of Versaform and SSFF
added $2.0 million in SGA, primarily related to salaries, wages and professional
fees  to  support  the  integration  of the  acquired  business.  Excluding  the
acquisitions,  increased  professional  fees of $0.4  million in 2002 offset the
benefit of not  amortizing  goodwill  under  SFAS No.  142,  Goodwill  and Other
Intangible Assets ("SFAS No. 142").

Goodwill  Impairment.  The segment recorded an impairment charge of $5.1 million
to reflect the write off of goodwill as determined  under SFAS No. 142. See Note
6 of the  Consolidated  Financial  Statements  included  as part of this  Annual
Report on Form 10-K and "Critical Accounting  Estimates" set forth later in this
discussion for more  information on the testing process and assumptions  made by
the Company.

Interest  Expense.  The Sheet Metal segment incurred  interest  expenses of $0.6
million in 2002, up from $0.1 million in 2001,  due to the $12.6 million in debt
incurred to finance the acquisition of Versaform and additional  borrowing under
the  Company's  revolving  line of credit made in order to fund working  capital
needs.

The Machining and Technology Segment

Net Sales.  The Machining and Technology  segment had net sales of $20.0 million
in 2002,  up from  $10.3  million  in  2001.  A  portion  of this  increase  was
attributable  to the fact that 2001 sales only  included nine months of activity
after the acquisition of Tempco in April 2001. The rest of the segment's  growth
resulted  from an  increase  in  sales  to both  the  technology  and  aerospace
industries.

Net  sales  to the  technology  industry  for  product  used  in  excimer  laser
applications  was $11.4  million  (57.0% of net sales) in 2002  compared to $5.0
million  (48.5%  of net  sales)  in 2001.  This  increase  was  attributable  to
increased  production  demand  and  new  product  development  orders  from  its
technology customers.

Net sales to the  aerospace  industry  were $ 7.3 million.  Products used in the
military  market  increased to $6.3  million  (31.5% of net sales) for 2002 from
$3.5 million (34.0% of net sales).  These sales primarily  related to components
used on the  Apache  helicopter  for Boeing  and its prime  subcontractors,  and
guidance systems for various military  applications for Northrop.  Net sales for
these  programs  were  stronger  in the first half of 2002 as the United  States
military  was  involved in the  conflict in  Afghanistan,  but  moderated in the
second half of the year.

Gross Profit.  Gross profit for the Machining  and  Technology  segment was $5.1
million  (25.5% of net sales) in 2002, an increase  from $2.1 million  (20.4% of
net sales) in 2001.  The  additional  volume and mix of work afforded  favorable
coverage of fixed costs for the segment.

Selling,   General,   and   Administrative   Expenses.   Selling,   general  and
administrative  expenses  increased to $1.6 million  (8.0% of net sales) in 2002
from $1.0  million  (9.7% of net sales) in 2001.  This  increase  was  primarily
attributable  to the  inclusion  of only  nine  months of  expenses  in 2001 and
additional  payroll of approximately  $0.2 million for new management  positions
created in 2002. As required by SFAS 142 "Goodwill and Other Intangible Assets,"
the  Company  conducted  an  annual  impairment  test  of  goodwill  and  ceased
amortizing  goodwill,  a  benefit  of $0.3  million  in 2002.  See note 6 to the
Consolidated Financial Statements included as part of this Annual Report on Form
10-K.





Interest  Expense.  In order to finance  the  purchase  of Tempco,  the  Company
secured  term debt in the amount of $14.3  million  bearing a  variable  rate of
interest with a floor of 7.0% and a cap of 8.5%. Interest expense resulting from
this  indebtedness  was $0.9  million in 2002  compared to $0.8 million in 2001.
Only nine months of interest expense was recorded in 2001. Interest expense from
2001 to 2002 also reduced  slightly as interest  rates declined on this variable
rate debt.

Consolidated Operations

Non-Operating Expenses:

Other Expense.  Included in other, net is a charge of $0.5 million to write down
the value of available for sale  securities.  These  securities have exposure to
the aerospace  industry.  The value of these securities  declined as the overall
market  declined  after the events of September  11, 2001 and did not improve as
difficult  conditions  continued to plague the  commercial  aerospace  industry.
Therefore,  the  Company  determined  the  decline  in value  to be  other  than
temporary and recorded an  adjustment  to write off the carrying  value of these
securities.

Income  Taxes.  The income tax benefit in 2002 was $0.7  million  compared to an
expense of $1.8  million  in 2001 due to  operating  losses.  During  2002,  the
Company's  effective tax rate was 8.7%  compared to 37.3% in 2001.  The decrease
effective  tax  rate  is   predominantly   attributable  to  the  impairment  of
non-deductible  goodwill  recorded  in 2002 . See  note  11 to the  Consolidated
Financial  Statements  included as part of this  Annual  Report on Form 10-K for
further information on the Company's effective tax rate.

Cumulative Effect of Change in Accounting Principle.  Effective January 1, 2002,
the  Company  adopted  SFAS No.  142,  under  which  goodwill  will no longer be
amortized  but  instead be tested for  impairment.  The  Company  completed  the
required  transitional  impairment test and recorded a $1,767 charge ($1,104 net
of tax) for the impairment of the Sheet Metal segments goodwill as of January 1,
2002. See note 6 to the Consolidated  Financial  Statements  included as part of
this Annual Report on Form 10-K for further information.

Liquidity and Capital  Resources.

During the  twelve-month  period ended December 31, 2003, we incurred a net loss
of $4.0  million.  Primarily as a result of our  continuing  losses  and lack of
liquidity our independent certified public accountants modified their opinion on
our December 31, 2003  Consolidated  Financial  Statement to contain a paragraph
wherein  they  expresed a  substantial  doubt about our ability to continue as a
going concern.  We have taken steps to improve our current liquidity and provide
the capital  necessary to fund our plan for future growth.  Our efforts to raise
alternative capital are discussed below.

The Company's  balance of cash and  equivalents  was $441,000 as of December 31,
2003 compared to a balance of  $1,182,000  at December 31, 2002.  Cash flow from
operating  activities  for 2003 was at  $1,011,000  and  reflected  $4.8 million
non-cash  depreciation  and  amortization,  and a  reduced  accounts  receivable
balance,  which were partly  offset by the  Company's  $3.9 million net loss and
lower accounts  payable.  Cash flow from operations was a use of $2.0 million in
2002 due to the net loss of $8.3 million,  higher accounts  receivable  balance,
and a lower income tax accrual;  favorably offsetting were non-cash depreciation
and  amortization  of $4.4  million,  and  $6.9  million  of  non-cash  goodwill
impairment charges.  Cash used for investing activities was $371,000 in 2003 and
included $1.0 million of capital  expenditures  offset by proceeds from the sale
of equipment and sale of a stock investment.  Cash used in investing activity in
2002 of $14.0  million  reflected  capital  additions  of $2.3 million and $11.7
million  of  investment  for the  acquisitions  of  Versaform,  Stretch  Forming
Corporation,  Southern  Stretch  Forming and  Fabrication,  and a charge for the
prior year Tempco acquisition. See related note 2 to the Consolidating Financial
Statements.  The Company's  financing activity in 2003 was a use of $1.4 million
as  scheduled  principal  pay downs on long term and notes  payable  were partly
offset  by  additional  borrowings  on  the  Company's  revolving  credit  line.
Financing  activities  provided $12.6 million in 2002 and reflected the proceeds
from the issuance of long-term debt to finance the acquisitions noted above.

The  Company's  ratio of total debt to  capitalization  (debt plus  stockholders
equity) was 45.2% as of December 21, 2003 and 44.3% as of December 31, 2002. The
ratio  of debt to  total  equity  increased  due to the net  loss in  2003.  The
Company's  revolving credit line at December 31, 2003 was at $7.7 million,  with
an additional line capacity of $1.4 million.

In 2003,  the Company's  failure to meet certain  financial  covenants  with its
primary lender resulted in a renegotiation  of its Lending  Agreement on January
5, 2004 and again on March 30, 2004.

On March 30,  2004,  the Company and Union  Planters  entered  into a Thirteenth
Amendment to Loan Agreement,  amending the Loan Agreement.  The primary purposes
of the  Thirteenth  Amendment  were to (a) extend the maturity of the  Company's
Revolving  Credit Loan provided  under the Loan Agreement from March 31, 2004 to
March 31, 2005, and (b) waive a default  arising under the Loan Agreement of the
EBITDA Covenant for the period ended December 31, 2003.

In addition, under the terms of the Thirteenth Amendment to Loan Agreement:

     o    The  maximum  principal  amount  of  the  Revolving  Credit  Loan  was
          increased from  $9,088,323 to $9,700,000  through  September 30, 2004,
          subject to a borrowing base calculation and further subject to a newly
          established  inventory  reserve  requirement  and a  more  restrictive
          requirement for eligible receivables, which could reduce the amount of
          borrowing availability under the Revolving Credit Loan.

     o    The interest rate on the Revolving  Credit Loan was changed from LIBOR
          plus 2.50% to Union  Planters'  prime rate plus 1%.  Moreover,  if the
          Company has not  executed and  delivered a letter of intent  regarding
          (i) the sale of the stock or of all or substantially all of the assets
          of  certain  of its subsidiaries, and/or (ii) the  procurement  by the
          Company of debt financing  providing the Company with sufficient funds
          to repay in full the Company's  obligations to Union Planters ("Letter
          of Intent")  on or before  June 30,  2004,  the  interest  rate on the
          Revolving  Credit Loan will be  increased  to prime plus  1-1/2%,  and
          further  increased to prime plus 2.00% if the Company has not paid all
          of its  obligations to Union  Planters in full on or before  September
          30,  2004.  The interest  rate on Term Loan A provided  under the Loan
          Agreement,  which,  as of  March  30,  2004,  had a total  outstanding
          principal  balance  of  $9,160,714,  was  changed  from LIBOR plus 3%,
          subject  to a floor of 7% and a ceiling  of 8.5%,  to Union  Planters'
          prime rate plus 2%,  subject to a floor of 7%.  The  interest  rate on
          Term Loan B provided under the Loan Agreement,  which, as of March 30,
          2004, had a total  outstanding  principal  balance of $8,773,816,  was
          changed  from  LIBOR  plus 3% to Union  Planters'  prime rate plus 2%.
          Moreover,  if the Company has not executed  and  delivered a Letter of
          Intent on or before June 30, 2004,  the interest  rate on Term Loans A
          and B will be  increased  to Union  Planters'  prime  plus  2-1/2% and
          further  increased to Union Planters' prime plus 3% if the Company has
          not  paid all of its  obligations  to the  Buyer in full on or  before
          September 30, 2004.

     o    If, by June 30,  2004,  the  Company  does not enter  into one or more
          Letters of Intent,  a fee of $125,000  will be payable on the earliest
          of March 31, 2005, the date the Company repays all of its  obligations
          to Union Planters or the date on which Union Planters  accelerates all
          of the Company's obligations.

     o    If the Company  fails to pay all of its  obligations  in full to Union
          Planters by September  30, 2004, a fee of $350,000  will be payable to
          Union  Planters  ($100,000  on  October  1, 2004 and  $250,000  on the
          earliest of March 31,  2005,  the date the  Company  repays all of its
          obligations  to Union  Planters  or the date on which  Union  Planters
          accelerates all of the Company's obligations).

     o    If the Company  fails to pay all of its  obligations  in full to Union
          Planters by December 30,  2004,  a fee of $200,000  will be payable to
          Union  Planters  ($100,000  on  December 31, 2004 and  $100,000 on the
          earliest of March 31,  2005,  the date the  Company  repays all of its
          obligations  to Union  Planters  or the date on which  Union  Planters
          accelerates all of the Company's obligations).

In addition,  the Company has  executed a  $1,300,000  note in favor of a former
owner of Versaform  Corporation,  now a director of the Company,  in  connection
with the Company's  purchase of  Versaform.  This note is secured by a pledge of
65% of the  Company's  interest in its Canadian  subsidiary,  and as part of its
obligations  under this note,  the Company's  Canadian  subsidiary is subject to
various restrictive  covenants relating to the its financial  performance.  This
note is payable monthly over three years and bears interest at 7.0%

The Company has entered into various  notes  payable for the purchase of certain
equipment.  The notes are  payable in monthly  installments  including  interest
ranging from 6.99% - 10.0% through  November 2006. The notes payable are secured
by equipment. The Company also has entered into capital lease agreements for the
purchase of certain  equipment.  The leases are payable in monthly  installments
including interest ranging from 4.98% - 9.15% through August 2005.

As a result of the above  described  debt,  the Company is required to utilize a
significant  portion  of its cash  generated  from  operations  to meet its debt
service obligations.  Furthermore,  if the Company were to fail in the future to
comply with the restrictive covenants in the Loan Agreement or in the promissory
note,  Company's  operations  could be  negatively  impacted  and the  Company's
ability to take  advantage of  potential  business  opportunities  as they arise
could  be  limited.  Moreover,  the  Company's  failure  to  comply  with  these
restrictive  financial and other  covenants  could result a default that, if not
cured or waived,  could cause the Company to be required to repay its borrowings
before  their due dates.  If the Company  were unable to make this  repayment or
otherwise refinance these borrowings, the Company's creditors could foreclose on
the assets securing its borrowings.  Although in the Thirteenth  Amendment Union
Planters  wavied the default  arising  from a failure of the Company to meet the
EBITDA  Covenant,  such  waiver was  limited to and valid only for the  specific
purposes  given.  Union Planters is not obligated soley by reason of such waiver
to agree to any additional waivers.

Please see Note 8 of the Consolidated  Financial  Statements included as part of
this Annual Report on Form 10-K and Exhibit  10.32 for more  detailed  financial
information relating to the Company's debt.

In addition to the cash requirements for debt service,  the Company  anticipates
that  it  will  incur  significant   additional  costs  to  meet  the  increased
requirements  of  Section  404 of the  Sarbanes-Oxley  Act  of  2002,  regarding
internal controls and procedures. Please see Item 9A - Controls and Procedures.

Based upon forecasted operating results and cash flows,  management believes the
current  lending  agreement is  sufficient  to meet its cash needs in 2004.  Our
management  has  developed  a  plan  that  includes  restructuring  or  possibly
disposing of segments of our business,  increasing sales and raising alternative
capital. However, the Company's losses from operations in recent years, together
with its inability to meet the EBITDA Covenant and certain other covenants under
the Loan Agreement, have raised substantial doubt about the Company's ability to
continue as a going concern.  If the Company fails to meet its covenants,  fails
to  comply  with the  refinancing  or sale of  assets  contemplated  in the Loan
Agreement,  or is unable to fund its  operations  within  the limits of the Loan
Agreement,  no  assurance  can  be  given  that  additional  and/or  replacement
financing can be obtained on reasonable or acceptable  terms or that the Company
will be able to continue as a going concern.

Off-Balance Sheet Arrangements

The Company's off-balance sheet arrangements consist of the operating leases and
capital commitments noted below.

Contractual Obligations and Commitments

The Company had the following contractual  obligations and commitments for debt,
capital leases and non-cancelable operating lease payments, ($ in thousands):




                    Total    2004     2005     2006     2007     2008     2009    Thereafter
                  -------- -------- -------- -------- -------- -------- -------- -------------
                                                          

Long Term Debt    $27,814   $6,058  $21,583     $173    $  -     $  -     $  -       $    -
Capital Leases         11       11        -        -       -        -        -            -
Operating Leases    9,474    2,231    1,859    1,288     799      650      572        2,075
                  -------- -------- -------- --------- ------- -------- -------- -------------
           Total  $37,299   $8,300  $23,442   $1,461    $799     $650     $572       $2,075
                  ======== ======== ======== ========= ======= ======== ======== =============

- ----------------------------

     (1) The Company has not  committed to any  signficant  current or long-term
     purchase orders for its operations.




Critical Accounting Estimates

Certain  accounting  issues require  management  estimates and judgments for the
preparation of financial  statements.  The Company  believes that the estimates,
assumptions and judgments  involved in the accounting  policies  described below
have the  greatest  potential  impact  on the  Company's  financial  statements.
Therefore,  the Company considers these to be its critical accounting estimates.
The Company's  management has discussed the  development  and selection of these
critical accounting estimates with the Audit Committee of the Company's Board of
Directors and the Audit Committee has reviewed the Company's disclosure relating
to these  estimates in the  "Management  Discussion and Analysis." The Company's
most significant estimates and judgments are listed below.

Accounts  Receivable  Reserves.  The Company evaluates the collectibility of its
accounts  receivable  based on a combination  of factors,  including  historical
trends and industry and general economic conditions.  In circumstances where the
Company  is aware  of a  specific  customer's  inability  to meet its  financial
obligations  (e.g.,  bankruptcy  filings,   substantial  downgrading  of  credit
scores),  a specific  reserve for bad debts is recorded  against  amounts due to
reduce  the net  recognized  receivable  to the amount  the  Company  reasonably
believes will be collected.  The Company's evaluation also includes reserves for
billing  adjustments,   pricing  changes,   warranty  claims  and  disputes.  If
circumstances  change (i.e.,  an unexpected  material  adverse change in a major
customer's ability to meet its financial obligations to the Company),  estimates
of the  recoverability of amounts due the Company could be reduced by a material
amount.  The Company  applies this policy to its acquired  businesses  and makes
adjustments to existing bad debt reserves based upon its evaluation.

