CPI AEROSTRUCTURES, INC.
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period Commission File Number 1-11398
ended March 31, 2003
CPI AEROSTRUCTURES, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
New York 11-2520310
--------------------------------------- ------------------------------------
(State or Other Jurisdiction (IRS Employer Identification Number)
of Incorporation or Organization)
200A EXECUTIVE DRIVE, EDGEWOOD, NY 11717
(Address of Principal Executive Offices)
Telephone number (631) 586-5200
(Issuer's Telephone Number Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or such 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 ____
The number of shares of common stock, par value $.001 per share, outstanding was
5,105,668 as of May 9, 2003.
CPI AEROSTRUCTURES, INC.
INDEX
--------------------------------------------------------------------------------
Part I: Financial Information:
Item 1 - Consolidated Financial Statements:
Independent Accountant's Report 3
Balance Sheets as of March 31, 2003 (Unaudited) and 4
December 31, 2002
Statements of Income for the Three Months ended March 31, 2003 5
(Unaudited) and 2002 (Unaudited)
Statements of Cash Flows for the Three Months ended March 31, 2003 6
(Unaudited) and 2002 (Unaudited)
Notes to Financial Statements (Unaudited) 7
Item 2 - Management's Discussion and Analysis of Financial Condition 10
and Results of Operations
Item 3 - Controls and Procedures 13
Part II. Other
Item 6 - Exhibits and Reports on Form 8-K 13
Signatures and Certifications 14
2
CPI AEROSTRUCTURES, INC.
--------------------------------------------------------------------------------
Part I: Financial Information:
Item 1 - Consolidated Financial Statements:
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
CPI Aerostructures, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of CPI
Aerostructures, Inc. and Subsidiary as of March 31, 2003, and the related
condensed consolidated statements of income and cash flows for the three-month
periods ended March 31, 2003 and 2002. These financial statements are
responsibility of the company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures and
making inquiries of persons responsible for financial and accounting matters. It
is substantially less in scope than an audit in accordance with generally
accepted auditing standards the objective of which is the expression of an
opinion regarding the consolidated financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements in order for them
to be in conformity with accounting principles generally accepted in the United
States of America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of CPI
Aerostructures, Inc. and Subsidiary as of December 31, 2002, and the related
consolidated statements of income, shareholders' equity, and cash flows for the
year then ended (not presented herein); and in our report dated February 4,
2003, except for the second paragraph of Note 15 and Note 16, as to which the
date is February 19, 2003, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of December 31, 2002,
is fairly stated in all material respects, in relation to the consolidated
balance sheet from which it is derived.
/s/ Goldstein Golub Kessler LLP
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
April 23, 2003
3
CPI AEROSTRUCTURES, INC.
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
March 31, December 31,
2003 2002
(Unaudited)
-----------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash $ 1,897,589 $ 91,537
Accounts receivable 3,362,160 2,331,775
Costs and estimated earnings in excess of billings on uncompleted
contracts 11,582,532 11,382,106
Deferred income taxes, net of valuation allowance of $-0- and $900,000, 651,000 651,000
respectively
Prepaid expenses and other current assets 91,819 465,498
Assets held for sale - discontinued operations --- 280,676
-----------------------------------------------------------------------------------------------------------------------
Total current assets 17,585,100 15,202,592
Property, plant and equipment, net 240,176 222,928
Deferred income taxes, net of valuation allowance of $1,987,000
and $2,910,000, respectively --- ---
Other assets 179,226 179,226
-----------------------------------------------------------------------------------------------------------------------
Total assets $18,004,502 $15,604,746
=======================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,798,465 $ 4,574,678
Accrued expenses 14,018 628,180
Current portion of long-term debt 79,457 8,024,160
-----------------------------------------------------------------------------------------------------------------------
Total current liabilities 3,891,940 13,227,018
Long-term debt 37,562 40,192
-----------------------------------------------------------------------------------------------------------------------
Total liabilities 3,929,502 13,267,210
-----------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
Shareholders' equity:
Common stock - $.001 par value; authorized 50,000,000 shares,
5,105,668 and 2,785,668 issued and outstanding 5,106 2,786
Additional paid - in capital 20,358,583 12,613,974
Accumulated deficit (6,288,689) (10,279,224)
-----------------------------------------------------------------------------------------------------------------------
Shareholders' equity 14,075,000 2,337,536
-----------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $18,004,502 $15,604,746
=======================================================================================================================
See Notes to Consolidated Financial Statements
4
CPI AEROSTRUCTURES, INC.
