-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QPGG2GOUR1BNcD0ZJ9fJ1vRR6K4Qpb39EDWOOdBR0olkuFFWgsgvYZJQw+w9d+ym se9+htflU0WGhqcysiRq9w== 0000950136-04-001513.txt : 20040511 0000950136-04-001513.hdr.sgml : 20040511 20040511164027 ACCESSION NUMBER: 0000950136-04-001513 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CPI AEROSTRUCTURES INC CENTRAL INDEX KEY: 0000889348 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 112520310 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-11398 FILM NUMBER: 04796818 BUSINESS ADDRESS: STREET 1: 200A EXECUTIVE DR CITY: EDGEWOOD STATE: NY ZIP: 11717 BUSINESS PHONE: 5165865200 10QSB 1 file001.txt FORM 10-QSB 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, 2004 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) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 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 ------- ------- As of May 6, 2004, the number of shares of common stock, par value $.001 per share, outstanding was 5,350,030. CPI AEROSTRUCTURES, INC. INDEX - -------------------------------------------------------------------------------- Part I: Financial Information: Item 1 - Condensed Consolidated Financial Statements: Independent Accountant's Report 3 Balance Sheets as of March 31, 2004 (Unaudited) and 4 December 31, 2003 Statements of Income for the Three Months ended March 31, 2004 5 (Unaudited) and 2003 (Unaudited) Statements of Cash Flows for the Three Months ended March 31, 2004 6 (Unaudited) and 2003 (Unaudited) Notes to Condensed Consolidated 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 Information 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 ACCOUNTANT'S 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, 2004, and the related condensed consolidated statements of income and cash flows for the three-month periods ended March 31, 2004 and 2003. These financial statements are the 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 condensed consolidated financial statements referred to above 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, 2003, 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 January 30, 2004, 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, 2003, 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 15, 2004 3
CPI AEROSTRUCTURES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS - --------------------------------------------------------------------------------------------------------------------------------- MARCH 31, DECEMBER 31, 2004 2003 (UNAUDITED) - --------------------------------------------------------------------------------------------------------------------------------- ASSETS Current assets: Cash $1,411,699 $ 2,794,310 Accounts receivable 1,713,076 1,747,824 Costs and estimated earnings in excess of billings on uncompleted contracts 18,608,793 17,449,887 Deferred income taxes 623,000 1,058,000 Prepaid expenses and other current assets 282,731 349,329 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 22,639,299 23,399,350 Property, plant and equipment, net 380,795 360,514 Other assets 179,226 179,226 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $23,199,320 $23,939,090 ================================================================================================================================= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,592,162 $ 3,343,875 Accrued expenses 75,609 541,798 Current capital lease obligation 7,071 7,303 Income tax payable 15,753 187,000 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 2,690,595 4,079,976 Capital lease obligation, net of current portion 24,110 26,311 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 2,714,705 4,106,287 - --------------------------------------------------------------------------------------------------------------------------------- Commitments and contingencies Shareholders' equity: Common stock - $.001 par value; authorized 50,000,000 shares, issued and outstanding 5,301,770 shares 5,302 5,302 Additional paid-in capital 21,713,447 21,713,447 Accumulated deficit (1,234,134) (1,885,946) - --------------------------------------------------------------------------------------------------------------------------------- SHAREHOLDERS' EQUITY 20,484,615 19,832,803 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $23,199,320 $23,939,090 =================================================================================================================================
See Notes to Condensed Consolidated Financial Statements 4
CPI AEROSTRUCTURES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME - ---------------------------------------------------------------------------------------------------------------------------------- FOR THE THREE MONTHS ENDED MARCH 31, 2004 2003 (UNAUDITED) - ---------------------------------------------------------------------------------------------------------------------------------- Revenue $ 6,228,108 $ 6,007,447 Cost of sales 4,302,014 3,841,546 - ---------------------------------------------------------------------------------------------------------------------------------- Gross profit 1,926,094 2,165,901 Selling, general and administrative expenses 838,076 722,919 - ---------------------------------------------------------------------------------------------------------------------------------- Income from operations 1,088,018 1,442,982 - ---------------------------------------------------------------------------------------------------------------------------------- Other income (expense): Interest/other income 2,211 2,654 Interest expense (3,417) (139,666) Gain on extinguishment of debt --- 2,431,233 - ---------------------------------------------------------------------------------------------------------------------------------- Total other income (expense), net (1,206) 2,294,221 - ---------------------------------------------------------------------------------------------------------------------------------- Income from continuing operations 1,086,812 3,737,203 Gain on sale of assets held for sale - discontinued operations --- 253,332 - ---------------------------------------------------------------------------------------------------------------------------------- Income before provision for income taxes 1,086,812 3,990,535 Provision for income taxes 435,000 --- - ---------------------------------------------------------------------------------------------------------------------------------- Net income $ 651,812 $ 3,990,535 ================================================================================================================================== Basic net income per common share: Income from continuing operations $ 0.12 $ 0.97 Gain on sale of assets held for sale - discontinued operations 0.00 0.07 - ---------------------------------------------------------------------------------------------------------------------------------- Earnings per common share - basic $ 0.12 $ 1.04 ================================================================================================================================== Diluted net income per common share: Income from continuing operations $ 0.11 $ 0.87 Gain on sale of assets held for sale - discontinued operations 0.00 0.06 - ---------------------------------------------------------------------------------------------------------------------------------- Earnings per common share - diluted $ 0.11 $ 0.93 ================================================================================================================================== Shares used in computing earnings per common share: Basic 5,301,770 3,848,779 Diluted 5,800,120 4,311,529