As discussed in Note 1 to the  consolidated  financial  statements,  the Company
generates a  significant  portion of its  revenues  and  corresponding  accounts
receivable  from sales to a limited  number of  customers in the  aerospace  and
technology  industries.   If  these  customers  experience  significant  adverse
conditions in their industries or operations,  including the continued impact of
the current  downturn in demand for aerospace  and  technology  products,  these
customers may not be able to meet their  ongoing  financial  obligations  to the
Company  for prior  sales or  purchase  additional  products  under the terms of
existing contracts.

Inventory.  The Company  values its  inventories  at the lower of cost or market
using actual cost for raw materials and average cost for finished goods and work
in process.  In assessing the ultimate  realization of inventories,  the Company
makes judgments as to future demand  requirements  based upon customer orders in
backlog,  historical customer orders, customer and industry analyst estimates of
aircraft  production  rates,  and other  market data  available  to the Company.
Additionally,  in the aviation industry, these future demand requirements depend
on estimates  of aircraft  lives and the need for spare parts over the course of
the aircraft  life.  The Company has recorded  charges in recent  periods due to
discontinuances of product lines,  losses of customer  contracts,  lack of order
activity,  or  changes in  expectations  of future  requirements.  In the fourth
quarter  of 2003,  the  Company  recorded  a charge of $1.4  million  based upon
management's   evaluation   of  the   current   aerospace   industry,   customer
requirements, and inventory quantities.

The  Company  sells  much  of  its  product  under  fixed  price   arrangements.
Occasionally,  costs of  production  may  exceed  the  market  values of certain
products and product  families which require the Company to adjust its inventory
value. In these circumstances, management is required to make estimates of costs
not yet incurred to determine the ultimate cost of these  products  which are in
work in process.  Changes in the  assumptions  and  estimates of such factors as
expected scrap, costs of material,  labor and outside services  and the amount
of labor  required to complete the  products  may result in actual  results that
vary from management's estimates.

At times,  the Company  accepts new orders for  products  from its  customers in
which actual production costs may differ from the Company's expectations when it
quoted the product.  Additionally,  customers may request engineering changes or
quality  acceptance  changes  in  products  that may alter the cost of  products
produced  by the  Company.  In these  circumstances,  the Company  notifies  the
customer of these issues and seeks  reimbursement  for costs  incurred  over and
above the selling price of the products and  re-pricing of the product on future
deliveries.  The Company's  inventory valuation considers the estimated recovery
of these costs.  Actual  negotiation of the claim amounts may result in outcomes
different from those estimated by the Company and may have material impacts upon
the  operating  results  of the  Company.  During  the  fourth  quarter of 2002,
significant  cost  over-runs  were  incurred on certain  products  for which the
Company  submitted a claim to its  customer.  At year-end, the Company could not
estimate the probable recovery of any amounts covered by this claim.  Therefore,
excess  inventory  costs were  written off and  margins in 2002 were  negatively
impacted.  Subsequent  recovery of this claim could have a material  impact upon
future operating results of the Company.

Goodwill. In June 2001, the Financial Accounting Standards Board issued SFAS No.
142 which addresses financial accounting and reporting for acquired goodwill and
other  intangible  assets and was  adopted by the Company  effective  January 1,
2002.  The  statement  requires  that  goodwill not be amortized  but instead be
tested at least  annually  for  impairment  and  expensed to the extent the fair
value of a reporting unit, including goodwill, is less than its carrying amount.

The Company  established  the value of these  segments with the assistance of an
outside expert that used Company  provided  forecasts of operations by reporting
unit,  independent review of the assumptions in these forecasts,  evaluations of
the carrying value of certain assets and liabilities, and independent appraisals
of the Company's fixed assets.  These forecasts required the Company to estimate
future sales  prices and volumes of its  reporting  units.  The Company used its
internal budgets, customer order backlog, historical customer ordering patterns,
customer and industry projections of demand and other market information as well
as current cost of production to estimate future cash flows.  Actual results may
vary  significantly  from the Company's  projections  and may result in material
adjustments to the goodwill balance on the Company's financial statements.

Income Taxes. The Company accounts for income taxes under the provisions of SFAS
No. 109,  "Accounting for Income Taxes." The objectives of accounting for income
taxes are to recognize the amount of taxes payable or refundable for the current
year and deferred tax liabilities and assets for the future tax  consequences of
events that have been  recognized in the company's  financial  statements or tax
returns.  SFAS No. 109 also  requires  that  deferred tax assets be reduced by a
valuation  allowance  if it is more likely than not that some  portion or all of
the deferred tax asset will not be realized.

Self Insured  Reserves.  The Company  provides health  insurance for many of its
employees through an insurance arrangement that requires the Company to fund all
claims incurred up to certain limits.  The Company purchases an insurance policy
to  limit  the  amount  of  claims  that it will be  responsible  to fund on any
specific claim as well as a policy that limits the total claims that the Company
would be  responsible  to fund in a specific plan year.  Since time delays occur
between delivery of medical services and ultimate payment of these services, the
Company is  required  to  estimate  the  incurred  claims that have not yet been
settled by the administrator that adjusts these claims. The administrator of the
claims provides the Company information such as historical claim values,  trends
in medical  costs,  and time lags between  service  dates and  ultimate  payment
dates.  The Company uses this  information to estimate the amount of claims that
may  have  been  incurred  but are not yet  reported  in order  to  establish  a
liability on its financial statements.

Additionally,  the Company provides workers' compensation  insurance for certain
of its  employees  that  requires  the Company to pay for actual  losses plus an
administrative  fee for all  claims  and  expenses  incurred.  The  Company  has
negotiated  minimum and maximum amounts that it may be required to fund with its
insurance  carrier.  The Company is provided such  information  as claim losses,
estimated  amounts that the  insurance  company feels will be required to settle
the claim,  and estimates of time delay  between  injuries and  notification  of
injuries. The Company uses this information to estimate its liability under this
arrangement.

Actual claim experience under these insurance plans may vary from estimates made
by the Company and could have material impacts upon its financial statements.

Related Party Transactions

In May of 2002, the Company acquired the outstanding  capital stock of Versaform
Corporation, a California corporation,  and the capital stock of its subsidiary,
541775  B.C.,  Ltd.,  a  corporation  incorporated  in the  Province  of British
Columbia,  Canada.  At the time,  541775 B.C., Ltd. owned all of the outstanding
capital stock of Versaform Canada Corporation, a corporation incorporated in the
Province of British Columbia,  Canada. The Company has since consolidated 541775
B.C., Ltd. and Versaform Canada  Corporation with its own wholly-owned  Canadian
subsidiary,  LMIV Holding  Ltd., a corporation  incorporated  in the Province of
British  Columbia,  Canada.  All of the  capital  stock of  Versaform  was owned
directly by Brian Geary, an individual  residing in the State of California.  In
June of 2002,  Mr. Geary was appointed as a director of the Company.  As part of
the  transaction  pursuant to which it acquired  Versaform  Canada,  the Company
executed a non-negotiable,  subordinated  promissory note in favor of Mr. Geary,
in the principal  amount of $1.3  million.  This  promissory  note is payable in
thirty-six monthly installments beginning on July 1, 2002, and bears interest at
a rate of seven percent per annum. The note is secured by a pledge of 65% of the
Company's interest in its Canadian subsidiary,  and pursuant to such pledge, the
Company's  Canadian  subsidiary is required to meet certain  financial and other
restrictive covenants. Also as part of the transaction,  the Company is required
to pay Mr. Geary  additional  consideration  of up to 5% of the annual net sales
received under agreements between Versaform and Hamilton Sundstrand,  a customer
of Versaform in excess of $3 million.

In  September  2002,  the Company  acquired  from Mr. Geary the  operations  and
certain of the assets of the  aerospace  division of SSFF,  an  aerospace  sheet
metal  manufacturer  based  in  Denton,   Texas.  The  Company  paid  Mr.  Geary
consideration  consisting  of 90,000  shares of the  Company's  common stock for
machinery and equipment,  issued pursuant to a private placement conforming with
the safe harbor  provisions of Rule 506 of  Regulations D promulgated  under the
Securities Act of 1933, as amended,  $115,000 cash for all inventories,  and the
transfer  of certain  equipment  valued at  $60,000.  Also,  as part of the SSFF
transaction,  the Company is required to pay Mr.  Geary 5% of the gross sales of
specific parts to a specific  customer during the period beginning on January 1,
2003 and ending on December 31, 2007,  not to exceed  $500,000.  Payments to Mr.
Geary under this agreement for the year ended December 31, 2003 was $55,000.

The Company  negotiated each of the above  transactions on an arms-length basis.
Although Mr. Geary was not a director at the time of the  Company's  acquisition
of Versaform,  the Company  received an opinion from an  independent  investment
banking firm stating that the Company's acquisition of Versaform was fair from a
financial point of view to the holder's of the Company's  common stock.  Because
the Company's  acquisition of SSFF occurred following Mr. Geary's appointment to
the  Company's  Board of  Directors,  and because of the  potential  conflict of
interest  created by the Company's  acquisition  of assets from Mr.  Geary,  the
Company's audit committee  reviewed the following  specific  factors relating to
the Company's acquisition of SSFF:

     o    whether or not the  potential  conflict of interest  arising  from the
          Company's proposed transaction with SSFF and indirectly with Mr. Geary
          had been fully disclosed and revealed to the Audit Committee;

     o    whether or not the proposed  transaction  had been negotiated at arm's
          length;

     o    whether or not Mr. Geary had  participated  in the  negotiation of the
          proposed transaction on behalf of the Company; and

     o    whether or not the terms of the proposed  transaction were fair to the
          Company and its shareholders.

After full  discussion and  deliberation  of these  factors,  the members of the
Company's  Audit  Committee  unanimously  determined  that  all  relevant  facts
regarding a potential conflict of interest had been fully disclosed to the Audit
Committee,  that the terms of the proposed transaction were fair and in the best
interests of the Company and its shareholders, and that the transaction had been
negotiated at arm's length,  without  participation by or influence of Mr. Geary
with respect to the Company's interest.

The Company  leases its facility  located at  11011-11021  Olinda  Street in Sun
Valley,  California  from  multiple  landlords,  one of whom is a trust  for the
benefit of Ernest L. Star, the father of Ernest R. Star, the General  Manager of
Tempco.  Ernest R. Star is a co-trustee of this trust.  Pursuant to the terms of
the  applicable  lease  agreement,  the Company pays the owners of this property
aggregate  annual rent  payments of  $155,347  for the lease of a facility  with
square footage of 20,320.  In addition,  the Company leases property  located at
8866 Laurel Canyon Blvd. in Sun Valley,  California  from  Starwood  Company,  a
company  beneficially owned in part by Ernest L. Star.  Pursuant to the terms of
the applicable  lease  agreement,  the Company pays Starwood  Company  aggregate
annual rent of $172,920 for the lease of a facility  having a square  footage of
26,200.  The leases  governing  the Company's  occupancy of the above  described
properties were entered into at the time of the Company's  acquisition of Tempco
Engineering.  Both leases were negotiated on an arms-length  basis, prior to the
time that Ernest R. Star became an officer of the Company.

The Company leases  property  located at 1315 S. Cleveland  Street in Oceanside,
California  from Edward D.  Geary,  the father of Brian  Geary,  a member of the
Company's Board of Directors.  Pursuant to the applicable lease arrangement, the
Company pays Edward D. Geary annual  aggregate  rent payments of $86,400 for the
lease of a facility with a square  footage of 19,000.  This lease was assumed by
the Company as part of its  acquisition  of  Versaform  Corporation.  This lease
expires in January 2005 and it is the Company's intention to vacate the building
during 2004.

Recent Accounting Pronouncements

In January 2003,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Interpretation  No. 46,  Consolidation of Variable Interest Entities ("FIN 46").
In general, a variable interest entity is a corporation,  partnership,  trust or
any other legal  structure  used for business  purposes that either (a) does not
have equity investors with voting rights or (b) has equity investors that do not
provide sufficient financial resources for the entity to support its activities.
FIN 46 requires  certain  variable  interest  entities to be consolidated by the
primary   beneficiary   of  the  entity  if  the   investors  do  not  have  the
characteristics  of a controlling  financial  interest or do not have sufficient
equity at risk for the  entity to  finance  its  activities  without  additional
subordinated   financial   support  from  other   parties.   The   consolidation
requirements of FIN 46 apply  immediately to variable  interest entities created
after January 31, 2003.  The Company  adopted the provisions of FIN 46 effective
February  1,  2003  and such  adoption  did not have a  material  impact  on its
consolidated  financial  statements since it currently has no variable  interest
entities.  In December  2003,  the FASB issued FIN 46R with  respect to variable
interest entities created before January 2003, which among other things, revised
the implementation  date to the first fiscal year or interim period ending after
March 15, 2004,  with the  exception of special  purose  entities  ("SPE").  The
consolidation requirements apply to all SPEs in the first fiscal year or interim
period ending after December 15, 2003. The Company adopted the provisions of FIN
46R effective December 29, 2003 and such adoption did not have a material impact
on its consolidated financial statements since it currently has no SPEs.

In April 2003, FASB issued Statement of Financial  Accounting Standards No. 149,
Amendment of Statement  133 on  Derivative  instruments  and Hedging  Activities
("SFAS  No.149").  SFAS No.149 amends and clarifies  accounting  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts,  and for  hedging  activities  under  SFAS No.  133.  SFAS  No.149 is
effective for contracts and hedging relationships entered into or modified after
June 30, 2003. The Company adopted the provisions of SFAS No.149  effective June
30, 2003 and such  adoption did not have a material  impact on its  consolidated
financial  statements  since the Company has not entered into any  derivative or
hedging transactions.

In May 2003, FASB issued  Statement of Financial  Accounting  Standards No. 150,
Accounting  for  Certain  Financial  Instruments  with  Characteristics  of Both
Liabilities and Equity ("SFAS No.150"). SFAS No. 150 establishes  standards for
how an  issuer  classifies  and  measures  certain  financial  instruments  with
characteristics  of both debt and equity and  requires an issuer to classify the
following instruments as liabilities in its balance sheet:

     o    a  financial   instrument  issued  in  the  form  of  shares  that  is
          mandatorily  redeemable and embodies an unconditional  obligation that
          requires  the  issuer  to redeem it by  transferring  its  assets at a
          specified  or  determinable  date or upon an event  that is certain to
          occur;

     o    a financial instrument, other than an outstanding share, that embodies
          an obligation to repurchase the issuer's equity shares,  or is indexed
          to  such  an  obligation,  and  requires  the  issuer  to  settle  the
          obligation by transferring assets; and

     o    a financial instrument that embodies and unconditional obligation that
          the issuer  must  settle by  issuing a  variable  number of its equity
          shares if the  monetary  value of the  obligation  is based  solely or
          predominantly  on (1) a  fixed  monetary  amount,  (2)  variations  in
          something other than the fair value of the issuer's equity shares,  or
          (3) variations  inversely  related to changes in the fair value of the
          issuer's equity shares.

In November 2003, FASB issued FASB Staff Position No. 150-3 ("SFAS 150-3") which
deferred the  effective  dates for applying  certain  provisions  of SFAS No.150
related to mandatorily  redeemable  financial  instruments of certain non-public
entities and certain mandatorily redeemable non-controlling interests for public
and  non-public  companies.  For public  entities  SFAS No.150 is effective  for
mandatorily  redeemable financial instruments entered into or modified after May
31, 2003 and is effective for all other  financial  instruments  as of the first
interim  period  beginning  after  June 15,  2003.  For  mandatorily  redeemable
non-controlling  interest that would not have to be classified as liabilities by
a  subsidiary  under the  exception in paragraph 9 of SFAS No. 150, but would be
classified as  liabilities by the parent,  the  classification  and  measurement
provisions of SFAS No.150 are deferred indefinitely.  The measurement provisions
of SFAS No.150 are also deferred  indefinitely for other mandatorily  redeemable
non-controlling  interests  that were issued before  November 4, 2003. For those
instruments,  the measurement guidance for redeemable shares and non-controlling
interests in other literature shall apply during the deferral period.

On December 17,  2003,  the Staff of the SEC issued  Staff  Accounting  Bulletin
No.104 (SAB No. 104), Revenue Recognition, which supersedes SAB No.101, "Revenue
Recognition in Financial Statements". SAB No.104's primary purpose is to rescind
accounting  guidance contained in SAB No.101 related to multiple element revenue
arrangements,  superseded as a result of the issuance of EITF 00-21, "Accounting
for Revenue Arrangements with Multiple Deliverables." Additionally,  SAB No. 104
rescinds the SEC's Revenue Recognition in Financial Statements  Frequently Asked
Questions and Answers (the FAQ) issued with SAB No.101 that had been codified in
SEC  Topic  13,  Revenue  Recognition.  Selected  portions  of the FAQ have been
incorporated  into SAB  No.104.  While the  wording of SAB No.104 has changed to
reflect the issuance of EITF 00-21,  the revenue  recognition  principles of SAB
No.101 remain largely  unchanged by the issuance of SAB No. 104. The adoption of
SAB No.104 did not materially affect the Company's revenue recognition policies,
nor the results of operations, financial position or cash flows.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

Market  risk  represents  the risk of loss  that  may  impact  the  consolidated
financial  position,  results of  operations  or cash flows of the Company.  The
Company is exposed to market  risk  primarily  due to  fluctuation  in  interest
rates.  The Company does not utilize any  particular  strategy or instruments to
manage its interest rate risk.