CONSOLIDATED STATEMENTS OF INCOME
--------------------------------------------------------------------------------
For the Three Months Ended March 31, 2003 2002
(Unaudited)
------------------------------------------------------------------------------------------------------------------------
Revenue $ 6,007,447 $ 4,691,784
Cost of sales 3,841,546 3,289,402
------------------------------------------------------------------------------------------------------------------------
Gross profit 2,165,901 1,402,382
Selling, general and administrative expenses 722,919 419,871
------------------------------------------------------------------------------------------------------------------------
Income from operations 1,442,982 982,510
------------------------------------------------------------------------------------------------------------------------
Other income (expense):
Interest/other income (expense) 2,654 (9,701)
Interest expense (139,666) (41,376)
Gain on extinguishment of debt 2,431,233 ---
------------------------------------------------------------------------------------------------------------------------
Total other income (expenses), net 2,294,221 (51,077)
------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 3,737,203 931,433
Gain on sale of assets held for sale - discontinued operations 253,332 ---
------------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes 3,990,535 931,433
Provision for income taxes --- 373,000
-------------------------------------------------------------------------------------------------------------------------
Net income $ 3,990,535 $ 558,433
=========================================================================================================================
Basic net income per common share:
Income from continuing operations $ 0.97 $ 0.21
Gain on sale of assets held for sale - discontinued operations 0.07 ---
-------------------------------------------------------------------------------------------------------------------------
Earnings per common share - basic $ 1.04 $ 0.21
=========================================================================================================================
Diluted net income per common share:
Income from continuing operations $ 0.87 $ 0.21
Gain on sale of assets held for sale - discontinued operations 0.06 ---
-------------------------------------------------------------------------------------------------------------------------
Earnings per common share - diluted $ 0.93 $ 0.21
=========================================================================================================================
Shares used in computing earnings per common share:
Basic 3,848,779 2,657,046
Diluted 4,311,529 2,706,197
=========================================================================================================================
See Notes to Consolidated Financial Statements
5
CPI AEROSTRUCTURES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
For the Three Months Ended March 31, 2003 2002
(Unaudited)
-------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income from continuing operations $3,737,203 $558,433
Adjustments to reconcile net income from continuing operations to net
cash used in operating activities:
Depreciation and amortization 27,061 9,525
Warrants issued for consulting fees 712 1,424
Common stock issued for bank fees 84,473 ---
Gain on extinguishment of debt (2,431,233) ---
Deferred portion of provision for income taxes --- 373,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (1,030,385) 244,763
(Increase) decrease in costs and estimated earnings inexcess of billings on
uncompleted contracts (200,426) 495,544
Decrease in prepaid expenses and other current assets 373,679 318
Decrease in accounts payable and accrued expenses (1,390,375) (1,824,277)
-------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (829,291) (141,270)
Cash used in investing activities - purchase of property, plant and equipment (44,309) ---
-------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net repayment of long-term debt (5,516,100) (2,364,576)
Proceeds from public offering 7,661,744 ---
-------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 2,145,644 (2,364,576)
-------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) continuing operations 1,272,044 (2,505,846)
Net cash from discontinued operations 534,008 2,363,178
-------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 1,806,052 (142,668)
Cash at beginning of period 91,537 180,578
-------------------------------------------------------------------------------------------------------------------------
Cash at end of period $ 1,897,589 $ 37,910
=========================================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 60,884 $ 41,376
=========================================================================================================================
Income taxes $ 8,410 $ 13,355
=========================================================================================================================
See Notes to Consolidated Financial Statements
6
CPI AEROSTRUCTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
1. INTERIM FINANCIAL STATEMENTS
The financial statements as of March 31, 2003 and for the three months
ended March 31, 2003 and 2002 are unaudited, however, in the opinion
of the management of the Company, these financial statements reflect
all adjustments (consisting solely of normal recurring adjustments)
necessary to present fairly the financial position of the Company and
the results of operations for such interim periods are not necessarily
indicative of the results to be obtained for a full year.