See Notes to Condensed Consolidated Financial Statements 5
CPI AEROSTRUCTURES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - ---------------------------------------------------------------------------------------------------------------------------------- FOR THE THREE MONTHS ENDED MARCH 31, 2004 2003 (UNAUDITED) - ---------------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income from continuing operations $651,812 $3,737,203 Adjustments to reconcile net income from continuing operations to net cash used in operating activities: Depreciation and amortization 27,579 27,061 Warrants issued for consulting fees --- 712 Common stock issued for bank fees --- 84,473 Gain on extinguishment of debt --- (2,431,233) Deferred portion of provision for income taxes 435,000 --- Changes in operating assets and liabilities: (Increase) decrease in accounts receivable 34,748 (1,030,385) Increase in costs and estimated earnings in excess of billings on uncompleted contracts (1,158,906) (200,426) Decrease in prepaid expenses and other current assets 66,598 373,679 Decrease in accounts payable and accrued expenses (1,217,900) (1,390,375) Decrease in income taxes payable (171,247) --- - ---------------------------------------------------------------------------------------------------------------------------------- Net cash used in operating activities (1,332,316) (829,291) Cash used in investing activities - purchase of property, plant and equipment (47,861) (44,309) - ---------------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Net repayment of long-term debt (2,434) (5,516,100) Proceeds from public offering --- 7,661,744 - ---------------------------------------------------------------------------------------------------------------------------------- Net cash (used in) provided by financing activities (2,434) 2,145,644 - ---------------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) continuing operations (1,382,611) 1,272,044 Net cash from discontinued operations --- 534,008 - ---------------------------------------------------------------------------------------------------------------------------------- Net (decrease) increase in cash (1,382,611) 1,806,052 Cash at beginning of period 2,794,310 91,537 - ---------------------------------------------------------------------------------------------------------------------------------- Cash at end of period $1,411,699 $ 1,897,589 ================================================================================================================================== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $3,417 $ 60,884 ================================================================================================================================== Income taxes $171,247 $ 8,410 ==================================================================================================================================
See Notes to Condensed Consolidated Financial Statements 6
CPI AEROSTRUCTURES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - ---------------------------------------------------------------------------------------------------------------------------------- 1. INTERIM The financial statements as of March 31, 2004 and for the three months ended March 31, FINANCIAL 2004 and 2003 are unaudited, however, in the opinion of the management of the Company, STATEMENTS: 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. 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, 2004 2003 ---------------------------------------------------------------------------------------------------- Net income - as reported $651,812 $3,990,535 Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects 89,621 74,819 ---------------------------------------------------------------------------------------------------- Net income - pro forma $562,191 $3,915,716 ==================================================================================================== Basic income per share - as reported $0.12 $ 1.04 ==================================================================================================== BASIC INCOME PER SHARE - PRO FORMA $0.11 $ 1.02 ==================================================================================================== Diluted income per share - as reported $0.11 $ 0.93 ==================================================================================================== DILUTED INCOME PER SHARE - PRO FORMA $0.10 $ 0.91 ====================================================================================================
7
CPI AEROSTRUCTURES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - ----------------------------------------------------------------------------------------------------------------------- 2. COSTS AND ESTIMATED Costs and estimated earnings in excess of billings on uncompleted contracts consist of: EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED March 31, 2004 CONTRACTS: --------------------------------------------------------------------------------------- U.S. Government Commercial Total --------------------------------------------------------------------------------------- Costs incurred on uncompleted contracts $25,097,415 $13,189,128 $38,286,543 Estimated earnings 13,698,627 6,106,547 19,805,174 ----------------------------------------------------------------------------------------- 38,796,042 19,295,675 58,091,717 Less billings to date 22,229,328 17,253,596 39,482,924 ----------------------------------------------------------------------------------------- COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS $16,566,714 $2,042,079 $18,608,793 ========================================================================================= December 31, 2003 --------------------------------------------------------------------------------------- U.S. Government Commercial Total --------------------------------------------------------------------------------------- Costs incurred on uncompleted contracts $22,466,590 $13,184,968 $35,651,558 Estimated earnings 11,783,814 6,111,775 17,895,589 ----------------------------------------------------------------------------------------- 34,250,404 19,296,743 53,547,147 Less billings to date 18,866,180 17,231,080 36,097,260 ----------------------------------------------------------------------------------------- COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS $15,384,224 $ 2,065,663 $17,449,887 =========================================================================================