The Company's  outstanding credit facility carries a floating interest rate that
now varies  based on changes to the prime rate of  interest  of Union  Planters.
Accordingly,  the  Company  is  subject to  potential  fluctuations  in its debt
service.  Based on the amount of the Company's outstanding debt as of the end of
the 2003 fiscal  year,  a  hypothetical  1% change in the  interest  rate of the
Company's  outstanding credit facility would result in a change in the Company's
annual  interest  expense of  approximately  $0.3 million during the next fiscal
year.

The Company's  potential  exposure to interest rate market risk increased during
the 2002  fiscal  year  due to the  Company's  increased  borrowings  under  its
outstanding credit facility. On May 16, 2002, the Company incurred an additional
$11 million of debt as part of a term loan  borrowed  under its  current  credit
facility. These funds were used by the Company to acquire Versaform Corporation,
and its affiliated entities.

Item 8.  Financial Statements and Supplementary Data.

The following financial statements are included in Item 8 of this report:


      Financial Statement                                               Page
                                                                   

      Report of Independent Certified Public Accountants                  38
      Report of Independent Auditor                                       39
      Consolidated Balance Sheets as of December 31, 2002 and 2003        40
      Consolidated Statements of Operations for the Years Ended           41
              December 31, 2001, 2002 and 2003
      Consolidated Statements of Stockholders' Equity for the Years       42
              Ended December 31, 2001, 2002 and 2003
      Consolidated Statements of Cash Flows for the Years Ended           43
              December 31, 2001, 2002 and 2003
      Notes to Consolidated Financial Statements                          44
      Schedule II - Valuation and Qualifying Accounts                     67






               Report of Independent Certified Public Accountants

The Board of Directors and Stockholders
LMI Aerospace, Inc.
Saint Charles, Missouri

We have audited the  accompanying  consolidated  balance sheet of LMI Aerospace,
Inc. and  subsidiaries  (the "Company") as of December 31, 2003, and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
the year ended December 31, 2003. We have also audited the accompanying Schedule
II, "Valuation and Qualifying Accounts." These financial statements and schedule
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements  and schedule are free of material  misstatement.  An audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall financial statement and schedule presentation. We believe
that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial  position of LMI Aerospace,
Inc. and subsidiaries at December 31, 2003, and the consolidated  results of its
operations  and its  cash  flows  for the  year  ended  December  31,  2003,  in
conformity with accounting principles generally accepted in the United States of
America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  described  in  Note 1 to the
consolidated  financial statements,  the Company has incurred substantial losses
from  operations in recent years.  In addition,  the Company is dependent on its
Loan Agreement, described in Note 8, to fund its working capital needs. The Loan
Agreement  contains  certain  financial  covenants  with which the Company  must
comply,  and compliance  cannot be assured.  These conditions raise  substantial
doubt about its ability to continue as a going  concern.  Management's  plans in
regards  to  these  matters  are  also  described  in Note 1.  The  consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.

Also, in our opinion,  the schedule presents fairly,  in all material  respects,
the information set forth therein.


                                      /s/  BDO Seidman, LLP

Chicago, Illinois
March 31, 2004



                         Report of Independent Auditor


The Board of Directors and Stockholders
LMI Aerospace, Inc.


We have audited the  accompanying  consolidated  balance sheet of LMI Aerospace,
Inc.  (the  "Company")  as of December  31, 2002,  and the related  consolidated
statements of operations, stockholder equity, and cash flows for each of the two
years in the  period  ended  December  31,  2002.  Our audit also  included  the
financial  statement schedule listed in the Index as Item 15(a). These financial
statements and schedule are the responsibility of the Company's management.  Our
responsibility  is to  express  an opinion  on these  financial  statements  and
schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  amangement,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial  position of LMI Aerospace,
Inc. at December 31, 2002 and the consolidated results of its operations and its
cash flows for each of the two years in the period ended  December 31, 2002,  in
conformity with  accounting  principles  generaly  ccepted in the United States.
Also, in our opinion, the related financial statement schedule,  when considered
in relation to the basic financial statements taken as a whole,  presents fairly
in all material respects the information set forth therein.

As described in Note 1 to the financial  statements in 2002 the Company  changed
its method of accounting for goodwill.



                                               /s/ Ernst & Young, LLP


St. Louis, Missouri
April 15, 2003





                               LMI Aerospace, Inc.
                           Consolidated Balance Sheets
             (Amounts in thousands, except share and per share data)


                                                            December 31
                                                     ------------------------
                                                         2002         2003
                                                     ------------------------
                                                          
   Assets
   Current assets:
     Cash and cash equivalents                         $1,182         $441
     Trade accounts receivable, net of allowance
       of $334 in 2002 and $245 in 2003                11,392        9,158
     Inventories                                       25,181       24,159
     Prepaid expenses                                     978          787
     Deferred income taxes                              1,389        2,206
     Income taxes receivable                            1,501        1,933
                                                     ------------------------
   Total current assets                                41,623       38,684

   Property, plant, and equipment, net                 25,986       22,248
   Goodwill                                             5,653        5,653
   Customer intangible assets, net                      4,267        3,792
   Other assets                                           336          142
                                                     ------------------------
   Total assets                                       $77,865      $70,519
                                                     ========================

   Liabilities and stockholders' equity
   Current liabilities:
     Accounts payable                                  $6,107          $4,570
     Accrued expenses                                   2,846           2,126
     Current installments of long-term debt
       and capital lease obligations                    4,616           6,069
                                                     -------------------------
   Total current liabilities                           13,569          12,765

   Long-term debt and capital lease obligations,
      less current installments                        24,621          21,756
   Deferred income taxes                                1,939           2,206
                                                     -------------------------
   Total long-term liabilities                         26,560          23,962

   Stockholders' equity:
     Common stock of $.02 par value;
       authorized 28,000,000 shares;
       8,736,427 shares issued in 2002 and 2003           175             175
     Preferred stock; authorized 2,000,000 shares;
       none issued                                          -               -
     Additional paid-in capital                        26,171          26,171
                                                     -------------------------
     Treasury stock, at cost, 554,641 shares
       in 2002 and 2003                                (2,632)         (2,632)
     Accumulated other comprehensive (loss) income        (17)             20
     Retained earnings                                 14,039          10,058
                                                     -------------------------
   Total stockholders' equity                          37,736          33,792
                                                     -------------------------
   Total liabilities and stockholders equity          $77,865         $70,519
                                                     =========================

See accompanying notes to the consolidated financial statement.





                               LMI Aerospace, Inc.
                      Consolidated Statements of Operations
                  (Amounts in thousands, except per share data)


                                                      Year Ended December 31
                                               -------------------------------------
                                                   2001         2002        2003
                                               -------------------------------------
                                                            

 Net sales                                        $70,823     $81,349     $75,855
 Cost of sales                                     54,809      69,185      67,485
                                               -------------------------------------
 Gross profit                                      16,014      12,164       8,370

 Selling, general and administrative expenses
                                                   10,194      12,931      13,423
 Goodwill impairment charges                            -       5,104           -
                                               -------------------------------------
    Income (loss) from operations                   5,820      (5,871)     (5,053)

 Other income (expense):
    Interest expense                                 (843)     (1,495)     (1,645)
    Other, net                                       (247)       (525)        306
                                               -------------------------------------
                                                   (1,090)     (2,020)     (1,339)
                                               -------------------------------------
 Income (loss) before income taxes                  4,730      (7,891)     (6,392)
 Provision for (benefit of) income taxes            1,764        (691)     (2,411)
                                               -------------------------------------
    Income (loss) before cumulative effect of
       change in accounting principle               2,966      (7,200)     (3,981)
 Cumulative effect of change in accounting
    principle, net of income tax benefit of
    $663 for 2002.                                   -         (1,104)          -
                                               -------------------------------------
 Net income (loss)                             $    2,966    $ (8,304)   $ (3,981)
                                               =====================================

 Amounts per common share:
 Income (loss) before cumulative effect of
    change in accounting principle             $     0.37      $(0.89)    $ (0.49)
 Cumulative effect of change in accounting
    principle                                           -       (0.14)          -
                                               -------------------------------------
 Net income (loss) per common share            $     0.37      $(1.03)    $ (0.49)
                                               =====================================


 Net income (loss) per common share -
    assuming dilution                          $     0.36     $ (1.03)    $ (0.49)
                                               =====================================

 Weighted average common shares
    outstanding                                 8,059,682   8,077,293   8,181,786
                                               =====================================
 Weighted average dilutive stock options
    outstanding                                    98,444           -           -
                                               =====================================

See accompanying notes to the consolidated financial statement.





                               LMI Aerospace, Inc.
                 Consolidated Statements of Stockholders' Equity
             (Amounts in thousands, except share and per share data)


                                                                                        Accumulated
                                                    Additional                             Other           Total
                                          Common      Paid-In    Retained   Treasury    Comprehensive   Stockholders'
                                           Stock      Capital    Earnings    Stock       income (loss)     Equity
                                         --------- ------------ ---------- ----------- ---------------- --------------
                                                                                     
Balance at December 31, 2000               $ 175     $ 26,164    $ 19,785   $ (3,174)       $ (272)       $ 42,678
                                         --------- ------------ ---------- ----------- ---------------- --------------
Comprehensive income (loss):
  Net income                                   -            -       2,966          -             -           2,966
  Unrealized gain on available-
   for-sale securities, net of
   income tax of $40                           -            -           -          -            67              67
  Reclassification adjustment for
   losses realized in net income,
   net of income tax benefit of $106           -            -           -          -           205             205
                                                                                                        --------------
   Comprehensive income (loss)                                                                               3,238

Exercise of options to purchase stock          -            7           -          -             -               7
Purchase of 119,000 shares of
  outstanding stock for treasury               -            -           -       (379)                         (379)
Issuance of 30,928 shares of treasury
  stock to profit sharing/401(k) plan          -            -         (46)       151             -             105
                                         --------- ------------ ---------- ----------- ---------------- --------------
Balance at December 31, 2001               $ 175     $ 26,171    $ 22,705    $(3,402)       $    -        $ 45,649
                                         --------- ------------ ---------- ----------- ---------------- --------------
Comprehensive income (loss):

  Net income                               $   -     $      -    $ (8,304)   $     -        $    -          (8,304)
  Exchange rate (loss)                         -            -           -          -           (17)            (17)
                                                                                                        --------------
  Comprehensive income (loss)                                                                               (8,321)

                                               -            -        (218)       427             -             209
Issuance of stock - 90,000 shares of
  common stock in connection with the
  acquisition of  SSFF

Purchase of 1,900 shares of                    -            -           -         (8)            -              (8)
  outstanding stock for treasury

Exercise of options to purchase stock          -            -        (101)       196             -              95

Issuance of 32,690 shares of treasury          -            -         (43)       155             -             112
  stock to profit sharing/401(k) plan
                                         --------- ------------ ---------- ----------- ---------------- --------------
Balance at December 31, 2002
                                           $ 175     $ 26,171    $ 14,039   $ (2,632)       $  (17)       $ 37,736
                                         --------- ------------ ---------- ----------- ---------------- --------------

Comprehensive income (loss):
  Net income                               $   -     $      -    $ (3,981)  $      -        $    -        $ (3,981)
  Exchange rate gain                           -            -           -          -            37              37
                                                                                                        --------------
  Comprehensive Income (Loss)                                                                               (3,944)
                                         --------- ------------ ---------- ----------- ---------------- --------------
Balance at December 31, 2003
                                           $ 175     $ 26,171    $ 10,058   $ (2,632)         $ 20        $ 33,792
                                         --------- ------------ ---------- ----------- ---------------- --------------

See accompanying notes to the consolidated financial statement.




                               LMI Aerospace, Inc.
                      Consolidated Statements of Cash Flows
                             (Amounts in thousands)



                                                                  Year Ended December 31
                                                          ------------------------------------
                                                            2001        2002        2003
                                                          ------------------------------------
                                                                      
 Operating activities
 Net income (loss)                                         $2,966    $ (8,304)    $ (3,981)
 Adjustments to reconcile net income (loss) to
   net cash provided by operating activities:
     Depreciation and amortization                          4,208       4,433        4,793
     Charges for bad debt expense                              49         110          132
     Charges for inventory obsolescence and
        valuation                                             739       2,599        2,549
     Goodwill impairment charges                                -       6,871            -
     Non cash investment loss                                 311         643            -
     Non cash loss on sale of equipment                         -           -           54
     Changes in operating assets and liabilities:
        Trade accounts receivable                           2,761      (2,746)       2,102
        Inventories                                        (3,567)     (3,446)      (1,527)
        Prepaid expenses and other assets                    (432)       (176)         128
        Income taxes                                          349      (2,026)      (1,043)
        Accounts payable                                     (612)        274       (1,537)
        Accrued expenses                                      213        (274)        (659)
                                                          ------------------------------------
 Net cash provided from (used by) operating activities      6,985      (2,042)       1,011

 Investing activities
 Additions to property, plant, and equipment               (3,387)     (2,293)      (1,001)
 Proceeds from sale of equipment                               90           -          325
 Proceeds from sale of stock investments                        -           -          305
 Acquisition of Versaform, net of cash acquired                 -     (10,458)           -
 Acquisition of Stretch Forming Corporation                     -        (825)           -
 Acquisition of Southern Stretch Forming and Fabrication        -        (115)           -
 Acquisition of Tempco, net of cash acquired              (14,908)       (300)           -
                                                          ------------------------------------
 Net cash used by investing activities                    (18,205)    (13,991)        (371)

 Financing activities
 Proceeds from issuance of long-term debt                  14,250      11,000            -
 Principal payments on long-term debt                        (715)     (2,918)      (3,812)
 Proceeds from equipment notes payable                      1,027           -
 Payment on notes payable                                       -           -         (867)
 Net advances on revolver                                       -       4,417        3,267
 Treasury stock transactions, net                            (380)         (7)           -
 Proceeds from exercise of stock options                        7          95            -
                                                          ------------------------------------
 Net cash provided from (used by) financing activities     14,189      12,587       (1,412)

 Effect of exchange rate changes on cash                       -          (17)          31
                                                          ------------------------------------
 Net increase (decrease) in cash and cash equivalents       2,969      (3,463)        (741)
 Cash and cash equivalents, beginning of year               1,676       4,645        1,182
                                                          ------------------------------------
 Cash and cash equivalents, end of year                   $ 4,645     $ 1,182       $  441
                                                          ====================================

 Supplemental Disclosures of Cash Flow Information
 Interest paid                                            $   798     $ 1,469       $1,659
 Income taxes paid (refunded), net                        $ 1,294     $   649      $(1,331)

See accompanying notes to the consolidated financial statement.






                               LMI Aerospace, Inc.
                   Notes to Consolidated Financial Statements
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

1.  Accounting Policies

Description of Business

LMI Aerospace, Inc. (the "Company") fabricates, machines, and integrates formed,
close  tolerance  aluminum  and  specialty  alloy  components  for  use  by  the
aerospace,  semiconductor  and  medical  products  industries.  The Company is a
Missouri  corporation with  headquarters in St. Charles,  Missouri.  The Company
maintains  facilities in St.  Charles,  Missouri;  Seattle,  Washington;  Tulsa,
Oklahoma; Wichita, Kansas; Irving, Texas; Sun Valley, California; Oceanside, CA;
Savannah, GA; and Langley, BC.

Basis of Presentation

The  accompanying  consolidated  financial  statements have been prepared on the
going  concern  basis  which  contemplates  the  realization  of assets  and the
satisfaction  of liabilities  in the normal course of business.  The Company has
suffered  recurring  losses from operations in recent years.  This factor raises
substantial  doubt about the Company's  ability to continue as a going  concern.
The Company's ability to continue as a going concern is ultimately  dependent on
its  ability  to  improve  operating   performance  such  that  it  can  operate
profitably,  sustain  positive  operating  cash flows and support  its  required
financial  covenants with its primary  lender.  Management is currently  seeking
alternative  financing  arrangements  and pursuing the sale of certain assets to
replace its current lender and secure  additional  funds.  However,  there is no
assurance  that the  Company  will be  successful  in  improving  its  operating
results,  obtaining alternative  financing,  or consummating the sale of assets.
The financial  statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.

Principles of Consolidation

The  accompanying   financial  statements  include  the  consolidated  financial
position,  results  of  operations,  and  cash  flows  of the  Company  and  its
subsidiaries.  All significant  intercompany balances and transactions have been
eliminated in consolidation.