The Company has elected to apply Accounting Principles Board ("APB")
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations in accounting for its stock options issued to
employees (intrinsic value) and has adopted the disclosure-only
provisions of Statement of Financial Accounting Standards ("SFAS") No.
123, Accounting for Stock-Based Compensation. Had the Company elected
to recognize compensation cost based on the fair value of the options
granted at the grant date as prescribed by SFAS No. 123, the Company's
net income and income per common share would have been as follows:
Three months ended March 31, 2003 2002
----------------------------------------------------------------------
Net income - as reported $3,990,535 $558,433
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects 74,819 461,182
----------------------------------------------------------------------
Net income - pro forma $3,915,716 $97,251
======================================================================
Basic income per share - as reported $ 1.04 $ 0.21
======================================================================
Basic income per share - pro forma $ 1.02 $ 0.04
======================================================================
Diluted income per share - as reported $ 0.93 $ 0.21
======================================================================
Diluted income per share - pro forma $ 0.91 $ 0.04
======================================================================
2. COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED
CONTRACTS:
Costs and estimated earnings in excess of billings on uncompleted contracts
consists of:
March 31, 2003
---------------------------------------------------------------------------------------
U.S.
Government Commercial Total
----------------------------------------------------------------------------------------
Costs incurred on uncompleted
contracts $14,718,335 $13,082,494 $27,800,829
Estimated earnings 7,714,723 5,969,853 13,684,576
-----------------------------------------------------------------------------------------
22,433,058 19,052,347 41,485,405
Less billings to date 12,841,448 17,061,425 29,902,873
-----------------------------------------------------------------------------------------
Costs and estimated earnings
in excess of billings on
uncompleted contracts $9,591,610 $1,990,922 $11,582,532
=========================================================================================
7
CPI AEROSTRUCTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
December 31, 2002
----------------------------------------------------------------------------------------
U.S.
Government Commercial Total
----------------------------------------------------------------------------------------
Costs incurred on uncompleted
contracts $13,272,589 $13,068,603 $26,341,192
Estimated earnings 6,508,822 5,969,156 12,477,978
----------------------------------------------------------------------------------------
19,781,411 19,037,759 38,819,170
Less billings to date 10,429,184 17,007,880 27,437,064
-----------------------------------------------------------------------------------------
Costs and estimated earnings
in excess of billings on
uncompleted contracts $9,352,227 $ 2,029,879 $11,382,106
=========================================================================================
8
CPI AEROSTRUCTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
3. EARNINGS PER COMMON SHARE:
Basic earnings per common share are computed using the weighted average
number of shares outstanding. Diluted earnings per common share is computed
using the weighted-average number of shares outstanding adjusted for the
incremental shares attributed to outstanding options and warrants to
purchase common stock. Incremental shares of 462,750 and 49,152 were used
in the calculation of diluted earnings per common share in the first three
months of 2003 and 2002, respectively.
4. DEBT AND EQUITY:
Debt consists of the following:
March 31, 2003 December 31, 2002
----------------------------------------------------------------------------
Notes payable - banks - $3,017,572
Note payable - seller - 4,898,034
Capitalized lease
obligations payable $117,019 148,746
----------------------------------------------------------------------------
117,019 8,064,352
Less current portion 79,457 8,024,160
-----------------------------------------------------------------------------
Long-term debt $37,562 $ 40,192
=============================================================================
The Company leases equipment under capital leases, which expire at various
dates through December 2007. The leases require monthly aggregate payments
of $11,064, including interest at 9.35%. Proceeds of approximately $674,000
were received during 2002 upon the sale of certain leased equipment, which
amount was remitted to the owners of the equipment.