8
CPI AEROSTRUCTURES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - ------------------------------------------------------------------------------------------- 3. EARNINGS PER Basic earnings per common share are computed using the COMMON SHARE: 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 498,350 and 462,750 were used in the calculation of diluted earnings per common share in the first three months of 2004 and 2003, respectively. 4. PUBLIC OFFERING In September 2003, the Company entered into a three year, AND CREDIT $5.0 million revolving credit facility with JP Morgan Chase FACILITY: Bank, secured by the assets of the Company. The facility specifies interest rates that range between the Prime Rate and 225 basis points over LIBOR, depending on certain terms and conditions. As of March 31, 2004, the Company has not borrowed any funds pursuant to this facility. In February 2003, the Company consummated a public offering of 2,300,000 shares of common stock, which provided the Company with net proceeds of $7,759,000. Approximately $2,433,000 of the net proceeds was used to repay bank loans, $2,700,000 was used to repay the Note Payable - Seller, which had a carrying value plus accrued interest of approximately $5,131,000. Accordingly, the Company recorded a gain of approximately $2,431,000 on the extinguishment of the debt. The remaining net proceeds of approximately $2,626,000 are being used to fund continuing operations.
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 Condensed 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." Contracts where billings to date have exceeded recognized revenues are recorded as a liability captioned "Billings in excess of costs and estimated earnings on uncompleted contracts." Changes to the original estimates may be required during the life of the contract. Estimates are reviewed monthly and the effect of any change in the estimated gross margin percentage for a contract is reflected in cost of sales in the period the change becomes known. The use of the POC method of accounting involves considerable use of estimates in determining revenues, costs and profits and in assigning the amounts to accounting periods. As a result, there can be a significant disparity between earnings (both for accounting and taxes) as reported and actual cash received by us during any reporting period. We continually evaluate all of the issues related to the assumptions, risks and uncertainties inherent with the application of the POC method of accounting, however we cannot assure you that our estimates will be accurate. If our estimates are not accurate or a contract is terminated, we will be forced to adjust revenue in later periods. Furthermore, even if our estimates are accurate, we may have a shortfall in our cash flow and we may need to borrow money to pay taxes until the reported earnings materialize to actual cash receipts. MATERIAL CHANGES IN RESULTS OF OPERATIONS The Company's revenue for the three months ended March 31, 2004 was $6,228,108 compared to $6,007,447 for the same period last year, representing an increase of $220,661 or 4%. Gross profit for the three months ended March 31, 2004 decreased by $239,807 or 11 %, compared with the same period last year. As a percentage of revenue, gross profit for the three months ended March 31, 2004 was 31% compared to 36% for the same period last year, due primarily to a less favorable product mix. Selling, general, and administrative expenses for the three months ended March 31, 2004 were $838,076 compared to $722,919 for the three months ended March 31, 2003, an increase of $115,157, or 16%. The increase was due to additional professional fees and salaries during the quarter. 10 CPI AEROSTRUCTURES, INC. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- The resulting income from operations for the three months ended March 31, 2004 was $1,088,018, a 25% decrease from $1,442,982 reported in the same period last year. Interest expense for the three months ended March 31, 2004 was $3,417, compared to $139,666 for the three months ended March 31, 2003, a decrease of $136,249, or 98%. The decrease was primarily due 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 on extinguishment of debt of $2,431,233. Income from continuing operations for the three months ended March 31, 2004 was $1,086,812 compared to $3,737,203 for the three months ended March 31, 2003. The decrease was primarily due to a gain on the extinguishment of debt of $2,431,233, which was realized in conjunction with the public offering of 2.3 million shares of the Company's common stock in February 2003. During the three months ended March 31, 2003, the Company realized a one time gain on the disposal of assets held for sale-discontinued operation of $253,332. The Company recorded a provision for income taxes of $435,000 for the three months ended March 31, 2004. For the same period last year, the Company was able to partially realize the benefit of its net operating loss carryforward for losses occurred in previous years, 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 three months ended March 31, 2004 was $651,812, or $0.12 per share, compared to $3,990,535, or $1.04 per share, for the same period last year. Diluted income per share for the three months ended March 31, 2004 was $0.11, calculated utilizing 5,800,120 diluted average shares outstanding for the period, compared to diluted income per share of $0.93, calculated utilizing 4,311,529 diluted average shares outstanding for the same period last year. MATERIAL CHANGES IN FINANCIAL CONDITION At March 31, 2004, the Company had working capital of $19,948,704 compared to $19,319,374 at December 31, 2003, an increase of $629,330. 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 in operating activities for the three months ended March 31, 2004 was $1,332,316, compared to net cash used in operating activities of $829,291 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 Company's public offering in February 2003, which provided the Company with approximately $7,759,000 of net proceeds, approximately $2,626,000 of which have been and will be used to fund continuing operations. 11 CPI AEROSTRUCTURES, INC. ITEM2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- In September 2003, the Company entered into a three year, $5.0 million revolving credit facility with JPMorgan Chase Bank, secured by the assets of the Company. The facility specifies interest rates that range between the Prime Rate and 225 basis points over LIBOR, depending on certain terms and conditions. As of March 31, 2004, the Company has not borrowed any funds pursuant to this facility. The Company believes that its current liquidity and capital resources are sufficient to meet its needs for the foreseeable future. CONTRACTUAL OBLIGATIONS The table below summarizes information about our contractual obligations as of March 31, 2004 and the effects these obligations are expected to have on our liquidity and cash flow in the future years.