Customer and Supplier Concentration

Direct sales to the Company's largest customer  accounted for 40.0%,  25.4%, and
18.6% of the  Company's  total  revenues in 2001,  2002 and 2003,  respectively.
Accounts  receivable balances related to direct sales to this customer were 7.8%
at December  31,  2002 and 8.0% at  December  31,  2003.  Indirect  sales to the
Company's largest customer  accounted for 11.0%, 8.7% and 10.0% of the Company's
total sales in 2001, 2002, and 2003, respectively.

Direct sales to the Company's second largest customer  accounted for 4.6%, 17.5%
and  14.1%  of the  Company'S  total  revenues  in  2001,  2002  and  2003,  and
represented  21.1% and 8.6% of the accounts  receivable  balance at December 31,
2002 and 2003, respectively.

Direct sales to the Company's third largest  customer  accounted for 8.6%, 10.6%
and 12.9% of the Company's  total revenue in 2001, 2002 and 2003 and represented
11.2% and 7.3% of accounts  receivable  balance at  December  31, 2002 and 2003,
respectively.

The  Company  purchased  approximately  34%  and  37% of the  materials  used in
production from three suppliers in 2002 and 2003, respectively.

                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United  States  requires  management  to make certain
estimates and assumptions.  These estimates and assumptions  affect the reported
amounts in the financial statements and accompanying notes. Actual results could
differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents  include cash on hand, amounts due from banks, and all
highly liquid investment instruments with an initial maturity of three months or
less.

Inventories

The Company's  inventories are stated at the lower of cost or market and utilize
actual  costs for raw  materials  and an average  cost for work in  process  and
finished goods. The Company  evaluates the inventory  carrying value and reduces
the carrying costs based on customer  activity,  estimated future demand,  price
deterioration,  and other relevant information. The Company's customer demand is
highly  unpredictable and may fluctuate by factors beyond the Company's control.
The Company therefore,  maintains an inventory  allowance for potential obsolete
and slow moving  inventories,  and for gross  inventory  items  carried at costs
higher than their potential market values.

Revenue Recognition

The Company  recognizes  revenue  when  products  are shipped and  services  are
rendered,  the price is fixed or  determinable,  and  collection  is  reasonably
assured.

Allowance for Doubtful Accounts

The  allowance for doubtful  accounts  receivable  reflects the  Company's  best
estimate of probable losses inherent in our accounts receivable.  The basis used
to  determine  this  value  is  derived  from  historical  experience,  specific
allowances for known troubled customers, and other currently available evidence.

Property, Plant, and Equipment

Property, plant and equipment are stated at cost. Equipment under capital leases
is stated at the present value of the minimum lease  payments.  Depreciation  is
calculated using the straight-line method over the estimated useful lives of the
related assets.  Equipment held under capital leases and leasehold  improvements
are amortized using the straight-line  method over the shorter of the lease term
or estimated useful life of the asset. Estimated useful lives for buildings  and
machinery and equipment are 20 years and 4 to 10 years, respectively.

Long lived assets

In accordance  with Statement of Financial  Accounting  Standard (SFAS) No. 144,
Accounting  for the  impairment  or  Disposal of Long Lived  Assets,  long lived
assets held and used are reviewed for impairment  whenever  events or changes in
circumstances  indicate  that  the  carrying  value  of  an  asset  may  not  be
recoverable. As of December 31, 2003, there has been no impairment of long lived
assets, other than as disclosed in Note 6.

                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

Pre-Production Costs

The Company  accounts for  pre-production  costs in accordance with (EITF) 99-5,
Accounting for  Pre-Production  Costs Related to Long-Term Supply  Arrangements.
All design and development  costs for products to be sold under long-term supply
arrangements are expensed unless there is a contractual  guarantee that provides
for specific required payments for design and development costs.

Goodwill and Intangible Assets

Effective  January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other
Intangible  Assets,  ("SFAS No.  142") under which  goodwill is no longer  being
amortized but instead is tested upon adoption of the Statement and then at least
annually  for  impairment  and  expensed to the extent the implied fair value of
reporting units,  including goodwill,  is less than carrying value (see Note 6).
Acquired  intangible assets with finite lives are amortized over the useful life
on a straight line basis.

Income Taxes

The Company  accounts  for income  taxes under the  provisions  of SFAS No. 109,
"Accounting for Income Taxes." The objectives of accounting for income taxes are
to recognize the amount of taxes payable or refundable  for the current year and
deferred tax  liabilities  and assets for the future tax  consequences of events
that have been recognized in the company's financial  statements or tax returns.
SFAS No. 109 also  requires  that  deferred tax assets be reduced by a valuation
allowance if it is more likely than not that some portion or all of the deferred
tax asset will not be realized.

Comprehensive Income

SFAS No. 130, "Reporting  Comprehensive  Income" ("SFAS No. 130"), requires that
certain items such as foreign currency translation adjustments, unrealized gains
and losses on certain  investments  in debt and equity  securities  and  minimum
pension   liability   adjustments   be  presented  as  separate   components  of
shareholders' equity. SFAS No. 130 defines these as items of other comprehensive
income and as such must be reported in a financial  statement  that is displayed
with the  same  prominence  as other  financial  statements.  Accumulated  other
comprehensive   income,   as  reflected  in  the   Consolidated   Statements  of
Shareholders Equity, was comprised of a foreign currency translation  adjustment
of  $20,000  and   ($17,000)  at  December  31,  2003  and  December  31,  2002,
respectively.




                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

Stock-Based Compensation

The  Company  accounts  for its stock  based  compensation  in  accordance  with
Accounting Principles Board (APB) Opinion No. 25 and related interpretations and
provides  the pro forma  disclosure  provisions  of SFAS No.  123.  The  Company
applied  APB  Opinion  No. 25 in  accounting  for its stock  option  plans,  and
accordingly,  no compensation cost has been recognized for stock options granted
at fair market value. Had the Company determined  compensation cost based on the
fair value at the grant date under SFAS No.  123,  net income and  earnings  per
share amounts would have been as follows:


                                                    2001       2002        2003
                                                 ---------- ----------- -----------
                                                              
 Net income (loss) as reported                    $ 2,966    $(8,304)    $(3,981)
    Less:  Total stock based employee
    compensation expense determined under
    fair value based method, net of tax effect       (225)      (208)       (129)
                                                 ---------- ----------- -----------
    Pro forma net income (loss)                   $ 2,741    $(8,512)    $(4,110)
 Net income per common share
    As reported                                      $.37     $(1.03)     $( .49)
    Pro forma net income (loss)                      $.34     $(1.05)     $( .50)
 Net income per common share
    Assuming dilution:
    As reported                                      $.36     $(1.03)     $( .49)
    Pro forma                                        $.34     $(1.05)     $( .50)

Financial Instruments

Fair values of the Company's  long-term  obligations  approximate their carrying
values.

Available-for-sale  securities  are stated at fair value based on quoted  market
prices,  with the  unrealized  gains and losses,  net of tax,  reported in other
comprehensive  income/loss.  Realized  gains and  losses and  declines  in value
determined  to be  other-than-temporary  on  available-for-sale  securities  are
included  in  investment  income.  The cost of  securities  sold is based on the
average  cost  method.  Interest  and  dividends  on  securities  classified  as
available-for-sale are included in other income.

The Company's other  financial  instruments  have fair values which  approximate
their respective  carrying values due to their short maturities or variable rate
characteristics.

Earnings per Common Share

The Company follows SFAS No. 128,  Earnings per Share, in calculating  basic and
fully  diluted  earnings per share.  Earnings per share are computed by dividing
net income by the weighted  average number of common shares  outstanding  during
the applicable periods.






                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

Recent Accounting Pronouncements

In January 2003,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Interpretation  No. 46,  Consolidation of Variable Interest Entities ("FIN 46").
In general, a variable interest entity is a corporation,  partnership,  trust or
any other legal  structure  used for business  purposes that either (a) does not
have equity investors with voting rights or (b) has equity investors that do not
provide sufficient financial resources for the entity to support its activities.
FIN 46 requires  certain  variable  interest  entities to be consolidated by the
primary   beneficiary   of  the  entity  if  the   investors  do  not  have  the
characteristics  of a controlling  financial  interest or do not have sufficient
equity at risk for the  entity to  finance  its  activities  without  additional
subordinated   financial   support  from  other   parties.   The   consolidation
requirements of FIN 46 apply  immediately to variable  interest entities created
after January 31, 2003.  The Company  adopted the provisions of FIN 46 effective
February  1,  2003  and such  adoption  did not have a  material  impact  on its
consolidated  financial  statements since it currently has no variable  interest
entities.  In December  2003,  the FASB issued FIN 46R with  respect to variable
interest entities created before January 2003, which among other things, revised
the implementation  date to the first fiscal year or interim period ending after
March 15, 2004,  with the exception of special  purpose  entities  ("SPE").  The
consolidation requirements apply to all SPEs in the first fiscal year or interim
period ending after December 15, 2003. The Company adopted the provisions of FIN
46R effective December 29, 2003 and such adoption did not have a material impact
on its consolidated financial statements since it currently has no SPEs.

In April 2003, FASB issued Statement of Financial  Accounting Standards No. 149,
Amendment of Statement  133 on  Derivative  instruments  and Hedging  Activities
("SFAS  No.149").  SFAS No.149 amends and clarifies  accounting  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts,  and for  hedging  activities  under  SFAS No.  133.  SFAS  No.149 is
effective for contracts and hedging relationships entered into or modified after
June 30, 2003. The Company adopted the provisions of SFAS No.149  effective June
30, 2003 and such  adoption did not have a material  impact on its  consolidated
financial  statements  since the Company has not entered into any  derivative or
hedging transactions.

In May 2003, FASB issued  Statement of Financial  Accounting  Standards No. 150,
Accounting  for  Certain  Financial  Instruments  with  Characteristics  of Both
Liabilities and Equity ("SFAS No. 150"). SFAS No. 150 establishes  standards for
how an  issuer  classifies  and  measures  certain  financial  instruments  with
characteristics  of both debt and equity and  requires an issuer to classify the
following instruments as liabilities in its balance sheet:

     o    a  financial   instrument  issued  in  the  form  of  shares  that  is
          mandatorily  redeemable and embodies an unconditional  obligation that
          requires  the  issuer  to redeem it by  transferring  its  assets at a
          specified  or  determinable  date or upon an event  that is certain to
          occur;

     o    a financial instrument, other than an outstanding share, that embodies
          an obligation to repurchase the issuer's equity shares,  or is indexed
          to  such  an  obligation,  and  requires  the  issuer  to  settle  the
          obligation by transferring assets; and

     o    a financial instrument that embodies and unconditional obligation that
          the issuer  must  settle by  issuing a  variable  number of its equity
          shares if the  monetary  value of the  obligation  is based  solely or
          predominantly  on (1) a  fixed  monetary  amount,  (2)  variations  in
          something other than the fair value of the issuer's equity shares,  or
          (3) variations  inversely  related to changes in the fair value of the
          issuer's equity shares.






                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

In November 2003, FASB issued FASB Staff Position No. 150-3 ("SFAS 150-3") which
deferred the  effective  dates for applying  certain  provisions  of SFAS No.150
related to mandatorily  redeemable  financial  instruments of certain non-public
entities and certain mandatorily redeemable non-controlling interests for public
and  non-public  companies.  For public  entities  SFAS No.150 is effective  for
mandatorily  redeemable financial instruments entered into or modified after May
31, 2003 and is effective for all other  financial  instruments  as of the first
interim  period  beginning  after  June 15,  2003.  For  mandatorily  redeemable
non-controlling  interest that would not have to be classified as liabilities by
a  subsidiary  under the  exception in paragraph 9 of SFAS No. 150, but would be
classified as  liabilities by the parent,  the  classification  and  measurement
provisions of SFAS No.150 are deferred indefinitely.  The measurement provisions
of SFAS No.150 are also deferred  indefinitely for other mandatorily  redeemable
non-controlling  interests  that were issued before  November 4, 2003. For those
instruments,  the measurement guidance for redeemable shares and non-controlling
interests in other literature shall apply during the deferral period.

On December 17,  2003,  the Staff of the SEC issued  Staff  Accounting  Bulletin
No.104 (SAB No. 104), Revenue Recognition, which supersedes SAB No.101, "Revenue
Recognition in Financial Statements". SAB No.104's primary purpose is to rescind
accounting  guidance contained in SAB No.101 related to multiple element revenue
arrangements,  superseded as a result of the issuance of EITF 00-21, "Accounting
for Revenue Arrangements with Multiple Deliverables." Additionally,  SAB No. 104
rescinds the SEC's Revenue Recognition in Financial Statements  Frequently Asked
Questions and Answers (the FAQ) issued with SAB No.101 that had been codified in
SEC  Topic  13,  Revenue  Recognition.  Selected  portions  of the FAQ have been
incorporated  into SAB  No.104.  While the  wording of SAB No.104 has changed to
reflect the issuance of EITF 00-21,  the revenue  recognition  principles of SAB
No.101 remain largely  unchanged by the issuance of SAB No. 104. The adoption of
SAB No.104 did not materially affect the Company's revenue recognition policies,
nor the results of operations, financial position or cash flows.


2. Acquisitions

                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

Tempco Engineering

On April 2, 2001, the Company  acquired  certain  assets of Tempco  Engineering,
Inc. and Hyco  Precision,  Inc.  (collectively,  "Tempco"),  two privately  held
related metal machining  companies based in Southern  California,  for cash. The
acquisition has been accounted for as a business  combination,  and accordingly,
the results of operations  were included in the Company's  financial  statements
from the date of acquisition.  Tempco produces  components for  photolithography
equipment used in the manufacture of  semiconductors,  as well as components for
the defense and commercial aerospace industries.  The purchase price for the net
assets  acquired,  net of acquired cash, was  approximately  $15,200,  which was
funded  through the "Tempco Term Loan" (see Note 8). The purchase  also included
contingent consideration of up to $1,250 if Tempco's EBITDA, as defined, exceeds
certain  limits for the two years ended March 31, 2003.  Tempco did not meet the
financial  thresholds  that would have  obligated the Company to pay  additional
consideration at the end of the contingency  period,  March 31, 2003. The excess
of the purchase price over the fair value of net assets  acquired,  $5,943,  was
allocated to goodwill.

Versaform

On May 16, 2002, the Company acquired all of the outstanding  stock of Versaform
Corporation and BC 541775, Ltd., a holding company that owned 100% of the common
stock  of  Versaform   Canada   Corporation   (collectively,   "Versaform")  for
approximately $11,787 consisting of cash of approximately  $10,487,  provided by
the  "Versaform  Term  Loan"  (see Note 8) and a note of $1,300  payable  to the
selling shareholder.  Versaform forms large sheet metal and extrusion components
predominantly for the corporate,  regional,  and military aerospace markets from
two  facilities in Oceanside,  California  and one facility in Langley,  British
Columbia, Canada.

The  acquisition  was  accounted  for as a purchase  business  combination,  and
accordingly,  the results of operations were included in the Company's financial
statements after May 16, 2002. The cost to acquire  Versaform has been allocated
to the assets acquired and liabilities assumed according to their estimated fair
values at the time of the acquisition as follows:

    Working capital                                             $    400
    Property, plant, and equipment                                 3,179
    Assumed long-term liabilities                                   (871)
    Customer-related intangible                                    3,975
    Goodwill (nondeductible)                                       5,104
                                                             --------------
                                                                $ 11,787
                                                             ==============

The intangible  asset relates to acquired  customer  relationships  and is being
amortized  over 15 years on a  straight  line  basis.  Based on the terms of the
purchase agreement,  the Company is obligated to pay additional consideration if
sales to a specific  customer  exceed certain annual  thresholds  over the three
years following the acquisition.  As of December 31, 2002 and 2003, sales to the
specific  customer did not meet these thresholds and is not expected to meet the
thresholds for the remainder of the three year contingency  period. The purchase
agreement  allows for certain  adjustments  to the purchase  price for claims in
excess of $100.  The  Company  has filed a claim for  reimbursement  of  certain
liabilities existing at the closing date. This claim was settled for $265 during
the third quarter of 2003 and paid to the Company in October  2003.  Versaform's
sales were approximately $12,000 in 2001.






                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

Southern Stretch Forming and Fabrication, Inc.

On September 30, 2002, the Company  acquired  certain assets of Southern Stretch
Forming and Fabrication, Inc. ("SSFF"). The former owner of Versaform, currently
a director of the Company,  held a 50% interest in SSFF. Following the Company's
acquisition of Versaform,  the director  purchased the remaining 50% interest in
SSFF and sold SSFF to the Company.  (See related party  transactions at Note 12)
The assets  consisted  primarily of  inventory,  machinery  and  equipment.  The
acquisition  was  accounted  for  as  a  purchase  business   combination,   and
accordingly,  the  related  results  of  operations  have been  included  in the
consolidated  statement of operations  after  September  30, 2002.  The purchase
price of $444,  which  includes the  assumption  of debt and direct costs of the
transaction,  consisted of $235 in cash and 90,000  shares of LMI common  stock,
with a market value of $209.