At December 31, 2002, the Company had in place three notes payable to banks
and a note payable - seller, related to its discontinued Kolar, Inc.
operation. The notes payable - banks were each collateralized and called
for monthly installments, each under independent terms and conditions. The
note payable -- seller totaled approximately $4,898,000.
In February 2003, the Company consummated the public offering of 2,300,000
shares of common stock, which provided the Company with net proceeds of
$7,662,000.
Each of the notes payable to banks and the note payable - seller were
extinguished in conjunction with the February 2003 public offering of the
Company's common stock. In conjunction with the repayment of the note
payable -- seller, the Company recognized a gain of $2,431,233.
5. INCOME TAXES:
There was no provision for income taxes for the quarter ended March 31,
2003 due to the utilization of federal and state net operating loss
carryforwards.
6. CONTINGENCIES:
In connection with the publication of a newspaper article about the Company
prior to the public offering of 2,300,000 common shares on February 19,
2003, the Company may, upon the occurrence of certain future events through
February 19, 2004, be required to return to certain investors all or part
of their purchase price. The net proceeds to the Company from the offering
therefore could be reduced.
9
CPI AEROSTRUCTURES, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
--------------------------------------------------------------------------------
The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements and footnotes thereto contained in this
report.
Forward Looking Statements
The statements discussed in this Report include forward looking statements that
involve risks and uncertainties, including the timely delivery and acceptance of
the Company's products and the other risks detailed from time to time in the
Company's reports filed with the Securities and Exchange Commission.
Critical Accounting Policies
Revenue Recognition
We recognize revenue from our contracts over the contractual period under the
percentage-of-completion (POC) method of accounting. Under the POC method of
accounting, sales and gross profit are recognized as work is performed based on
the relationship between actual costs incurred and total estimated costs at the
completion of the contract. Recognized revenues that will not be billed under
the terms of the contract until a later date are recorded as an asset captioned
"Costs and estimated earnings in excess of billings on uncompleted contracts."
Changes to the original estimates may be required during the life of the
contract. Estimates are reviewed monthly and the effect of any change in the
estimated gross margin percentage for a contract is reflected in cost of sales
in the period the change becomes known. The use of the POC method of accounting
involves considerable use of estimates in determining revenues, costs and
profits and in assigning the amounts to accounting periods. We continually
evaluate all of the issues related to the assumptions, risks and uncertainties
inherent with the application of the POC method of accounting.
Income Taxes
We account for income taxes in accordance with SFAS No. 109, "Accounting for
Income Taxes." Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. We record a valuation allowance that represents federal
and state operating loss carryforwards for which utilization is uncertain.
Management judgment is required in determining our provision for income taxes,
deferred tax assets and liabilities and the valuation allowance recorded against
our net deferred tax assets. The valuation allowance would need to be adjusted
in the event future taxable income is materially different than amounts
estimated. We have recorded valuation allowances of $1,987,000 and $3,810,000
against our deferred tax assets at March 31, 2003 and December 31, 2002,
respectively.
Material Changes in Results of Operations
The Company's revenue for the three months ended March 31, 2003 was $6,007,447
compared to $4,691,784 for the same period last year, representing an increase
of $1,315,663 or 28%. This increase is largely attributable to an increase in
the number and value of government contracts awarded to the Company. During the
three months ended March 31, 2003, new contract awards totaled $11,967,000, an
increase of 56% compared with last year's total of $7,650,000. A portion of the
new contract awards was shipped during the quarter.