- ----------------------------------------- -------------------------------------------------------------------------------------- PAYMENTS DUE BY PERIOD ($) - ----------------------------------------- -------------------------------------------------------------------------------------- LESS THAN CONTRACTUAL OBLIGATIONS TOTAL 1 YEAR 1-3 YEARS 4-5 YEARS AFTER 5 YEARS - ----------------------------------------- ----------------- ---------------- ----------------- --------------- ----------------- Short-Term Debt -0- -0- -0- -0- -0- - ----------------------------------------- ----------------- ---------------- ----------------- --------------- ----------------- Capital Lease Obligations 31,181 7,071 16,856 7,254 -0- - ----------------------------------------- ----------------- ---------------- ----------------- --------------- ----------------- Operating Leases -0- -0- -0- -0- -0- - ----------------------------------------- ----------------- ---------------- ----------------- --------------- ----------------- Employment Agreement Compensation * 1,336,300 673,800 662,500 -0- -0- - ----------------------------------------- ----------------- ---------------- ----------------- --------------- ----------------- Total Contractual Cash Obligations 1,367,481 680,871 679,356 7,254 -0- - ----------------------------------------- ----------------- ---------------- ----------------- --------------- -----------------
* The employment agreements provide for bonus payments that are excluded from these amounts. 12 CPI AEROSTRUCTURES, INC. - -------------------------------------------------------------------------------- ITEM 3 - CONTROLS AND PROCEDURES An evaluation of the effectiveness of the Company's disclosure controls and procedures was made as of March 31, 2004 under the supervision and with the participation of the Company's management, including the Company's chief executive officer and acting chief financial officer (the Company's 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. During the most recently completed fiscal quarter, there has been no change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. PART II: OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K a) Exhibit 31 Section 302 Certification by CEO and acting CFO Exhibit 32 Section 906 Certification by CEO and acting CFO b) During the three months ended March 31, 2004, a Current Report on Form 8-K, dated March 30, 2004, was filed by the Company with the Securities and Exchange Commission on March 31, 2004, reporting events under Items 7 and 12. 13 CPI AEROSTRUCTURES, INC. SIGNATURES 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 6, 2004 By /s/ Arthur August ------------------- Arthur August Chairman of the Board Dated: May 6, 2004 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 14 EX-31 2 file002.txt SECTION 302 CERTIFICATION CPI AEROSTRUCTURES, INC. EXHIBIT 31 SECTION 302 CERTIFICATION PURSUANT TO RULE 13A-14 AND 15D-14 UNDER THE SECURITIES 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 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 small business issuer as of, and for, the periods presented in this report; 4. The small business issuer'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 small business issuer 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 small business issuer, 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) [intentionally omitted]; (c) Evaluated the effectiveness of the small business issuer'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 (d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and to the audit committee of the small business issuer'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 small business issuer'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 small business issuer's internal control over financial reporting. Date: May 6 2004 By: /s/ Edward J. Fred ----------------------------------------- Name: Edward J. Fred Title: Chief Executive Officer, President and acting Chief Financial officer (Principal Executive and Financial Officer) 15 EX-32 3 file003.txt SECTION 906 CERTIFICATION CPI AEROSTRUCTURES, INC. EXHIBIT 32 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, 2004 as filed with the Securities and Exchange Commission (the "Report"), the undersigned, in the capacities and on the date 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 6, 2004 /s/ Edward J. Fred ------------------------------------------------ Edward J. Fred Chief Executive Officer, President, acting Chief Financial Officer and Secretary (Principal Executive and Financial Officer) 16 -----END PRIVACY-ENHANCED MESSAGE-----