The cost to acquire these assets has been  allocated to the assets  according to
their fair values and consisted of inventory of $115 and equipment and machinery
of $718 and  assumed  liabilities  of $389.  Net  sales  for SSFF for 2001  were
approximately $3,820, of which approximately $1,739 were to the Company.

Stretch Forming Corporation

On June 12,  2002,  the  Company  acquired  certain  assets of  Stretch  Forming
Corporation ("SFC"),  based in Southern  California.  The purchase price of $861
was allocated to the assets  acquired based on their fair value and consisted of
working  capital  of  $465,  equipment  of $66 and an  intangible  asset of $329
related to production  backlog,  to be amortized over 3 years on a straight line
basis.

3.  Treasury Stock Transactions

The Board of Directors authorized the Company to repurchase shares of its common
stock and place these shares in a Treasury Stock account for use at management's
discretion.  The Company  purchased  1,900  shares in 2002 in the open market at
prices  ranging from $4.48 to $2.00 per share.  In addition,  the Company issued
32,690  shares in 2002 in  conjunction  with the exercise of certain  employees'
options,  as well as  contributions  to and purchases by the  Company's  benefit
plans.  These  transactions  were recorded at cost in  stockholders'  equity.  A
portion of the  consideration  for SSFF  consisted of 90,000  shares of treasury
stock  recorded at fair value.  There was no treasury  stock activity in 2003 as
the Company did not purchase or issue any treasury shares.

4.       Inventories


Inventories consist of the following:                2002                 2003
                                            -----------------------------------
                                                             
Raw materials                                    $  4,469             $  3,989
Work in process                                     5,576                5,479
Finished goods                                     15,136               14,691
                                            -----------------------------------
         Total Inventories                       $ 25,181             $ 24,159
                                            ===================================

Includes reserves for obsolete and slow moving inventory of $407 and $2,173; and
a reserve  for lower of cost or market of $1,958  and $and  $2,173  and $647 for
2002 and 2003, respectively.



                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

5. Property, Plant, and Equipment

Property, plant, and equipment consist of the following:


                                                      2002        2003
                                                  -------------------------
                                                       
Land                                                $   705     $   705
Buildings                                            12,689      12,795
Machinery and equipment                              36,493      36,652
Leasehold improvements                                  918         927
Software and other                                    1,608       2,038
Construction in progress                                552         301
                                                  -------------------------
    Total Gross Property, Plant & Equipment          52,965      53,418
Less accumulated depreciation                        26,979      31,170
                                                  -------------------------
    Total Net Property, Plant & Equipment           $25,986     $22,248
                                                  =========================

Depreciation  expense (including  amortization  expense on software) recorded by
the  Company  totaled  $3,730,  $4,284  and $ 4,366  for  2001,  2002 and  2003,
respectively.

6.  Goodwill and Intangibles

As required by SFAS No. 142,  the  Company  performed  the initial  phase of its
transitional  impairment  test as of January 1, 2002 during the first six months
following  adoption  and  determined  that  its  reporting  segments  constitute
reporting units. Additionally, the Company determined that the carrying value of
its Sheet Metal segment exceeded its fair value.

The initial phase of the transitional test indicated potential impairment of the
Sheet Metal  segment's  goodwill with a carrying value of $1,767  reflecting the
current industry  conditions and estimates of aerospace industry spending in the
foreseeable   future.  The  Company  engaged  valuation  experts  to  assist  in
performing a review of the fair value of the Sheet Metal segment's  tangible and
intangible  assets,  including  goodwill,  as of January 1, 2002. Based upon the
valuation  completed  in the fourth  quarter  of 2002,  relying  primarily  on a
discounted cash flow valuation  technique,  the Company recorded a $1,767 charge
($1,104 net of tax) for the  impairment of the Sheet Metal  segment's  goodwill.
The charge is reflected as the cumulative  effect of adopting the new accounting
standard as of January 1, 2002.

In the fourth quarter 2002, the Company performed the required annual impairment
test under SFAS No. 142. The initial phase of the required annual test indicated
potential impairment of the Sheet Metal segment's goodwill with a carrying value
of $5,104, all of which related to the May 2002 acquisition of Versaform.  These
impairment  indicators  arose  from  poor  operating  performance  at the  other
operations in the Sheet Metal segment  reflecting  further  deterioration in the
industry  conditions  and  estimates  of  aerospace  industry  spending  in  the
foreseeable   future.  The  Company  engaged  valuation  experts  to  assist  in
performing a review of the fair value of the Sheet Metal segment's  tangible and
intangible  assets,  including  goodwill,  as of October 1, 2002. Based upon the
valuation,  relying primarily on a discounted cash flow valuation technique, the
Company  recorded a $5,104  charge as a  component  of  operating  income in the
fourth quarter of 2002.

In the  fourth  quarter of 2003,  the  Company  performed  the  required  annual
impairment  test under SFAS No. 142, and concluded  that the remaining  Goodwill
balance,  which relates to the Machining and  Technology  Segment only,  was not
further impaired.

                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

The changes in the carrying  amount of goodwill for the fiscal years ended 2001,
2002, and 2003 were as follows:


                                                     2001     2002      2003
                                                   -------- --------- ----------
                                                            
Beginning of the year                               $1,888    $7,420    $5,653
    Additions                                        5,943     5,104         -
    Amortization                                      (411)        -         -
    Impairment:
      Cumulative effect of accounting change             -    (1,767)        -
      Annual impairment assessment                       -    (5,104)        -
                                                   -------- --------- ----------
End of the year                                     $7,420    $5,653    $5,653
                                                   ======== ========= ==========

Goodwill  remaining at December 31, 2003 relates to the Machining and Technology
segment.

Prior to the  adoption of SFAS No. 142,  amortization  expense was  recorded for
goodwill.  The  following  table sets forth a  reconciliation  of net income and
earnings per share information for fiscal years 2001, 2002 and 2003 adjusted for
non-amortization provisions of SFAS No. 142.


                                                      Year ended December 31
                                                    2001       2002       2003
                                                 ---------- ---------- ---------
                                                           
   Reported net income (loss)                    $  2,966   $ (8,304)  $ (3,981)
   Goodwill amortization                              411         -           -
                                                 ---------- ---------- ---------
   Adjusted net income (loss)                    $  3,377   $ (8,304)  $ (3,981)
                                                 ========== ========== =========

   Earnings /(loss) per share - basic            $    .37   $  (1.03)  $   (.49)
   Goodwill amortization expense, net of tax          .05          -          -
                                                 ---------- ---------- ---------
   Adjusted earnings per share - basic           $    .42   $  (1.03)  $   (.49)
                                                 ========== ========== =========

   Reported earnings/(loss) per share - diluted  $    .36   $  (1.03)  $   (.49)
   Goodwill amortization expense, net of tax          .05          -          -
                                                 ---------- ---------- ---------
   Adjusted earnings per share-diluted           $    .41   $  (1.03)  $   (.49)
                                                 ========== ========== =========

Customer Related Intangibles

The carrying amount of customer related intangibles for the years ended December
31, 2002 and 2003 were as follows  (there were no customer  related  intangibles
prior to 2002):


                                      Gross    Accumulated        Useful
                                     Amount   Amortization          Life
                                   --------- -------------- -------------
                                                   
Versaform                            $3,975            $66      15 years
Stretch Forming Corp.                   419             61     3.5 years
                                   --------- -------------- -------------
         December 31, 2002           $4,394           $127
                                   ========= ==============

Versaform                            $3,975           $332
Stretch Forming Corp.                   329            180
                                   --------- --------------
         December 31, 2003           $4,304           $512
                                   ========= ==============

Customer related intangibles  amortization  expense for the calendar years 2001,
2002 and 2003 were $0, $127 and $385, respectively.




                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

7.   Accrued Liabilities Accrued liabilities include the following:


                                            December 31
                                          ------------------
                                            2002     2003
                                            ----     ----
                                           
     Accrued Payroll                    $    358  $   187
     Accrued Vacation & Holiday            1,118      902
     Accrued Employee Benefits               542      444
     Accrued Property Taxes                  152      221
     Accrued Legal & Accounting              110      195
     Accrued Commissions                     128       38
     Accrued Interest                         59       30
     Other                                   379      109
                                        -------- --------
                                 Total  $  2,846 $  2,126
                                        ======== ========


8. Long-Term Debt and Revolving Line of Credit

Long-term debt consists of the following:


                                                          December 31
                                                      2002            2003
                                                   -----------------------------
                                                         
  Term Loans:
    Tempco                                          $ 11,705      $  9,670
    Versaform                                         10,738         9,167
  Revolving Line of Credit                             4,417         7,684
  Note payable to Director, principal and
     interest payable monthly at 7%                    1,003           614
Notes payable, principal and interested
payable monthly, at fixed rates, ranging from
a 6.99% to 10.0%                                       1,212           679
Capital lease obligations                                162            11
                                                   -----------------------------
                                                    $ 29,237      $ 27,825
Less current installments                              4,616         6,069
                                                   =============================
                                         Total      $ 24,621      $ 21,756
                                                   =============================

The Company has a loan agreement  ("Loan  Agreement")  with Union Planters Bank,
NA. The Loan Agreement  consists of a revolving line of credit  ("Revolver"),  a
term loan to finance the purchase of Tempco  ("Tempco  Term  Loan"),  and a term
loan to finance the purchase of Versaform ("Versaform Term Loan"). The Company's
Loan Agreement is secured by all the domestic assets of the Company and requires
compliance with certain  non-financial and financial covenants including minimum
levels of EBITDA and tangible net worth.




                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

On January 5, 2004 the Company's  extended its Loan Agreement to March 31, 2004,
received a waiver for certain non  financial  covenants,  and agreed to a fee of
$75.  Subsequently,  on March 30, 2004, the Company and Union Planters Bank N.A.
("Union  Planters")  entered  into a  Thirteenth  Amendment  to  Loan  Agreement
("Thirteenth  Amendment"),  amending the Loan  Agreement  dated as of August 15,
1996 (the "Loan  Agreement")  between Leonard's Metal, Inc. the precedecessor in
interest to the Company, and Magna Bank, National  Association,  the predecessor
in interest to Union Planters.  The primary purposes f the Thirteenth  Amendment
were to (a)  extend  the  maturity  of the  Company's  Revolving  Line of Credit
provided under the Loan Agreement  ("Revolving Credit Loan") from March 31, 2004
to March 31,  2005,  and (b) waive a default  arising  under the Loan  Agreement
providing for the maintenance of a minimum of consolidated EBITDA amount for the
period ended December 31, 2003.

In addition, under the terms of the Thirteenth Amendment to Loan Agreement:

     o    The  maximum  principal  amount  of  the  Revolving  Credit  Loan  was
          increased from  approxiately  $9,088 to $9,700  through  September 30,
          2004, subject to a borrowing base calculation and further subject to a
          newly established inventory reserve requirement and a more restrictive
          reuirement  for  eligible  receivables,   which,  notwithstanding  the
          increased   borrowing   maximum  amount  provided  by  the  Thirteenth
          Amendment, could reduce the amount of borrowing availability under the
          Revolving Credit Loan.

     o    The interest rate on the Revolving  Credit Loan was changed from LIBOR
          plus 2.50% to Union  Planters'  prime rate plus 1%.  Moreover,  if the
          Company has not  executed and  delivered a letter of intent  regarding
          (i) the sale of the stock or of all or substantially all of the assets
          of certain of its  subsidiaries,  and/or (ii) the  procurement  by the
          Company of debt financing  providing the Company with sufficient funds
          to repay in full the Company's  obligations to Union Planters ("Letter
          of Intent")  on or before  June 30,  2004,  the  interest  rate on the
          Revolving  Credit Loan will be  increased  to prime plus  1-1/2%,  and
          further  increased to prime plus 2.00% if the Company has not paid all
          of its  obligations to Union  Planters in full on or before  September
          30,  2004.  The interest  rate on Term Loan A provided  under the Loan
          Agreement,  which,  as of  March  30,  2004,  had a total  outstanding
          principal balance of approximately $9,161, was changed from LIBOR plus
          3%, subject to a floor of 7% and a ceiling of 8.5%, to Union Planters'
          prime rate plus 2%,  subject to a floor of 7%.  The  interest  rate on
          Term Loan B provided under the Loan Agreement,  which, as of March 30,
          2004, had a total  outstanding  principal  balance of $8,773,816,  was
          changed  from  LIBOR  plus 3% to Union  Planters'  prime rate plus 2%.
          Moreover,  if the Company has not executed  and  delivered a Letter of
          Intent on or before June 30, 2004,  the interest  rate on Term Loans A
          and B will be  increased  to Union  Planters'  prime  plus  2-1/2% and
          further  increased to Union Planters' prime plus 3% if the Company has
          not  paid all of its  obligations  to the  Buyer in full on or  before
          September 30, 2004.

     o    If, by June 30,  2004,  the  Company  does not enter  into one or more
          Letters of Intent,  a fee of $125,000  will be payable on the earliest
          of March 31, 2005, the date the Company repays all of its  obligations
          to Union Planters or the date on which Union Planters  accelerates all
          of the Company's obligations.

     o    If the Company  fails to pay all of its  obligations  in full to Union
          Planters by September  30, 2004, a fee of $350,000  will be payable to
          Union  Planters  ($100,000  on  October  1, 2004 and  $250,000  on the
          earliest of March 31,  2005,  the date the  Company  repays all of its
          obligations  to Union  Planters  or the date on which  Union  Planters
          accelerates all of the Company's obligations).

     o    If the Company  fails to pay all of its  obligations  in full to Union
          Planters by December 30,  2004,  a fee of $200,000  will be payable to
          Union  Planters  ($100,000  on December  31, 2004 and  $100,000 on the
          earliest of March 31,  2005,  the date the  Company  repays all of its
          obligations  to Union  Planters  or the date on which  Union  Planters
          accelerates all of the Company's obligations).

Thus,  increased  interest  rates and  additional  fees will  apply  during  the
remaining  term  of  the  Loan  Agreement   (through  March  31,  2005)  if  the
indebtedness under the Loan Agreement is not repaid in full through  alternative
financing and/or a sales of assets by certain  prescribed dates. The Company has
engaged Lincoln Partners LLC, a Chicago, Illinois based investment banking firm,
to assist in these efforts.

At  December  31,  2003,  the  Company's  Revolver  allowed for a $9,088 line of
credit,  subject to a borrowing  base  calculation,  to fund  various  corporate
needs.  Interest was payable  monthly based on a ninety day LIBOR plus 2.25% and
was 3.67% at December 31, 2003. The Company had $7,684  outstanding on this line
at December  31,  2003.  This  facility  was  amended in January  2004 to extend
maturities  to March 31, 2004 and included an increase in interest to LIBOR plus
2.5%.  On March 30,  2004,  the Company  further  amended the Loan  Agreement to
extend the Revolver  maturity to March 31, 2005 and  establish the Revolver line
at $9,700 until  September 30, 2004,  and $9,000  thereafter,  each subject to a
borrowing base. The Revolver interest was amended to prime plus 1% with possible
adjustments as described  above.  The credit  facility  prohibits the payment of
cash  dividends  on common  stock  without  the prior  written  consent of Union
Planters Bank.

The Company  borrowed $14,250 (Tempco Term Loan) on April 2, 2001 to finance the
Tempco acquisition. The Tempco Term Loan required monthly principal and interest
payments over three years using a seven year  amortization  and bearing interest
at ninety day LIBOR plus 3%,  subject to a cap of 8.5% and a floor of 7.0%.  The
interest  rate was 7.0% at  December  31,  2003.  On March 30,  2004 the Company
amended  this note  establishing  a maturity of March 31,  2005 and  interest at
prime plus 2% with possible adjustments as described above.





                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

The  Versaform  Term Loan was issued for $11,000 on May 15, 2002.  The Versaform
Term Loan  required  monthly  principal  and interest  payments over three years
using a seven year  amortization and bears interest at the ninety day LIBOR plus
3%. The  interest  rate was 4.2% at  December  31,  2003.  On March 30, 2004 the
Company  amended this note  increasing  interest to prime plus 2% with  possible
adjustments as described above.

The  Company  entered  into a note  payable  for $1,300  with the prior owner of
Versaform in connection with the acquisition. The prior owner has since become a
member of the board of directors of the  Company.  This note is payable  monthly
over three years and bears interest at 7.0%.  This note is secured by 65% of the
stock of the Company's Canadian subsidiary.

The Company  entered  into  various  notes  payable for the  purchase of certain
equipment.  The notes are  payable in monthly  installments  including  interest
ranging from 6.99% - 10.0% through  November 2006. The notes payable are secured
by equipment.

The Company  entered into capital lease  agreements  for the purchase of certain
equipment.  The leases are payable in monthly  installments  including  interest
ranging from 4.98% - 9.15% through August 2005.