Gross profit for the three months ended March 31, 2003 increased by $763,519 or
54%, compared with the same period last year. As a percentage of revenue, gross
profit for the three months ended March 31, 2003 was 36% compared to 30% for the
same period last year, due primarily to a more favorable product mix.
10
CPI AEROSTRUCTURES, INC.
--------------------------------------------------------------------------------
Selling, general, and administrative expenses for the three months period ended
March 31, 2003 were $722,919, an increase of $303,048, or 72%, compared with the
same period last year. This increase is largely due to bank, legal and
accounting fees associated with the early extinguishment of the debt. The
remaining balance reflects increased spending associated with the higher level
of business activity.
The resulting income from operations, for the three months ended March 31, 2003,
was $1,442,982, a 47% improvement over the $982,510 reported in the same period
last year.
Interest expense increased by $98,290 for the three months ended March 31, 2003,
compared to the same period last year. The increase in interest expense is due
primarily to bank fees associated with the early extinguishment of approximately
$2,433,000 of the Company's bank debt in February 2003. Included in other income
for the three months ended March 31, 2003, is a gain of $253,332 from the sale
of a building included in assets held for sale - discontinued operations and a
gain of $2,431,233 from the early extinguishment of a the note payable-seller.
Income from continuing operations for the three months ended March 31, 2003 was
$3,737,203, which includes a gain on the extinguishment of debt of $2,431,233,
compared with $931,433 for the same period last year. Due to losses incurred in
prior years, the Company was able to partially realize the benefit of its net
operating loss carryforward during the quarter, resulting in a reversal of
$1,823,000 of the previously established valuation allowance and no provision
for taxes for the three months ended March 31, 2003. As a result, net income for
the quarter was $3,990,535, or $1.04 per share, compared with $558,433, or $0.21
per share for the same period last year. Diluted earnings per share, for the
three months ended March 31, 2003, were $0.93, calculated utilizing 4,311,529
diluted average shares outstanding for the period, compared with diluted net
income per share of $0.21, calculated utilizing 2,706,197 diluted average shares
outstanding for the same period last year.
Material Changes in Financial Condition
At March 31, 2003, the Company had working capital of $13,693,160, compared with
$1,975,574, at December 31, 2002, an increase of $11,717,586. This increase is
primarily attributable to the public offering of 2,300,000 shares of common
stock consummated in February 2003, which provided the Company with net proceeds
of $7,662,000 and the net income of $3,990,535. The net proceeds of the offering
were used to repay approximately $2,433,000 of the Company's bank debt, and
approximately $4,898,000 of note payable - seller, plus accrued interest of
approximately $199,000. The Company recognized a gain of approximately
$2,431,000 on the extinguishment of the note payable-seller. The remaining net
proceeds of the public offering of $2,529,000 were available to fund continuing
operations.
A large portion of the Company's cash is used in paying for materials and
processing costs associated with contracts that are in process and which do not
provide for progress payments. These costs are components of "Costs and
estimated earnings in excess of billings on uncompleted contracts" on the
Company's balance sheet and represent the aggregate costs and related earnings
for uncompleted contracts for which the customer has not yet been billed. These
costs and earnings are recovered upon shipment of products and presentation of
billings in accordance with contract terms.
Net cash used by operating activities for the three months ended March 31, 2003
was $829,291, compared with net cash used in operating activities $141,270 for
the same period last year.
Liquidity and Capital Resources
The Company currently finances its operations through a combination of existing
resources and cash provided by operations. Liquidity and capital resources were
significantly improved as a result of the consummation of the public offering in
February 2003.
The Company is presently negotiating with certain bank lenders to establish a
new revolving credit facility that will give the Company greater flexibility.
The Company believes that the cash flow generated by operating activities and
the availability of the additional facility will provide sufficient resources to
meet the growing needs of the Company for the foreseeable future.
11
CPI AEROSTRUCTURES, INC.
--------------------------------------------------------------------------------
Contractual Obligations
The table below summarizes information about our contractual obligations as of
March 31, 2003 and the effects these obligations are expected to have on our
liquidity and cash flow in the future years.