The  aggregate  maturities  of  long-term  debt as of  December  31, 2003 are as
follows:



              Year ending December 31:
                                                 
                2004                                      $  6,069
                2005                                        21,583
                2006                                           173
                Thereafter                                       -
                                                        ------------
                                Total                     $ 27,825
                                                        ============


9.  Leases

The Company leases certain facilities and equipment under various non-cancelable
operating  lease  agreements  which expire at various  dates  through  2013.  At
December 31, 2003, the future minimum lease payments under operating leases with
initial non-cancelable terms in excess of one year are as follows:


              Year ending December 31:
                                                 
                2004                                      $ 2,231
                2005                                        1,859
                2006                                        1,288
                2007                                          799
                2008                                          650
                Thereafter                                  2,647
                                                        ------------
                            Total                         $ 9,474
                                                        ============

Rent  expense  totaled  $1,354,  $2,107  and  $2,701  in 2001,  2002  and  2003,
respectively.




                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

10.  Defined Contribution Plans

The Company has a noncontributory  profit sharing plan and a contributory 401(k)
plan which covers substantially all full-time employees.  Employees are eligible
to participate  in both plans after reaching 1,000 hours of accredited  service.
Contributions to the profit sharing plan are at the discretion of management and
become  fully  vested  after seven  years.  Contributions  by the Company to the
profit  sharing  plan  totaled  $121,  $0  and  $0  for  2001,   2002  and  2003
respectively.  Contributions  by the Company to the 401(k) plan, which are fully
vested  to  the  employees  immediately  upon  contribution,  are  based  upon a
percentage  of  employee  contributions,  up to a maximum  of $675  dollars  per
employee (dollars not in thousands).  The Company's  contributions to the 401(k)
plan  totaled  $86,  $229 and $191,  for 2001,  2002 and 2003  respectively.  In
addition,  at December 31, 2003,  the Company had 600,000  common  shares of its
stock reserved for contributions to the 401(k) plan.

11. Stock Options

The Company's 1998 Employee Stock Option Plan provides options for up to 900,000
shares to be granted to key employees at exercise  prices  greater than or equal
to the fair market  value per share on the date the option is  granted.  Options
issued under the Plan are at the discretion of management and may be in the form
of Incentive Stock Options or Non-Qualified Stock Options. Vesting periods range
from 0 to 4 years.

At December 31, 2003, a total of  1,157,822  shares of  authorized  and unissued
common stock were  reserved for issuance of stock awards and options  granted or
authorized to be granted.



                                     2001                   2002                  2003
                            ----------------------  --------------------- ---------------------
                              Number     Weighted     Number    Weighted    Number    Weighted
                             of Shares   Average     of Shares  Average    of Shares  Average
                                         Exercise               Exercise              Exercise
                                          Price                  Price                 Price
                                                                   
Options outstanding at
  beginning of year          404,235       3.62      470,295      3.09      500,475     3.41
Granted                      146,700       2.38       89,500      4.76       28,500     2.10
Exercised                     (2,005)      2.75      (40,645)     2.31           -         -
Canceled/expired             (78,635)      4.38      (18,675)     4.23     (132,407)    3.52
                            ----------              ----------            -----------
Options outstanding at
 end of year                 470,295       3.09      500,475      3.41      396,568     3.28
- --------------------------- ==========              ==========            ===========





- ---------------------------------------------------------------------------------------------- ------------------
 Range of        Number of        Weighted           Weighted         Number        Weighted
 Exercise        Outstanding      Average            Average        Exercisable      Average
  Prices           Options       Remaining        Exercise Price                  Exercise Price
                               Contractual Life
- -------------------------------------------------------------------------------------------------
                                                                     

 $2.00 - $3.00     272,443         6.84               2.54           255,368           2.57
 $3.01 - $5.00      60,300         6.58               4.34            58,650           4.34
 $5.01 - $6.06      63,825         6.67               5.46            62,950           5.46
- -------------------------------------------------------------------------------------------------
         Total     396,568         6.78               3.28           376,968           3.33
=================================================================================================

The number of vested  options  exercisable  and the  related  range of  exercise
prices at December 31, 2001, 2002, and 2003 were 276,170 shares, with a range of
exercise prices from $2.00 to $5.93;  404,200  shares,  with a range of exercise
prices from $2.00 to $6.06; and 376,968 shares,  with a range of exercise prices
from $2.00 to $6.06 respectively.






                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

The  fair  value  for  options  was  estimated  at the  date  of  grant  using a
Black-Scholes   option   pricing  model  with  the  following   weighted-average
assumptions for 2001, 2002 and 2003,  respectively:  risk-free interest rates of
4.78%, 3.36% and 3.86%;  dividend yields of 0%, 0% and 0%; volatility factors of
the expected  market price of the Company's  common stock of 104%,  83% and 73%;
and a weighted  average  expected life of the option of six years for 2001, 2002
and 2003. The weighted  average fair value of options  granted during 2001, 2002
and  2003 was  $1.96,  $3.40  and  $2.10,  respectively.  The  weighted  average
remaining life of outstanding options as of December 31, 2003 was 6.78 years.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
the  Company's  employee  stock  options  have   characteristics   significantly
different  from those of traded  options and because  changes in the  subjective
input assumptions can materially affect the fair value estimate, in management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its employee stock options.

12. Income Taxes

The temporary  differences  between the tax basis of assets and  liabilities and
their financial  reporting amounts that give rise to the deferred tax assets and
liabilities are as follows:


                                                 2002          2003
                                             -------------------------
                                                   
Deferred tax assets:
     Accrued vacation                        $    295        $   264
     Inventory                                    828          1,122
     State tax credits                            129            129
     Goodwill                                     466            314
    Net operating loss carry forward                -            288
                                             --------------------------
    Other                                         138             89
                                             --------------------------
 Total deferred tax assets                      1,856           2,206


 Deferred tax liabilities:
    Depreciation                               (2,406)         (2,206)
    Other                                          (7)              -
                                             ---------------------------
 Total deferred tax liabilities                (2,406)         (2,206)
                                             ---------------------------
 Net deferred tax liability                  $   (550)        $
                                                               ---------
                                             ===========================












                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

The  Company's  income tax  provision  (benefit)  attributable  to income before
income taxes and cumulative effect of change in accounting  principle  consisted
of the following for the year ended December 31:



                                              2001       2002        2003
                                            ----------------------------------
                                                       
 Federal:
    Current                                 $ 1,820     $ (171)    $ (1,988)
    Deferred                                   (188)      (468)        (250)
                                            ----------------------------------
                                              1,632       (639)      (2,238)
 Canadian:
     Current                                      -         22           39
      Deferred                                    -          -           32
                                            ----------------------------------
                                                  -         22           71
 State:
    Current                                     150        (50)        (201)
    Deferred                                    (18)       (24)         (43)
                                            ----------------------------------
                                                132        (74)        (244)
                                            ----------------------------------
    Provision (benefit) for income taxes    $ 1,764     $ (691)    $ (2,411)
                                            ==================================


The  reconciliation  of income tax computed at the U.S.  federal  statutory  tax
rates to income tax expense  attributable to income before  cumulative effect of
change in accounting principle is as follows:


                                                   2001      2002       2003
                                                 -------------------------------
                                                          
 Federal taxes (benefit)                         $ 1,608   $ (2,683)  $ (2,173)
 State and local taxes, net of federal benefit       140        (74)      (224)
    Benefit
 Non deductible goodwill                               -      1,758        124
 Valuation allowance for capital loss on               -        241       (114)
     available for sale securities
 Other                                                16         67        (24)
                                                 -------------------------------
 Provision (benefit) for income taxes            $ 1,764   $   (691)  $ (2,411)
                                                 ===============================

Remaining net operating loss carry-forward is immaterial.




                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

13. Related Party Transactions

In May 2002,  the Company  entered into certain  acquisition  transactions  with
Brian  Geary,  a director  of the  Company,  related to the  Versaform  and SSFF
acquisitions (See Note 2 for further  description of these  acquisitions).  As a
part of the acquisition of Versaform,  the consideration included a note payable
of $1,300 to Mr.  Geary (the then sole  shareholder  of  Versaform)  which bears
interest  at 7% and is payable  in monthly  installments  through  May 2005.  In
addition,  a relative of Mr. Geary retained ownership of a building and property
where   Versaform   operates   and  leases  the  facility  to  the  Company  for
approximately  $86 per year.  This lease  expires in January  2005 and it is the
intention of the Company to vacate during 2004.

Prior to his  appointment  as a director of the Company,  Mr. Geary owned 50% of
SSFF.  Subsequently,  Mr. Geary purchased the remaining 50% of SSFF and sold the
entity to the Company.  Prior to approving  the purchase of SSFF,  the Company's
Audit  Committee,  at the  request  of the Board of  Directors,  considered  the
potential  conflict of interest  regarding the  acquisition  of SSFF.  The Audit
Committee  concluded that the above transaction was negotiated on an arms length
basis, consummated on terms generally similar to those prevailing with unrelated
third  parties,  and were fair and in the best  interest  of the Company and its
shareholders.

The Company leases the two Tempco operating  facilities from entities in which a
relative of Ernest  Star, a member of the  Company's  Board of  Directors,  is a
principal  beneficiary.  The leases  governing the Company's  occupancy of these
facilities were entered into at the time of the Tempco acquisition, prior to Mr.
Star's appointment as a Director, and were negotiated on an arms length basis at
terms generally similar to those prevailing with unrelated third parties.

14. Commitments and Contingencies

On  February  6, 2004,  Versaform,  a  wholly-owned  subsidiary  of the  Company
acquired on May 16, 2002, was served a subpoena by the federal government.

The Subpoena relates to the time period January 1, 1999 through February 6, 2004
and was  issued  in  connection  with an  investigation  by  certain  government
agencies  including  the  Department  of Defense,  Office of Inspector  General,
Defense Criminal Investigative Service, and the Federal Bureau of Investigation.
The subpoena refers to structural  components Versaform  manufactured for Nordam
Corporation  for B-52 engine  cowlings,  components  for  auxiliary  power units
Versaform  manufactured for Hamilton Sundstrand a United  Technologies  Company,
and certain tools Versaform manufactured for Lockheed Martin Corporation.

The Company has not been  served  with any notice of any  pending  legal  action
filed by any government agency. Accordingly, the Company has no knowledge of any
specific   allegations  of  wrongdoing   against  Versaform  by  any  regulatory
authority.

The Company intends to cooperate fully with the federal government in connection
with any investigation of this matter.

Other than noted  above,  the  Company is not a party to any legal  proceedings,
other than  routine  claims and lawsuits  arising in the ordinary  course of its
business. The Company does not believe such claims and lawsuits, individually or
in the aggregate, will have a material adverse effect on the Company's business.

                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

15. Business Segment Information

As set forth in the  criteria of statement  of SFAS No. 131,  Disclosures  about
Segments of an Enterprise and Related Information, the Company is organized into
two reportable  segments:  Sheet Metal and Machining and  Technology.  The Sheet
Metal segment fabricates,  finishes, and integrates close tolerance aluminum and
specialty alloy components  primarily for the aerospace industry.  The Machining
and Technology  segment  machines close  tolerance  aluminum and specialty alloy
components for the aerospace, semiconductor, and medical products industries.

During 2002,  the Company  determined  that its Machining and Technology met the
definition  of a reportable  segment in  accordance  with SFAS No. 131 given its
management reporting structure and differences in products and customers.  Prior
period reporting has been restated to conform to the new segment reporting.

The accounting  policies of the segments are the same as those described in Note
1. Sales between segments are insignificant.  Corporate assets, liabilities, and
expenses  related  to the  Company's  corporate  offices  are  allocated  to the
segments,  except for income taxes. The table below presents  information  about
reported  segments for years ended December 31, on the basis used  internally to
evaluate  segment  performance  (Machining and Technology  results are presented
beginning April, 2001, the date of acquisition):





                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

15. Business Segment Information (continued)



                                                 December 31
                                        ---------------------------------
                                           2001       2002      2003
                                        =================================
                                                   
Net sales:
   Sheet Metal                           $60,552    $61,397   $61,969
   Machining and Technology               10,271     19,952    13,886
                                        ---------------------------------
                                         $70,823    $81,349   $75,855
                                        =================================
Income (loss) before income taxes:
    Sheet Metal                           $4,353   $(10,465)  $(6,354)
    Machining and Technology                 377      2,574       (38)
                                        ---------------------------------
                                          $4,730    $(7,891)  $(6,392)
                                        =================================
Interest Expense:
    Sheet Metal                              $64       $591      $885
    Machining and Technology                 779        904       760
                                        ---------------------------------
                                            $843     $1,495    $1,645
                                        =================================
Capital expenditures:
    Sheet Metal                           $2,615     $1,496      $771
    Machining and Technology                 123        277        83
    Corporate                                649        520       147
                                        ---------------------------------
                                          $3,387     $2,293    $1,001
                                        =================================
Depreciation and amortization:
    Sheet Metal                           $3,665     $4,062    $4,399
    Machining and Technology                 543        371       394
                                        ---------------------------------
                                          $4,208     $4,433    $4,793
                                        =================================

                                                 As of December 31
                                        ---------------------------------
Goodwill:                                  2001       2002      2003
                                        =================================

    Sheet Metal                           $1,767     $    -    $    -
    Machining and Technology               5,653      5,653     5,653
                                        ---------------------------------
                                          $7,420     $5,653    $5,653
                                        =================================

Total Assets:
    Sheet Metal                          $44,770    $56,690   $49,896
    Machining and Technology              15,942     16,319    15,016
    Corporate                              7,290      4,856     5,607
                                        ---------------------------------
                                         $68,002    $77,865   $70,519
                                        =================================






                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

16. Restructuring Charges

The Company adopted SFAS No. 146,  Accounting for Costs Associated with Exit and
Disposal Activities, in 2003. SFAS No. 146 requires companies to recognize costs
associated with exit and disposal  activities when they are incurred rather than
at the date of commitment  to an exit or disposal  plan.  Costs covered  include
lease  termination,   costs  to  consolidate  facilities  and  certain  employee
severance  costs  that  are  associated  with  a   restructuring,   discontinued
operation, plant closing or other exit or disposal activity,

On July 23, 2003, the Company  announced the details of a restructuring  plan to
reduce operating expenses and increase efficiencies at its St. Charles, Missouri
location  which included a reduction of work force of  approximately  60 people,
the exit of two leased facilities, and relocation of a significant amount of its
manufacturing  equipment.  In December 2003, the Company announced an additional
restructuring program at the Wichita, Kansas plant, including a staged reduction
in  workforce  of  approximately  60  employees,  and the  sale of an  LMI-owned
building and excess equipment. The Wichita restructuring program is scheduled to
occur over a five month period  during which the Company  plans to transfer from
its Wichita  facility all extrusion  stretch work to its Auburn,  Washington and
Vista, California locations and its milling work packages to its Tulsa, Oklahoma
and  Auburn,  Washington  facilities  and plans to  transfer  its high  pressure
forming work currently produced in Auburn to the Wichita, Kansas plant. Employee
severance costs for the Wichita plant restructuring will be paid upon completion
of service  term in 2004 and,  therefore  were not  accrued in 2003 per SFAS No.
146.  The costs of these  restructuring  plans as of December 31, 2003 were $527
incurred  as  follows:  $348 for  moving  and  relocation,  $118 for  consulting
services,   and  $61  for  severance   costs.   The  Company  expects  to  incur
restructuring  costs for both of these  programs of $434 in the first quarter of
2004 and $910 for the total year ended December 31, 2004. Total cumulative costs
for both  programs over both years are  estimated at $1,538.  All  restructuring
costs are attributable to the Sheet Metal Segment and are classified as Selling,
General and Administrative expenses.






                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

17. Quarterly Financial Data (Un-audited)



2002                               First (1)     Second      Third    Fourth
                                   ---------------------------------------------
                                                     
Net sales                          $ 17,908   $ 20,355   $ 21,258   $ 21,828
Gross profit                          3,806      4,097      3,532        729
Income (loss) before cumulative
 effect of change in accounting
 principle                              464        462       (420)    (7,706)
Cumulative effect of change in
 accounting principle, net of tax    (1,104)         -          -          -
Net income (loss) after
 accounting changes                $   (640)  $    462   $   (420)  $ (7,706)
                                   =============================================
Amounts per common share:
Net income (loss)                  $  (0.08)  $   0.06   $  (0.05)  $  (0.94)
                                   =============================================
Net income (loss) - assuming
 dilution
                                   $  (0.08)  $   0.06   $  (0.05)  $  (0.94)
                                   =============================================

(1) First  quarter  2002 results  have been  restated to reflect the  cumulative
effect of change in  accounting  principle  related to the  adoption of SFAS no.
142.



2003                               First         Second      Third    Fourth (2)
                                   ---------------------------------------------
                                                     

Net sales                          $ 20,842   $ 18,865   $ 17,566   $ 18,582

Gross Profit                          2,220      2,429      2,743        978

Net income (loss)                  $  (957)   $   (740)  $   (644)  $ (1,640)
                                   =============================================
Amounts per common share:
Net income (loss)                  $  (.11)   $   (.09)  $  (.08)   $   (.20)
                                   =============================================
Net income (loss) - assuming
 dilution                          $  (.11)   $   (.09)  $  (.08)   $   (.20)
                                   =============================================

(2) In the fourth quarter of 2003,  Management  increased the Company's reserves
for  obsolescence  and  slow  moving  inventory  by  $1.4  million  based  on an
evaluation of the current market place and customer buying patterns.






                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

18. Fourth Quarter Adjustments

The fourth quarters of 2002 and 2003 include significant adjustments to increase
inventory  reserves  totaling  $1,958 and  $1,421,  respectively.  In the fourth
quarter of 2002,  management  established  a reserve for lower of cost or market
("LOCOM") to reduce the  inventory  carrying  value by $1,958 due to  production
inefficiencies. This reserve has a current balance of $647 at December 31, 2003.

The Company also performed an in-depth  analysis of inventory  obsolescence  and
slow moving products at the end of the fourth quarter of 2003. This analysis was
based on the current  markets for the  Company's  products and the change in the
buying  patterns of the Company's major  customers.  The result of this analysis
was the  recording  in the fourth  quarter  2003 of an  additional  obsolescence
reserve of $1,421.  The  Company's  reserve  for  obsolescence  and slow  moving
products totaled $2,173 at December 31, 2003.

The total for both the reserve for obsolescence and slow moving products and the
reserve for LOCOM was $2,364 and $2,820,  for December 31, 2002 and December 31,
2003, respectively.

                              LMI Aerospace, Inc.
                Schedule II - Valuation and Qualifying Accounts
         (Dollar amounts in thousands, except share and per share data)
                               December 31, 2003



                                                         Additions              Deductions
                                          -----------------------------------  -------------
                                                                      Other
                               Beginning   Charge to  Acquisitions  Charge to    Write-offs    Ending
                                Balance      Cost/         (a)        Cost/        net of      Balance
                                          Expense (c)               Expense (b)  Recoveries
                                                                          
Reserve for Accounts
 Receivable
Year ended December 31, 2001     $ 50        $ 49         $  -         $    -      $ 35          $ 64
Year ended December 31, 2002       64         110          220              -        60           334
Year ended December 31, 2003      334         132            -              -       221           245

Reserve for Inventory
Year ended December 31, 2001     $  -        $739         $313         $    -      $739        $  313
Year ended December 31, 2002      313         641            -          1,958       548         2,364
Year ended December 31, 2003    2,364       2,549            -         (1,311)      782         2,820

(a)  Includes effects of business acquisitions, Tempco - April 2001, Versaform -
     May 2002,  Stretch  Forming  Corporation - June 2002, and Southern  Stretch
     Forming - September 2002.

(b)  During year ended  December  2002,  due to production  inefficiencies,  the
     Company  established  a  reserve  for lower of cost or  market  (LOCOM)  of
     $1,958.  In the year ended December 2003,  improved  efficiencies and price
     increases on selected products resulted in a reduced  requirement of $1,311
     of this reserve.

(c)  In the fourth quarter of 2003,  Management increased the Company's reserves
     for obsolescence and slow moving inventory by $1,421 based on an evaluation
     of the current market place and customer buying patterns.

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

On  September  22,  2003,  Ernst & Young,  LLP informed the Company that Ernst &
Young was resigning as the Company's independent accountants, effective upon the
completion  of the  quarterly  review  of the  Company's  fiscal  quarter  ended
September 30, 2003.  Ernst & Young's  resignation  became  effective on November
14, 2003.

The reports of Ernst & Young on the financial  statements of the Company for the
past two fiscal years  contained no adverse opinion or disclaimer of opinion and
were not  qualified or modified as to  uncertainty,  audit scope,  or accounting
principles.

In  connection  with its audit for each of the two most recent  fiscal years and
through  November 14, 2003, the date of Ernst & Young's  resignation,  there had
been no disagreements with Ernst & Young on any matter of accounting  principles
or practices,  financial  statement  disclosures or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Ernst & Young, would
have  caused  Ernst & Young to make  reference  thereto  in their  report in the
financial statements for such years.

During the 2001 and 2002 fiscal years,  and through November 14, 2003, the dates
of Ernst & Young's resignation,  there have been no reportable events as defined
in Registration S-K, Item 304(a)(1)(v).

Effective as of December 29, 2003, BDO Seidman, LLP accepted engagement to serve
as the Company's Independent  Certified Public Accountants.  The Company's Audit
Committee selected,  and its Board of Directors ratified the appointment of, BDO
Seidman, LLP to serve as the Company's Independent Certified Public Accountants.

During the Company's  two most recent  fiscal years ended  December 31, 2001 and
2002,  and through  December  29,  2003,  the  Company did not consult  with BDO
Seidman,  LLP with respect to the  application  of  accounting  principles  to a
specified  transaction,  either  contemplated or proposed,  or the type of audit
opinion that might be rendered on the  Company's  financial  statements,  or any
matter that was either the subject of a disagreement or a reportable event.




                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

Item 9A.  Controls and Procedures.

As of end of the fiscal  quarter ended  December 31, 2003,  the Company's  Chief
Executive Officer and Chief Financial Officer carried out an evaluation with the
participation  of other  members  of the  Company's  management  as they  deemed
appropriate,  of the  effectiveness of the design and operation of the Company's
disclosure  controls and procedures (as defined in Exchange Act Rules  13a-15(e)
and 15d-15(e) under the Securities  Exchange Act of 1934). Based upon and on the
date of the end of the  Company's  last  fiscal  quarter,  the  Chief  Executive
Officer and Chief  Financial  Officer  concluded  that the Company's  disclosure
controls and procedures were effective in all material respects in ensuring that
material  information  required to be disclosed in periodic  reports the Company
files with the  Securities  and  Exchange  Commission  is  recorded,  processed,
summarized and reported in a timely manner.

This portion of our Annual report is our  disclosure of the  conclusions  of our
management,  including our Chief Executive Officer and Chief Financial  Officer,
regarding the effectiveness of our disclosure  controls and procedures as of the
end of the period covered by this report,  based on  management's  evaluation of
those  disclosure  controls and  procedures.  You should read this disclosure in
conjunction  with the  certifications  attached as Exhibit 31.1 and 31.2 to this
annual report for a more complete understanding of the topics presented.

In connection with its 2003 year-end audit, our independent  certificate  public
accountant has identified a material  weakness relating to our internal controls
and  procedures.  While we are in the process of  implementing  a more effective
system of controls and procedures,  we have instituted controls,  procedures and
other changes to ensure that information required to be disclosed in this annual
report  on Form  10-K has been  recorded,  processed,  summarized  and  reported
accurately.

The  incremental  steps  that we have  taken as a result  of the  aforementioned
control  deficiencies to ensure that all material  information about our company
is accurately  disclosed in this report  included the  application of additional
methods  and  techniques  to evaluate  the  accuracy  of  inventory  costing and
adequacy of inventory reserves.

Based in part on the steps listed  above,  our Chief  Executive  Officer and our
Chief  Financial  Officer  have  concluded  that  our  disclosure  controls  and
procedures are effective to ensure that  information we are required to disclose
in reports that we file or submit under the  Securities  Exchange Act of 1934 is
recorded, processed,  summarized and reported accurately within the time periods
specified in Securities and Exchange Commission rules and forms.







                               LMI Aerospace, Inc.
            Notes to Consolidated Financial Statements - (Continued)
         (Dollar amounts in thousands, except share and per share data)
                                December 31, 2003

Item 9A.  Controls and Procedures. (cont)

In addition, in order to address further the deficiencies described above and to
improve our internal  disclosure and control  procedures for future periods,  we
will:

     1.   Review,  select and implement  available  improvements  to information
          systems for inventory accounting;
     2.   Perform a review of internal  controls and  procedures  in  connection
          with Section 404 of Sarbanes Oxley legislative requirements;
     3.   Perform more detailed  quarterly  reconciliations  and analysis of the
          company's inventory accounts related to its distributors;
     4.   Continue  to enhance  staffing  to  provide  sufficient  resources  to
          accomplish the foregoing objectives.

These steps will constitute  significant  changes in internal controls.  We will
continue to evaluate the  effectiveness of our disclosure  controls and internal
controls and  procedures on an ongoing  basis,  and will take further  action as
appropriate.

No significant  changes were made in the Company's internal controls or in other
factors  that  could  significantly  affect  these  controls  during  the fourth
quarter.






                                    PART III

Item 10.  Directors and Executive Officers.

The information  contained under the caption "Information About the Nominees and
Current Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance"
in the Company's  definitive  proxy statement to be filed pursuant to Regulation
14A for the Company's  2004 Annual Meeting of  Shareholders,  which involves the
election of directors,  is incorporated herein by this reference.

The following is a list of the current executive officers of the Company,  their
ages, their positions with the Company,  and their principal  occupations for at
least the past five years.


Name                     Age     Position

Ronald S. Saks            60     Chief Executive Officer, President and Director

Robert Grah               49     Vice President - Central Region

Brian Olsen               44     Vice President - West Region

Lawrence E. Dickinson     44     Chief Financial Officer and Secretary

Set forth below are biographies of each executive officer of the Company.

Ronald S. Saks has served as Chief  Executive  Officer  and  President  and as a
director of the Company since 1984.  Prior to his  employment  with the Company,
Mr. Saks was an Executive Vice President with  Associated  Transports,  Inc. for
eight years and was a Tax Manager with Peat Marwick Mitchell & Co., now known as
KPMG Peat Marwick LLP, for the eight years prior thereto.  Mr. Saks obtained his
Bachelor's degree in Business Administration from Washington University in 1966.
He also studied  engineering at the Massachusetts  Institute of Technology,  and
completed an executive education program at Stanford  University.  Mr. Saks is a
Certified Public Accountant.

Robert T. Grah joined the Company in 1984 as  Production  Control  Manager.  Mr.
Grah  has  held  various  management  positions  with  the  Company,   including
Purchasing  and Contracts  Manager,  Maintenance  Manager,  Facilities  Manager,
General Manager of LMI Finishing, Inc., and was promoted to his current position
as Vice  President  - Central  Region in  December  2002.  Prior to joining  the
Company, Mr. Grah was a supervisor for Associated Transports, Inc. and a manager
for Beneficial  Finance.  Mr. Grah's  education has included  Florissant  Valley
Community  College,  and numerous  continuing  education  courses in management,
total  preventative   maintenance,   and  various  environmental  and  technical
subjects.

Lawrence E. Dickinson has been the Chief Financial  Officer of the Company since
1993. He served as a Financial  Analyst and  Controller  for LaBarge,  Inc. from
1984 to 1993 and as a Cost  Accountant  with  Monsanto  from  1981 to 1984.  Mr.
Dickinson  received his Bachelor's  degree in Accounting  from the University of
Alabama  and  received  his  Master's  degree in  Business  Administration  from
Washington University in 1994.

Brian Olsen  graduated from the  University of Washington  with a BA in Business
Administration  in 1982. He  concentrated  in marketing  and finance.  From 1982
through 1997,  Mr. Olsen worked for  Tramco/BF  Goodrich,  a transport  category
aircraft repair and maintenance  facility.  Mr. Olsen began as their Director of
Marketing  and  became  Chief  Operating  Officer in 1987.  In 1988,  Tramco was
purchased  by BF  Goodrich.  Mr.  Olsen was  appointed  General  Manager  of the
division  and served in that  capacity  from 1992 to 1997.  Mr.  Olsen served as
president of a small marine manufacturing and service company from 1997 to 2000.
Mr.  Olsen  then  managed  two  divisions  of  Milgard  Manufacturing,  a window
manufacturing  company owned by Masco  Corporation  from 2000 to 2002. Mr. Olsen
joined  LMI as a  Market  Sector  Director  in 2002  and  then  became  the Vice
President - West Coast Region in October of 2003.

Item 11.  Executive Compensation.

The  information   contained  under  the  captions   "Directors   Compensation,"
"Executive  Compensation,"  "Option/SAR Grants in Last Fiscal Year," "Aggregated
Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option SAR Values,"
"Employment  Arrangements  with Named  Officers",  and  "Compensation  Committee
Report" in the  Company's  definitive  proxy  statement to be filed  pursuant to
Regulation  14A for the Company's  2004 Annual  Meeting of  Shareholders,  which
involves the election of directors, is incorporated herein by this reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

The  information  contained  under the caption  "Security  Ownership  of Certain
Beneficial  Owners" and  "Security  Ownership of  Management"  in the  Company's
definitive  proxy  statement  to be filed  pursuant  to  Regulation  14A for the
Company's  2004 Annual Meeting of  Shareholders,  which involves the election of
directors, is incorporated herein by this reference.

Item 13.  Certain Relationships and Related Transactions.

The  information  contained  under the  caption  "Certain  Transactions"  in the
Company's  definitive proxy statement to be filed pursuant to Regulation 14A for
the Company's 2004 Annual Meeting of  Shareholders,  which involves the election
of directors, is incorporated herein by this reference.

Item 14.  Principal Accountant Fees and Services.

The information  contained under the caption "Fees Billed by Independent  Public
Accountants" in the Company's definitive proxy statement to be filed pursuant to
Regulation  14A for the Company's  2004 Annual  Meeting of  Shareholders,  which
involves the election of directors, is incorporated herein by this reference.





                                     PART IV

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)  1.   For a list of the Consolidated  Financial  Statements  of the  Company
          included as part of this report, see the index at Item 8.

     2.   Other than  Schedule  II -  Valuation  and  Qualifying  Accounts,  all
          schedules have been omitted as the required information is not present
          in  sufficient  amounts  or  the  required   information  is  included
          elsewhere in the Consolidated Financial Statement or notes thereto.

         3. Exhibits:

                           See Exhibit Index (each management contract or
                           compensatory plan or arrangement listed therein is
                           identified).

(b)  Reports on Form 8-K:

     (i)  On  November  17,  2003,  the  Company  filed a  Report  on Form  8-K,
          announcing third quarter results.

     (ii) On  November  18,  2003,  the  Company  filed a  Report  on Form  8-K,
          announcing the  effectiveness of the resignation of Ernst & Young, LLP
          as the Company's independent  accountants.

     (iii)On  December  4,  2003,  the  Company  filed a  Report  on  Form  8-K,
          announcing  the  Company's  entry  into  a  long-term   contract  with
          Bombardier,  and the appointment of two  independent  directors of the
          Company's  Board of Directors.

     (iv) On  December  11,  2003,  the  Company  filed a  Report  on Form  8-K,
          announcing  the  restructuring  plans  of its  facilities  located  in
          Wichita,  Kansas.

     (v)  On  December  28,  2003,  the  Company  filed a  report  on Form  8-K,
          announcing  the  appointment  of  BDO  Seidman,  LLP to  serve  as the
          Company's independent accountants.

(c)  Exhibits:

          See Exhibit Index

(d)  All schedules have been omitted as the required  information is not present
     in sufficient amounts or the required  information is included elsewhere in
     the Consolidated Financial Statement or notes thereto.







                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the  undersigned,  thereunto  duly  authorized,  in the  County of St.
Charles and State of Missouri on the 14th day of April, 2004.

                                      LMI AEROSPACE, INC.


                                      By: /s/ Ronald S. Saks
                                         --------------------------------------
                                         Ronald S. Saks
                                         President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.



Signature                          Title                         Date
                                                

/s/ Ronald S. Saks
- -------------------------   Chief Executive Officer,              April 14, 2004
Ronald S. Saks              President, and Director


/s/ Joseph Burstein
- -------------------------   Chairman of the Board, and            April 14, 2004
Joseph Burstein             Director

/s/ Lawrence E. Dickinson
- -------------------------   Chief Financial Officer and           April 14, 2004
Lawrence E. Dickinson       Secretary

/s/ Duane Hahn
- -------------------------   Vice President, Regional              April 14, 2004
Duane Hahn                  Manager and Director

/s/ Sanford S. Neuman
- -------------------------   Assistant Secretary and               April 14, 2004
Sanford S. Neuman           Director

/s/ Thomas Unger
- -------------------------   Director                              April 14, 2004
Thomas Unger

/s/ Brian D. Geary
- -------------------------   Director                              April 14, 2004
Brian D. Geary

/s/ Paul L. Miller, Jr.
- -------------------------   Director                              April 14, 2004
Paul L. Miller, Jr.

/s/ John M. Roeder
- -------------------------   Director                              April 14, 2004
John M. Roeder






                                  EXHIBIT INDEX

Exhibit
Number   Description

2.1      Asset Purchase Agreement by and among Tempco Engineering, Inc. and Hyco
         Precision, Inc., the shareholders of Tempco Engineering,  Inc. and Hyco
         Precision,  Inc.  and Metal  Corporation,  dated as of March 28,  2001,
         filed as Exhibit 2.1 to the  Registrant's  Form 8K filed April 17, 2001
         and incorporated herein by reference.

2.2      Stock Purchase  Agreement  between LMI Aerospace,  Inc. and Brian Geary
         dated as of May 15, 2002, filed as Exhibit 2.1 to the Registrant's Form
         8-K filed May 16, 2002 and incorporated herein by reference.

3.1      Restated Articles of the Registrant  previously filed as Exhibit 3.1 to
         the  Registrant's  Form S-1 (File No.  333-51357)  dated as of June 29,
         1998 (the "Form S-1") and incorporated herein by reference.