----------------------------------------- --------------------------------------------------------------------------------------
Contractual Obligations Payments Due By Period ($)
----------------------------------------- --------------------------------------------------------------------------------------
----------------------------------------- ----------------- ---------------- ----------------- --------------- -----------------
Total Less than 1-3 years 4-5 years After 5 years
1 year
----------------------------------------- ----------------- ---------------- ----------------- --------------- -----------------
Short-Term Debt -0- -0- -0- -0- -0-
----------------------------------------- ----------------- ---------------- ----------------- --------------- -----------------
Capital Lease Obligations 117,019 79,457 20,096 17,466 -0-
----------------------------------------- ----------------- ---------------- ----------------- --------------- -----------------
Operating Leases -0- -0- -0- -0- -0-
----------------------------------------- ----------------- ---------------- ----------------- --------------- -----------------
Employment Agreement Compensation * 1,215,322 495,100 720,222 -0- -0-
---------------------------------------- ----------------- ---------------- ----------------- --------------- -----------------
Total Contractual Cash Obligations 1,332,341 574,557 740,318 17,466 -0-
----------------------------------------- ----------------- ---------------- ----------------- --------------- -----------------
* The employment agreements provide for bonus payments that are excluded from
these amounts.
12
CPI AEROSTRUCTURES, INC.
--------------------------------------------------------------------------------
Item 3 - Controls and Procedures
Within the 90-day period prior to the filing of this report, an evaluation
of the effectiveness of our disclosure controls and procedures was made
under the supervision and with the participation of the Company's
management, including the chief executive officer and acting chief
financial officer (our executive officer and principal financial officer).
Based on that evaluation, he concluded that the Company's disclosure
controls and procedures are effective to ensure that information required
to be disclosed by the Company in reports that it files or submits under
the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange
Commission rules and forms. Subsequent to the date of his evaluation, there
were no significant changes in our internal controls or in other factors
that could significantly affect these controls, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Part II: Other
Item 6 - Exhibits and Reports on Form 8-K
a) No Exhibits
b) During the three months ended March 31, 2003, a Current Reports
on Form 8-K, dated March 31,2003, was filed by the Company with
the Securities and Exchange Commission, reporting events under
Items 7 and 12.
13
CPI AEROSTRUCTURES, INC.
--------------------------------------------------------------------------------
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
CPI AEROSTRUCTURES, INC.
Dated: May 15, 2003 By: /S/ Arthur August
------------------------------
Arthur August
Chairman of the Board
Dated: May 15, 2003 By: /S/ Edward J. Fred
----------------------------
Edward J. Fred
Chief Executive Officer,
President, acting Chief
Financial Officer (Principal
Executive, Accounting and Financial
Officer), Secretary and Director
SECTION 302 CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CPI Aerostructures, Inc. (the
"Company") on Form 10-QSB for the period ended March 31, 2003 as filed with the
Securities and Exchange Commission (the "Report"), each of the undersigned, in
the capacities and on the dates indicated below, hereby certifies pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
1. the Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2. the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operation of the Company.
Dated: May 15, 2003
/s/ Edward J. Fred
---------------------
Edward J. Fred
Chief Executive Officer, President,
acting Chief Financial Officer and
Secretary (Principal Executive
and Financial Officer)
14
CERTIFICATION
PURSUANT TO RULE 13a-14 AND 15d-14 UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Edward J. Fred, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of CPI Aerostructures,
Inc.;
2. based on my knowledge, this quarterly 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 quarterly report;
3. based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly report;
4. the registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures 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 quarterly
report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
15
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. the registrant's other certifying officers and I have indicated in
quarterly annual report whether 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: May 15, 2003 /s/ Edward J. Fred
-----------------------
Name: Edward J. Fred
Title: Chief Executive Officer,
President, acting Chief Financial
Officer and Secretary (Principal
Executive and Financial Officer)
16