3.2      Amended and  Restated  By-Laws of the  Registrant  previously  filed as
         Exhibit 3.2 to the Form S-1 and incorporated herein by reference.

3.3      Amendment  to Restated  Articles of  Incorporation  dated as of July 9,
         2001 filed as Exhibit 3.3 to the Registrant's  Form 10-K filed April 1,
         2002, and incorporated herein by reference.

4.1      Form of the Registrant's  Common Stock Certificate  previously filed as
         Exhibit 4.1 to the Form S-1 and incorporated herein by reference.

10.1+    Employment Agreement, dated January 1, 1997, between the Registrant and
         Ronald S. Saks, as previously filed as Exhibit 10.2 to the Form S-1 and
         incorporated herein by reference.

10.2     Lease  Agreement,  dated November 25, 1991,  between the Registrant and
         Roy R. Thoele and Madonna J. Thoele,  including all amendments  (Leased
         premises at 3000 Highway 94 North), previously filed as Exhibit 10.8 to
         the Form S-1 and incorporated herein by reference.

10.3     Lease Agreement,  dated June 28, 1988, between the Registrant and J & R
         Sales,  including  all  amendments  (Leased  premises at 204 H Street),
         previously  filed as  Exhibit  10.9 to the  Form  S-1 and  incorporated
         herein by reference.

10.4     Lease Agreement,  dated May 6, 1997,  between the Registrant and Victor
         Enterprises,  LLC,  including all  amendments  (Leased  premises at 101
         Western  Avenue S),  previously  filed as Exhibit 10.10 to the Form S-1
         and incorporated herein by reference.

10.5     Lease Agreement, dated February 1, 1995, between the Registrant and RFS
         Investments  (Leased  premises at 2621 West Esthner  Court)  previously
         filed as  Exhibit  10.11 to the Form  S-1 and  incorporated  herein  by
         reference.

10.6+    Profit Sharing and Savings Plan and Trust,  including amendments nos. 1
         through  6,  previously  filed  as  Exhibit  10.12  to the Form S-1 and
         incorporated herein by reference.

10.7     Loan Agreement between the Registrant and Magna Bank, N.A. dated August
         15, 1996,  including  amendments nos. 1 through 3, previously  filed as
         Exhibit 10.13 to the Form S-1 and incorporated herein by reference.

10.8     Indenture  of  Trust  and Loan  Agreement,  both  with  the  Industrial
         Development  Authority of St. Charles County,  Missouri and dated as of
         September 1, 1990 previously filed as Exhibit 10.14 to the Form S-1 and
         incorporated herein by reference.

10.9     General  Terms   Agreement,   Special  Terms   Agreement  and  Warranty
         Agreements,  between the Registrant and Boeing Seattle previously filed
         as Exhibit 10.15 to the Form S-1 and incorporated herein by reference.

10.10    Form of Master Order Agreement covering Boeing 777 and 747 Programs and
         Master Order Agreement  covering Boeing 737 Leading Edge Program,  both
         between the Registrant and Boeing North American,  previously  filed as
         Exhibit 10.16 to the Form S-1 and incorporated herein by reference.

10.11    Form of Contract  between the Registrant and Boeing Wichita  previously
         filed as  Exhibit  10.17 to the Form  S-1 and  incorporated  herein  by
         reference.

10.12    General Conditions (Fixed Price -  Non-Governmental)  for the G-14/F100
         Program,  General  Conditions for the Wing Stub/Lower 45 Program Boeing
         Model 767 Commercial  Aircraft and Form of Master  Agreement,  all with
         Vought   previously  filed  as  Exhibit  10.18  to  the  Form  S-1  and
         incorporated herein by reference.

10.13+   Amended  and  Restated  1998 Stock  Option  Plan,  previously  filed as
         Exhibit 10.37 to the Registrant's  Form S-8 (File No.  333-38090) dated
         as of May 24, 2000 and incorporated herein by reference.

10.14    General Terms  Agreement  between Boeing  Company and Leonard's  Metal,
         Inc. with Special  Business  Provision  attached,  previously  filed as
         Exhibit  10.15 to the  Registrant's  Form 10-Q dated as of November 16,
         1998 and incorporated herein by reference.

10.15    Lease  Agreement  between Mother Goose  Corporation and Precise Machine
         Partners  L.L.P.  (Leased  premises  at 2205 and 2215  River Hill Road,
         Irving, Texas) dated August 25, 1998, previously filed as Exhibit 10.24
         to the  Registrant's  Form 10-K for the fiscal year ended  December 31,
         1999, and incorporated herein by reference.

10.16+   Employment  Agreement  effective  as of January 1, 2000,   between  LMI
         Aerospace, Inc. and Lawrence E. Dickinson,  previously filed as Exhibit
         10.32 to the Form 10-K for the fiscal year ended December 31, 2000, and
         incorporated herein by reference.

10.17    Fourth  Amendment  to Loan  Agreement  dated as of  October  30,  2000,
         previously  filed as Exhibit 10.37 to the  Registrant's  Form 8-K dated
         December 26, 2000 and incorporated herein by reference.

10.19    Fifth  Amendment to and Restatement of Loan Agreement dated as of April
         2, 2001, previously filed as Exhibit 10.1 to the Registrant's Form 10-Q
         dated August 9, 2001, and incorporated herein by reference.

10.20    Sixth Amendment to Loan Agreement  dated as of October 30, 2001,  filed
         as Exhibit 10.2 to the Registrant's  Form 10-Q dated November 14, 2001,
         and incorporated herein by reference.

10.21    Business  Reformation  Agreement  between  Leonard's  Metal,  Inc.  and
         Lockheed Martin Aeronautics  Company dated September 21, 2001, filed as
         Exhibit 10.1 to the Registrant's Form 10-Q dated November 14, 2001, and
         incorporated by reference.

10.22    Lease dated  April 2, 2001 by and  between  Peter Holz and Anna L. Holz
         Trustees  of the Peter and Anna L. Holz Trust  dated  2/8/89,  as to an
         undivided one-half  interest,  and Ernest R .Star and Linda Ann Zoettl,
         Trustees  under the  Ernest L. Star and  Elizabeth  H. Star 1978  Trust
         dated August 25, 2978, as to an undivided  one-half  interest and Metal
         Corporation,  filed as Exhibit 10.27 to the Registrant's  Form 10-K for
         the fiscal year ended  December 31, 2001,  and  incorporated  herein by
         reference.

10.23    Lease dated April 2, 2001, between Tempco  Engineering,  Inc. and Metal
         Corporation,  filed as Exhibit 10.28 to the Registrant's  Form 10-K for
         the fiscal year ended  December 31, 2001,  and  incorporated  herein by
         reference.

10.24+   Employment  Agreement  Effective  as of  January  1, 2002  between  LMI
         Aerospace,  Inc.  and  Robert T. Grah,  filed as  Exhibit  10.29 to the
         Registrant's Form 10-K for the fiscal year ended December 31, 2001, and
         incorporated herein by reference.

10.25+   Employment  Agreement  Effective  as of  January  1, 2002  between  LMI
         Aerospace,  Inc.  and  Duane  Hahn ,  filed  as  Exhibit  10.30  to the
         Registrant's Form 10-K for the fiscal year ended December 31, 2001, and
         incorporated herein by reference.

10.26    Seventh  Amendment to and  Restatement of Loan Agreement dated November
         30, 2001, filed as Exhibit 10.1 to the Registrant's Form 10-Q filed May
         15, 2002 and incorporated herein by reference.

10.27    Eighth  Amendment to and  Restatement of Loan  Agreement  dated May 15,
         2002, filed as Exhibit 10.1 to the Registrant's  Form 8-K filed May 16,
         2002 and incorporated herein by reference.

10.28    Ninth Amendment to Loan Agreement dated June 30, 2002, filed as Exhibit
         10.1  to  the  Registrant's   Form  10-Q  filed  August  14,  2002  and
         incorporated herein by reference.

10.29    Tenth  Amendment to Loan Agreement  dated  November 13, 2002,  filed as
         Exhibit  10 to the  Registrant's  Form 10-Q filed  August 14,  2002 and
         incorporated  herein by  reference.

10.30    Eleventh  Amendment to Loan  Agreement  dated April 15, 2003,  filed as
         Exhibit  10.1 to the  Registrant's  Form 8-K filed  April 23,  2003 and
         incorporated herein by reference.

10.31    Twelfth  Amendment to Loan  Agreement  dated January 5, 2004,  filed as
         Exhibit  10 to the  Registrant's  Form 8-K  filed  January  6, 2004 and
         incorporated herein by reference.

10.32    Thirteenth  Amendment to Loan Agreement dated March 30, 2004,  filed as
         Exhibit  10.1 to the  Registrant's  Form 8-K filed  March 31,  2004 and
         incorporated herein by reference.

10.33    Multi-year  contract  between  Leonard's  Metal,  Inc.  and  Gulfstream
         Aerospace  dated  September  3,  2003,  filed  as  Exhibit  10.1 to the
         Registrant's Form 8-K filed September 12, 2003 and incorporated  herein
         by reference.

10.34    Special Business Provisions Agreement between Leonard's Metal, Inc. and
         Boeing  Company  dated  March 20,  2003,  filed as Exhibit  10.2 to the
         Registrant's Form 8-K filed September 12, 2003 and incorporated  herein
         by reference.

10.35    General Terms Agreement  between  Leonard's Metal,  Inc. and the Boeing
         Company,  filed as  Exhibit  10.3 to the  Registrant's  Form 8-K  filed
         September 12, 2003 and incorporated herein by reference.

10.36    Net   Industrial   lease  between  Nonar   Enterprises   and  Versaform
         Corporation,  dated as of September 12, 2003,  filed as Exhibit 10.1 to
         the  Registrant's  Form 10-Q filed  November 14, 2003 and  incorporated
         herein by reference.

21.1     List of Subsidiaries of the Registrant  (filed herewith).

23.1     Consent of BDO Seidman, LLP (filed herewith).

23.2     Consent of Ernst & Young, LLP (filed herewith).

31.1     Rule  13a-14(a)  Certification  of Ronald S. Saks,  President and Chief
         Executive Officer (filed herewith).

31.2     Rule 13a-14(a) Certification of Lawrence E. Dickinson,  Chief Financial
         Officer (filed herewith).

32       Section 1350 Certification (filed herewith).

99.P    Code of Business Conduct and Ethics (filed herewith).

- -----------------------------------------
+ Management  contract or compensatory plan or arrangement  required to be filed
as exhibit to this report.




                                                                    Exhibit 21.1


                           Subsidiaries of Registrant



                  Subsidiary                            Jurisdiction
                  ----------                            ------------
                                               
                  LMI Finishing, Inc.                   Missouri
                  Leonard's Metal, Inc.                 Missouri
                  Precise Machine Partners, L.L.P.      Texas
                  Precise Machine Company               Texas
                  Tempco Engineering, Inc.              Missouri
                  Versaform Corporation                 California
                  LMIV Holding Ltd.                     British Columbia, Canada






                                                                    Exhibit 23.1


               Consent of Independent Certified Public Accountants


We  hereby  consent  to the  incorporation  by  reference  in  the  Registration
Statements  (Form S-8 No.  333-70259  and No.  333-38090)  pertaining to the LMI
Aerospace,  Inc.  Profit  Sharing  and Savings  Plan and Trust,  the Amended and
Restated LMI  Aerospace,  Inc.  1998 Stock Option  Plan,  and the 1989  Employee
Incentive Stock Option Plan of our report dated March 31, 2004,  relating to the
consolidated  financial  statements  and  financial  statement  schedule  of LMI
Aerospace, Inc., which appears in this Form 10-K for the year ended December 31,
2003.  Our report  contains an  explanatory  paragraph  regarding  the Company's
ability to continue as a going concern.


                                        /s/ BDO Seidman, LLP



Chicago, Illinois
April 14, 2004




                                                                    Exhibit 23.2


                         Consent of Independent Auditors


We consent to the  incorporation  by  reference in the  Registration  Statements
(Form S-8 No. 333-70259 and No. 333-38090) pertaining to the LMI Aerospace, Inc.
Profit  Sharing  and  Savings  Plan and Trust,  the  Amended  and  Restated  LMI
Aerospace,  Inc. 1998 Stock Option Plan, and the 1989 Employee  Incentive  Stock
Option Plan of our report dated April 15, 2003, with respect to the consolidated
financial statements,  as amended, of LMI Aerospace, Inc. included in the Annual
Report (Form 10-K) for the year ended December 31, 2003.


                                           /s/ Ernst & Young LLP

St. Louis, Missouri
April 14, 2004






                                                                    Exhibit 31.1

                                 CERTIFICATIONS

     I, Ronald S. Saks, certify that:

     1. I have reviewed this annual report on Form 10-K of LMI Aerospace, Inc.;

     2. Based on my knowledge, this report does not contain any untrue statement
of a  material  fact or omit to  state a  material  fact  necessary  to make the
statements made, in light of the circumstances  under which such statements were
made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

     4. The  registrant's  other  certifying  officer and I are  responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)  Designed  such  disclosure  controls  and  procedures,  or caused  such
disclosure  controls and  procedures to be designed  under our  supervision,  to
ensure that  material  information  relating to the  registrant,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

     b) Evaluated the effectiveness of the registrant's  disclosure controls and
procedures and presented in this report our conclusions  about the effectiveness
of the disclosure  controls and procedures,  as of the end of the period covered
by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant's internal control
over  financial  reporting  that occurred  during the  registrant's  most recent
fiscal quarter (the registrant's  fourth fiscal quarter in the case of an annual
report) that has  materially  affected,  or is  reasonably  likely to materially
affect, the registrant's internal control over financial reporting; and

     5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial  reporting,  to
the  registrant's   independent  certified  public  accountants  and  the  audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent functions):

     a) All significant  deficiencies  and material  weaknesses in the design or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  registrant's  ability  to  record,  process,
summarize and report financial information; and

     b) Any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's  internal control over
financial reporting.

     6. The registrant's  other certifying  officer and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.



Date:  April 14, 2004                      /s/ Ronald S. Saks
                                           -------------------------------------
                                           Ronald S. Saks
                                           Chief Executive Officer and President






                                                                    Exhibit 31.2

                                 CERTIFICATIONS

     I, Lawrence E. Dickinson, certify that:

     1. I have reviewed this annual report on Form 10-K of LMI Aerospace, Inc.;

     2. Based on my knowledge, this report does not contain any untrue statement
of a  material  fact or omit to  state a  material  fact  necessary  to make the
statements made, in light of the circumstances  under which such statements were
made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

     4. The registrant's  other certifying  officer(s) and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)  Designed  such  disclosure  controls  and  procedures,  or caused  such
disclosure  controls and  procedures to be designed  under our  supervision,  to
ensure that  material  information  relating to the  registrant,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

     b) Evaluated the effectiveness of the registrant's  disclosure controls and
procedures and presented in this report our conclusions  about the effectiveness
of the disclosure  controls and procedures,  as of the end of the period covered
by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant's internal control
over  financial  reporting  that occurred  during the  registrant's  most recent
fiscal quarter (the registrant's  fourth fiscal quarter in the case of an annual
report) that has  materially  affected,  or is  reasonably  likely to materially
affect, the registrant's internal control over financial reporting; and

     5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial  reporting,  to
the  registrant's   independent  certified  public  accountants  and  the  audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent functions):

     a) All significant  deficiencies  and material  weaknesses in the design or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  registrant's  ability  to  record,  process,
summarize and report financial information; and

     b) Any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's  internal control over
financial reporting.

     6. The registrant's  other certifying  officer and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.



Date:  April 14, 2004                      /s/ Lawrence E. Dickinson
                                           -------------------------------------
                                           Lawrence E. Dickinson
                                           Chief Financial Officer and Secretary






                                                                      EXHIBIT 32


Pursuant to Section 906 of the  Sarbanes-Oxley  Act of 2002 (subsections (a) and
(b) of Section 1350,  Chapter 63 of Title 18,  United States Code),  each of the
undersigned  officers  of LMI  Aerospace,  Inc.,  a  Missouri  corporation  (the
"Company"), does hereby certify that, to the best of their knowledge:

The Annual Report on Form 10-K for the fiscal year ended  December 31, 2003 (the
"Form 10-K") of the Company  fully  complies  with the  requirements  of Section
13(a) or 15(d) of the Securities Exchange Act of 1934 and information  contained
in the Form 10-K  fairly  presents,  in all  material  respects,  the  financial
condition and results of operations of the Company.

Date:  April 14, 2004                      /s/ Ronald S. Saks
                                           -------------------------------------
                                           Ronald S. Saks
                                           President and Chief Executive Officer

Date:  April 14, 2004                      /s/ Lawrence E. Dickinson
                                           -------------------------------------
                                           Lawrence E. Dickinson
                                           Secretary and Chief Financial Officer

A signed  original of this  written  statement  required by Section 906 has been
provided to LMI Aerospace,  Inc. and will be retained by LMI Aerospace, Inc. and
furnished to the Securities and Exchange Commission or its staff upon request.